Marriott negotiations ‘stalled’

Negotiations between Marriott and a “third party owner” for a possible Marriott flagged hotel in Georgetown are currently “stalled” after more than two years of talks, a senior Marriott source has told this newspaper.

However, work on the sewerage system intended to accommodate the construction of the hotel is due to start next month.

Stabroek News was unable to get any confirmation from official sources locally about the state of negotiations and whether the investors were still proceeding with the project.

The historical Kingston seawall area west of Le Meridien Pegasus had been identified for the project.

Last week Guyana Power and Light (GPL) was replacing utility poles in the area and this newspaper understands that a New York-based contractor is scheduled to start work on the diversion of sewerage pipes next month in preparation for the construction of the building intended to house a hotel.

When asked via e-mail whether the negotiations were stalled because of financial issues, a senior Marriott source told this newspaper that it was for the investors to give an update on the state of play on investment.

Stabroek News sought information from some 11 sources locally, including the Guyana Office for Invest-ment, the Ministry of Tourism and Industry and the Office of the President, but no one appeared to know much about the project. One official told Stabroek News that the matter was reportedly being dealt with directly by the Office of the President. Officials whose positions should have qualified them to have some knowledge of the project said that as far as they knew “the Marriott project was on stream.”

On October 8, 2007, President Bharrat Jagdeo told the local media when questioned at a press conference that arrangements for the construction of the building to house a five-star hotel under the Marriott Hotels brand were expected to be concluded by the end of 2007 when details of the investors and other arrangements would have been revealed.

To date no details of the project have been disclosed.

Stabroek News understands that the negotiations with representatives of the investors began with Marriott representatives in early 2006 and a senior Marriott official in November 2006 had noted that Marriott was “very excited” about the possibility of leasing the Marriott franchise to an investor.

The official had said that Marriott felt the market deserved another high quality flag and that their presence would add to Guyana’s growing reputation as a serious business market.

On that occasion in November 2006, he said that he could not divulge the investor’s identity, or the site location, or they would have been in violation of the letter of intent since they were under confidentiality obligations. However, he did say that the negotiations were going well and he hoped that they could complete and make the deal public in a “couple of months.”

In October last year, President Jagdeo said that he did not want to make any disclosure on the project and when the agreement had been signed and the arrangements concluded the country would know about it.

He said too there was a memorandum of understanding paving the way for preliminary arrangements under confidentiality provisions, which were normal in any business environment until the parties signed on to an actual commitment to commence the project.

He would not speak on the matter until there was financial closure, he said, because experience had shown that “companies could make a big hullabaloo” without financial closure, and then they fell through with the arrangements because they did not get the required funding.

He recalled the example of the proposed hotel project at Liliendaal in Greater Georgetown, about which there had been much talk, but the investors could not close the financial aspects to provide for its funding.

Though he did not say who the investors were for the Marriott project, he described them as “a range of investors, a consortium of different groups,” adding that when the project was launched the details about the people who had been given the franchise to build the hotel would be known.

Stabroek News understands that the works which were halted on the diversion of pipes which serve as an outlet for the city’s sewerage system in the Kingston area, are to restart next month under a Guyanese, New York-based contractor, Mike Ahmad of Adam Development Enterprises Inc.

The US$700,000 project had initially been awarded to Courtney Benn Contracting Services Limited, but was withdrawn because the investors in the hotel building wanted some more assurances about the sewerage lines built around the area, Jagdeo had said.

He said that the investors had tremendous construction expertise and along with the government they were working out an arrangement whereby the work could be built into their contract as part of the mobilisation phase, rather than having the government pay a separate contractor.

He said that the investor wanted to be assured that the sewerage system which was next to the investment and which served the entire city was done to a standard which would not allow for malfunction when the project was finished.

The new investment was earmarked for the Battery Road, Kingston area, in the vicinity of the former Luckhoo Swimming Pool and the building that once housed the Food and Drug/Analyst Department, a stone’s throw from Le Meridien Pegasus Hotel.

Last April the area was cleared of undergrowth and tons of garbage were removed.

This newspaper understands that the consortium had expressed interest in the construction of a 250 to 300-room property. The deal was apparently contingent on casino legislation being passed in January last year to enable the investors to recover their investment.

Stabroek News learnt earlier that a prominent local businessman had previously expressed an interest in the Marriott brand, but in February 2005 one of Marriott’s Vice Presidents had informed him that “due to the challenging lodging market in Guyana and the concurrent difficulty of justifying a significant lodging investment in that market” they declined to participate in the project.

The Vice President had said in his correspondence to the local businessman that “Marriott strives to enter into lodging transactions with its owners that are win/win and in the challenging lodging market that exists in Guyana currently, we are uncertain that we could fulfill this very important goal.”