Jabir Wins Herathere Lease

By Judith Evans in Malé
May 24, 2008

Tourism firm Yacht Tours, majority-owned by Gaaf Alif MP Abdullah Jabir, on Wednesday provisionally secured a 20-year lease to operate Herathere, the country’s second largest resort.

Yacht Tours will be paying an average rent of US $18,196 per bed per year for Herathere, which has had a troubled history since its December opening, seeing occupancy decline to 15 per cent after complaints over seagrass in its lagoon.

It was developed by flagship government wealth redistribution initiative the Maldives Tourism Development Corporation (MTDC), which is now sub-leasing Herathere to raise cash for further resort development.

Jabir’s win, secured in a sealed-bids auction, comes amid an ongoing wrangle with government over compensation for a failed bid for the island of Biyadhoo, which Jabir says was wrongly disqualified.

Winning Bid

Following the provisional award, Yacht Tours must now submit a bank guarantee for one year’s bed rent, plus the first quarter’s rent – over US $2,700,000 – in cash. The company says it hopes to fulfil these conditions and take over the 273-room resort by 1 June.

Offering the highest bed rent in terms of net present value (NPV), Yacht Tours has beaten off other tourism giants to take over Herathere, which is the first resort in the southern atoll of Addu.

Rivals included AAA Hotels & Resorts – whose director is prominent Maldivian Democratic Party (MDP) member Ali Shiyam – and Thai firm MINOR International. The fourth bidder was Sunny Beach, rumoured to be a subsidiary of Maldivian firm Sun Travel.

A spokesman for the MTDC said sub-leasing a fully operational resort was an unusual step, as completed resorts are normally dealt with under management contracts. But the sub-lease allowed the bidding to be opened more widely, he argued.

“Not Ready”

Herathere was built in record time, opening just 15 months after the start of development by the MTDC, a 55 per cent publicly owned company.

But a planeload of tourists had to be diverted to other resorts in November after travel agency Thomas Cook decided Herathere was “not ready for guests”.

And even after its official opening in January, visitors complained on the resort’s website forum that parts were still under construction and its lagoon was filled with seagrass.

Following a survey by the Environment Ministry, work has now begun to clean up the lagoon, as well as to dredge a channel between the island and neighbouring Hulhudhoo to solve the problems of seagrass and dirty beaches.

But whilst the work is ongoing, over half the resort is closed, and occupancy stands at just 15 per cent.

Resolving the seagrass problem will be “the first priority”, says Yacht Tours director Ibrahim Shiham, adding he is confident the resort’s fortunes can be turned around – and that as southerners, he and Jabir are dedicated to employing locals.

A first round of bidding for the sub-lease, on less favourable terms such as a 15-year contract and requiring cash up front rather than a bank guarantee, had to be called off once it became clear the seagrass was damaging business.

Biyadhoo

Yacht Tours is meanwhile engaged in a four-year battle with government over a failed bid for the resort island of Biyadhoo, which Jabir says was unfairly disqualified on a technicality. Biyadhoo was awarded to Sunland, which is part owned by fisheries minister Hussein Hilmy.

On May 2 the civil court ordered that Yacht Tours receive the island of Kuda Villingilli, in north Malé atoll, as compensation.

But the terms of the offer – including a 5 per cent government share in the resort, and limits on land reclamation – failed to match up with Jabir’s demands, and negotiations with government continue.

The award followed allegations by Ibrahim “Mavota” Shareef, MP for the ruling Dhivehi Raiyyithunge Party (DRP), that Jabir was “blackmailing” government over the Biyadhoo case, after the People’s Association (PA) political group – to which Jabir belongs – sided with the opposition during the crucial parliamentary vote on proposed amendments to the Civil Service Act.

The PA appears now to have moved further away from government by starting the procedure to register as a political party, with Jabir as one of the initial signatories.


Related Articles:
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After A Generation's Wait, Addu Has A Resort
Jabir Threatens Second Legal Action Over Biyadhoo