AHI initiates legal action against Marriott Hotel contractor

Sep 03, 2017 News

-says still dealing with defects every month

Atlantic Hotel Inc. (AHI) has initiated legal action to have workers for the contractor of the Marriott Hotel, Shanghai Construction Group (SCG), removed from the hotel’s premises.

The controversial Marriott Hotel

The workers of the company have been squatting in a section of the Hotel for months now. They refuse to move, claiming that they are owed payment to the tune of US$4M.
But according to AHI’s Chairman, Hewley Nelson, there are serious defects which management continues to face on a monthly basis. Nelson said that the cost to deal with these problems is also in the neighbourhood of US$4M.
He noted, however, that since the issue remains unresolved, AHI’s team of lawyers is considering initiating the process to go to arbitration.
Nelson told Kaieteur News, “We have serious problems with the hotel which still need to be fixed and it is likely that we will have to go to arbitration. The contract stipulates where the arbitration takes place. They are still squatting and we have instituted legal proceedings to have them removed. According to my intelligence, it’s around seven to 10 of them squatting in there.”
The AHI head said that some of the defects are in relation to the quality of materials used in the construction of the hotel.
“We had to bring in contractors to have some of those defects addressed and we continue to deal with defects…the cost is in excess of US$4M and it is all documented for the arbitration process. We have had to deal with leaking, air conditioning issues, poor quality of infiltration equipment etc. We even had some issues with the elevator, and we had to end up bringing in people to address it. This was all documented.”
As for the future of the Hotel, AHI directors have confirmed that it is the intention of the Government to divest the structure. This is likely in the next four years.
Junior Finance Minister, Jaipaul Sharma had also confirmed to Kaieteur News that government intends to divest the hotel. Sharma, who is also a member of the Cabinet sub-committee on the hotel, said that the matter has been transferred to the Privatization Unit for advice. He said it was sent there to determine the best way to divest the hotel.
The Junior Finance Minister also sought to explain that selling the hotel is not as easy as ABC. He said that the previous government has tied the nation to a most unfavourable and technical Management Agreement with the Marriott International brand.
He said that anyone interested in buying the hotel would have to take it with the Marriott brand. The purchaser would not be able to change the name of the hotel, since Guyana signed on to a contract that would inhibit this for the next 30 years.
Additionally, Sharma explained that even if the Government wants to sell shares, the Marriott International brand can have a say in that process. He said that the brand owners can object to it being sold to owners of competitive hotels such as the Pegasus Hotel.
It has been over two years since the coalition administration has been in office and it is still unable to remove itself from the Hotel.
In the meantime, the Government has taken the decision to repay the loan for the hotel. Government is forking out about $40 million a month to meet loan payments to Republic Bank, Trinidad.
The hotel was birthed by the previous Government, and there were always questions about the risks involved and the financing structure which give control to private investors, despite Government spending the bulk of the money.
The 197-room hotel was completed at more than US$50M with real cost for lands and other concessions estimated at more than US$80M, critics of the project say.

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