NEW OWNER PLANS $28 MILLION UPGRADE OF APIA HOTEL

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By Alan Ah Mu

APIA, Samoa (Samoa Observer, June 26) - Chief Executive and Founder of Rogue Hospitality, Eneliko Smith, is waiting for Government approval to lease the Kitano Hotel Samoa site before taking over.

They want the site for 99 years.

[PIR editor’s note: According to an April story in Radio New Zealand International, Eneliko Smith is a former Samoan boxing champion and international business entrepreneur who recently bought the Hotel Kitano Samoa for US$5.4 million. Rogue Hospitality, according to a company news release, is Based in Las Vegas, Nevada, and "creates hotels that embody very select lifestyles and the celebrities and brands that support them in a relevant way."]

"That’s the only delay we have left," Mr. Smith told the Sunday Samoan yesterday.

If all goes well, they’re looking at a takeover in the first week of September.

There was confusion between the parties involved in the deal of Government and Kitano Corporation and Rogue Hospitality over the lease period.

They thought they were talking about a 99-year lease.

"Instead it was two 20-year leases with five years after..." said Smith. "That’s the longest authorizable lease.

"And of course we want a 99-year lease because when you’re investing $12 million or $28 million dollars (US) to the three phases of this project, that gives you the highest chance of getting your return - of making your money back, you know. For example, if we just wanted a 25 year lease, we wouldn’t be able to spend more than three million ... or maybe six million dollars maximum to be able to recover ... our investment. So the longer the lease the more stable the investment forum. So that’s why we’ve asked for the 99-year lease."

Rogue Hospitality South Pacific Development Manager, Fonoti Perelini S. Perelini, said it was "very standard" to ask for such a lease.

Even if its 20 plus 20 plus 20, having the option to extend, it is very possible for the landowner to say "Sorry guys, after 20 years, we’ve changed our minds. It ends here," said Fonoti.

"And then you have US$30 million investment in here," he said.

"So it’s not something out of the blue. It is a very standard requirement. And it’s been done here before.

"But the good thing is that Government is on board on it."

Rogue Hospitality has a three-phase project with a resort in a rural area included.

"The first phase is to clean up that mess over there," said Fonoti. "Really clean up, fix repairs, and then also renovate the rooms, complete with all the new equipment, furniture, upgrade the service."

Smith said they want to add up to 300 rooms to the existing site.

He said Phase Two involves building a resort at a rural site of 22 modern fale (thatched cottage) and four houses.

"And we’re hoping they’ll connect each other with a 400-room (Kitano) hotel feeding a 44-room property on the beach.

"We can make a very first class hotel.

It will be a sister property to the Kontiki El Salvador," Smith said, referring to another project they have in the South American country.

"Phase Three is we come back to the Kitano resort and after two years we’ll get all the entitlements and approvals to build the tower.

"A 10-story tower."

The tower will be a structure of condominiums.

Said Smith, "Phase one is US$12 million, phase two is US$2.7 million, phase three is another US$12 million.

"So in summation it’s a US$20 million project over five years.

"Three to five years, depending on the speed of the legislation. I have no concerns about the pre-sales of our condos."

The hotelier said if things go well, they’re looking at taking over Kitano the first week of September.

"I think what Aggie Grey’s did at the airport really helped us, encouraged us in our efforts because of the success of that project," Smith said.

"And the Government was very smart to take that risk.

"Something had to initiate a spark and Aggie Grey’s resort at the airport did that. And now we’re just following up."

Fonoti said the Government’s reform of Polynesian Airlines, which saw Polynesian Blue created, was an "excellent idea."

"But I think right now you really need rooms; require 400 rooms ... very critical. And it’s a three to five year plan. You know we’re not talking about 20 years.

"Monday we will meet with the Prime Minister and we know that there’s a Cabinet meeting next week."

Mr Smith and Fonoti are hoping Government will agree to their lease in principle so that they can move forward.

Mr Smith said they inquired and looked at data and have asked what was holding the market up.

"And it seems to be the same answers: more seats," he said. "And the guys with the seats say ‘we need more rooms.’

"So what we’re saying is we’ll provide the rooms and the seats will come."

With the instability around the region right now "people are really looking for a stable safe environment at the moment to go to and I think Samoa is the long term bet."

They’ve sold some assets so that by September they’ll have six million in cash in the bank, he said.

"From a commercial prospective, $6 million is really 60 million. When you talk about the leverage you can accomplish with six million dollars.

"So we’ve been very lucky."

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