This time for complete acquisition
After Ghion Hotel, the largest state run hotel, failed to attract bidders for a joint venture, the Privatization and Public Enterprises Supervisory Agency (PPESA) has decided to privatize it completely, awarding whoever wins the bid one hundred percent ownership.
Wendafrash Assefa, Public relations head of PPESA, told Capital that the agency is also revising the estimated floor price of the hotel.
Two years back the agency and Aklile Berhan Mekonnen (Prince), an Ethiopian born Italian based investor, had sealed a deal to acquire the hotel on a joint venture (JV), but the deal failed after six months due to the investor’s inability to deliver the first down payment as per the agreement.
In 2010, Aklile promised to come up with USD 210 million as his registered initial capital down payment. The total investment sum agreed upon was USD 310 million, which included USD 100 million for the government-shared hotel. The deal added that if the investor spent an additional USD 300 million in the next five years, he would own 80 percent of the Ghion Hotel. The rest would remain state-owned.
Ghion hotel, located in the heart of Addis Ababa, bordering the National Palace, has grabbed the attention of many high profile investors and companies over the years, following the government’s repeated invitation for interested parties to come on board in a JV basis. However, all of the deals, which included local and foreign speculators, have so far failed.
The Indian business giant, Tata, and the Saudi billionaire Al Walid Bintalal were some of the investors that had shown interest to manage Ghion with the agency. Hilton Addis is yet another entity that had discussed management option of the Ghion before the government decided to partially privatize the hotel about a decade ago.
In early February the agency had invited investors to develop, expand or upgrade Ghion hotel. PPESA invited individuals or a consortium to submit their Expression of Interest (EOI) including their price offer and design for expansion before April 2, 2012. However, an agency official said that no offer was received by the deadline.
According to Wendafrash, after getting a new floor price estimate, the agency will announce the bid before the end of the current budget year (July 7, 2012), to transfer the hotel fully for capable investor(s).
Filoha Hotel Enterprise and Ghion are the only two hotels administered under the agency. In the last three years PPESA has transferred Ethiopia hotels and Ras hotels enterprises, which have a chain of hotels in several tourist areas, to private investors.
Similarly the agency has also transferred three hotels located in the northern historical towns that were under the Ghion Hotel Enterprise to private investors.
Currently the government does not seem to have a plan to privatize Filoha hotel, which is popular for its naturally hot spring water.
The Ghion Hotels Enterprise was established in 1951 and previously operated a chain of eleven hotels, all in the northern part of Ethiopia, except the National Hotel in Addis Ababa. The latter was sold to the Ethiopian Athletics Federation. Roha Hotel, one of the hotels administered by Ghion Hotel, was also transferred to Ayat Real Estate two years ago.