Selling 60% of Shares the Only Viable Option to Revitalize Hotels, Says SSNIT

Written by GliveRadio Accra on July 8, 2024

The Social Security and National Investment Trust (SSNIT) has justified its decision to sell 60% of its shares in four hotels to a private investor, citing it as the most viable strategy to revive the hotels’ fortunes.

The hotels in question are Labadi Beach Hotel, La Palm Royal Beach Resort, Elmina Beach Resort, and Ridge Royal Hotel.

Speaking at a media briefing in Accra on Monday, SSNIT’s Director-General, Kofi Bosompem Osafo-Maafo, clarified that extensive due diligence had been conducted and that retaining current management was deemed unfeasible due to sustained financial losses at the hotels.

“We have undergone an extensive process to reach this decision. It’s important to note that we’ve also experimented with external management companies to operate the SSNIT hotels, but this approach did not resolve the underlying issues either.

“So, for us, we look at it twofold, that we are looking to resolve a problem and do so with the introduction of a strategic investor and we outlined the reasons there.”

“Consistent losses by almost all of our hotels. I know you are aware that Labadi doesn’t make a profit, but the returns are below [par]. They haven’t paid us any dividends with the exception of Labadi. Labadi Beach Resort only started paying dividends for the last 2 years. They haven’t from inception,” he stated.

Despite Labadi Beach Hotel’s historical profitability, Osafo-Maafo justified its inclusion in the sale.

He explained that this decision aligns with SSNIT’s objective to maximize overall returns, given that the current profits from the hotel were deemed insufficient.

“We want to maximize what we get out of it and the question that I asked somebody the other day is if you were selling your car or even your house, if you were selling your house, you’d make an attempt to actually paint it.

“You wouldn’t wait for your car to be put on stones and then say, now this is the time to sell it. You make it look good. There’s no reason why if a business is doing well and we seek to maximise capital from its to invest elsewhere, we shouldn’t do so.”

“The reason is simple. Returns are lower than we believe they should be, but also cash always has alternative uses. So why not? There’s a good investment rationale for that,” he stated.