The devastated Taj Mahal Palace & Towers will be closed for a year. “The Taj is not accepting reservations till the end of 2009. Both the Palace wing and the Tower wing will be closed for renovation,” say Taj officials.
Function areas such as the ballroom and the restaurants, which include the famed Zodiac Grill, will also be closed.
Earlier, Raymond Bickson, managing director of Indian Hotels Company, said, “All the employees of the Taj Mahal Palace & Towers are being taken care of and some may be redeployed until operations are resumed.”
An East India Hotels (EIH) spokesperson said the Oberoi Towers would perhaps reopen in about four months, while the Trident (earlier the Hilton) would be ready to reopen in a fortnight.
The Maharashtra police have provided access to the management to the Trident. Other than security forces, nobody is allowed to enter the Oberoi as yet. Police are yet to clear the hotel. Those who have left their belongings in the hotel can now collect them, said EIH officials.
“Since the damage to the Trident is less, we will be opening the hotel in 10 to 12 days. The terrorists caused huge damage to the Oberoi. So we will be able to open the hotel only after three or four months,” said Ketaki Narain, director of corporate communications for the Oberoi group.
“In the early hours of December 1, the security authorities handed control of the Taj Mahal Palace and Towers back to the Taj group. However, certain parts of the property are still inaccessible, either due to the continuing security investigations or for safety reasons,” says a Taj statement.
“With immediate effect, the building has being placed under as tight a seal as possible until a full risk assessment has been completed. Access to the hotel buildings is only being given to a limited number of specialised personnel. This is due to the need to remove all potential sources of risk arising from the attack. Sections of the building also require specialised assessment to establish their structural integrity, but these surveys will not be initiated until the risk assessment is complete,” the statement adds.
P R S Oberoi, chairman of East India Hotels, which owns the Oberoi and Trident hotel brands, had earlier said that his company, along with their insurers, New India Assurance and United India Insurance, were assessing the damage caused. But from preliminary assessment, the damage at the Oberoi (327-room capacity) appears to be much more than at the Trident (541 rooms), he had said in a statement last week.
Icra that rates Indian Hotels Company estimates that the cost of building a luxury hotel room, excluding the cost of land, is around Rs 1.25 crore per room.
“But we estimate that they will need to invest much less than that to retrofit the rooms. The project team has already started work we understand,” says Pavethra Pooniah, senior analyst at Icra.
“These properties will come back and do so at a bigger premium than what they currently command versus hotels in North Mumbai as these have a loyal clientele and there’s a restriction on fresh land supply in south Mumbai. I do not feel these events will put people off though there might be fear or anxiety for a while. But this will not keep people away from these hotels over the long run,” says Akshay Kulkarni, director of South Asia Cushman & Wakefield Hospitality.
The Taj has four hotels in Mumbai, including the 80-room Taj Wellington Mews luxury residences and the 565-room
Taj Mahal Palace and Towers. The damaged property is by far the largest.
Of Indian Hotels Company’s standalone revenues, the Mumbai and Delhi properties account for a disproportionate share, as per Icra’s estimates.
The top six hotels, across four cities, account for 66 per cent of revenues and 90 per cent of profits, say an Icra report.
“Mumbai as a market could comprise almost a quarter of Indian Hotels Company’s standalone revenues, of which the Taj Colaba would be the biggest chunk. The four Mumbai properties and the two Taj properties in Delhi are the top six in India: Taj Mansingh and the Taj Palace in Delhi,” says Subrata Ray, head of corporate sector ratings, Icra.
According to him, a major part of the capital expenditure on rebuilding the Taj would be covered by the insurance policy. The impact on revenues would need to be assessed in the light of the extent of coverage available under the company’s loss of profits, insurance policy and the period when the hotel would be closed.
The Indian Hotels Company stock fell to a 52 week low of Rs 38.5 on the Bombay Stock Exchange before rising to close at Rs 39.85, down 0.62 per cent on Monday. The closing price was quite near the book value of Rs 39.54 per share. The East India Hotels stock closed at Rs 99.75, up 2.05 per cent on the BSE.