Douglas stands by Outameni investment
NHT expects attraction to break even in three years
Tameka Gordon, Business Reporter
National Housing Trust (NHT) is projecting that its newly acquired attraction Outameni Experience will break even in its third year of operation, by which time the business is expected to be turning over $50 million in annual revenue.
The Trelawny-based property, in which NHT will invest another $111 million over three years atop the $180 million acquisition price, aims to tap income from student tours as well as cruise and stopover tourists.
Close to two-thirds of revenue in the first year is projected to come from tourists, while educational tours and special events make up most of the rest.
Documents obtained by Sunday Business indicate that the NHT based its "sales forecast" on the attraction company's past income statements and projected visitor inflows from Jamaica Tourist Board. The property was previously owned by Lenbert 'Lennie' Little-White.
NHT Chairman Easton Douglas has described the Outameni deal - which gives the agency ownership of a 10-acre historic property - as a social investment, much like the public park it developed and operates in New Kingston. But the attraction will be operated as a commercial venture.
The deal has been heavily criticised as going outside the agency's remit of providing housing, and as a potential drain on the trust's resources.
The property on which Outameni is located at one time had been on the auction block.
Pressure continues to mount from among business groups and the political Opposition for a probe of the $180 million transaction.
"As a privately owned asset, the property has proven to be a loss-making entity, despite repeated efforts to make it a profitable tourist attraction," said the Private Sector Organisation of Jamaica (PSOJ).
"It is questionable to now think that the Government, which generally has fewer management resources than the private sector, will now be able to bring the company to profitability. This will lead to continual losses accruing to the NHT," the PSOJ said last Thursday in its release.
Earlier last week, NHT Chairman Douglas told Sunday Business that he stands by the deal.
The decision to buy the loss-making attraction was "a clear and well-considered investment", he said on Monday, while noting that leaks about the deal were akin to "mischief" that could hurt the trust's reputation.
Subsequent revelations indicated that some on the NHT board had raised questions about the transaction.
NHT expects to earn revenue of about $33 million from Outameni in 2015; $42 million in 2016 and $51 million in 2017.
Stopover tourists - that is, those who buy accommodation at hotels and other properties - are projected to spend $2.376 million in year one, rising to $2.8 million by 2017.
Cruise ship passengers are expected to bring in another $18.622 million for 2015, and $22.537 million by 2017.
And locals and Jamaicans visiting from overseas are projected to spend $2.234 million in year one, and up to $6.932 million in year three of operation.
Over the same periods, events will bring $6.455 million and $10.866 million; and school tours $3.234 million and $7.632 million, respectively.
Under the NHT plan, the Orange Grove Great House will be the first to be refurbished and reopened at a cost of $30 million, and projected operating costs thereafter of $8 million. The great house operation is projected to break even in year four.
A children's fun village to be staffed by eight is to be added to the attractions at a cost of $20 million. Operating costs for the village is projected at $6 million per year.
Douglas said previously that the NHT may also develop some housing on the property.