FIJI HOTELIERS LAUD GOVERNMENT PURCHASE OF SUVA HOTEL

admin's picture

SUVA, Fiji (Fiji Times, Sept. 6) – The Fiji National Provident Fund's recent purchase of the Holiday Inn in Suva has been welcomed by the Fiji Hotel Association.

The association said that FNPF's FJ$19.3 million (US$11.2 million) investment would ensure the hotel kept operating.

"The fact is that the hotel will keep on operating and this will continue to provide rooms," association president, Dixon Seeto said.

He said this would not have been possible if the property had completely closed down or closed for renovation or rebuilding purposes.

Mr Seeto added the association wanted to keep the industry viable.

Former Opposition leader, Mick Beddoes, said the fund had to increase its members' returns and the investment was "logical in terms of growth".

"FNPF on the other end has to invest in order to increase the returns to its members and they are limited in the kinds of investment they can get involved with and as tourism is the flavor of the month in terms of growth, it would be logical to invest in this area," Mr Beddoes said.

[PIR editor’s note: Former Prime Minister Mahendra Chaudhry has criticized the purchase, saying it was a risky investment of government funds. ]

However, he expressed concern about the fund's previous investment into Amalgamated Telecom Holdings. "The value of that investment has reduced significantly," he said.

The FNPF has said it's $19.3 million purchase of the Holiday Inn will not be the last investment in the industry. It said it is moving towards owning a group of hotels.

FNPF chief executive Olota Rokovunisei said the InterContinental Hotels Group would continue to manage the Holiday Inn on behalf of the fund. He said the fund was happy with the partnership, which both parties would benefit from.

However, Mr Beddoes warned the fund's management deal with IHG would be an expensive one. He said IHG could make more money than the owner.

In a statement, IHG said it would continue to manage the hotel for at least 10 years and it had the option to extend that management term for a further 10 years.

The group sold nine hotels in Australia and New Zealand for $390million, taking advantage of a revival in international travel to offload the assets.

InterContinental will continue to manage the hotels for at least 10 years for an annual fee of about $8 million.

"We are delighted that IHG will continue to provide its management services in the operation of Holiday Inn Suva," said Mr Rokovunisei.

"This new acquisition is a progressive step to eventually establishing a cluster arrangement where IHG will manage a group of hotels for FNPF in Fiji.

"This strategy brings tremendous advantages to both parties."

It is believed that the fund chose to invest in the Holiday Inn rather than in an overseas hotel because it wanted its resources directed to helping Fiji's economy.

Only about 6 per cent of FNPF's investment is in the international market.

September 7, 2005

Fiji Times Online: http://www.fijitimes.com.

Rate this article: 
No votes yet

Add new comment