Guyana Marriott costs three times more than Jamaica
January 6, 2013, By KNews, Filed Under News, - Source
- Government remains mum on investors
Quick Facts
· Jamaica project – US$23M versus Guyana project US$58M
· Average cost per room in Jamaica – US$176, 923 verses Guyana cost US$294, 416
· Guyana’s project cost is 152 per cent more than Jamaica
· Jamaica project is privately funded (private equity) versus GOG investment
Full disclosure on Jamaica project, little disclosure on Guyana project
Construction cost of the Guyana Marriott hotel is more than three times the comparative cost of a Jamaica Marriott.
The cost for constructing the Guyana “Marriott” Hotel and Casino is projected as at almost US$60 million, while the Jamaican project has been announced at US$23 million. Guyana projects to build 197 rooms while the Jamaican project is 130 rooms.
Using the Jamaican cost, the comparative cost for Guyana project should be in the vicinity of US$35 million.
Taking the average cost per room, if one were to use the overall cost in Jamaica and divide it by the projected number of rooms, it would mean that the cost per room is US$176,923. The comparative price in Guyana should be the same. But, Guyana is building a room for US$294,416.
International construction companies peg an average cost for a 130-room hotel at US$22.8 million which matches the Jamaica project cost. According to one analyst, “Guyana defeats logic in its projection of costs on its projects.”
The Guyana “Marriott” project should be cheaper than a comparative Jamaican projects for many reasons including the low labour cost and the free land. It must be noted that the Jamaica cost includes the cost of land whereas in Guyana the land is Government-owned and therefore would be free to the Government project.
Despite pressure by opposition parliamentary parties and a Parliamentary motion to halt Government funding for the project, the government is stubbornly pushing ahead with the project.
With existing hotels in Guyana struggling to fill their rooms, it is strange that government is insisting that the Guyana “Marriott” hotel is viable, but it is refusing to make public the studies which justify the project.
The government is so far using tax dollars to fund the project. It has already handed over US$10million (G$2 billion) to SCG Shanghai Construction Group International (Trinidad and Tobago) Ltd, which was awarded the contract to build the hotel.
Private investors are expected to contribute US$27 million.
The government has some special arrangement that guarantees the private investors that they would get their money if the project folds.
So, if in a scenario where the project fails and the value of the property depreciates to a value below what the investors have plugged, then the investors will get back their money, and there would be nothing to return to NICIL. Taxpayers’ dollars would go down the drain.
The government will participate in the project, by way of equity, in the sum of US$4 million. This will be committed through NICIL, one of the investment arms of the government which holds its assets.
The equity contribution determines the government’s strength in Atlantic Hotels Incorporated – the company created to see the project through. As it stands, the government is currently the sole shareholder in the company.
However, apart from the equity contribution, financing for the project would also come from “subordinate loan stocks” of US$15 million invested by NICIL.
Adding the US$2 million, NICIL will end up spending in development costs for the project, including design and other preliminary studies altogether, US$21 million into the project.
So, in total, the amount of money the government is pushing into the project is just about what the Jamaica hotel project is costing, and just about what it should cost in Guyana to complete the project, industry experts say. The additional US$40 million remains a mystery to everyone.
