By Anthony O. Miller
THE COUNCIL of Ministers, eager to get the government out of the hotel business, yesterday decided what the state should do with its two scandal- stained, money-losing hotels, the Nicosia Hilton and the Philoxenia.
“We are not hoteliers,” Commerce Minister Nicos Rolandis told the Cyprus Mail after the Cabinet’s weekly meeting. “The Council decided… to proceed with asking for tenders for either the whole, or 13 per cent” of the state’s shares in the Hilton.
The government owns 82 per cent of the Cyprus Tour Development Company (CTDC), which owns the Nicosia Hilton. The private sector owns the rest. Stock Exchange rules require it to reduce its holdings to below 70 per cent of CTDC’s shares, so the CTDC can stay listed on the Exchange. The deadline is September.
“There will be a publication very soon in local newspapers asking for international tenders for either 82 per cent, or 13 per cent” of the CTDC, Rolandis said. “This will happen in the next few days.”
As for the Philoxenia Hotel, which the government wholly owns, Rolandis said: “We shall close the hotel at the end of this month” and either find someone to run it, or “in case we cannot find anybody who will satisfy us, we shall use is to locate one of the ministries.”
Rolandis said the Philoxenia would be put up for rent as is, and any renovations carried out would be done by whoever rents the facility. The nearby Conference Centre is not part of the rental package, he added.
The Nicosia Hilton has been the subject of controversy for years, notably since it lost millions of pounds in the wake of its recent renovation. It lost £1 million in 1998, while it was making an identical amount before the ‘improvements’.
The fate of the Philoxenia has wobbled about several alternate courses for years, among them closure and renovation, closure and use as a ministry, or closure for good. March 31 was the set date for turning out the lights, whatever the course chosen.
An exasperated Diko Deputy Tassos Papadopoulos recently suggested pulling down the Hilton logo and letting local businessmen run the hotel under a new name. But Rolandis strenuously opposed this, lest the loss of the famous name’s cachet cost the hotel even greater losses.
Besides, he noted, the government is committed until the end of 2024 to allow Hilton International, which is owned by British gambling giant Ladbrokes, to run the hotel under its logo.
Hilton International makes money on the Nicosia Hilton, and yearly pays the CTDC some £900,000 to £1 million by way of rental. “In our case, this evaporates, because of the high depreciation and interest that we pay. Interest alone is more than £1 million,” Rolandis has said.
The interest and other Hilton losses stem from the £17 million spent in the early 1990s to add extra rooms and refurbish existing ones; and timing that construction to the very moment two other luxury hotels, the Forum International and the Holiday Inn, opened their doors, drawing off Nicosia’s tiny hotel market.
Before the investment, the CTDC had income of about £1.4 million per year and a profit of £1 million, after interest and depreciation, Rolandis recently said. “After the £17 million investment, the picture was reversed.”
Scandal has swirled around the renovations, with some alleging that £9 million of the £17 million was questionably spent by a Hilton board that was chaired by the owner of companies that benefitted from some of the renovation contracts.
The Philoxenia hotel is likewise mired in allegations of wrongdoing, including claims that relatives of hotel staff held weddings there for free; that mukhtars and others used its rooms for sex romps with mistresses and girlfriends; and the hotel board – called the “Service Committee” – grew to its 10-member size due to political party nepotism.
There are also claims that £200,000 was wasted on renovation drawings that were never used; that one bill for renovations was tripled – from an estimate of £300,000 to a final bill of £900,000; and that a 50 per cent cost-overrun for other renovations jacked the cost from £1 million to £1.5 million.
