Vice-President Bharrat Jagdeo yesterday announc-ed that the Guyana Marriott Hotel will remain under the government’s control for now as it will not be moving ahead with its sale given that the highest bid to purchase the hotel was only US$65m.
At his weekly press conference, Jagdeo said that they were only testing the market when they went to tender, stressing that they will keep control of the hotel until they are able to attract a bid which reflects the real value of the hotel and its capacity to earn.
He stated, “When we went out to tender we were testing the market… We believe in the government that none of the bids meet our price expectations and therefore we will not proceed with any of those bids.”
According to him, “The Marriott will remain in the public domain as part of the government until we can get an appropriate offer that mirrors the true value and we know what the true value will be in the current context.”
Earlier this month, American businessman and entrepreneur Ramy El-Batrawi, founder of investment group X, LLC tendered the highest bid for the Guyana Marriott Hotel of US$65m.
The decision not to proceed with the bid process will raise question as to the credibility of future invitations. Not proceeding with the bids could also possibly have legal ramifications.
One analyst yesterday disputed Jagdeo’s contention that the bids were too low. The analyst pointed out that since opening in 2015 the hotel built with taxpayers’ funds has never returned a cent to the Government, even though the state continues to pay the loan contracted from Republic Bank (Guyana) Limited.
In considering the bids offered by six bidders the analyst said that one needs to consider what is a fair price of the hotel and several factors have to be considered.
The analyst said that the hotel’s best year was 2022 during which it made just over US$5M in pretax profit or US$3.75M in after tax profit on sales of US$24M. The analysts said that this means that all bidders who offered US$50m and more have in effect agreed to pay 15 years of profit.
“In today’s environment this is a very attractive price to any rational seller, more so to a Government that has approved more than 10 new hotel projects and the uncertain environment this has created”, the analyst said.
On Wall Street, the analyst said that Blue Chip companies’ valuations range from 8 to 12 times annual profits and asked why isn’t the 15+ times profits offered by bidders fan attractive price?
The analyst pointed out that the Guyana Marriott has paid no dividend to the state since opening and continuing the hotel under the Marriott brand is a liability to the country.
From its 2023 financial statements, the analysts said that Marriott is taking 80% of all revenue for its operations and all sorts of fees, payment of royalty, expatriates’ salary, fees and other expenses are being paid.
The analysts said that the bids offered are the best the Government could hope for and comparable hotels are being built with a budget of US$50m.
The tenders for the hotel were opened in the presence of representatives of bidders at the National Industrial & Commercial Investments Limited (NICIL) head office on Camp Street and the reputed billionaire who was born in Egypt delivered the highest bid.
Guyanese hotelier, Robert Badal tendered the second-highest bid of US$55.5 million for the purchase of the state-owned Kingston hotel.
Chief Executive Officer of NICIL, RK Sharma, in a statement issued following the opening of the tenders, had named the bidders as Georgetown Investments and Management Services Inc (Mustafa Eray Kanmaz), X LLC (Ramy El- Batrawi), Muneshwers Limited (Amarnath Muneshwer), Integrated Group Guyana Inc. (Ravindra Prashad) and NCB Capital Markets (Steve Gooding).
NCB Capital Markets of Jamaica, the wealth and asset management arm of the National Commercial Bank submitted a US$33 million bid while Integrated Management Group and Georgetown Investments and Management Services, which currently operates the Princess Hotel Casino, tendered bids amounting to US$55 million and US$50 million respectively. Muneshwers Limited tendered a bid of US$25 million.
Last year, NICIL had issued a ‘Pre-qualification Notice’ seeking Expressions of Interest (EOIs) from persons or companies, individually or as part of a joint venture/consortium, with an interest in purchasing its shares in AHI for the acquisition of the Guyana Marriott Hotel.
The closing date for EOIs was 10th January 2023 at 2:00 pm. Applications for pre-qualification were to include the following: financial capability in terms of net worth, audited financial statements for the last three financial years, net worth of a minimum of US$250m, and a letter of financial capability from a recognized financial institution to acquire NICIL’s shares in Atlantic Hotel Inc (AHI) for the Guyana Marriott Hotel. AHI was incorporated on 10th September 2009, as a special-purpose company to construct and manage the establishment.
