Name ID 738
The East African
Extract Author: Peter Munaita
Extract Date: 2000 July 14
A substantial investment estimated at $20 million will be required to upgrade six Tanzanian leisure lodges, which were privatised recently, to world class standards.
Industry sources say the sum is needed following years of neglect by the government-owned Tanzania Hotels Investment Ltd (TAHI), on whose behalf the hotels were being managed by the Accor Group of France.
The lodges were last week awarded to Mauritius-based Hotels and Lodges Ltd, which placed a top bid of $28 million, ahead of other leading international hotel groups. The Presidential Parastatal Sector Reform Commission chairman, Mr. John Rubambe, has confirmed the offer to Hotels and Lodges on behalf of the Tanzanian government.
The six hotels - Mt Meru, Ngorongoro Wildlife Lodge, Seronera Wildlife Lodge, Lobo Wildlife Lodge, Lake Manyara Lodge and Mafia Island Lodge - have a total bed capacity of 1,500.
They will give the new owners a 90 per cent market share of Tanzania's growing upmarket tourism sector.
TAHI has divested from the hotels under an ambitious privatisation exercise that will see the government cede interest in 395 enterprises. At the end of 1998, 270 ventures had been sold off, with the remainder targeted for the end of this year.
Bids for the hotels were floated in February and the exercise was supervised by a foreign financial consultant, HSBC Equator Bank plc, in order to enforce transparency. Previous privatisation programmes have been handled internally.
Out of 68 interested suitors, only 18 were prequalified on the basis of a solid track record in hotel management, sound financial position and environmental concerns.
Hotels and Lodges led four other firms that were eventually invited to bid, including Soba Management Ltd ($9.2 million for four properties), Coastal Travels ($1.2 million), World Wide Leisure Group ($2 million for two properties) and East African Holdings Ltd, associated with the Madhvani Group of Uganda, ($9.85 million for four properties).
Kenya's Tourist Promotion Services, who own the Serena hotels, opted out of the deal after being short-listed. Other contenders who fell by the wayside included Accor, Club Med, Conservation Group of South Africa and Golden Tulip Worldwide.
Hotels and Lodges is a sister company of Gulf Africa Petroleum Company (Gapco) of Mauritius, which took over the operations of Esso and Caltex in the region a few years ago, gaining access to 750 petrol stations and a vast storage network.
Gapco took over the operations of Agip in Sudan last year after the previous operators pulled out. The conglomerate has a presence in Tanzania, Kenya, Uganda, Zambia, Malawi, Mauritius and Sudan and is owned by the Kotak brothers, Dhiren and Yogish, Mauritian oil magnates.