Bidding firms seek easing of stringent conditions; annual 10 percent hike clause draws objections

Bidders have requested relaxation of certain conditions and exemptions from the steep annual payments. These appeals will be discussed at the upcoming board meeting of Jungle Lodges and Resorts, where a final decision will be taken. The new deadline will also be fixed during the board meeting.

Mysore/Mysuru: The process of handing over the iconic Lalitha Mahal Palace Hotel to private operators has been delayed after the State Government extended the deadline for submitting tenders for the renovation and management of the heritage property.

The century-old hotel, currently managed by Jungle Lodges and Resorts (JLR), is operating profitably. However, the Government has cited the urgent need for large-scale restoration works estimated at over Rs. 50 crore, along with long-term maintenance challenges, as the key reasons for inviting                                   private participation.

Built in 1921 by Nalwadi Krishnaraja Wadiyar, the Lalitha Mahal Palace has shown visible signs of deterioration in recent years. Peeling plaster and water stagnation on the terrace during monsoon have highlighted the need for immediate  conservation measures.

Considering the scale of investment required and the challenges involved in maintaining the sprawling heritage property, the Government decided to lease the hotel to a private operator for 30 years. The selected company will be responsible for undertaking restoration works and managing hotel operations.

Bidders seek relaxation

A global tender was floated through the State e-Procurement portal, with the last date for submission initially fixed for Apr. 30. The deadline has now been extended following requests from companies seeking relaxation and clarification on several conditions in the tender document.

According to sources, many firms that have either submitted bids or are preparing to participate have expressed concerns over what they describe as stringent financial conditions. They have urged the Government to ease certain norms to make the project commercially viable.

Under the tender conditions, the successful bidder must first undertake restoration of the Palace under the supervision and guidance of a Government-appointed expert committee to ensure that the heritage character of the building is preserved.

Payment, increment factor

The tender value has been fixed at Rs. 3.76 crore, while earnest money deposit (EMD) has been set at Rs. 25 lakh. In addition, selected operator must pay State Government Rs. 4 crore annually as the lease amount, with a mandatory 10 percent increase every year throughout the 30-year lease period.

This means the annual payment would rise to Rs. 4.40 crore in the second year, Rs. 4.84 crore in the third year and continue increasing progressively throughout the lease tenure.

Bidders have reportedly conveyed to JLR Managing Director Prashanth that the financial burden could become unsustainable. According to them, investing nearly Rs. 50 crore upfront for restoration, coupled with steadily escalating annual lease payments, could make the project economically unviable.

Despite these concerns, private hospitality companies continue to view the opportunity to manage the Lalitha Mahal Palace Hotel as highly prestigious. Modelled on London’s St. Paul’s Cathedral and known for its striking white façade and Royal architecture, the Palace remains one of Mysuru’s most recognisable heritage landmarks.

Revenue fluctuations

Industry players point out that the hotel depends largely on foreign tourists rather than domestic visitors, making revenues vulnerable to fluctuations in international tourist arrivals.

They argue that if overseas tourist inflow declines, meeting the annual payment obligations to the Government would become difficult.

Against this backdrop, bidders have sought exemptions or revisions to the annual Rs. 4 crore payment and the mandatory 10 percent yearly escalation.

The extension of the tender deadline is understood to have been granted to examine these requests and provide greater clarity on the conditions.

Meanwhile, heritage experts have cautioned that the renovation must be handled with utmost care.

Eight firms express interest

As many as eight firms responded when Expressions of Interest (EoI) were invited, signalling strong competition for the heritage property. Following this, the Government moved to the tender stage.

Several companies have already submitted bids, each accompanied by an earnest money deposit of Rs. 25 lakh.

However, under the global tender process conducted through the e-Procurement portal, the identities and number of bidders will remain confidential until the tender process concludes and the bids are officially opened.