Susan Gordon, Business Reporter

Dennis Morrison, executive director of the Ministry of Development, said he was unaware of the transaction and referred calls to the Ministry of Tourism.- File

The US$30 million acquisition of Holiday Inn Sunspree Montego Bay died because investors Hospitality Properties Trust (HPT) failed to secure regulatory approval from Jamaican authorities, the company said in filings to the U.S. Securities Regulation Commission.

The acquisition was meant to be the ninth acquisition of a 10-hotel deal valued at US$196.2 million under which the American company would acquire properties operating under brands owned by InterContinental Hotel Group.

"On June 30, 2006, our agreement to purchase the ninth hotel, a 524 room Holiday Inn SunSpree Resort hotel in Montego Bay, Jamaica for US$30 million expired as a result of not receiving certain Jamaican tax and regulatory approvals," said the HPT's June quarter report to the SEC filed August.

"We have mutually agreed with InterContinental to cease pursuing the approvals required to consummate the purchase and we no longer expect to acquire this hotel."

HPT manager of investor relations Tim Bonang told the Financial Gleaner on Wednesday that the court case against a ruling of the Industrial Disputes Tribunal (IDT) relating to attempts at unionising Holiday Inn workers to be heard this month in Jamaica's Judicial Review Court, had no bearing on the investment company's decision.

"In the simplest form, what we were looking for was a consistent and stable tax situation as we are a conservative investor," said Bonang.

"The hotel is outside of the U.S. and so had certain tax implications. We wanted to make sure the situation did not have any taxes going forward, so the closing of the purchase was contingent on the taxes going forward."

Dennis Morrison, executive director in the Ministry of Development, referred calls to the Ministry of Tourism, saying the investor's point of contact would have been there.

Yesterday, communications head of the tourism ministry said it only deals with incentives and concessions and does not interact with hotels at that level, and would not have been involved in the Holiday Inn transaction.

through at their New Kingston offices, but requests to the ministry's Director General for comment were unsuccessful.

Said Bonang: "We were trying to get clarity on the taxes going forward and we couldn't get any clearance."

In a press release in April 2006, HPT had stated as a concern the possibility it may not legally be able to transfer support payments between its properties in other countries.

The investment company owns several hotels worldwide, which it contracts to hotel groups to manage under their brands.

HPT had planned to close the sale on Holiday Inn Sunspree later this year, after which it would lease it back to a subsidiary of IHG to operate.

susan.gordon@gleanerjm.com