Home ECONOMY State revives sale of stake in 5-star hotels

State revives sale of stake in 5-star hotels

by biasharadigest
Market News

State revives sale of stake in 5-star hotels

InterContinental Hotel
InterContinental Hotel in Nairobi. PHOTO | SALATON NJAU 

The privatisation agency is restarting the sale of the government’s stake in four five-star hotels.

The Treasury revealed this in the Budget Policy Statement released to Parliament for consideration as part of budget estimates preparation.

The hotels to be sold include the Hilton and InterContinental in Nairobi, Mountain Lodge and The Ark in Nyeri.

Sale of other hotels the State has significant shareholding, including Kabarnet, Mt Elgon and Kenya Safari Lodges and Hotels, is also on the cards even as the four hotels remain the priority.

The State owns shares in the establishments through the Tourism Finance Corporation (TFC).

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“On privatisation of hotels, the offer to transfer shares of TFC made in 2014 by the Privatisation Commission of Kenya to the other shareholders of Hilton Hotel, Intercontinental Hotel, Mountain Lodge and The Ark Hotel expired without successful offers,” said the Treasury.

“The PCK has, therefore, restarted the privatisation process of these hotels. The privatisation process of other hotels, that is, Kabarnet Hotels, Mt Elgon Hotel Limited, Kenya Safari Lodges and Hotels is ongoing.”

The hotels were initially advertised for sale in 2011 when the State was trying to raise funds for an expanded budget and for an economy that was still recovering from a slump in 2008 and 2009.

The government planned to sell its 40.5 percent stake in Hilton Hotel and 33.8 percent in Intercontinental Hotel.

However, for unclear reasons at the time, the plan was not effected and was started again in 2013 but ended up stalling in 2015.

The failure in 2015 was attributed to low bid prices that investors submitted.

The State itself was blamed for setting high reserve prices, yet the other owners of the hotels had preemptive rights to buy them, indicating that they had some idea about the true value of the outlets.

The privatisation commission has, however, never revealed the reserve prices of the hotels.

In 2011-12 period when the hotels were first put on sale, the owners complained that the facilities had remained in poor condition because funds could not be committed without knowledge of the future of the entities.

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