We want to improve profitability — SSNIT justifies sale of shares in “struggling hotels”
Mr Kofi Osafo Maafo, Director General, Social Security and National Insurance Trust (SSNIT), says the decision to sell the Trust’s 60 percent shares in six hotels is to “improve profitability” and ensure the SSNIT scheme is sustained in the long-term.
Addressing the press in Accra on Monday, he said the move to select a strategic investor to take over operations of the “non-performing” hotels was “consistent” with the strategy and investment policy of the Trust.
“What we seek to do at SSNIT is to improve investment returns so if a part of our business is yielding substandard returns, we have to address the issue…We are looking to take the hotel business to a world class standard that is why we [want] to bring private investors and we are looking to do so from the capital we raise from selling our equity,” he stated.
SSNIT is offloading its assets to operators, including Labadi Beach Hotel, La Palm Royal Beach Hotel, Ridge Royal Hotel, Busua Beach Resort, and Elmina Beach Resort.
Mr Maafo, in his address, said the “struggling hotels” had made consistent losses, and made “frequent request for maintenance capital”, among other factors, which justified the need for a private investor.
The Director General explained that Trust had, in the past, relied on external management companies to run the SSNIT hotels but that approach did not “resolve the problems either”.
He noted that some of the hotels had to fall on the Trust to pay the social security contributions of employees working at the facilities, while others could not afford payment for auditors to audit business accounts.
“I don’t think anyone running an investment fund anywhere in the world would be sitting on assets which are earning substandard returns and seek to do nothing…
“A group of the hotels have not been able to pay their auditor’s fees and so accounts since 2018 have not been audited…So if you put all of that together, what we have to do is to take action and that is what we are seeking to do,” Mr Maafo emphasised.
Highlighting the track record of some of the hotels, he said about [GH¢] 200 million had been “pushed into the operations of some of the hotels with no return in sight”.
Ridge Royal Hotel, according to Mr Maafo, owed about 44 million of the investment SSNIT had made in the business and “none of the debt had been serviced”.
In the wake of public concerns, he said discussions regarding the sale of the hotels began in 2018, with the bidding and evaluation processes gone through “transparent and lengthy processes”.
Rock City Hotels, the highest bidder for the hotels, Mr Maafo added, “came top after technical and financial proposal” had been evaluated, adding that the Trust would continue engaging stakeholders on various negotiations regarding the sale of the hotels.
Source: GNA