Court injunction stops auction of troubled hotel

Snowcrest Hotel has been closed down due to a fall in business and failure to repay loans issued for its construction. Its woes have been compounded by road works along Arusha-Moshi Road now under construction, which has made the facility virtually inaccessible. PHOTO | THE CITIZEN REPORTER

What you need to know:

  • Reports that have reached The Citizen have it that the High Court in Dar es Salaam has stopped the sale of the outfit, which has not been operational for months.

Arusha. The sale of troubled Snowcrest Hotel in Arusha through an auction has been put on hold as a result of a court injunction.

Reports that have reached The Citizen have it that the High Court in Dar es Salaam has stopped the sale of the outfit, which has not been operational for months.

The hotel, located at Kwa Ngulelo along the Arusha-Moshi Road, which was opened in December 2009, has been performing badly in business in the last few years

Its closure has been associated with failing to pay back money sourced from creditors for its construction, mainly the PTA Investment Bank.

Sources further confided that the sale, which was scheduled for last weekend, could not take place following the High Court’s injunction in Dar es Salaam that was communicated to brokers. Allan Mollel of First World Investment Court Brokers, who was to oversee the sale of the hotel, confirmed the injunction.

“We have just received a letter from the High Court not to continue with the exercise because the hotel owes PTA Investment Bank $ 3.5 million, which used for its construction, but has not been repaid,” he said.

He added that he was in Dar es Salaam to present to the Court all documents concerning the facility, which other sources said the hotel owed also Sh400 million to the National Social Security Fund (NSSF) being the workers’ benefits.

“I am with all project files,” he said, without saying, who was behind the court injunction to stop the sale of property. A senior official of the NSSF in Arusha said recently they had expected hotel buildings to be sold to recover Sh400 million the company owed NSSF. This includes terminal benefits for workers it employed for the first five years, when it was fully operational until 2014, when it its business started dropping sharply, leading to its closure.

“We want PTA Investment Bank to speed up the sale so that we can also recover our money,” the official with NSSF told The Citizen.

Snowcrest is one of the two major hotels recently reported to have been considered for sale by its operators, the other being Mt Meru Hotel.

While details on the proposed sale of Mt Meru are still scanty, Snowcrest’s closure mirrors the downward trend in the hospitality industry in Arusha following a decline in the number of meetings and to slow down in tourist arrivals.

The hotel, located five kilometres from down town Arusha, had its wall demolished two days after it was launched by President Jakaya Kikwete on December 18, 2009.

A concrete barrier build in front of it was pulled down by the National Road Agency (Tanroads) on grounds that it was erected within the road reserve.

Later on, it was faced with stiff competition from some newly-built hotels or refurbished outfits such as the massively renovated (at the cost of $24 million) Mt Meru Hotel which was also opened by President Kikwete in December 2010.