Braco expansion may cost US$50m
The 250 new rooms to be built at the Braco resort property in Trelawny would require around US$50 million of investment, which translates to J$5.8 billion.
Property owner National Insurance Fund (NIF) says it is too early to speak about the project, but Melia's Country Manager, Dimitris Kosvogiannis, said it would take about US$200,000 per room to do the expansion.
Melia Hotels Group has a 15-year contract to manage the Trelawny-based property, which is undergoing repairs by owner NIF ahead of a December 2015 re-opening.
Asked whether Melia would be participate as an equity partner in the expansion plan disclosed at the groundbreaking for the repair project, Kosvogiannis said the Spanish hotel group's 15-year plan does not include any equity investment in the Braco property, but will be pursuing other investments of its own.
As soon as Melia gets "comfortable" in Jamaica, it is likely to build its own hotels, said the country representative, while noting that locations in Negril and Montego Bay are under consideration.
The 225-room Braco hotel is fully owned by NIF, which is spending US$23.5 million (J$2.7 billion) on the refurbishment, according to senior director of investments Audrey Deer-Williams.
The repair bill is close to double the original $1.5 billion that Deer-Williams estimated the project would have cost last year. NIF threw out the first set of bids for the repair project and subsequently triumphed in a legal challenge of that decision by the rejected bidders.
The contract was eventually awarded to YP Seaton & Associates.
Deer-Williams said the overhaul includes all rooms, the kitchens, air-conditioning systems and furnishings, and that the pension fund expected to recoup the investment in four to five years.
NIF paid US$20 million to acquire Braco in the year 2000. Within the last two to three years, the pension fund purchased an adjoining property for US$275,000, on which the additional 250 rooms are expected to be built.
Deer-Williams said talk of the expansion was "premature", when asked for details this week, but would be examined after the renovation programme. "It's not currently on the table," she said.
Kosvogiannis, who will run Melia Braco Villiage as its general manager, said Monday that his estimated cost per room of US$200,000 for the expansion was inclusive of each room's share of public areas, and that NIF would be responsible for the funding of any expansion or upgrades over the life of Melia's contract.