Aug 11, 2017 News
The decision by Central Government to take on the payments needed for the Marriott Hotel has contributed to the increase of the nation’s overall external debt.
This is according to the Ministry of Finance.
In its half year report, the Ministry said that the external debt stock increased by 5.0 percent, from US$1,143.5 million at end June 2016 to US$1,200.7 million at the end of June 2017.
The Finance Ministry said that this was due to a number of reasons. In this regard, it was explained that Guyana’s external debt increased as a result of the decision taken by the Government, in April 2017, to transfer the Atlantic Hotel Inc. (AHI)’s financial obligations to Republic Bank Limited (Trinidad), to the Central Government. This was due to AHI’s inability to meet the repayment. AHI is the owner of the Guyana Marriott Hotel, Georgetown.
One of the shareholders in the Hotel is the National Industrial and Commercial Investments Limited (NICI). According to its head, Horace James, the new Board for AHI has been receiving unsolicited requests from persons who are interested in the construction of the Marriott’s Entertainment Complex and the benefits that might bring.
With this in mind, James said that the board is currently working out how they are going to deal with that in terms of advertising and construction of the complex.
James said, “But Marriott International is managing the hotel. There is a contract between AHI and the International brand for that. In terms of the loans, the hotel is not making money to service the loans. In fact, the Government has to pay US$1.2M every six months.”
The official said that while this cost should have been handled by AHI and/or NICIL, the latter simply does not have the money. He stressed that “NICIL cannot stand on its own two feet”.
James said, “So the government is helping out both AHI and NICIL. Marriott can become profitable, but I don’t think it should really be a government-owned institution. That is why I think government is looking and will continue to look for a model to sell the whole thing or some shares in it. There is a better possibility of getting something from Marriott”.
But since its opening in early 2015, the hotel has done poorly, as a key money-earning section – the entertainment facility – has not been completed.
The entertainment section was supposed to include a casino, nightclub and restaurant. The revenues from that section are what Marriott had been banking on to meet commitments, including loans, salaries, Marriott fees and utilities.
Since taking office in May 2015, the Coalition Government has been saddled with paying the amounts to the bank which has lent almost US$30M.
According to Finance Minister Winston Jordan, although the bank has given the hotel and government time to make the payments, the reality is that “time is not infinite”.
The hotel was birthed by the previous Government, but there were questions about the risks involved and the financing structure, which gives control to private investors despite Government spending the bulk of the money.
While the hotel is currently making money on its restaurant, rooms and conference hall, it will never make enough to meet expenses unless the casino and the other entertainment sections become a reality.
The 197-room hotel was completed, reportedly at more than US$50M, with real cost for lands and other concessions estimated at more than US$80M, critics of the project have said.
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