In light of the Government rejecting the low bids submitted for purchase of the Marriott Hotel, the National Industrial and Commercial Investments Limited (NICIL) has now set a base price and asked the six bidders to resubmit their proposals.
This is according to Chief Executive Officer of NICIL, Radhakrishna Sharma, who recently told this publication that these companies were given two weeks to resubmit their lists.
“On 2nd May, 2023, all six bidders were contacted and advised by NICIL that their submitted bids had been rejected. All six bidders were then invited [to] resubmit a new bid with a minimum bid price of no less than USD85 million. The deadline for submission is on 16th May, 2023,” RK Sharma said.
Six companies had submitted bids ranging from US$25 million to US$65 million to purchase the Marriott Hotel located in Kingston, Georgetown. However, Government publicly stated that all six bids came in at a figure that was not acceptable.
The highest bid of US$65 million was received from an American investment group – X, LLC.
Among the other bidders are Pegasus Hotel Guyana, which bid at US$55.5 million; Georgetown Investments and Management Services Inc, which bid at US$50M; Muneshwers Ltd at US$25 million, Integrated Group Guyana Inc at US$55 million, and NCB Capital Markets Limited at US$33 million.
A feasibility study conducted by a Miami-based firm, HVS Consulting, back in 2010 had outlined that the Marriott Hotel is likely to be sold 10 years after its operationalisation at some US$76.1 million.
To this end, Vice President Bharrat had disclosed last month that Government decided not to sell the US$58 million Guyana Marriott Hotel to any of the six bidders since their offers are below the current market value of the profitable property.
“When we went out to tender, we were testing the market. We believe, in the Government, that none of the bids meet our price expectations and therefore, we would not proceed with any of those bids,” he posited.
The Vice President had pointed out that Government wants an appropriate offer that reflects the true value of the hotel that is currently operating at its highest profit since existence.
“The Marriott will remain in the public domain as part of the Government until we can get an appropriate offer that mirrors the true value… We know what a true value will be in the current context. So, that matter should be put to rest that we will not proceed with any of the bids because we believe that they’re too low based on the value of that asset now and its capacity to earn,” Jagdeo stated last month.
Government’s rejection of the initial bids submitted had attracted criticisms from some quarters. In response, however, the Vice President argued that Government is not obligated to accept the highest bid.
“The Government is not obligated to accept the highest bid. You have different forms of valuation. You can look at the earning capacity, you can look at the value of the asset and a whole range of things,” he stated.
According to Jagdeo, Government will not be swayed by the naysayers and will go ahead with selling the hotel at a higher price.
“First, it was a bad project, then it was a good project, then we shouldn’t sell it, then we should sell it… Now, we’re trying to get too much money for selling it… It’s this madness but along the way, we have proven all of the naysayers wrong… And, if we do sell this [hotel], it will be at a higher price… But we will prove, again, the naysayers wrong on this,” he noted at a press conference earlier this month.
In a notice back in December 2022, NICIL had announced its intention to sell the State’s shares in Atlantic Hotels Incorporated (AHI), the State-owned holding company for the Marriott Hotel.
AHI is the NICIL special purpose company that owns the Marriott, a 197-room hotel that opened in 2015, whose financing structure had depended on a casino and entertainment centre to make enough money to repay up to US$30 million in debts to the banks and other creditors. But those add-ons to the hotel were scrapped.
A total of eight Expressions of Interest (EoIs) were received but only six offers were made by April 17 upon invite from NICIL.
In April, VP Jagdeo had said that now is the right time to sell the Marriott Hotel, which is currently operating at a profit even without the casino and entertainment centre add-ons.
“Now, it would be best to sell the Marriott off. You could probably maximise the price that you will get when it’s profitable and before the seven new hotels that are privately [being] built, that are international brands, come on the market… within a year or two,” he had stated.
The construction of the Marriott Hotel, which started in 2011, had sparked widespread controversy. At the time, Jagdeo was the President and his Administration had faced heavy criticism over the use of taxpayers’ monies to finance the hotel.
But Jagdeo has always defended the decision.
“The Government didn’t need to own a hotel at that time, but the era was that we were not getting new hotels built and we had to trigger the investment… There is no particular supreme benefit to Government owning [the hotel],” he has emphasised.
According to the Vice President, the hotel is operating at a profit and provides some 500 jobs to Guyanese, directly and indirectly. He insists that selling the Kingston, Georgetown hotel now would bring in “maximum value” to the State that could go towards triggering other investments in the country.
The Guyana Marriott Hotel was completed in 2015, the same year ExxonMobil first found oil in Guyana’s waters. The hotel has since gone on to play an important part in Guyana’s developing oil and gas sector, as it is used to accommodate local and overseas offshore workers. It is also a prime venue to host numerous private and State-sponsored events.
