In a major boost for cash-strapped Himachal Pradesh, the government has secured a record bid of 47.1% of the annual gross revenue for granting licence rights to operate and manage the iconic Wildflower Hall hotel near Shimla, which is one of its most prized hospitality properties.
“As per the agreement, the East India Hotels Limited, a flagship company of the Oberoi Group, will continue to manage the property by sharing 47.10% of gross revenue with the state government with periodical escalation,” said Sandeep Kumar, secretary for tourism and civil aviation, Himachal Pradesh. This is stated to be the highest-ever revenue-sharing bid in India for a transaction of this nature.
The arrangement is expected to generate substantial and sustained recurring revenue for the state exchequer, estimated at approximately ₹ 3 crore per month, with an annual escalation of 3%, over the licence period of 35 years. The transaction is projected to generate aggregate revenue of approximately ₹ 2,000 crore during the licence period, besides an upfront licence fee of ₹ 24 crore, and a committed minimum investment of ₹ 50 crore in the hotel property. Consequently, the state government has secured complete ownership and control of the hotel land and property, the joint venture company and its associated assets and rights, along with cash accruals of approximately ₹ 400 crore. After Independence, the property was taken over by the government of India that ran an agricultural school in it till 1973 when it was handed over to the Himachal Pradesh Tourism Development Corporation (HPTDC) to run a hotel. The HPTDC built 11 cottages and four rooms, a multipurpose hall and a green room. On April 5, 1993, the building was destroyed in a fire caused by a short circuit. In 1996, the government transferred the land in the name of the company.
However, the HPTDC kept running the cottages and four other rooms that had survived the blaze till the Himachal Pradesh government signed a joint venture with the Oberoi Group to rebuild Wildflower Hall as a luxury hotel. The state government then decided to explore various methods and possibilities of putting the hotel back in operation. After which global tenders were invited to re-develop it as a five-star hotel. East India Hotels Limited, a flagship company of the Oberoi Group, also participated and the state government decided to work in partnership with it. Under the joint venture, a company called Mashobra Resort Limited was formed to build the five-star hotel within four years. It was under the Virbhadra Singh-led Congress government the joint venture was established. But even after six years, the company could not make the hotel ready for use.
