SSNIT hotels not sold, negotiation ongoing – Kofi Osafo-Maafo

The Social Security and National Insurance Trust (SSNIT), has stated that its hotels have not been sold yet, but justified their reasons for considering the sale of 60% shares in each of its four hotels to the Rock City Hotel Limited.

“We have sold the hostels; we are in the process of negotiations. There is no predetermine outcome”, The Director-General for SSNIT, Mr. Kofi Osafo-Maafo stated.

During a press conference at the SSNIT Pension House on Monday, 8^th July, 2024, Mr. Kofi Osafo-Maafo emphasized that their commercial rationale is not in doubt. Highlighting that the organization aims to raise capital to invest in its hostel business and elevate it to international standards. Consequently, they are seeking private investors.

Mr. Osafo-Maafo stated that, SSNIT decided to consider only the sale option in its efforts to intervene in its hotel investment portfolio due to: consistent losses across almost all the hotels, non-payment of dividends with the exception of Labadi Beach Hostel but their returns have been low, inability to service debts owed to SSNIT, calls on SSNIT to fund maintenance, operational activities and employee emoluments, and the necessity for regular significant capital injections to effectively operate the hotels.

“If you look at these hotels they are capital intensive businesses, they require periodic heavy and continuous capital expenditure and SSNIT does not have the funding to do that.

“The businesses have been making consistent loses, and if we have business that by and large are yielding us returns that are below what we find acceptable, even if they are profitable, we will look to divert the stake to deploy elsewhere.”

“We have also tried having external management companies running the said SSNIT hostels and that has not resolved the problem”, Mr. Maafo added.

He Highlighting that SSNIT has invested over GHC230 million to revive the hotels, but all the hotels have failed to bring returns.

“If you look at Elmina, the picture is not that different. Indeed, in nine out of the last fourteen years, it has not paid us a dividend. The money we put into that hasn’t earned us any returns. The returns are negative over the period preceding the decision to diversify the 60 percent shares.”

“If you look at Basua beach, it’s the same, no dividend. Losses in most of the years and returns negative. Indeed, minus thirty-one point seven for the period 2010 to 2017. Let’s put everything into perspective. That is why we will want to improve it with private investment,” Mr Osafo-Maafo explained.

He added that, “a significant amount was put in the hotel. In fact, the hotel owes us GHC44 million that we have put in this hotel, we have also had engagement with NPRA and once more we will have another engagement and if it is deemed necessary, we will continue to engage and that is the message”.

According to him, Rock City bided $29.4 million USD for Labadi Beach Hostel, and they were also the sole bidders for Ridge Royals and Elmina Beach Resort. He mentioned that Rock City had the highest bid, saying, “Now if you were in the Trust’s shoes, I am not too sure what you will do differently but to accept the highest bid on the table and then proceed to negotiate”.

The bids for 60% ownership in the recent transaction valued at US$61,200,000 resulted in Rock City offering the highest bids for Labadi Beach Hotel (US$29,400,000), La Palm Royal Beach (US$21,000,000), Ridge Royal Hotel (US$8,400,000), and Elmina Beach Resort (US$2,400,000), totaling US$59,156,843 across all properties.

A total of nine (9) companies responded to the advertisements for an Expression of Interest (EOI) for SSNIT Hotels by submitting proposals by the deadline on March 23, 2022, with six firms qualifying. These firms where Rock City Hotel Limited, Yaw Addo Development, Spartan-Ives, Temple Investment, Westridge Developers Ghana Limited and Luxor Hotels Limited.

Clearing the air, the Director-General for SSNIT debunked all claims from the Commission on Human Rights and Administrative Justice (CHRAJ), which includes the transaction with Rock City Hotel contradicts SSNIT’s initial request for expression of interest, among many others were not true.

Background

There have been a series of controversies surrounding the sale of 60 percent shares in four hotels owned by the Social Security and National Insurance Trust (SSNIT).

Resulting into a protest, The ‘Hands Off Our Hotels’ demonstration, spearheaded by North Tongu MP Samuel Okudzeto Ablakwa, which took place on Tuesday, June 18, 2024, aimed to pressure the government into halting the sale of 60 percent shares in the following hotels owned by SSNIT.

The said hotels are Labadi Beach Hotel, La Palm Royal Beach Resort, Elmina Beach Resort, and Busua Beach Resort.

Mr. Ablakwa filed a petition with the Commission on Human Rights and Administrative Justice (CHRAJ) seeking an investigation into the matter.