Mar 13, 2016 News
Junior Finance Minister, Jaipaul Sharma, is of the firm belief that any serious attempt to sell the Marriott
Hotel would perhaps see the Government pushing for the completion of the hotel’s casino and entertainment complex.
In a recent interview, Sharma said that this was one of the issues raised during a meeting with the members of the subcommittee set up to plan the way forward for Government regarding the future of the Marriott.
The politician said that the subcommittee members are expected to meet with the representatives of Atlantic Hotel Inc (AHI) on Monday to make a final decision at the subcommittee level, on the way forward.
Beverly Harper, Ansa Mcal Chief Executive Officer, was appointed Chairman of the Board of Directors at Atlantic Hotel Inc. (AHI) last year. AHI is the Special Purpose Company established to own the Marriott Hotel in Kingston, Georgetown.
The new Board was installed last year with its other Directors. They include Larry London, Derrick Cummings and Patricia Bacchus. AHI was previously headed by Winston Brassington and Marcia Nadir-Sharma.
The Junior Finance Minister explained, “We are stuck with the Hotel and we have to sell it but in order to do so we have to make it more attractive. To do this, we may have to complete the entertainment complex with its casino and that I suppose would not take long.”
He continued, “At this point, the hotel I can say is at a break-even stage and that is good. But on Monday when I meet with the AHI people, we will get a detailed breakdown on how they are doing with the expenses and how it is performing.”
AHI had initially approached Republic Bank to secure a loan from a consortium of investors to raise of US$27M. However, this was cut short as a result of court action filed by then opposition Member of Parliament, Desmond Trotman.
That court action resulted in only US$15.3M being transferred from Republic Bank to Atlantic Hotel Inc for the multi-million dollar hotel.
Sharma noted that the case, according to his information, has been dropped. Now AHI has access to some US$11M. This is the remainder of the $27M loan from Republic Bank.
He said that the meeting on Monday will decide whether AHI would be interested in investing the remainder of the money now available to them into the completion of the Hotel’s entertainment complex.
However, the Casino and Entertainment Complex of the facility was proposed at an additional US$16M.
The US$60M Marriott Hotel was met with much contention by the then Opposition bloc A Partnership for National Unity (APNU) and the Alliance For Change (AFC), when it was being constructed under the previous regime. The project had been criticized for lacking transparency.
Managing the construction shares of the company was Atlantic Hotel Incorporate (AHI), a subsidiary of the National Industrial Commercial and Investments Limited (NICIL) which falls under the Government.
The Marriott was also given “extravagant incentives and benefits”, which left other local hotel operators screaming over the unlevel playing field.
Despite the controversy, the hotel was opened to begin its phase one operations.
Three months later, the 197-room facility was already showing signs that it was not going to be the overnight success the PPP claimed it would be.
In fact, Marriott racked up a $60M loss up to the end of June, 2015, according to Government officials. The state-owned hotel’s biggest expense is its electricity consumption. Its monthly bill to Guyana Power and Light (GPL) is in excess of $25M.
This has been a major factor why construction of a critical component of the hotel- the adjoining entertainment complex- has not started.
Marriott’s electricity tab would contrast starkly with that of its nearby competitor, the Pegasus Hotel, whose electricity consumption averages $15M monthly.
Marriott also has a five-megawatt generator with the capacity to power the Kingston area. It has been using this from time to time.
While in Opposition, the AFC, of which Hughes is a member, had made it clear that the party would revisit, review and if necessary impose sanctions on the hotel should the party get into Government.
However, the Minister explained that while the former Opposition was critical of how the hotel was handled, it has no reservations about the actual Marriot franchise itself.
“I want people to understand that the concerns we had about the Marriott were purely in terms of the fact that we as an administration did not feel that the Government should spend (US) millions on a hotel,” related the Tourism Minister.
She said they had felt that the private sector or international investors should have been the ones to put their money into the Hotel, without spending taxpayers’ dollars.
Finance Minister, Winston Jordan, had also stated that once the price is right, Government would be willing to part with the Hotel.
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