Oman developer drops hotel over increased fees
Al Batinah has withdrawn its participation in the Crowne Plaza project at OCEC after the value of its agreed 5% investment was increased from $1.7m to $2.6m
Oman's Al Batinah Development and Investment Holding Co has announced that it has exited the project team of a Crowne Plaza hotel being built in the sultanate.
The four-star hotel is being developed at Oman Convention and Exhibition Centre (OCEC).
In a statement to Muscat Securities Market, Al Batinah said the hotel's developer has "has imposed additional fees of OMR7m [$18.2m] on the project as a whole for the rights other than what has been agreed previously".
"Thus, the value of the company's contribution to the project is OMR1m [$2.6m], representing 5% of the project capital instead of OMR656,000 [$1.7m], which was defined previously."
In a January statement to the Muscat bourse, Al Batinah's board announced it had agreed to invest $1.7m – 5% of the total value – in the capital of Destination Hotel Management Co, a subsidiary of Omran that owns the Wadi Irfan Crowne Plaza Hotel project.
According to the January statement, the hotel is under construction and is expected to commence operation in Q1 2017.
The increased investment cost, however, has prompted Al Batinah's board of directors (BOD) to withdraw the firm's participation.
"After the BOD [studied] the impact of... these additional running costs of the project fee, [it] has decided to not participate in this project's investment [due to] non-feasibility of the investment.
"There is no obligation on the company or impact on the financial statements of the company as a result of this decision," Al Batinah's latest statement added.