Mumbai, June 24: The Indian Hotels Company (IHC) will soon make a comeback in the US.
Four Seasons, the Toronto-based hotel company, is shedding the lease and operating responsibilities at The Pierre hotel, a luxury Manhattan landmark. Taj Hotels Resorts & Palaces is ready to take over the responsibilities as shareholders of 795 Fifth Avenue Corp, the company which owns the hotel, had earlier approved the move.
While definitive agreements are yet to be signed, it is understood that IHC will announce details of the Pierre deal on Monday. Reports place the deal at $45 million and a 30-year lease for Taj, which will see the Tata group return to New York. Earlier, the Tatas had managed three-star hotels in Manhattan (Lexington Hotel) and Chicago (Executive Plaza).
The group had exited the Lexington Hotel a few years ago and has been looking for a good landmark hotel in the city ever since. The group also manages other overseas properties and has been looking at other business hubs.
However, it had lost out on its two previous bids to acquire a five-star property in the US. The group has also made an unsuccessful $130-million bid for the Carlyle Hotel in Manhattan and later it came close to acquiring the Inter-Continental Hotel.
According to reports, the Pierre deal will be funded by the chest of $150 million that the firm has raised from a foreign currency convertible bond issue. However, IHC is also open to raising other instruments to fund the deal.
Earlier this month, Four Seasons said it expects to shed the lease and operating responsibilities at the Pierre hotel by the month-end. The company has been trying to restructure its lease on the hotel. However, its negotiations to revise the lease failed.
The Pierre was once owned by US oil billionaire John Paul Getty.
Four Seasons wanted better contract terms from 795 Fifth Avenue Corp. The company has run the Pierre since 1981 and reports say that it has been selling hotels and exiting leases to focus on its management business.
Its original investors included E. F. Hutton and Walter Chrysler when it opened in 1930. Getty purchased the hotel in 1938 for $2.5 million.
Taj Hotels Resorts and Palaces comprises 57 hotels in 38 locations across India. It also has 13 international hotels in the Maldives, Mauritius, the UK, Nepal, Sri Lanka, Africa and West Asia.
In May, Taj Hotels entered Southeast Asia through a management contract with Rebak Island Marina Berhad to operate and manage the Rebak Marina Resort, a 106-room premium resort on the island of Langkawi in Malaysia.
The move was part of Taj’s global strategy to establish its presence in key gateway cities and leisure destinations.
