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Government to understand the Aggie Greys Hotel loan deal before a decision

By Lagi Keresoma

APIA, SAMOA -11 OCTOBER 2022: The Government has endorsed the auctioning of three hotels that could not pay their loans with the Development Bank of Samoa.

Prime Minister Fiame Naomi Mataafa announced the Cabinet approval of the Development Banks’ application to auction the Orator Hotel, Le Vaea Hotel and Le Manumea Hotel.

There is a long list of hotels the Government gave another chance in 2018 to try pay up their debts following a meeting with the Hotels Association.

However, the Government has yet to make a decision on the Aggie Greys Hotel (now Sheraton Samoa Aggie Grey’s Hotel & Bungalows) until they get the full information on the deal and circumstances surrounding the loan and the sale of the hotel.

The ST$50 million loan for the hotel from the Development Bank was facilitated and endorsed by the previous government and the hotel was later sold to Chinese business interests.

Prime Minister Fiame Naomi Mataafa said the Aggie Greys Hotel is different from the case of hotels now approved to be auctioned.

When the hotel was sold, the previous owners paid their loans with the commercial banks and not the Development Bank, said Fiame.

She said the Government needs to understand the extent why the hotel was sold, what the losses were and whether an investment could have been possible.

The Government is currently in negotiation with the current hotel owners in search for a solution.

hotel manumea
hotel manumea

The Manumea Hotel to be auctioned.

Tourism dominates funds allocated for agriculture
The Prime Minister also pointed to the main focus of the Development Bank of Samoa on the development of agriculture, however tourism has dominated the Banks’ lending in the past and landing hotels with historical debts and now are being auctioned.

She said the Bank can only allocate a certain percentage to the tourism sector but tourism has taken up a huge percentage of the funds allocated to the bank.

Problems then struck and several hotels could not pay back their loans which impacted negatively on the tourism sector and also denied opportunities for farmers.

Fiame said the Government cannot carry the degree of indebtedness and certainly not the Development Bank of Samoa.

The Bank’s last option to recover its losses is to auction the hotels that had been on mortgagee sale for a number of years and the Government has approved it.