Braco Hotel, a property in Trelawny owned by the National Insurance Fund, seems set to hit the market in 2022.

In an update given to the Jamaica Observer, the Ministry of Labour and Social Security (MLSS), which has oversight of the fund, said that the property is now set for divestment.

The 232-room hotel in Trelawny owned by the State pensions manager, 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.

The MLSS stated, “Resort properties owned by the National Insurance Fund are not anticipated to be reopened for normal guest operations. In relation to Braco Resort Hotel (Trelawny) it said, “Since the hotel closed to normal guest operations at the onset of the COVID pandemic, Cabinet has made a decision to divest the property.”

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

Meanwhile, the MLSS indicates that the national pensions fund manager is considering the pros and cons of selling El Greco Resort in Montego Bay as well.

The MLSS stated, regarding El Greco Resorts (St James): “The hotel closed to normal guest operations at the onset of the COVID pandemic. The board of management of El Greco Resort subsequently decided to effect permanent closure of the hotel as a going concern.

“The National Insurance Fund is currently conducting an analysis of options for the best treatment of the property in keeping with the overall objectives of the fund. The results of the analysis could include a recommendation for divestment/sale.”

In its update, the MLSS said that the last valuation on Braco Resort Hotel (Trelawny) was US$48.3 million in 2020. El Greco Resorts (St James) was last valued at $1.3 billion in 2015.

The MLSS indicates that in any sale procedure, “The NIF is guided by the procedures outlined in the Policy Framework and Procedures Manual for the Privatisation of Government Assets: The Privatisation Policy and the Policy Framework and Procedures Manual for the Divestment of Government-Owned Lands.”

It added, “Internally, the National Insurance Board votes on the resolution as to whether or not the property is to be sold. If the resolution is adopted it is then passed on to the Ministry of Finance pursuant to section 39(4) of the National Insurance Act and then to Cabinet for approval. Once approved all other steps are outlined in the policies mentioned prior.”

El Greco Resort, owned by the NIF, is an all-suite 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.

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.

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.