Wildflower Hall hotel’s losses questioned

November 27th, 2008 - 1:43 pm ICT by IANS  

Shimla, Nov 27 (IANS) Wildflower Hall, one of India’s luxury resort hotels, is in the eye of a storm. The Himachal Pradesh government has questioned hospitality major Oberoi Group’s claim that the hotel is incurring huge losses.Once a British colonial property, Wildflower Hall is located at Charabra near the Himachal Pradesh capital at a height of 8,300 feet amid thick verdant forests of pine and cedar.

Trouble started last week when the three management board directors appointed by the government - the four others are appointed by the Oberois - refused to accept the hotel’s claim that accumulated losses for the financial year ending March 2008 had crossed Rs.800 million against a capital expenditure of Rs.460 million.

“The three government directors of the Wildflower Hall board, including chief secretary Asha Swaroop, who chaired the meeting, recorded their dissent during the board meeting called to pass the annual accounts,” tourism secretary Manisha Nanda told IANS.

“It’s shocking that all hotels run worldwide by the Oberois are earning profits, and only Wildflower Hall is incurring losses. It is something unbelievable,” she said.

Wildflower Hall was once the residence of Lord Kitchener, the commander-in-chief of the British.

After India’s independence, the building was handed over to the Himachal Pradesh Tourism Development Corporation for running a hotel. It was gutted in a fire in 1992. The government then approached prominent hoteliers and finally shortlisted the Oberois.

It was handed over to the hospitality group under a joint venture in 1995 by the Congress government to set up a five-star hotel.

At that time, the cost of constructing the 85-room hotel was pegged at Rs.400 million and the state government’s share was fixed at 35 percent. Subsequently, the Oberois raised the cost of the project to over Rs.990 million, which reduced the government’s equity.

“The state has not got a penny out of its equity since the hotel was operationalised in March 2001. It is strange that the hotel management board has been showing losses for the past eight years,” Nanda added.

The state government scrapped the joint venture agreement with the Oberois on May 3, 2002, pointing out serious irregularities in the construction cost. The Oberois challenged the decision of the government in the Himachal Pradesh High Court, which appointed an arbitrator.

Nanda said even arbitrator R.P. Sethi, a former Supreme Court judge, announced his opinion in favour of the government in July 2005.

The Oberois, who were told to pay Rs.940 million to the government as rent for a period of 40 years from 1995, again moved the high court against the decree. The case is now pending in court.

Chief Minister Prem Kumar Dhumal said: “Our decision to cancel the project was even upheld by the arbitrator. The Oberois should honour that and pay us our due amount.”

Ketaki Narain, director corporate communications at Oberois, said: “The matter is sub judice, so I will not comment much on this issue. Because of poor air connectivty and bad roads, the hotel is suffering losses.”

Wildflower Hall, because of the breathtaking view that one can get from there, is sought after by high-value tourists, celebrities and politicians. Congress Party chief Sonia Gandhi and her daughter Priyanka had stayed there last year while Bollywood stars Saif Ali Khan and Kareena Kapoor visited this year.

Besides Wildflower Hall, the Oberoi Group has two other hotels in Shimla - Clarke’s and Cecil.

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