As it begins to show a surplus, the Marriott Hotel is boasting of consistent occupancy of 65% but revenue will be used to correct building defects and as such it will likely not be able to start paying on the Republic Bank Ltd loan.
As such, Marriott representatives are currently in negotiations with the bank for a moratorium on the loan repayments which would have seen interest on the financing kicking in from January 1st 2017.
“Occupancy is still exceedingly good, averaging 65 percent and that is now without any particular special events. Business wise I would say it is very good,” Chairman of the Board of Atlantic Hotel Inc (AHI), Beverly Harper told Stabroek News last week. AHI is the company set up to run the hotel.
While the Chairman of the Board did not provide figures on operational costs or what the last quarter’s returns were, Harper assured that the hotel was doing well and has started registering a surplus.
However, she explained that most of the revenue has to now be channeled into fixing the various defects on the structure before an analysis of the profit and loss position can be completed. Until such time the hotel is negotiating to see if the interest on the repayments can be stalled with its debtor, Republic Bank.
“Profit wise, we are starting to turn a profit but you know with the pay back to the Republic Bank loan, which becomes payable at the end of the year, we are trying to get a moratorium on that. We still are in the fixing phase, that is the fixing the defects stage but we have not as yet gotten to advertising for tenders for the (entertainment) complex,” Harper asserted.
“We have to finish with fixing the defects on the building before anything else,” she added.
The hotel was constructed with majority state funds and a total of US$15.25 million was received from Republic Bank Ltd of Trinidad as part of the US$27 million debt financing for it. Payment on the interest is scheduled to take effect from December 31st 2016 with repayment on the principal to kick in sometime in 2017.
Continued State support for the hotel has been an issue of much controversy after an audit last year revealed that uncertainty about the financial viability of its operations and rising costs could take the final price tag for the project to at least US$98 million.
The audit, conducted by former Auditor General Anand Goolsarran said that the escalating cost of the venture, as well as the fact that the former PPP/C government proceeded to channel funds into construction without parliamentary approval and struck a deal that would give Hong Kong investors majority ownership for just over 10% of the total cost of the project, was reason to sell the hotel. The prospective Hong Kong investors later bailed out of the deal. The report had urged government to either sell the hotel or retain a majority interest but pointed out that in the latter case, there was uncertainty about its financial viability.
“The Government of Guyana should proceed with haste to advertise for the sale of the hotel, bearing in mind that the Management Agreement with Marriott International is for 30 years renewable for another 10 years. The Agreement does provide for the sale of the hotel to a reputable individual or firm so that it can roll-over to the new owners,” the report had said.
“Alternatively, the Government could retain majority interest in the hotel and offer 49% of shares to the public and institutional investors, such as banks and insurance companies.
However, the risk still remains in terms of the financial viability of the operations of the hotel,” it added.
As part of its marketability plan the completion of an entertainment centre is also in the works.
“There is the outfitting of the entertainment centre and we are also going out to tender for that. There are several persons interested and we are confident that it will be built. The shell is there you know, so it just has to be outfitted,” Harper noted.
And as a part of its current marketing drive to bring patrons to the Kingston, Georgetown, entity, the hotel is putting its rooms on sale with a weekend getaway package of US$99 for single room occupancy, down from an original US$149. Guests will have to check in on Saturday from 10 am and checkout at 8 pm on Sunday.
The US$99 per night offer runs until the end of December 2016.
In June this year, Harper had told Stabroek News that the Marriott Hotel is making itself marketable as government prepares to sell it in two years’ time with the outfitting of the Entertainment Complex and Casino set to begin soon.
“I don’t expect it to be any longer than a year or two to finish the project and then we sell it,” Harper had told Stabroek News.
