Selmun Palace Hotel sale – third time’s the charm?

Contacted by MaltaToday, General Workers’ Union Hospitality & Foods section head Josef Bugeja confirmed that talks have been held between the government and the union on the way forward for Selmun Palace Hotel Company Ltd, a fully-owned subsidiary of Air Malta.

It will be the third time that the government attempts to sell off the hotel - that employs roughly 58 workers - to private operators. The first attempt in January 2010 fell through because the sole bid tabled was deemed too low. The second attempt, later that year, was aborted when the bidder did not conform to tender requirements.

On Tuesday, Bugeja confirmed that government intends to re-open the possibility to sell off the hotel to private investors, adding that the decision was communicated to the GWU during meetings held on Friday 25 February.

Bugeja said that during meetings held between himself, Kevin Camilleri, GWU secretary-general Tony Zarb, and Air Malta management – which included Air Malta chairperson Sonny Portelli – it emerged that government already knows of two buyers potentially interested in making a bid for the company. “He didn’t elaborate on who these contacts are,” Bugeja added however.

Bugeja also confirmed that the possibility of the third disposal attempt falling through was also discussed – and the employee’s future in that scenario. “I asked Portelli point-blank: does Air Malta intend to absorb the hotel’s workers in the same way that Air Malta’s excess workers might be absorbed by the public sector?”

“He however assured us that the intention of both Air Malta and the government are that workers will not bear the brunt,” Bugeja said.

He added that the sale is likely to take place within the coming months, within the same timeframe as Air Malta’s overall restructuring process.

The airline, which announced losses amounting to €31 million in 2009 and is currently undergoing emergency restructuring efforts, decided in 2010 to sell non-core operations and focus solely on the airline business. One of the conditions for Selmun Palace Hotel’s sale is that the bidder purchase Air Malta’s entire equity in the company.

Selmun Castle, originally built by the Knights of St John in 1783, was being offered along with the hotel on a temporary emphyteusis for a period of 99 years against a ground rent of €70,000 a year. The castle houses some of the hotel suites as well as being the venue of weddings and other functions.

The first attempt to sell off the hotel and the temporary grant over the castle fell through in January, as the sole bid received stood at €2,012,556. It was turned down because it was deemed too low, as government decided to raise the price tag to €8.4 million.

Later that year, subsequent attempts to dispose of Selmun Palace Hotel and the 18th century castle again fell through after the only two bids received fell short of requirements.

When the second call for tenders closed in April, the Land Department had received two bids, from Caterina Vitale Company Ltd and Orbis Group International. The former submitted a bid of nearly €8.6 million (just above the minimum required) while the other company did not specify how much it was offering.

However, Caterina Vitale Company Ltd’s bid was not accompanied by a €150,000 bid bond, as required in the tender document, resulting in the process being aborted. At the time, government did not dismiss the possibility that a third attempt could be on the cards.