Completion of Marriott Hotel Phase Two…Govt. making unwise, reckless, and politically wounding decision – Goolsarran

Oct 05, 2016 News

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– administration must provide valid reasons to the nation for its decision
Former Auditor General  Anand Goolsarran is convinced that it would be a reckless, unwise and politically wounding decision for government to move forward with the completion of the US$12M Entertainment Complex and Casino of the Marriott Hotel.
Goolsarran stressed that it was this very hotel that Government ministers criticized as being “a monument of corruption” during its election campaign.
In an advertisement in last Saturday’s edition of the Guyana Chronicle, it was stated that the Atlantic Hotel Inc (AHI) is a fully-owned government company which owns the Marriott Hotel.
The advertisement also stated that AHI is embarking on Phase Two of the Guyana Marriott Project, which consists of the design and outfitting of an Entertainment Complex and Casino.
Beverly Harper, Ansa McAl’s Chief Executive Officer, was appointed Chairman of the Board of Directors at Atlantic Hotel Inc. last year. Other AHI board members include Larry London, Derrick Cummings and Patricia Bacchus. AHI was previously headed by Winston Brassington and Marcia Nadir-Sharma.

Goolsarran emphasized that he even stated in his forensic audit report on the hotel that there is no point in moving forward with the second phase. He said that there is no market study or intelligence which speaks to the success of casinos in Guyana.
The forensic auditor also stated that one cannot lend much credibility or reliance on the figures which may be put forward by some to support the profitability of the Princess Casino.
The Chartered Accountant said, “Government should not proceed based on the overwhelming uncertainties…My report on it is clear that they should halt it. I don’t know to what extent they think completing the second part, they will get a better price for the hotel and that is if they still have the intention to sell.
“But that aside, what is the point of doing a forensic audit on the hotel if they are not going to make use of crucial recommendations made by the auditors. This is troubling and disappointing.”
The Chartered Accountant also reminded of some pertinent points he made in his forensic audit report on the hotel.
He said that he made it pellucid in his report that the Entertainment Complex is too risky a venture for the government to undertake. Goolsarran said that there are also indications of possible amendments to the Marriott International’s Management Contract including whether or not the Agreement can be terminated within a five-year period and whether the projections made by the consultancy firm, HVS, are likely to materialize.
Instead, Goolsarran said that 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 and renewable for another 10 years.
He said that while 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, the risk still remains in terms of the financial viability of the operations of the hotel.
The Chartered Accountant said that it is important for citizens to bear in mind that the Republic Bank loan of US$15.25 million is ranked priority to that of NICIL and is secured by “debenture and mortgages”. Goolsarran said that these conditions have serious implications should AHI default in payment.
Furthermore, the Chartered Accountant recalled that the Marriott Hotel was opened for commercial operations on April 16, 2015. He said that AHI provided a copy of Marriott’s consolidated profit and loss statement as of June 30, 2015, that is some 10 months after its opening.
Goolsarran said that a review of the statement indicated that the hotel has made a loss of $59.311 million as of that date. He said that this was mainly due to the less-than-anticipated income from rooms coupled with the high cost of utilities which was73.9% higher than budgeted. The occupancy rate during that period was 29.8%.
AHI however commented that on the basis of management information, the hotel is performing in accordance with budget.
Goolsarran said, “Since my report was issued, the full US$27 million was drawn down from the Republic Bank, presumably to complete the Entertainment Complex estimated to cost US$12 million. I maintain my position that AHI should not have proceeded with the construction, given the uncertainties as to whether the operations of the Casino will be a success story. In the circumstances, the balance of the loan resources should have been cancelled.”
The former Auditor General said that it is also extremely uncertain whether the additional investment of US$12 million will be recovered when the hotel is sold.
He concluded, “I agree that a recommendation is not binding. However, there must be valid reasons for setting aside the recommendation. These should be presented to the nation but so far, I have seen none.”

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