A private investor will be contributing US$8 million towards the needed equity for the completion of the Marriott Hotel, Executive Director of the National Industrial and Commercial Investment Limited (NICIL) Winston Brassington announced yesterday.
The unnamed investor with which Atlantic Hotel Inc (AHI) has executed agreements to build the Marriott Hotel in Guyana, was approved after an “intense” due diligence study was conducted by Republic Bank Limited in Trinidad and Marriott International, Brassington told reporters yesterday in an effort to “set the record straight”.
With NICIL providing just US$4 million towards the equity, the unnamed investor is the majority investor and Brassington promised to reveal the identity of the investor once the agreement reaches financial closure, which is expected before the end of the year.
Although Trinidad-based Shanghai Construction Group (SCG) International (Caribbean) Limited, a subsidiary of SCG, has already been supplied with US$10 million ($2 billion), which has facilitated the construction of the shell of the hotel, there has been some speculation that NICIL might not have the required funds to complete the project.
It is possible that these amounts will be supplied in the form of debt from several sources. In his presentation yesterday, Brassington said that Republic Bank Limited is making available US$27 million, while the operator of the hotel’s Entertainment Complex, not yet identified, will provide US$4 million, which is the expected cost to outfit the complex.
In all, Brassington said, NICIL is responsible for putting just under US$20 million into the project. In addition to the US$4 million in equity, NICIL will also be putting up US$15.5 million, which is effectively one third of the debt. Despite all doubts expressed, Brassington indicated that the hotel is expected to be opened in the third quarter of 2014.
Addressing questions as to why taxpayer’s dollars are being used in the project, Brassington said that government’s investment is needed to catalyse the project. This practice, he said, is nothing strange, as the feasibility study has found that government participations has seen the construction of the Hyatt Regency in Trinidad, the Harmony Cove Development Jamaica, the Sandals Whitehouse in Jamaica, and several others.
Despite the stiff opposition to the project, particularly from the parliamentary opposition, Brassington reminded yesterday that it has been on the cards for close to a decade although the sod turning ceremony, heralding the commencement of construction, took place in 2011.
The hotel, which will have 197 rooms and house a three-part entertainment complex which includes a restaurant, a casino and a nightclub, will fall under the brand of and will be managed by the Marriott brand under a 30 years agreement. The hotel is being developed using the “Private-Public Partnership Model or the Project Finance Model,” he said.
AHI, a special purpose company incorporated specifically for this transaction, will select the operators for each of the hotel’s components, although consent will have to be granted by Marriott International.
In addition to SCG, which will be constructing the hotel, Tongji Architectural Institute is its designers and the overall supervising firm is M.A Angeliades. All of these firms, Brassington said, including the unnamed private investor, were selected using a competitive process of advertisement.
Until financial closure, the AHI, which was incorporated in September 2009 for the specific purpose of pursuing the development of the Marriott project and the entertainment complex using the public-private partnership model, will continue to be owned by the Government of Guyana through NICIL.
In 2009, advertisements requesting expressions of interest to participate in the partnership were placed. Advertisements have been placed as recently as April 12, 2013, when expressions of interest from casino, nightclub and restaurant operators were sought.
As it relates to the pre-qualification of contractors, Brassington said that 23 firms sought to be pre-qualified, out if which seven were successful based on the criteria set out. Of these, two firms submitted tenders, both of which were quite high.
Both firms were asked to re-submit tenders with reduced amounts. This process spanned June 23, 2010 to August 20, 2010, Brassington explained. Of the resubmitted tenders, SCG‘s was the lowest and was awarded the contract.
This, he insisted, is proof that these aspects of the project were conducted in a transparent manner and that no “friends” were treated preferentially.
Brassington said that since the Pegasus was de-flagged, Guyana is without a quality branded hotel. Nevertheless, the country has been growing and the travel trends to Guyana, according to the World Travel and Tourism Council, are projected to continue in the next 10 to15 years and the project is expected to beneficial to development. This reality presents very promising prospects once the hotel is completed, he said.
In addition, the latest feasibility study completed last year by HVS International, a US-based consulting and valuation firm, shows that the project has an overall rate of return of 11%.