THE National Social Security Authority might never recover the millions of dollars worth of investment into Beitbridge Hotel, now a white elephant after former tenant Rainbow Tourism Group vacated it citing recurrent losses.
NSSA chairman Robin Vela said in an interview that the investment in the property was a bad decision that could have been avoided. The authority is now pursuing alternative use for the property to recover some value.
“Beitbridge is a bad investment, which could have been done far much better and the ($49 million) investment put into the Beitbridge Hotel will not be recovered,” he said. However, he said efforts to find alternative use for the vacant property were ongoing.
The construction contract for hotel was first awarded at $17,4 million, but the cost ballooned, as the contractor, Costain, struggled to pay suppliers and workers and requested NSSA to take-over the responsibility, which the social security authority obliged to.
Inordinate delays in completing the project, which took 26 instead of 26 months, endless bungling of the tender process and obscure payments to contractors and service providers contributed to the unjustifiably inflated cost of building the hotel.
While Mr Vela would not say what the NSSA planned regarding alternative use for the property, which RTG dumped in May last year after it losing $2 million over two years, NSSA has previously said it intends to convert the hotel into residential flats.
Mr Vela said that there were too many alternative uses to which the hotel property could be put to, but he was unequivocal about the fact that the investment was certainly money thrown down the drain.
RTG closed the hotel on May 31 last year, citing depressed occupancies, low margins and high operating costs as the major reasons for exiting Beitbridge Hotel, as that situation made it unviable.
But Mr Vela reckoned that while they sought alternative use for the hotel, including retail and office space, could bring in some little income through collection of rentals, the investment might never be recovered, it would take too long to regain the lost value.
NSSA general manager, Elizabeth Chitiga is on record saying options being considered included redeveloping the hotel property into conference rooms, retail shops, offices and residential accommodation by converting some rooms into one-bedroom flats.
The property’s sits on plus or minus 15 000 square metres of land and comprises a total of 144 rooms, casino, conference room, gym, resident banking hall and swimming pool among others.
In February 2007, NSSA and RTG entered a strategic partnership to construct the four-star hotel and a commercial centre in the border town, but the costs rose dramatically from the initial budget of $3 million 2007 to $49 million on completion in 2014.
A forensic report on what transpired with regard to the failed project said NSSA had different reasons for investing in Beitbridge.