The Director-General of the Social Security and National Investment Trust (SSNIT) Kofi Bosompem Osafo-Maafo has justified the decision to sell 60% of its shares in various hotels to a private investor.
Addressing the press on Monday, Mr Osafo-Maafo said selling the shares was the only viable option to revive the fortunes of the four hotels.
The hotels include Labadi Beach Hotel, La Palm Royal Beach Resort, Elmina Beach Resort and Ridge Royal Hotel.
Mr Osafo-Maafo explained that due diligence was done and changing management was not considered feasible due to the continuous losses the hotels had been accruing.
“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, 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 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.
