The Social Security and National Investment Trust (SSNIT) has announced that selling 60% of its shares in four hotels to a private investor was the only viable option to restore its financial stability.
This decision comes amidst concerns about a change in management and controversies suggesting that SSNIT did not follow due process before opting to sell its shares in these hotels.
The hotels involved are: Labadi Beach Hotel, La Palm Royal Beach Resort, Elmina Beach Resort, and Ridge Royal Hotel.
During a press conference in Accra on Monday, SSNIT’s Director General, Kofi Bosompem Osafo-Maafo, clarified that thorough due diligence was conducted.
According to him, changing management was deemed feasible due to the persistent losses the hotels had been experiencing.
“We’ve been through quite a lengthy process to do so. Bear in mind, we’ve also tried having external management companies running the SSNIT hotels and that hasn’t resolved the problem 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 its profitability, Mr. Osafo-Maafo also justified the inclusion of Labadi Beach Hotel in the sale.
He stated that, this decision was guided by SSNIT’s objective to optimise overall returns, as the current profits from the hotel were considered inadequate.
“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 it 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 added.
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