Great Eastern Hotel, an icon in Calcutta, was called the Jewel of the East. It opened for business in 1840. It was originally called the Auckland Hotel—named after George Eden, 1st Earl of Auckland, then the Governor General of India who lived literally next door. The owner of the hotel was David Wilson.
One more interesting trivia: in 1883 the premises of the hotel were electrified, thus becoming the first hotel in India, to have power-driven fans and lights. The present Raj Bhavan, which was earlier called the Government House, was next door. After the transfer of power from the East India Company to the British Crown in 1858, it became the official residence of the Viceroy of India.
There were two famous hotels in Calcutta when I was young: The Grand and The Great Eastern. When there was a test match at the Eden Gardens, one team stayed at the Grand and the other at the Great Eastern. Because Raj Bhavan and the Government offices were closer, Great Eastern had a higher share of foreign dignitaries. The Guest List was sprinkled with a very diverse set of celebrities and dignitaries: Mark Twain, Rudyard Kipling, Queen Elizabeth II, Khrushchev, Bulganin, Ho-Chi-Minh and Frank Worrell.
My grandfather had a preference for the Great Eastern. He would take us to the Chinese restaurant for lunches. When I was old enough I went to Maxim’s. When he became the Sheriff of Calcutta, my grand-father’s celebratory party was at the Great Eastern.
I was sad that the hotel gradually went to seed when it was taken over by the state government. The government did not have the expertise to manage a fine hotel. In addition, it used the hotel as a glorified government guesthouse. Bureaucrats and ministers threw official parties in the hotel. Professional managers were replaced by petty officials who ran it from the Tourism Ministry of the Writers’ Building. There was no money allocated for upkeep or refurbishment. Visitors to the city and tourists all voted with their feet to greener pastures : Oberoi Grand, Taj Bengal, ITC Sonar, Hyatt and The Park. The Great Eastern Hotel became a shadow of its glorious past.
It also became an albatross around the neck of the state government. It was losing money, the condition of the hotel was pathetic and the citizens were quite upset that the government had run a heritage hotel property to the ground. The Minister Shri Subhas Chakraborty had tried to shake off the asset through a joint venture with the French Accor Group. But he failed because the Accor Group did not want to take over the employees or the liabilities. The union belonging to his party , CITU, opposed the move.
Minister Subhas Chakraborty had no desire to let go of the Great Eastern. It was his fiefdom and all his events were organized there. The CITU bogey was a handy excuse of maintaining the status quo. Things, however, began to change when Buddhadeb Bhattacharjee became the Chief Minister in 2000. He picked a straight-shooter Nirupam Sen as his Industry Minister. Buddhadeb’s vision was to invite investments and industrialize the state rapidly to create employment for the youth. He was of the view that there was a huge disguised employment in the farm sector and that it was necessary to gainfully employ them in industry. He believed that the government’s job was to maintain law and order and to provide access to education and health. The government was not in the business of running hotels, purified water plants and pharmaceutical companies. Without exception, they were losing money and draining the public exchequer.
Under his guidance, Nirupam Sen created a blue-print to “privatize” loss-making state-owned undertakings of the government: 18 in the first go with the Great Eastern Hotel at the top of the list. The UK government’s Department for International Development (DFID) engaged PricewaterhouseCoopers to assist the government in the “privatization” effort. It was decided that that DFID would finance the separation of labour through a generous Early Retirement Scheme (ERS).
The litmus test was the Great Eastern Hotel. The engagement partner in the project was Arindam Guha, who was both energetic and bright. He studied the Hotel’s situation and told me that if we tried to divest the hotel with the employees, the buyers will shy away and there was a risk that the transaction would fail. We did not want to take the risk.
I knew the Chief Minister and sought an appointment with him and the Industries Minister. I told them that there was not a snowball’s chance in hell of selling the hotel without exiting the employees. If we tried to retain the employees and sell, we will all have eggs on our face and PwC was unwilling to participate in the transaction if the government held its ground.
The CM told me that if that was PwC’s honest belief, can we formally write to him? We did. The CM then discussed the matter with the CITU leaders and his party and gave us the go ahead. Our first task was to design a generous ERS package which included a lump-sum payment, a group medical insurance for employees agreeing to the package and vocational training for one younger member of the family which would result in his/her employment with designated organizations. Once it was decided, the CITU behaved like disciplined soldiers. The CITU leader who was the cashier distributed the ERS cheques and took receipts.
The Great Eastern Hotel was a heritage property. It was important that the bidder understood the constraints that it imposed on the renovation. The Chief Minister was keen that the new owner restored the hotel to its former glory and did not change its end use into, say, a shopping mall. For that, we consulted the lawyers Amarchand Mangaldas, who drafted the conditions and suggested that the government should retain 10% shares in the new entity. Because the West Bengal Government still holds a 10% stake in the new company, it is the only luxury hotel to which the current Chief Minister Sm. Mamata Banerjee comes to attend official functions.
Once we were ready, the bid document was released. The formula was simple. The hotel would go to the highest bidder but we would also factor in how much of guaranteed investment each bidder promised. I called a number of hotel-chains including ITC and we were cautiously optimistic that a number of bidders would compete.
On the day of the bidding, I was sitting with the Industries Minister Nirupam Sen at an event in Pragati Maidan, New Delhi. I received a call from my partner Arindam Guha. He told me two bidders have already bid. They were Bicky Chakraborty, an NRI hotel-owner from Sweden and Prasun Mukherjee of Universal from Indonesia. The Lalit Group representative had two envelopes with him and he was overheard saying, “Sir, if ITC does not come, I will put in envelope #2 five minutes before the close of the bid.” To our great disappointment ITC decided not to bid and Lalit representative put in envelope #2. When the bid was opened, they were #1 on both counts, the bid money and the guaranteed investment. History was made. A communist Chief Minister had succeeded in privatizing a loss-making, run-down heritage hotel with British tax-payers’ money!
Shortly after “buying” Great Eastern, Lalit Suri died in London. His wife Jyotsna Suri helped in the renovation. The hotel was closed for the first time in 2005. After seven years of meticulous restoration it was again partially opened to the public in 2013.
I went back to The Great Eastern. Perhaps not to dine but to relive the fond memories of my childhood. Great Eastern is so much part of the grand, old Calcutta, the news of whose death, as Twain said, are “greatly exaggerated.”