Sale of 60% shares key strategy to revive ‘struggling’ hotels – SSNIT
The Social Security and National Investment Trust (SSNIT) has firmly backed its decision to sell a majority stake in four hotels to a private investor.
They described the decision as the best strategy to revive the financially struggling properties.
The hotels include Labadi Beach Hotel, La Palm Royal Beach Resort, Elmina Beach Resort and Ridge Royal Hotel.
SSNIT’s Director General Kofi Bosompem Osafo-Maafo in a media address in Accra on Monday, July 8, stressed that extensive due diligence had been conducted.
He explained that changing management was not considered a viable solution due to the persistent financial losses experienced by the hotels.
“We’ve been through quite a lengthy process to do so. Bear in mind, we’ve also tried having external management companies running the SSNIT hotels and that hasn’t resolved the problem either.
“So, for us, we are looking to resolve a problem and do so with the introduction of a strategic investor and we outlined the reasons there. Consistent losses by almost all of our hotels.
“I know you are aware that Labadi doesn’t make a profit, but the returns are below [par]. They haven’t paid us any dividends except Labadi. Labadi Beach Resort only started paying dividends for the last 2 years. They haven’t from inception,” he stated.
Despite its profitability, Mr Osafo Marfo said the decision to include Labadi Beach Hotel in the sale was driven by SSNIT’s goal to maximize overall returns, as the current profits were deemed insufficient.
“We want to maximize what we get out of it and the question that I asked somebody the other day is if you were selling your car or even your house, you’d make an attempt to actually paint it.
“You wouldn’t wait for your car to be put on stones and then say, now this is the time to sell it. You make it look good. There’s no reason why if a business is doing well and we seek to maximise capital to invest elsewhere, we shouldn’t do so.”
“The reason is simple. Returns are lower than we believe they should be, but also cash always has alternative uses. So why not? There’s a good investment rationale for that,” he stated.
Meanwhile, SSNIT says the decision to sell off a 60 per cent stake in four of its hotels remains inconclusive.
The trust has also revealed that it has halted negotiations leading to the sale of a 60 per cent stake in its hotels to Rock City Hotel, which is owned by the Food and Agric Minister, Bryan Acheampong.
This is in line with a directive from the National Pensions Regulatory Authority, NPRA, the institution added.