23 April 2018

Lesotho: Govt Probes Victoria Hotel

The government has resolved to probe the operations of Victoria Hotel in Maseru amid revelations that the operator who is leasing the facility for a song has not been paying rent and taxes on the government-owned property for almost a decade.

This was said by the Minister of Tourism, Environment and Culture, Motlohi Maliehe, in an exclusive interview with the Lesotho Times this week.

Mr Maliehe said the probe would also extend to all government-owned accommodation and tourism facilities because some private operators have not been paying any dividends, rent and taxes to the government for several years.

He said the government had been losing millions of maloti to the private operators and some of the operators had only started to pay up when the government began to scrutinise their operations.

Mr Maliehe said that while the ministry was working in line with the government policy of promoting the Public, Private, Partnerships (PPP), they were eager to foster win-win outcomes with the private operators running government tourism and accommodation establishments.

The audit, he said would, help to recover all the revenue the tourism ministry has lost over the years and to help devise a monitoring and evaluation mechanism that would ensure quick identification of challenges for the mapping-out of solutions.

He cited Victoria Hotel in the central business of Maseru as one of the establishments that were guilty of failing to pay rent and taxes to the government for many years.

"We have analysed and discussed the (Victoria Hotel) matter at ministerial level and we are now in discussions with the ministry of finance with regards to the agreement they had with the private operator. The crux of the matter is that, for years, the government has not received anything from that investment, including rent. Although it has taken this long to realise, we all agree that something has to be done," Mr Maliehe said.

The 56-room Victoria Hotel, which employs 58 employees was leased to the current operator, South African businessman Thabiso Tlelai, almost a decade ago in 2009. Mr Tlelai told this publication that the rent is M60 000 per month. Theoretically, Mr Tlelai only needs two days of full occupancy to pay his monthly rent and still have lots of change left over. A room costs M710 per person during the week and M870 per couple.

On weekends, the cost is M625 per person and M750 per couple. Assuming the hotel is always fully booked by single people the operator would make M880 000 per month in rentals alone. This excludes the rentals for the conference facilities at the hotel and income from food and beverages.

Mr Maliehe said leasing facilities without getting any returns did not make sense for the government as establishments were expected to generate revenue that would be used to further improve the tourism sector.

He further explained that the ministry was looking at leasing all its facilities, some of which have since become white elephants to local and foreign investors who would pay decent amounts in rentals.

"We are not saying we will be unreasonable and we want to milk the investors, but we have to work out agreements that ensure that the government also gets something."

However, the current operator of Victoria Hotel, Mr Tlelai, refuted Mr Maliehe's claims that he had not been paying rent, saying his lease agreement with the government stipulated that the rent would be deducted from the M20 million capital he claims he injected into improving the facility upon leasing it. He however, failed to furnish this publication with a copy of the lease agreement or proof that he had invested M20 million.

He said Mr Maliehe could be speaking from an uninformed point of view with regards to the issue.

"The truth of the matter is that I got sign-offs on the huge capital I injected into the facility and the government is getting rent out of that capital injection," he said, adding that he would be happy to meet the Mr Maliehe and his principal secretary to discuss the issue.

"It would help if we can meet to discuss what areas they would like fixed. If they do not understand the agreement, I will inform them so that their actions are based on the correct information," he said adding the lease agreement will continue until 2025.

Mr Tlelai explained that since he started operating the hotel, he has injected more than M20 million into the establishment and he estimates that he will need to inject another M30 million to further improve the facility to international standards.

He said at the time he took over Victoria Hotel, the then government had approached some big names in the hospitality sector in the Southern Africa region and none of them were interested in the facility.

"The hotel was in shambles when I took over. All the rooms, kitchen and dining area were a disaster. For me to even have the audacity to run the hotel was about improving the standards and I spent millions of my own money because no banks lend you money to invest in a property you don't own," Mr Tlelai said.

However, Mr Maliehe said as much as the partnerships with the private sector were very important, he was not happy with how some of the operators had deprived the government of millions in revenue.

"This defeats the PPP concept ... ..It says to us there is something wrong hence the need for us to put in place mechanisms that will inform us as to whether or not we are really benefitting from these facilities. I visited Molimo Nthuse accommodation facility in Selibeng, which boasts of a lot of potential and it was painful to watch it because it was badly run-down.

"The government did not establish the facility for someone to ruin but to support the private sector and work together in providing employment to the Selibeng community. We need to see how best the facility can be resuscitated together with Thaba Chitja in Mohale's Hoek.

"Corrupt practices will not be entertained. We are looking at serious and professional partnerships. I feel the tourism sector could have significantly developed by now had it been managed efficiently. This was not happening because of issues to do with corruption and unfair agreements."

He said the unprofessional conduct by some civil servants have cost the country dearly in terms of lost revenue in the tourism sector.

"I can also cite the Tourist Information Centre in Butha Buthe which has been closed since 2010 and the Liphofung Caves and Nature Reserve deal in Butha Buthe, which we lost some years ago because somebody wanted 10 percent free shareholding.

"An investor left because of the selfishness of one very senior civil servant. There are other such cases where certain individuals shamelessly sacrificed hundreds of jobs that could have benefitted our people, simply because they could not pocket anything in the deals. This government should make sure that level of shameless corruption is stopped. Our Prime Minister, Dr Tom Thabane continues to speak against corruption and we should not let him down or work against the ideals of development which seek to empower our people."

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