Treasury restarts sale of its hotels

Hilton Hotel building in Nairobi. [Wilberforce Okwiri/Standard]

The National Treasury has restarted the process of selling its stake in several hotels.

This includes three premium facilities whose sale has been on the cards for close to a decade now.

Plans to sell the stake in Intercontinental and Hilton hotels and Serena Mountain Lodge started in 2009 and even got Parliament’s approval in 2013, but not much progress has been made.

The other hotels include Sunset Hotel in Kisumu, which has recently been the subject of contention between the Tourism Finance Corporation (TFC) and the county government of Kisumu (which has a minority stake). TFC holds the Government stake in the hotels.

The Privatisation Commission said it was looking for transaction advisers to conclude the stalled sale of the Government’s stake in Intercontinental, Hilton and Mountain Lodge.

The advisers will also prepare the other six State-run hotels for sale in a process that will entail a review of their books and proposals on how their ownership structure will look like after the privatisation.

National Treasury Principal Secretary Kamau Thugge said the process was in its early stages and that the Government did not expect any proceeds from the sale of its stake in any hotel in the next financial year. He said the process might take some time to be concluded. “That’s an ongoing process and we have not factored any receipts in the budget,” he said.

The work will be undertaken in two batches. In the first one, a transaction adviser will offer advisory services for the conclusion of the privatisation of the three hotels that was started in 2009 but stalled.

Business valuation

The second transaction will entail the sale of six other hotels owned by the Government. Existing shareholders will have first right to buy the Government shares, held by Tourism Finance Corporation, before other investors are invited on board.

“The transaction adviser is also expected to update due diligence work undertaken in 2009 and 2013, conduct a business valuation and implement the sale of TFC shares in the three hotels through a pre-emptive process approved by Parliament in 2013,” said the Privatisation Commission in a notice inviting transaction advisers to bid for the job. Interested firms have a July 10 deadline to submit their proposals.

In the second transaction, the adviser will prepare the six hotels for sale and some of the work to be done includes cleaning up the hotels’ books and preparing a restructuring plan.

“The scope of work involves due diligence work... in respect of Sunset Hotel, Golf Hotel, Kenya Safari Lodges and Hotels (Mombasa Beach Hotel, Ngulia Lodge and Voi Safari Lodge), Mt Elgon Lodge, Kabarnet Hotel and the Ark Limited,” said the commission.