Mussa Dankwah writes: Rock City is the Biggest Hotel in Africa?

I have seen many people on social media making this claim and I scratch my head. You can build 5000 room hotels, but what is the occupancy rate and how much money are you making from such a hotel?

In finance, to assess the profitability of hotel, let’s just look at one KPI, TRevPAR,

Total Revenue Per Available Room is the total operating revenue of a hotel that includes the rooms revenue, food, and business revenue., etc. Basically, this accounts for all the means by which your property gains money.

You can calculate TrevPAR by dividing the total revenue of your hotel by its total number of rooms. For example, if your total revenue collected for a day was GHc40,000 and you have 200 rooms then your TRevPAR is GHc200. What is TRevPAR of Rock City Hotel compared to the hotels it was trying to acquire?

Also, those defending the transaction clearly have a problem and am not focusing on the conflict of interest but the financial arrangement for the payment of the shares to be sold to SSNIT. If you read the transaction advisors report and you are a board member and you are happy with it, then you have no business sitting on any board.

I heard the advisor pointed out that Rock City does not have the balance sheet to pay for the agreed amount and you are saying it is the biggest hotel in West Africa.

I have sat on a board for more than 10 years and also serves as the chairman of the finance committee of the board. This kind of transaction will not have passed under my nose and make its way all the way to the main board, it will be dead on arrival. I was not paid the kind of money SSNIT board get paid but I put the company’s interest first at all times but at SSNIT they could not put Ghana’s interest first, why?

As an experienced transaction advisor myself, sometimes, you need to prepare your clients better. Rock City should have known that some questions will arise and they must be able to address those satisfactorily. Build you balance sheet, have liquidity either through profit or equity/debt injection before submitting your bid. Provide your sources of funding for the purchase.

So, on what basis was Rock City shortlisted? How come some of these issues were not stated as qualifying criteria even when the bids were submitted? All these issues raises peoples’ concern about the sale.

By Mussa Dankwah