The govt.’s role in the revived Marriott hotel project demands sound business explanations

Jul 15, 2010 Letters

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Dear Editor,
According to your July 8 news story, “Jagdeo says Princess, Pegasus not good enough for tourism,” with the strap line, ‘Government looking to seal investor in Marriott Project by year-end’, I have to admit the put down of Pegasus and Princess did not come as a shock, because the President is known for this kind of gaffe a lot when he wants to score points.
He says stuff before he thinks stuff and this causes his reasoning to often appear disjointed.
As for the revived Marriot hotel project, Guyanese are still smarting from the previous failed attempt at a Marriott in which millions were spent on preparing the foundation in Kingston, Georgetown, after many weeks passed without Guyanese knowing who the overseas investors or partners were and whether it was really the downturn in the world economy that drove the foreign partners away or the fact that Guyana is not as hot a tourism spot as government is making it out to be.
So what exactly is behind the efforts to revive the Marriott hotel project and who exactly will be the sole investors/owners of this project that will have taxpayers’ money at start-up?
After all, the original owners of Pegasus Hotel in Guyana , London-based Trust House Forte (THF), sold the Guyana franchise to CEO of Guyana Stockfeeds Incorporated, Mr. Robert Badal around 2005-2006, after operating for 40 years in Guyana.
THF, according to information I Googled, ‘owns and operates a wide range of hotels and eating establishments around the world. The company’s rapid growth has made it one of the world’s hotel leaders: with 75,000 rooms in 800 hotels, THF ranks eighth in the world in number of rooms but first in terms of profitability, a reflection of its crisp management style and great strength in the highly profitable luxury market’.
Question: Why would a hotel chain that is first in the world in terms of profitability sell its Guyana franchise after 40 years? Any sound businessman who is making a profit on his investment will not get rid of that investment, but will unhesitatingly do so if any part of his total investments is hemorrhaging his profits.
Ergo, THF’s sale of its Guyana franchise was a sound business decision from its owners’ standpoint. This does not mean the new local owner will not do well, but just that the argument for selling is understood.
In 2007, government rushed to the aid of Buddy Shivraj to help him speed up completion of his hotel by pumping $168 million in loans into the project.
Let’s set aside the convoluted arrangement surrounding the loan and repayment processes and focus on this fact: about one year after the hotel was finished and up and running, Buddy sold the hotel for a tidy profit. Mind you, when the government announced the loan arrangement, the President himself declared that the hotel would be better and more attractive than any of the existing ones. He also defended his decision to not help the existing ones upgrade to come up to par with Buddy’s in time for CWC 2007 when thousands of overseas guests were expected to arrive and pave the way for a stream of foreigners over the long run.
So why did Buddy sell his hotel only one year after its completion? Well, like the THF owners, it had to come down to a sound business decision if the hotel was not making money, which brings me to yet another question: If the highly profitable Pegasus bailed out after 40 years and Buddy’s bailed out after one year, even though the President bragged about this latter hotel’s potential, why would the President be so insistent on having government be a partner, albeit with taxpayers’ money, in another major hotel venture?
This is not the President’s personal money he is using, but taxpayers’ money, so taxpayers (and all Guyanese everywhere) should be up and about seeking answers and not roll over and adopt a ‘que sera, sera’ attitude, or else they may end up being burdened with unnecessary expenses which may well redound to the benefit of a ‘chosen few’.
In October 2007, Kaieteur News columnist, Ms Stella Ramsaroop, penned a piece, “A Marriott hotel could be very good for Guyana,” but the situation in Guyana deteriorated since then, so she did a new piece on July 11 this year, “A Marriott is not the key to attracting tourists.” In May 2008, Caribbean Net News carried a story by Kevin London, “Marriott hotel in Guyana one step closer to reality.” Then on May 25, 2009, SN carried a shocker: “Alleged Marriott hotel project dead,” with this qualifier: “The long-questioned and controversial Kingston hotel project which was allegedly to carry the Marriott brand appears to have been finally consigned to the dustbin as the government yesterday advertised for expressions of interest in a joint venture for the same location.”
After a hiatus, on June 22, this year, the Marriott posted this information on its website: “Marriott International announces first hotel in Guyana,” with a strap line: ‘Georgetown Marriott Hotel to open in 2013; seeking LEED status by USBGC’. The information goes on to state (if everything goes as planned) the hotel will be Marriott’s first LEED® ((Leadership in Energy and Environmental Design) hotel in the Caribbean and Latin America, and that it will operate under a management agreement with Atlantic Hotel Incorporated (AHI) currently owned by the Government of Guyana as part of a public-private partnership between the Government of Guyana and private sector investors’.
First, if Marriott says this will be its first hotel in Guyana, then who were those persons involved in the previously failed Marriott hotel construction bid? Second, on what date did the Jagdeo government establish this new state-owned AHI and who are its principal executives? (Are they the same people on the state-owned company NICIL?) Third, no original estimates have been given for this latest project, so what is this going to cost taxpayers? Fourth, is it possible the government and local banks are flush with tons of cash that ‘must be spent’, hence this venture?
In fact, the Marriott statement specifically noted the hotel will be part of a public-private partnership between the GoG and private sector investors, so it would be helpful to know what is government’s share and what is the private investors’ share, and also whether Marriott will be making any direct investments? Again, is this going to be an all-Guyanese business investment with the Marriott brand name; if so, why is the government insistent on investing taxpayers’ money in a project that is not guaranteed to deliver positive returns in a bleak tourism market? The government’s role in this project begs for serious answers and explanations, but I will rest here.
Emile Mervin

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