THE US$58M flagship Marriott Hotel in Kingston, Georgetown, opens its doors on Thursday to the public with an Official Ribbon Cutting Ceremony – a feat despite the naysayers, litigation, protests, Parliamentary motions and the plethora of resistance to one of Government’s key developmental projects.The National Industrial and Commercial Investments Limited (NICIL) is the Government-owned company, lawfully entrusted to pursue investments on behalf of the State, including public-private partnerships and in September, 2009, incorporated Atlantic Hotel Inc. (AHI), the Special Purpose Company to pursue the Marriott project.

REGIONAL NATIONAL SUPPORT
It’s been made pellucid time and time again. No tax dollars were directly invested into the Marriott Hotel Project, in Kingston, Georgetown, but even if this were the case, such a reality is not unique to the industry in the Region.

As is evidenced as close as Trinidad and Tobago, Barbados and Puerto Rico – established travel hubs of the Caribbean – Governments have been taking on leading roles in developing hotel projects.

Local critics chastised the Guyana Government for its part in pursuing the Marriott Hotel project but over in Trinidad and Tobago, its 428-room Hyatt Regency was built by that country’s Government, despite its already established, privately-owned hospitality industry.

The Trinidad and Tobago Government had taken a conscientious step to develop and diversify its tourism industry and to make it more attractive and sustainable, hence pursuit of the Hyatt Regency in 2007. The Trinidad Government‘s strategy was focused also on business conventions, conference hosting, eco-adventure, sport and recreation – similar to the pursuits espoused by the Guyana Government.
The Urban Development Corporation of Trinidad and Tobago Limited (UDeCOTT), Trinidad’s leading public developer now owns the hotel and all elements of the mixed-development.

Over in Barbados, there is an even more glaring example of Government taking the principal role in pursuit of the development of a major hotel project – not waiting on the private sector – as is advocated by antagonists locally. In fact, in pursuit of the Four Seasons Hotel in Clear Water Bay, Barbados, that country’s Government not only provided a ‘Government Guaranteed’ loan to the tune of US$60M. It also supplied additional financing by sourcing another US$30M from the State-owned, National Insurance Scheme (NIS).

Over in Puerto Rico, that country’s Government successfully pursued the development of a Ritz Carlton Hotel at a cost of almost US$350M.
This too was funded partially by that country’s National Tourism Development Board which allowed for certain equity and guarantees for the developers.

In fact, the Puerto Rican Government, in using tax dollars to boost the tourism industry has also “installed aggressive incentives laws which reduce tax rates charged to hotel operators.”

But this was not the end of Government support for the development of the hotel project. The Puerto Rican Government also put in place a “90 per cent tax exemption and various tax credits, some of which are transferrable and may be sold and utilised as part of the equity involved used to finance hotel development.

In Guyana’s case, NICIL, a privately registered Government-owned company invested and loaned to the Marriott project, money not derived from tax dollars but rather revenues earned by the shareholding company.

VOCIFEROUS ANTAGONIST
Over the years, criticisms and unwarranted opposition against the Marriott project have persisted incessantly. Among the recent criticisms by vociferous antagonist, Christopher Ram, is that the creation of AHI, preceded any feasibility study for the project but “which company exactly, would have been tasked with hiring the international consultants for a feasibility study or approach the Marriott Group?”

This was an observation made by AHI Chairman, Winston Brassington, who ahead of this week’s opening attempts to once and for all dispel the incessant criticisms against the project, which in part did lead to an Opposition Parliamentarian leading court action that saw financing being held up and NICIL having to rescue the project.

According to Brassington, as the opening of the internationally branded hotel draws nears, AHI has set the record straight too on NICIL’s involvement in the project, contrary to numerous inaccurate, erroneous and sometimes fabricated reports in the media and irresponsible assertions made by Opposition politicians.
GUYANESE DREAM
In fact, Brassington, in setting the record straight, is of the opinion that had NICIL not played the role it did in crafting and marketing an investor friendly package during a time of a global financial crisis, the Marriott Hotel, as it stands in Kingston, Georgetown, ready to open its doors, “would have still been a Guyanese dream.” All the processes for attracting investors, selecting the contractor, selecting the supervision firm were all conducted in an open and transparent manner.

Construction of the hotel started in earnest in early 2012 following the sod turning ceremony in November 2011, but ever since 2009, AHI had been actively looking for partners locally and internationally interested in entering into a public private partnership to develop the hotel.

This invitation was published at least a dozen times but there were no takers from locals, including the owner of the nearby Pegasus Hotel, Robert Badal, who after years of criticising the project is now looking to buy into the project.
However, even if Mr. Badal had the funds, he would have to be approved by Government, Marriott and Republic Bank and would need to prove that he is fit and proper and that any ownership interest would not be harmful to the parties.

Given the recent attacks, including his recent attack on Marriott, and the many court matters with NICIL over Mr. Badal improper shareholder actions, such an approval would be unlikely.

By 2010, the following year, AHI also caused to be published numerous invitations locally and internationally for contractors to submit their proposals to be pre-qualified. These were again repeated in 2012.
FEASIBILITY STUDIES
As is appreciated by most if not all in the field of business, before venturing into such a large scale project, a study of the various market forces at work needs to be undertaken in order to determine the feasibility of the endeavour.
Such feasibility studies generally contain confidential information a client would not want shared with the public, especially its commercial competitors.
Despite this knowledge, the naysayers continued to peddle the assertion that there were no such studies undertaken, when in fact in 2010, Marriott International Inc, and by HVS Valuation and Consultancy did two such studies.

All parliamentarians had been made aware of these facts, and it was indicated in March 2012 that “these documents are confidential at this time; however the Government is willing to have a closed door presentation that will allow certain details of these documents to be made available under the condition of utmost confidentiality and discussed with key Opposition members without these documents being made public.”

The Parliament was however supplied with a full answer to all of its questions and given copies of all major contracts including the SCG contract, the lease, and the tax agreements.

The Opposition never accepted the offer for a closed door presentation. However, in 2013, extracts of an updated study conducted by HVS Valuation and Consultancy were placed in the public domain at a public press conference. This, however, did little to stop the onslaught of criticisms and subsequent court action against the hotel’s lease and financing.
SHANGHAI CONSTRUCTION GROUP
Having determined, that the project was feasible AHI, continued in its pursuit of a qualified contractor that would be able to meet the standards as required by Marriott International and also build the project within budget.

Twenty-three firms expressed a formal interest in being shortlisted to be considered for the construction of the Hotel and Entertainment Complex and after an evaluation, seven firms were shortlisted and invited on January 23, 2011 to bid for the project. Tenders for the construction of the Hotel, Casino and Entertainment Complex were closed on May 3, 2011 and submissions were publicly opened at NICIL’s office in the presence of a representative from the Guyana Audit Office.

Bidders were given the option of bidding on a design already conceptualised or to submit an alternative design that will meet the Marriott standards, AHI’s requirements and the Leadership in Energy and Environmental Design (LEED) certification. Two proposals were received both offering the option of an alternate proposal. According to Brassington, SCG submitted an alternative design proposal during the tender process which was considered to be more cost effective while guaranteeing that its design would be in accordance with Marriott International Hotel Design Standards.

This conceptual design was accepted by Marriott International as the look of its Guyana flagship hotel which is now being open this week.
SUPERVISION
Even as AHI pursued a qualified contractor to build the hotel, the company was also actively seeking a reputable company to supervise the construction of the project. Requests for proposals for construction supervision for the Marriott Hotel were publicly advertised and two proposals received.

M.A. Angeliades Inc submitted a bid of US$1,068,000 and secured the contract with the other bid coming from CEMCO Consultants Inc at US$1,614,000.

According to Brassington, “AHI contracted M.A. Angeliades of New York to supervise the construction of the project based on price and experience with constructing hotels both in the USA and within the Caribbean.”

FINANCING
But while things seem to be coming together for the project, the international financial crisis that had devastated economies of scale across the world, the Opposition onslaught to stop the project, the attacks from the owners of the Pegasus, legal actions, Parliamentary action, and increasing risk in Guyana in light of its failure to pass the Anti-Money Laundering Bill, were all taking its toll on the project. Reeling against a relentless Opposition posturing that made securing a private investor, a most difficult undertaking, even Republic Bank which already had expressions of interest in 2011, began to find investors backing away.

NICIL/AHI, according to Brassington, structured an attractive public private partnership arrangement to pursue a project that was ultimately determined to cost about US$58M to construct and bring into operation.

The unique financing structure saw that no tax paying dollars were being put into the project, an incorrect assertion that has continuously been peddled over the years.

Under the financing arrangement for the project, the Marriott Hotel would be built using a debt and equity structure, which simply means some of the money will come from an actual investment of private capital and the remainder of the money would be borrowed. The private investors will in the end own 100 per cent of the equity of the AHI, which in turn would own 100 per cent of the debt which would be borrowed and have to be repaid. The total equity of the Marriott Hotel is US$12M while the total debt was projected at about US$46M.

NICIL agreed to invest US$4M to own 33 per cent of the shares of AHI, while an international private investor agreed to invest the remaining US$8M of the hotel’s equity and would inherently own 67 per cent ownership of AHI. NICIL as an investor of US$4M and the confidential Private Investor with his investment of US$8M would together own 100 per cent shares of AHI, and the company would be responsible for the repayments of all the debts.

NICIL loaned the project US$15.4M and AHI approached Republic Bank Trinidad to syndicate the (US$27M) that needed to be borrowed. According to Brassington, this information has been in the public domain for a number of years and has consistently been twisted in order to peddle inaccurate assertions against the project.
Brassington observed too that critics continuously lamented that a private investor is being cajoled to invest US$8M to own 67 per cent of a US$58M hotel, “a complete fabrication…the furthest thing from the truth that can be substantiated with the plethora of evidence in the public domain.

The private investor would only own 67% of the equity of 12 M; the rest of the financing would be owed to the bank, who would hold a debenture and mortgage securing themselves ahead of the equity investors.
ACE Square Investment
Early last year, the announcement came: the COMPLETION of the financial arrangements by Republic Bank for the US$27M Syndicated Loan and British Virgin Island (BVI) registered, ACE Square Investments Ltd. ACE Square Investments Ltd. will acquire 67 per cent of the equity of AHI for US$8M.

The continued effort to stop the project, led to court action by A Partnership for National Unity’s (APNU) Desmond Trotman. The litigation by Trotman inherently delayed completion of the financing of the project, according to Brassington, who said that despite this, the principals continued to pursue the realisation of the investment, for an internationally branded Marriott Hotel, Casino and Entertainment Complex, once the legal matters were discharged.

As part of the arrangement with Republic Bank, Trotman firstly challenged the lease between NICIL and AHI for the land on which the property sits. NICIL had initially leased the land to AHI with an option to buy it for US$1M as long as there is a significant amount of the proposed infrastructure in place.

Overcoming the Opposition Parliamentarian, saw AHI having to, at the earliest possible time – opting to buy the property outright which would render the litigation against a lease ‘null.’ This, however, did not stop the Opposition parliamentarian, who not satisfied that his attempt to thwart the project did not succeed, moved to the Court a second time leading to the delay of the disbursement of several million dollars committed by Republic Bank, critical to the project.
COURT ACTION
The syndicated US$27M loan for the project is being secured through a debenture and a mortgage, since the northernmost plot of the Kingston property is still leased while the other swathe of land on which the building sits, had to be purchased by AHI. This predicament, according to Brassington, led to the use of the financial facilities of both a mortgage and debenture to secure the USS$27M syndicated by Republic Bank. The litigation by Trotman has currently held up more than US$11.7M of the syndicated loan; some of the other investors have proceeded to lend ahead of the discharge of the Opposition to the mortgage.

But the maneuverings on the part of Trotman and the political Opposition have not only delayed the full disbursement of the Republic Bank Syndicated Loan but also caused the Private Equity Investor, ACE Square Investment Inc’s, transfer of US$8M to the project to also be halted.

This situation, led to NICIL, which is already a US$4M equity partner in the project having to advance US$16M, to the project, to ensure the completion of the hotel, now set to open its doors on Thursday – all in face of the chronicled plethora of attacks against the project.

The Marriott Hotel will be officially declared open by Head of State, Donald Ramotar at a grand ribbon-cutting ceremony to mark the occasion with Marriott executives. Already many, including the Private Sector Commission, are raving about the impressiveness of the property and the project.