The foreclosure of several local hotels by the Development Bank of Samoa due to ‘historical debts’ was a hard decision the Samoan Government says had to be made.
The financial situation faced by the local properties, according to Prime Minister Fiame Naomi Mata’afa, is beyond the control of the bank and the institution ultimately had to recover its money.
In a press conference on Thursday, Fiame who recently returned from overseas travels, said the bank list of auctioned properties was a long outstanding issue.
“They [hotels] have been in trouble way before COVID,” she said, when responding to questions on the hotels being placed on public auction.
“In all honesty with the DBS it had a certain percentage allocated to different sectors like tourism and agriculture but if you can remember this bank was established to support agriculture.
“What had happened is the allocation had been taken over by the tourism [industry] and it has come to the point where hotels have not paid their loans, not only has it impacted the sector it has also affected the whole reason why the bank was set up.”
According to the Prime Minister, there was consideration given to recapitalising the properties in trouble but given the degree of debt they are in the Government and the bank cannot afford to take on the debts.
“The bank will be in trouble, and all fails,” she said. “In finality a hard decision has to be made.”
Just last month three local hotels were advertised for auction with others being threatened with foreclosure notice just months after the country reopened its border.
In light of the situation faced by the tourism facilities, Samoa Hotels Association (S.H.A.) President Tupa’i Sale’imoa Va’ai said selling the properties does not do any good to the industry and the economy itself.
“We need more open minded and courageous financial institutions to find solutions, take risks for something that is good for the industry and the country,” said Tupai.
“We are taking the easier option out to just sell them but it’s not the only option out there.
“We have rallied to give properties more time and, in our view, they need a little bit more time to pick things up especially now we’ve just opened up.
“It didn’t help that covid came in when trying to assist properties unfortunately the hardship and challenge is not just in Samoa it’s a global pandemic.”
The three properties that were up for public auction include the Orator Hotel at Tanumapua, the Le Manumea Hotel at Vailima and the Vaea Hotel Samoa in Togafuafua.
The owners of the properties were approached for comment, and some were shocked by the drastic action taken by the DBS and were not aware of the move……PACNEWS