Melia Braco, a 232-room hotel in Trelawny owned by the National Insurance Fund (NIF) and which used to be its primary income earner, has not reopened since the lockdown due to the novel coronavirus pandemic. Neither has the other remaining property owned by the fund, El Greco Resort in Montego Bay. Sources indicate that both properties might soon come on the market for sale.

Melia Braco resort was upgraded at a cost of $2.5 billion two years ago, but after it was given to the Spanish management chain Melia to manage, it began underperforming expected targets.

The property was last valued as the NIF’s most valuable property in a real estate portfolio valued at around $12 billion in 2017.

The NIF, funded by national insurance contributions and is the source from which pensions and other benefits under the National Insurance Scheme (NIS) are paid, was last reported as seeing mixed results from pandemic conditions. Investment was down in May 2020, but revenue was up, partially due to increased contribution levels and inflows from rentals and dividends.

Colette Roberts Risden, permanent secretary in the Ministry of Labour and the Social Security (MLSS), said in May 2020 that from audited financials for March 2020, investment income had declined year over year. This was primarily due to the fall in the prices of equities and global bonds,brought about by the pandemic.

The resort sector was shuttered under like every hotel last year, and while several across the island have resumed operations, the two NIF properties remain closed. El Greco Resort, owned by the NIF, is the only all suites resort located in Montego Bay, St James, five minutes away from the Sangster International Airport.

All suites come with air-conditioned bedroom/s, living areas, kitchen/kitchenette (with refrigerator) and private balcony.

The Business Observer reached out to the Ministry of Labour and Social Security for information on the properties and also reached out to Ludlow Bowie, director, real estate/property management at the NIF. However, Bowie’s phone rang without an answer, while the MLSS has not responded to e-mails.

Braco made pre-tax losses of US$5.05 million at last report in 2016, which was said to be the first full year of operation under management company Melia Hotels International. The Spanish chain was contracted by State pension fund NIF, through the NIF Resort Management Company Limited, to market and manage the hotel.

Projections for the first five years of operation from 2016 to 2020 were for the hotel to deliver gross operating profit every year ranging from US$4.87 million in year one to US$$7.3 million in year five. The level of return was based on average occupancy rates of 63-67 per cent over the period.

In January 2021, Auditor General Pamela Monroe Ellis highlighted what she described as weaknesses in the management and execution of the renovation, refurbishing and subsequent operations of the Melia Braco Village Resort.

The MLSS has oversight of the fund which pays pensioners. At last report, more than 74 per cent of the State pension fund’s portfolio was in government securities, and another 15 per cent was in real estate, inclusive of hotel properties. At March 31, 2020 the fund’s total assets were valued at approximately $112.22 billion (unaudited), an increase of 4.41 per cent over March 2019.