Chail Palace Among 18 State-Run Hotels To Be Shut Down In Himachal. Here's Why
The issue began with the failure of the state government to pay the dues owed to retired employees of the HPTDC.
The Himachal Pradesh High Court on Tuesday, November 19, issued two significant rulings over the past two days, which placed the state government, led by Chief Minister Sukhvinder Singh Sukhu, under intense public scrutiny. The first ruling concerns the seizure of Himachal Bhawan in New Delhi due to the non-repayment of a Rs 64 crore loan from the state’s Hydro Project Company, which includes 7% interest. The second decision directed the closure of 18 loss-making hotels owned by the Himachal Pradesh Tourism Development Corporation (HPTDC), all of which have been underperforming with an occupancy rate of just 40% annually.
What makes this decision even more striking is that the High Court’s order came following a petition from retired employees of the HPTDC, who have been demanding long-overdue financial benefits, including arrears and pensions. Among the hotels affected by the closure is the iconic Chail Palace in Solan, a historic property built in 1891.
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The issue began with the failure of the state government to pay the dues owed to retired employees of the HPTDC. These pensioners, having worked for the corporation, had not received their entitled gratuity, leave encashment, commutation, and other financial benefits for years. Frustrated with the lack of action, the retirees took their grievances to the Himachal Pradesh High Court.
Delivering the Tuesday ruling, Justice Ajay Mohan Goyal remarked that despite repeated warnings to the HPTDC, the corporation had failed to disburse the financial benefits owed to its retired staff. The court also instructed the tourism department to present a comprehensive list of all retired employees, deceased employees, and Class IV staff, ensuring the pending payments are made to both retirees and the families of deceased staff members.
The court had previously ordered the HPTDC to provide detailed reports on the income generated by each of its units over the past three years. Additionally, it sought the list of rooms and restaurant units under the corporation’s management. The ruling reflects growing concerns that these government-run hotels have become a financial burden on the public.
Earlier, on September 17, the High Court had already directed the Tourism Corporation to implement corrective measures to stop the mounting losses from these hotels. However, the government did not take meaningful steps to address the issue, prompting the court to take more drastic action.
The court noted that if the corporation was unable to efficiently operate its hotels, it should consider partnerships or lease agreements with private entities. Such moves, the court argued, would not only help reduce the financial burden on the state but also boost tourism in Himachal Pradesh, potentially increasing the revenue of the tourism corporation.
One key figure in the court’s decision is the Managing Director of HPTDC, who has been held personally responsible for ensuring the compliance with these orders. The court emphasised that only the minimum number of staff required for maintaining the cleanliness of these hotels should remain employed, with the surplus staff being redistributed to other hotels where there is a staffing shortage. A final decision on this matter is expected by November 25.
The Chail Palace Hotel’s Struggles
Among the 18 hotels ordered to be closed is the Chail Palace in Solan, a once-thriving hotel with 50 rooms. Unfortunately, over the past three years, the occupancy rate of the Chail Palace has consistently remained below 40%, underscoring the unprofitability of these government-run properties.
The High Court did not mince words, labelling these hotels as “white elephants" – an expression often used to describe costly, underperforming projects that drain public resources. The court expressed its dissatisfaction, pointing out that the government had failed to present a solid plan to address the issue even after its September 17 ruling. The court made it clear that taxpayers’ money could no longer be allowed to be wasted on such unprofitable ventures.
What’s Next?
The Himachal Pradesh government now faces a significant challenge. In addition to taking immediate action on the closure of the underperforming hotels, the state must also address the long-overdue financial claims of its retired employees. The court has demanded that the tourism department file an affidavit in the next hearing, providing clear evidence of their efforts to resolve these issues. If the state fails to comply, further legal action may follow.
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