Who will buy Umaid Bhawan Palace?

Ever since Umaid Bhawan Palace, the luxury palace resort in Jodhpur, severed its ties with Adrian Zecha-promoted Amanresorts in June, at least three Indian hotel companies have been in the race to secure the management rights to the property.

Among these are ITC Hotels, Indian Hotels Company that owns the Taj Group and EIH Ltd that runs the Oberoi hotel chain. The hospitality companies are said to be running neck-and-neck to tie-up for the 98-room property built in 1929.

Hotel industry sources say that the ITC director, S S Habib Rehman, has already met Gaj Singh II, the former maharaja of Jodhpur and the chairman of Marudhar Hotels Ltd that owns Umaid Bhawan, a couple of times.

A team of senior Taj Group executives as well as EIH Ltd promoters are also said to have visited Jodhpur earlier this month, to bid for the management contract for Umaid Bhawan.

Incidentally, the palace property was run by ITC Hotels from 1978 to 2003 before it signed up Amanresorts.

Shivraj Singh, Gaj Singh's son and executive director of Marudhar Hotels, says that Umaid Bhawan Palace will sign on the new partner by the end of this month or in early August. He rules out tying up with a foreign company.

"While a few foreign parties have shown interest, we find that working with an Indian chain is more satisfying," says Shivraj Singh. For Umaid Bhawan, Marudhar Hotels is planning a capital infusion of Rs 55 crore (Rs 550 million) with the new partner putting in Rs 30 crore (Rs 300 million) to turn it into a spa destination.

Singh says that, as reported in a section of the media, the split with Amanresorts was not over any renovation project with a price tag of $8 million. "The first year was just an assessment period," he says.

He also rubbishes another report, which stated that Marudhar Hotels intended to raise Rs 50 crore (Rs 500 million) for the renovation through its real estate development project.

"Our real estate business has always been a stand alone deal," he says.

Marudhar Hotels had, earlier, signed up Mumbai-based S G Properties to develop high-end villa homes on a 100-acre, family-owned land. The project, to be executed in phases, targets the NRIs.

The company also runs luxury hotels such as Bal Samand Lake Palace, Sardar Samand Palace, Maharani Bagh and Royal Tented Camps near Jodhpur.

Slowly, the hospitality company is moving into real estate. On the anvil are plans to build a 25,000 sq ft, six-floor shopping complex in Jodhpur city.

Meanwhile, Marudhar Hotels also has big plans for Maharaja Heritage, its 50:50 joint venture with ITC Hotels. Maharaja has been marketing small, family-owned heritage properties under the WelcomHeritage brand name for the last five years.

Maharaja Heritage is expected to sign franchisee deals with Ramgarh Cottage in Nainital, Sheikhpura Koti in Haryana, Gorkha House Boat in Srinagar and Ranjit's Svaasa in Amritsar next month. Sometime back, Umaid Bhawan withdrew from the WelcomHeritage fold, as it was not really a small property, explains Singh.

Currently, Maharaja Heritage has franchisee and marketing rights for 36 properties including palaces and boutique hotels, wildlife getaways and tea estates. It has a reach in 10 states, including Himachal Pradesh, Punjab, West Bengal and J&K.

Last year, it secured the franchisee rights for Rajendra Villas in Mysore and the Regency Villas and Fernhill Palace in Ooty.

Under the franchisee agreement, according to sources, WelcomHeritage charges a joining fee of Rs 10,000 per key (room) or Rs 150,000 per year as the brand marketing fee.

It also charges a franchisee fee of 3 per cent of the total turnover and 2 per cent of the turnover as sales marketing and brand promotion cost.

But for Singh, currently busy with finalising a partner for Umaid Bhawan Palace, the ultimate aim is to make his flagship brand into something bigger than what it is now.

"I want to promote it as a stand alone, unique property and turn it into a recognisable brand," he says. Clearly, whoever secures the management contract for the property, will be crucial to his future plans.