| -wants President to mount inquiry into project“At 8.9per cent interest per year on Republic Bank’s syndicated loan, it would require US$2.4M ($480M) per year to cover interest payment, an amount that far exceeds the total profits of the entire hotel and hospitality industry in Guyana.”- Robert BadalOnce operational, Guyana’s proposed flagship Marriott Hotel would be hard pressed to even cover its interest payments.According to businessman Robert Badal, the main principal in the Pegasus Hotel, figures being presented are showing why no investor was interested in putting their money in the project. The hotel is currently under construction in Kingston.Robert BadalGovernment is hoping that an internationally-branded hotel would attract international visitors but the project because of its very financing, costs and initial secrecy, has been meeting with objections from the Opposition and sections of the business community. But Government has persevered using monies from privatization deals to finance the project.Badal said that with the hotel facing US$27M in proposed loans, it would not even cover its interest payments.“At 8.9 per cent interest per year on Republic Bank’s syndicated loan, it would require US$2.4M ($480M) per year to cover interest payment, an amount far exceeding the total profits of the entire hotel and hospitality industry in Guyana.”“Interest payment would be even higher considering that accumulated interest during the construction phase, at least 18 months, would have to be capitalized and added to the principal.”Badal is basing some of his arguments on the feasibility study submitted to the media which “at last resort shows unrealistic assumptions.”According to his letter, Government which has been pushing the project, assumes an average occupancy of 62 per cent and an average daily rate of US$150. “With the two major hotels, Pegasus and Princess with aggregate room stock of 380 rooms, running at below 50per cent annual occupancy, and secondary boutique hotels at less than 40per cent on aggregate of 274 rooms, where would the additional traffic come from to realize 62per cent for an additional 197 rooms which the Marriott is bringing?”The return on equity which Mr Brassington is projecting,NFL Jerseys Wholesale, US$8M at 22 per cent return for the unknown investors and NICIL US$19.5M at 6.2per cent, would require additional profits of US$2.96M per year.This would mean that the hotel would have to earn US$5.3M annually just to meet interest payments.An artist’s impression of the Marriott Hotel.Another major expense that will face Marriott is the electricity costs which account up 25per cent to 35per cent of revenue. Labour costs would take around 15per cent, with other direct cost and overheads another 15-20 per cent depending on occupancy.“In the first few months of the Marriott these percentages would be even higher resulting in crippling operating losses with no cash flows being available to cover interest payments as this outfit would not even realize 15 per cent occupancy.”Badal, who manages the Guyana Stockfeeds and has strong overseas ties, warned that the writing on the wall is clear…this would rapidly lead to bankruptcy.“It is no surprise that no credible investor showed any interest in this project. Those that deliberately, fraudulently and openly seek to deceive this nation must be swiftly brought to justice.Mr Winston Brassington and those behind the scene to whom he reports are reckless with taxpayers’ resources. This is nothing but an indecent assault on the private sector and fraud on the taxpayer.”The businessman called on President Donald Ramotar to mount an inquiry into the project and do so “without delay”.Government, through the National Industrial and Commercial Investments Limited has gone ahead with the project despite strong objections from the Parliamentary Opposition which said that it was never consulted. In addition to questioning the costs, there was also anger over that fact that the money being spent has not been blessed by the National Assembly.Government is hoping to complete the 197-room hotel, which will boast a casino, nightclub and restaurant, by next year August. |
