The Director General of the Social Security and National Insurance Trust (SSNIT), Mr Kofi Osafo-Maafo, has stated that 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.
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.
Mr. Osafo-Maafo stated these at a news conference in Accra on Monday to address all the propaganda sounding the sale of the hotels.
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.
“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,” Mr. Osafo-Maafo stated.
According to him, 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 Osafo-Maafo emphasised.
Hotel losses
Highlighting the track record of some of the hotels, the SSNIT Director-General said GH¢233.8 million had been “pushed into the operations of some of the hotels with no return in sight”.
Ridge Royal Hotel, according to Mr Osafo-Maafo, owed about GH¢44 million of the investment SSNIT had made in the business and “none of the debt had been serviced”.
Again, La Palm Beach Hotel made losses in 11 years of the last 14 years, Elmina Beach Resort made losses in nine out of the last 14 years, Busua Beach Resort made losses in nine out of the past 14 years, and Ridge Royal Hotel made losses in all the eight years of operations.
In the wake of public concerns, Mr. Osafo-Maafo 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 Osafo-Maafo added, “came top after technical and financial proposal” had been evaluated.
He added that the Trust would continue engaging stakeholders on various negotiations regarding the sale of the hotels.
