Hotel Wildflower Hall auction fetches record 47.1% revenue share for Himachal

35-year licence deal expected to generate Rs 2,000 crore; State retains ownership of iconic Shimla property

Shimla, Oct 30,

In what marks the culmination of a nearly three-decade-long legal battle over one of Himachal Pradesh’s most prized hospitality properties, the state government has secured a record bid of 47.1 per cent of the annual gross revenue for granting licence rights to operate and manage the iconic Wildflower Hall hotel near Shimla.

The Himachal Pradesh Government has successfully completed the competitive e-auction for the operation, management and maintenance of the luxury property at Chharabra, with Chief Minister Sukhvinder Singh Sukhu describing the outcome as a significant achievement in protecting the state’s interests and unlocking the economic potential of public assets.

According to the government, the 47.1 per cent revenue-sharing offer is the highest ever secured in India in a transaction of this nature. The 35-year licensing arrangement is expected to generate approximately Rs 3 crore per month for the state, with an annual escalation of three per cent. Over the entire licence period, the cumulative revenue is projected to touch approximately Rs 2,000 crore.

The successful bidder has also committed to paying Rs 24 crore as upfront licence fee and making a minimum investment of Rs 50 crore in the hotel’s property. The arrangement, however, does not involve an outright sale of the property. Ownership of the hotel, its land and the underlying assets will remain with the Himachal Pradesh Government.

Interestingly, while the state government has announced the financial outcome of the e-auction, including the record 47.1 per cent revenue-sharing offer, it has not made public the identity of the successful bidder. The name of the entity that will operate and manage one of Himachal’s most prestigious hospitality properties for the next 35 years remains undisclosed in the government’s announcement.

From a fire-ravaged property to a prolonged legal battle

The latest development brings an important chapter of the Wildflower Hall dispute to a close. The property, which once served as the residence of British Army Commander-in-Chief Lord Kitchener, was gutted in a devastating fire on April 5, 1993. Subsequently, the state government entered into a joint venture agreement with East India Hotels Limited (EIH), the Oberoi Group company, on October 30, 1995, to reconstruct and operate the property as a luxury hotel.

The joint venture, Mashobra Resort Limited (MRL), was formed to develop and manage the hotel. The state government subsequently executed a conveyance deed in favour of MRL in February 1997.

However, differences emerged between the two partners over the implementation of the agreement, including the completion and commercial operation of the hotel and the shareholding structure of the joint venture. The then Prem Kumar Dhumal-led BJP government terminated the agreement on March 6, 2002, citing alleged violations of its terms. EIH challenged the decision, triggering a prolonged legal battle that continued for more than two decades.

The dispute was referred to arbitration, with retired Supreme Court judge Justice R.P. Sethi delivering an award in favour of the state government on July 23, 2005. The award provided for the restoration of the state’s rights over the property in the event of non-compliance with its directions. The litigation subsequently travelled through various forums, with the state consistently seeking restoration of possession and control.

Supreme Court verdict paved the way for takeover

A major breakthrough came in October 2022, when the Himachal Pradesh High Court dismissed EIH’s challenge to the arbitral award. In November 2023, the High Court directed the company to hand over the hotel to the state government. Its subsequent review proceedings also failed.

Also read: Global hospitality asset under hammer: HP invites international bids for Hotel Wildflower Hall
On February 20, 2024, the Supreme Court dismissed EIH’s challenges and upheld the process leading to restoration of the property to the state, allowing the company to continue managing the hotel until March 31, 2025, to facilitate an orderly transition.

Also read:Wildflower hall law suit: Major set back to Oberoi group as HP HC dismisses decades old litigation 
The state government formally took over vacant and peaceful possession of Wildflower Hall on March 31, 2025. EIH was subsequently allowed to continue providing operational and management services temporarily to ensure continuity of hotel operations until a new operator could be selected through a competitive bidding process.

The subsequent legal proceedings also addressed the financial and corporate assets associated with the joint venture. In October 2025, the state secured a significant legal breakthrough concerning its entitlement to the financial assets and benefits associated with MRL, with the overall amount involved estimated at around Rs 401 crore.

Global bidding process and long-term revenue opportunity

With possession and ownership issues resolved, the government initiated the process of bringing in a new professional operator. In June 2026, the Tourism and Civil Aviation Department invited global bids for the operation, management and maintenance of the property under a long-term licensing arrangement.

The successful e-auction now marks the transition from the prolonged ownership dispute to a new commercial management framework. The government expects the arrangement to ensure a predictable long-term revenue stream while retaining control over the underlying public asset.

Chief Minister Sukhu said the resolution of the nearly 25-year-old legal dispute was an important achievement for Himachal Pradesh. He said his government had consistently worked to protect the state’s legitimate rights in important projects and assets, including the Kishau Multipurpose Project and matters involving JSW.

The Chief Minister maintained that the government would not compromise on the interests of the state and its people. He also credited the legal teams and professional advisers for their contribution to securing the state’s interests throughout the process.

He said bringing Wildflower Hall back under government control, securing a record revenue-sharing bid and ensuring long-term financial returns reflected the government’s commitment to safeguarding public assets and strengthening the state’s economy.

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