Tanzania sells its stake in disputed Embassy Hotel The Embassy Hotel in Dar es Salaam. Before privatisation, Tanzania had 15 hotels and game lodges under the state-owned Tanzania Tourist Corporation. Photo/LEONARD MAGOMBA By WILFRED EDWIN and JOSEPH MWAMUNYANGE THE EAST AFRICAN Posted Sunday, October 19 2008 at 09:48 One of the most problematic privatisation transactions in Tanzania - the sale of the once-famous Hotel Embassy - is set to be concluded as it emerges that the hotel that has not been operational for almost five years, has at last been offloaded to a third party. The EastAfrican has learnt that the government has sold off its shares in the Dar hotel to Messrs Karmali Juma, a joint venture partner in the hotel. The development now sets the stage for another round of litigation between workers who were declared redundant and the new owners of the former state-owned hotel. Jointly owned by three investors, Hotel Embassy has not been operating due to a protracted court case between workers who were declared redundant and the owners. The matter is still pending at the High Court. Investigations by The EastAfrican have revealed that the government has sold off its 40 per cent shares to Karmali Juma & Sons at a price of $538,640. In the previous shareholding structure, Karmali Juma's interests in the company were represented by K.J Motors. Both the government and K.J Motors owned a 40 per cent stake in the hotel, with Kibo Hotels owning another 20 per cent. Joseph Mapunda, public and regulatory manager for the Consolidated Holdings Corporation, which oversees privatised public enterprises, told The EastAfrican that the sale agreement would soon be signed off, declining to disclose a clear time frame. The estimated current value of the hotel stands at $1.3 million, taking into account the location and the assets. When the deal is finally concluded, Karmali Juma & Sons will now assume a majority 80 per cent share. In the first ruling of the battle before the Industrial Court, the workers won the first round, with the court ordering the employer to pay arrears, including for the period when the hotel had remained closed. However, the employer disputed this and appealed at the High Court challenging the ruling of the Industrial Court. With the parties deadlocked, the workers have been lodging suits and counter-suits with little success. At one stage, the workers were appealing against what the courts had awarded them, insisting that the amount be revised upwards. This came at a time when their employer had said he was willing to withdraw the case and settle matters with the former employees. At one point, a senior retired trade unionist is said to have tried to broker informal negotiations between the parties. Before privatisation, Tanzania had 15 hotels and game lodges under the state-owned Tanzania Tourist Corporation, which accounted for two-thirds of the country's tourist-class accommodation. The game lodges - which included Novotel Mount Meru, Lake Manyara Hotel, Ngorongoro Wildlife Lodge, Seronera Wildlife Lodge, Lobo Wildlife Lodge, Mikumi Wildlife Lodge and Mafia Island Lodge - had a total bed capacity of 1,500. The first six lodges were awarded to Mauritius-based Hotels and Lodges Ltd, which placed a top bid of $28 million, ahead of other leading international hotel groups, whereas Mikumi Wildlife Lodge was awarded to a local investment firm before it was gutted by fire. Most of the state-owned hotels were operated under the government-owned National Development Corporation in co-operation with private investors. This was mainly through equity fund and loans. The first state-owned hotel to be opened in the country was Kilimanjaro Hotel (now Kilimanjaro Hotel Kempinski), which commenced operations in 1965. Other hotels that were owned by the government but are now in private hands were Bahari Beach Hotel, Kunduchi Beach Hotel, New Africa Hotel, all in Dar es Salaam, and Tanzania Wild Safaris Ltd and a beach hotel in Zanzibar.