affect hotel prices

Radisson sale could affect hotel prices

VANUATU’S top casino, the Radisson has been sold to a Singaporean group for what is considered to be well below the government’s earlier reserve price of US$B million. Valuers expect tnat the recent sale could set a new benchmark for hotel property in the region. The value of hotels has been falling in the last two years throughout the world.

On December 1 the hotel was taken over by a Singaporean group which will hand over management to tne Meridien group. The Radisson hotel/casino was owned by John Abel and Trammel Crow interests. The property went into receivership in 1992 and had been on sale for over a year. The debts of the company included a first mortgage of US$2 million to Regent Limited and a second mortgage of US$l.5 million to Westpac. There were also substantial unsecured debts led by local interests in Vanuatu amounting to some US$4 million plus. It was because of these unsecured interests that the Vanuatu government appears to have taken such a keen interest in the sale.

The government felt that an appro- Eriate price for the Radisson was one illion vatu or US$B million which would have effectively recouped debts of both secured and unsecured credi tors.

In August it is understood that the receiver, A R Tuttle of KPMG in Brisbane came to an agreement on a sale price of A 55.4 million with a Hong Kong group. It is understood that the offer of the Hong Kong Group was a virtually identical offer to that of the

Singaporean Group, Hotel Properties

Limited and included a commitment to refurbish the Radisson and an agree

ment to add an extra 100 rooms beginning within three years. It was this extension of hotel beds that was particu larly important to the Vanuatu govern ment as the number of hotel beds is considered to be a major block to the development of Vanuatu’s all

important tourism industry.

Lawyers close to the transaction indicate that just before the scheduled meeting in Port Vila between Westpac, the Prime Minister of Vanuatu and the receiver on October 9 a further bid of US$B million was received from a subsidiary of the Japanese brewing conglomerate Konishi. Apparently it was the failure of Konishi to provide a deposit plus the 60-day delay that caused the receiver to reject the offer. As one accountant put it, “For over a year there have been bids-some as high $l6 million but once they took a good look they realised that it was not viable at that sort of price.“ However, according to local sources, Konishi had by late November set aside the US$BOO,OOO deposit for the hotel.

Needless to say the unsecured creditors were very displeased with the decision of the receiver to reject the Japanese bid, without giving it due consider ation. If either of the Hong Kong or Singaporean bids were accepted then the unsecured creditors would receive

nothing.

The sale of the Radisson contrasts sharply with the sale of the much smaller Solaise hotel in 1990. The 32 room hotel sold for US$l.4 million in comparison to the 167 room Radisson which has the country’s only casino. It is widely felt that the sale will decrease hotel values around the Pacific. □