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Madhvani Group acquires Kigali’s Umubano Hotel

Umubano Hotel

The new investor will renovate the facility to tap into growing country’s tourism sector

Rwanda’s hospitality industry has received a major boost after Uganda’s Madhvani Group acquired Umubano Hotel, ending a long-running delay that was hurting the credibility of this facility as well as tourism prospects.

The 4- star facility , with 100 rooms, 14 suites, four conference rooms, a swimming pool, tennis court,  and a mini-golf course is  located approximately 5km from the heart of Kigali.

The East African nation has been seeking for an investor to acquire the facility since 2013 when the Libyan government, which owned the majority stake, failed to renovate it.

Parasuramn Eswar, the corporate affairs director at the Madhvani Group told The Independent in an interview that the deal to buy the facility was concluded on Jan 27 at US$20million.

“The new deal means that we now own 100% of the facility including costs of renovation,” Eswar said. “This major investment now enables us to complete the circuit across the east African region.”

He said the Madhvani decision, which also owns Kabuye Sugar Works in the Kigali’s neighborhood, was aimed at tapping into the country’s tourism sector.

He added that the company officials are currently doing due diligent within 30-days ahead of full take-over next month.

Data from the Rwanda Development Board shows tourist arrivals in the country increased from 1.26 million in 2014 to 1.3million in 2015 as a result of aggressive marketing.  This led to a surge in the earnings from $305 million to $318 million during the same period.

The acquisition of Umubano Hotel now widens Madhvani’s presence in the region’s hospitality industry with eight properties. The company owns four properties in Uganda -Silver Back Lodge, Mweya Safari Lodge, Chobe Safari Lodge, and Paraa Safari Lodge- and three in Kenya which includes Aberdare Country Club, The Ark, and Mara Leisure Camp.

However, Belise Kariza, the chief tourism officer at the Rwanda Development Board could not be reached for a comment in spite of repeated calls.

Madhvani’s move comes at the time more Ugandan companies are also setting their foot in Rwanda following the implementation of the Common Market nearly seven years ago by the East African Community states.

For instance, property mogul Sudhir Ruparelia owns Down Town- Real Estate and Crane Bank in Kigali while Mukwano Group of Companies has established Acacia properties in Ubumwe, a commercial property firm.

 Umubano Hotel’s troubles

The Rwandan government decided to take over and liquidate the facility in 2013 when Soprotel, a Libyan government-affiliated company, which owned 60 % of the property, failed to honour its contractual obligation agreed with the co-owner.

In particular, the contractual obligations that were allegedly violated was in relation to an increase in share capital and renovation and expansion of the hotel, as well as sale of minority shares.

According to the contract, equity from Soprotel was to be invested in refurbishing the hotel and used in its expansion, a development that would have positioned the hotel to offer better services in a country that still faces shortage of quality accommodation services.

However, during the implementation of the investment, the Libyan government under Col Gaddafi was overthrown in October 2011, stalling all the developments.

And when the transition government took over in Tripoli following the ouster of Col Muammar Gaddafi, it resumed talks with the Rwandan government, promising to invest in the hotel.  But they did not manage to save the hotel.

Reports indicate that hotel rooms in Rwanda stood at 8,000 of March 2015 and was expected to reach 13,800 by end of 2017 due to the surging number of tourists amidst few accommodation facilities.

As such, more international hotel brands have ventured into the country’s hospitality industry Serena, Radisson Blu, Marriott, and Golden Tulip to have a pie of the promising tourism sector.

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editor@independent.co.ug

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