On Tuesday, the new 175-room US$45M Marriott Hotel in Port-au-Prince, Haiti was opened on budget, on time and without government funding while Guyana’s hotel project is yet to be inaugurated and has been heavily dependent on financing from the state.
The 197-room US$58M Guyana Marriott has been under consideration since 2004.
Guyana’s Government formulated a private-public partnership initiative to complete the hotel according to Executive Director of the National Industrial and Commercial Investments Limited (NICIL) Winston Brassington. Unlike the Haitian hotel, Guyana’s project was inclusive of NICIL investing US$20M in public funds towards the hotel. The Clinton Foundation, spearheaded by former American President Bill Clinton, facilitated the collaboration between Marriott Worldwide and the Digicel Group, the owner of the new enterprise and Haiti’s largest telecom provider.
Atlantic Hotel Inc (AHI) is a special purpose entity incorporated in 2009 for the purpose of pursuing the development of the Marriott project here with the government holding company, NICIL, being the principal investor.
It was only in May of last year that AHI made the announcement that Hong Kong businessmen, Victor How Chung Chan and Xu Han would be investing the US$8M towards the needed equity for the completion of the Marriott Hotel and would become the majority shareholders. This injection appears to have been held up by court action against AHI.
With the Guyana Marriott project slated to be completed by March of this year, according to Marriott Worldwide’s website, a US$27 million debt financing agreement between AHI and Republic Bank Ltd (RBL) of Trinidad would require a significant occupancy rate for the business to thrive.
According to AHI and RBL, Ace Square Management Ltd, an affiliate of ACE Square Investments Ltd, was selected to operate the Entertainment Complex and secure the outfitting cost, estimated at a minimum of US$4M. Additionally, they said Ace Square Management Ltd will guarantee a minimum financial performance of the Entertainment Complex, consistent with the October 31, 2012 Feasibility Study conducted by HVS International, which found that the project has an overall rate of return of 11%.
Construction began in 2011, but multiple deadlines have since passed with the hotel still to be opened. The Haiti Marriott by comparison began construction in March 2013 and was slated to be completed by February 2015 and was. Prior to the 2010 earthquake that devastated the country, Marriott Worldwide had been considering the country for a potential development project.
Over 1,100 Haitian construction workers were hired for the project in contrast to Guyana’s Marriott project which is being built by China’s Shanghai Construction Group with very little Guyanese labour. The contractor for the Marriott here was disclosed in 2011 prior to any private investors being identified for the private-public partnership investment. One of the provisions was that Chinese labourers would be brought in for the construction.
Former Auditor General Anand Goolsarran had stated last year that the cost of the project could be in the US$100M mark inclusive of the land. Noting that equity participation plus debt financing for the hotel totalled US$58M, Goolsarran added to this figure US$20M for what he said was the estimated value of the “virtual giveaway of seven acres of prime ocean property”. The land is being leased by the special purposes company set up by the government, Atlantic Hotel Inc (AHI) for US$120 per month with the option to buy.
Goolsarran also added to this figure the estimated interest charges over the three-year construction period for the debt-financed component and said this could easily add another US$6.2M to the bottom line. The former auditor general also factored into the final cost figure the US$2M that government holding company NICIL spent on development and design costs prior to the closing of the deal in addition to the US$2.7M for rerouting the Georgetown sewerage system and the dismantling of the Government Pharmacy Bond and its relocation.
Brassington has never publicly stated the land value but instead said that the land was tied to the project and could have been purchased for US$1 million. He himself does not give a breakdown on how AHI, which currently leases the land from the government had the land valued.
In defence of the sums that are not factored into the Marriott Hotel Project’s US$58M price tag, Brassington said those were routine and that investors rarely attached themselves to developmental and design costs.
