Pegasus Hotel blasts Marriott deal

Jul 23, 2010 News

Chairman of Pegasus, Robert Badal

“Use of taxpayers’ money an indecent assault on private sector” – Chairman

Chairman of the Pegasus Hotel, Robert Badal, has broken his silence on the controversial Marriott deal, describing it as an indecent assault on the local private sector and questioning President Bharrat Jagdeo’s judgment with respect to the agreement.
In a statement yesterday to Kaieteur News, the businessman, who also controls the Guyana Stockfeeds Limited, said it is difficult to understand why “Mr. Jagdeo has committed US$20M of poor tax-payers’ money to a hotel for the benefit of Marriott International, a wealthy American hotel group. So far no rational explanation has been forthcoming despite widespread criticisms.”
Badal explained that Marriott Hotels would usually, under normal commercial management contracts, have to pay a management fee to compensate a developer and owner of a hotel a minimum of 10% of the project cost. In this case a minimum of US$2M per year.
Feasibility
According to Badal, no hotel in Guyana earns a profit of US$2M ($400M) per year, “so it is easy to deduce that if Marriott has agreed to manage the hotel, then the usual rules must have been relaxed by the Government of Guyana. Nor is it unlikely that the hotel would receive no less favourable tax concessions than Buddy’s Hotel at Providence, which received a 10 year tax holiday.
So we can conceptualise a foreign Hotel Group for which the Government of Guyana has relaxed the usual rules of operation, and given a 10 year tax holiday! Guyana must need such an investment very badly.”
Badal is unimpressed that the President’s justification to the building of the hotel in Kingston is that the Pegasus and Princess hotels do not meet the required standard.
President Jagdeo had made the statement during the recent CARICOM Heads of Government meeting in Jamaica.
“If that was genuinely the reason, and Guyana so desperately needed to improve its standards, why not make these locally generated resources available to the Guyanese operators with strict conditionalities?”
The hotel’s Chairman said that the management and staff of the Pegasus Hotel are deeply disturbed by the “irresponsible, erratic, and unpatriotic behaviour of President Jagdeo in criticizing this icon (Pegasus Hotel) and hallmark of Guyanese hospitality. Such claims come at a time when the local tourism industry is actively trying to attract tourists to Guyana as an alternative destination.”
Such behaviour is also unbecoming of any Guyanese public official and uncomplimentary to the investments being made to Guyana’s tourism and hospitality industry, Badal said.
Iconic Pegasus
“The Pegasus Hotel has for the past 40 years been an icon of hospitality to Guyanese and those who visit Guyana on business and otherwise. We have been hosts to many dignitaries, Heads of State, senior diplomats and statesmen, and many other important persons.”
The hotel official said it was only on Monday, that Pegasus catered the formal dinner for the visiting Kuwaitis, hosted at State House.
“The local hospitality industry has three times the number of rooms needed when one looks at the average annual occupancy in Guyana. Many of these additional rooms were built in response to the Government’s request of local entrepreneurs to invest in the sector to meet the needs of the 2007 ICC World Cup Cricket, something those that invested regretted bitterly, as most of those properties are up for sale because of the lack of sustained demand.”
Badal pointed out that another hotel would only exacerbate the problem by increasing the supply of rooms without a compensating increase in the demand for them.
“This will reduce average occupancy below break-even point thereby threatening the collapse of the local hospitality industry. Maybe therein lies the otherwise elusive answer to the question posed above.”
Indecent Assault
According to Badal, the statements of President Jagdeo must be seen as an “indecent assault on the local hospitality industry, but more so on the local private sector.
Why would a government of a poor country seek to use taxpayers’ money in a manner completely contrary to the growth and development of its very own private sector, the supposed engine of growth, source of employment and taxes.”
The businessman further noted that the statements go to the core of Guyanese politics.
“The consequence of this is clearly illustrated by the state’s investment in the Skeldon Estate which has bankrupted GuySuCo and has thousands of Guyanese families facing the looming prospect of ruin.”
“Such massive government investment could be better deployed in lowering the cost of electricity, clean water, better roads and other infrastructure, even in garbage disposal, security at airports and crime-fighting, among other things.
Why should the use of our money to enrich a foreign multinational enjoy priority over the above? All in the private sector must raise their voices to condemn this assault and wanton misuse of public resources.”
The businessman also challenged opposition parties to demand answers to their repeated questions on this project, debating it in parliament.
“Let’s ensure that the government we elect is finally made accountable to us and acts in our interest – not some foreign interest.
It would be difficult to see the President of the United States placing a foreign investment in a better position than his own Marriott, but then, Barack Obama he (Jagdeo) is not!”