Intercontinental Group Threatens To Pull Out Of Nigeria

The InterContinental Hotels Group (IHG), the multinational hotels company headquartered in the United Kingdom, has threatened to pull out of Nigeria by January 18 over a breach of contract and huge debt owed it by the receiver/manager appointed by Skye Bank Plc.

The IHG, which entered into a international management agreement with Milan Industries Limited, owners of InterContinental Hotel Lagos, in January 2012, had in a notice of termination of the agreement dated January 3, 2018, expressed its displeasure with Messrs Kunle Ogunba who was appointed the receiver/manager by Skye Bank following an interim court order.

Should the British hotels group make good its promise, hundreds of Nigerians working for the Lagos hotel may find themselves without jobs.

According to the IHG, “We had, on various occasions, engaged the receiver/manager to ensure the proper management and operation of the hotel as part of IHG’s global hotel network.

“Despite multiple letters issued to the receiver/manager and Milan dated May 18, 2017, June 1, 2017, June 14, 2017, July 18, 2017, October 31, 2017, November 12, 2017, December 15, 2017, requesting the cooperation of the receiver/manager with IHG in order to ensure that the hotel maintains its operating licence and to avoid a material breach of the agreement, a significant amount of fees outstanding in the sum of $3,142,324/NGN995,223,818 owed to IHG remains unpaid and continues to accrue on a daily basis.

“Furthermore, Clause 16.1 empowers IHG to terminate immediately the agreement upon the appointment of an administrator or receiver over the assets of Milan, whereupon the marks, licence and software licence granted for the use of Milan by IHG shall cease; access of the hotel to IHG’s reservations system will be suspended and the management and operation of the hotel by IHG shall terminate.

“Take note that this letter formally serves as notice of termination of the agreement with effect from January 18, 2018.”
The Milan Group, an Indian family-owned conglomerate with over 40 years of trading in Nigeria, had taken a facility from Skye Bank to part finance the five-star hotel located in Victoria Island, Lagos, and managed by IHG.

The Milan Group, it was gathered, had up till 2021 to pay back the facility but in a curious move, the bank obtained an interim order to take over the management of the hotel.

The takeover did not go down well with IHG, which has severally complained about the manner the receiver/manager has been going about the assignment, culminating amongst other issues: “Failure to pay in full and on time all amounts due to IHG,” developments the British hotel group considers a fundamental breach of the existing agreement.

The IHG also complained in an earlier letter dated December 26, 2017 that it was “highly concerned that the hotel’s payroll has been suspended until after the Christmas holidays”.
“This is a further breach of the agreement, and we insist that all relevant payments are made to hotel employees immediately,” the hotel group said.
IHG further complained that the service delivery level was being impaired by the omissions highlighted in its letters.

Attempts to reach the receiver manager, Ogunba, proved abortive, but a source close to his law firm informed us that IHG was trying to blackmail both the bank and the receiver manager.
The source said the group had become a leach to the hotel, adding that since the law firm took over the hotel as receiver manager, it had paid the group N173 million.

He said what IHG had failed to acknowledge is that the resources from the hotel can no longer sustain its operations, wondering why the group was always demanding the little the hotel makes.
“They want to use blackmail to get an unfair advantage over the resources of the organisation and that is not fair,” the source said, adding that whatever the grievances, they would be resolved.
“We are currently engaging them in order to resolve the issues,” he noted.

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