GRAND DECEPTION: The stunning facade of Hotel Ashok in Delhi hides many skeletons

Shanghai Dosa is a delicacy at the Delhi-based Kamakshi restaurant. A cross between south Indian rava dosa and Chinese noodles, the food is an oddity just like the hotel chain that houses the restaurant-the India Tourism Development Corporation (ITDC). Set up to blend public-sector ownership with private-sector standards of service, ITDC is yet another of Jawaharlal Nehru's grand social experiments that turned sour. Its 26 hotels across the country today stand like congenitally defective species, being sold for a song to turn them into normal businesses.

Three ITDC hotels-Khajuraho Ashok, Hassan Ashok and Bodhgaya Ashok-have been sold for about Rs 2 crore each, a price that won't fetch a bungalow in posh colonies in the metros. Hotels in tourist hotspots like Agra and Manali have been transferred to private parties for Rs 3.9 crore and Rs 4 crore.

The group's pride, Delhi's Hotel Ashok-the capital's first 5-star deluxe hotel with a building as grand as a monument-did not attract a single bidder when it was twice offered for long-term management lease in January and February this year.

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5-STAR DISCOMFORT Hotel Ashok, Delhi Rooms: 560 Built: 1956 Area: 16.11 acre Losses (2001-2): Rs 9 crore Occupancy: 33% Sales: Rs 37 crore Wage bill: Rs 23 crore » Operated for 36 years without a building plan and a completion certificate. Pays Rs 25,000 a year as land rent instead of the market rate of Rs 14 crore. THE SEAMIER SIDE: Shanty staff quarters are in stark contrast to the hotel's exterior » Has 347 staff quarters, housing over 3,000 people, and a creche on the hotel premises all of which were unauthorised till a few months ago. » Rooms were given free to friends, relatives and VIPs and shown as "under repair" in the registers. » Rampant under-invoicing of bills, specially for large events. Employees pocketed 15 per cent commission in all purchases made by the hotel. WELFARE STATE: A creche for hotel employees » Has piled up losses of Rs 28 crore in three years. Owes Rs 22 crore in municipal bills. » Twice put up for sale of management in January and February 2002, but did not attract a single bidder.

The hotel's income in 2001-2 fell by 25 per cent to Rs 37 crore, from Rs 46.41 crore a year before. Its annual loss was Rs 9 crore. Tourism Minister Jagmohan, who was initially opposed to privatisation of Delhi's Ashok Hotel and estimated an investment of Rs 25-odd crore to turn it around, changed his opinion after a visit to the hotel. He sought Rs 100 crore from the Finance Ministry to rehabilitate it. Private companies, however, put the cost of refurbishment at over Rs 200 crore.

The garage sale of ITDC properties-18 hotels have been sold in less than 12 months-has unearthed some amazing details. Sordid tales of improprieties, abuse of power and outright loot and corruption, all of which were swept under the smelly carpets of its hotels for years. If there was a whiff of the rot, it was only on their obscure balance sheets.

All the hotels, except one, are in the red for over three to six years. Their sales have plummeted in the past five years, but not the wage bill. From an already high level of 30 to 50 per cent five years ago, wages in 2001-2 accounted for 50-250 per cent of sales in most hotels. The figure for well-run private hotels is 15 per cent. True, 9/11, Gujarat riots and Indo-Pak tensions have slaughtered tourism this year, but ITDC has bled much more than private hotels. The room occupancy in ITDC hotels last year was 20 to 30 per cent, against the national figure of 45 to 50 per cent. In June, when India Today visited Ashok Jaipur and Ashok Kalinga in Bhubaneswar, the two hotels had just two guests.

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THE ENEMY WITHIN Kanishka, Delhi 200 rooms vacant for 3 years "Delay in privatisation is not good for the company or the country." Arun shourie, Disinvestment Minister Rooms: 325 Built: 1982 Area: 2.5 acre Sales: Rs 9.7 crore Wage bill: Rs 10.4 crore Losses (2001-2): Rs 9.4 crore Occupancy: 33% » In 1997, some shafts of Kanishka Hotel began to leak, rendering 100-odd rooms unusable. The repairs took an inexplicable three years. The 325-room hotel could not rent out 200 rooms during that period-a notional loss of over Rs 90 crore. The occupancy rate plummeted from 40 to 28 per cent. The Kanishka slumped into losses in 1999 and never recovered. » In another case of self-inflicted loss, General Manager Jawahar Ghadiok continued to occupy five rooms for over a year after he was transferred from the Kanishka in July 1998. The damage: Rs 70 lakh. » The final nail in the coffin came in 2001, when an ITDC vice-president occupied five rooms of the hotel for a year pending "renovation" of a flat allotted to him at Delhi's Asiad Village. Another loss of Rs 70 lakh.

Of course, all guests don't have to pay for their stay or food at ITDC. In its 37 years of existence, the 4,000-room hotel chain has entertained as many freeloaders-prime ministers, ministers, politicians and its own staff-as its paying guests. A few years ago, the chief accounts officer of Delhi's Ashok was asked to cater food at a private party hosted by a former prime minister. Months after the party when the officer enquired about the payment, he was asked to produce written proof that food was indeed supplied. This was difficult as the order was given over the phone. When the officer persisted, the former prime minister's personal secretary threatened him with dire consequences. This wasn't an isolated incident. Oral requests for meals and parties from all and sundry in the government were a norm till Jagmohan banned unwritten requests in 2001.

Jagmohan's predecessor in the ministry, Ananth Kumar, had his own way of showering affection on ITDC. Bangalore's oldest 5-star hotel, Ashok Hotel, whose management has recently been taken over by Bharat Hotels, was one of Kumar's favourite haunts. According to the hotel staff Suite 201 and 202 were booked for him virtually every weekend. Even when the minister was not around, the rooms (Rs 7,500 a day for 201 and Rs 4,000 a day for 202) were not let out because the staff did not know when he might dash to Bangalore. That when Kumar's house in the city is just about 3 km from the hotel. The first three times he stayed at the hotel as tourism minister Kumar checked into the presidential suite (Rs 18,000, including taxes) but after a local news reporter got wind of it, he asked the hotel to "downgrade" him to a lower suite. Each visit of the minister cost the hotel a minimum of Rs 15,000 a day. Kumar's fancies afflicted other hotels in the group also (see Of Mischief and Minister).

With the minister setting the trend, the staff did not hesitate in jumping on the gravy train. An informal inquiry into the dealings of Delhi's Ashok by the Intelligence Bureau a few months ago found glaring irregularities: the staff pocketed 15 per cent commission on all purchases, recurring instances of occupied rooms being listed as rooms under repair and massive under-invoicing of bills, especially of large events. Methods of fraud weren't very clever. While the register at the reception would show a few rooms under repair, the kitchen register had entries of food being served to those rooms and the floor register showed them being cleaned every day.

Other group hotels are not very different. The general manager of Kalinga Ashok in Bhubaneswar was suspended in April for illegally occupying suites for his family and hosting free parties for friends and family (see Going, Going...).

As unofficial loot ate into the foundations of ITDC, official apathy perpetuated the collapse. For five years the hotel chain has had no full-time CEO. Various officials of the Tourism Ministry have "looked after" ITDC as and when they found time. The lack of leadership, vision and accountability proved costly when tourist inflows were deteriorating and competition intensifying. Then, of course, there was the long shadow of privatisation that snuffed out any prospect of a recovery.