Hilton Garden Inn Gaborone, Botswana – Gaborone, Botswana

Project description:

Our Client, a fixed property manager to the Botswana Public Officers Pension Fund, was considering an investment into a mixed-use development situated in Gaborone’s Central Business District. One of the elements incorporated in the mixed-use development was a 150-key hotel.

At the time of Horwath HTL (South Africa’s) appointment, the Client was contemplating the appointment of Hilton Worldwide to manage the hotel component under the Hilton Garden Inn brand. Horwath HTL’s South Africa-based office was appointed to undertake a review of the indicative financial projections prepared by Hilton Worldwide in respect of the proposed hotel component and the hotel management agreement drafted by Hilton Worldwide.

Horwath HTL solution: Horwath HTL (South Africa) reviewed the indicative financial projections prepared by Hilton Worldwide and engaged with Hilton Worldwide with regard to the underlying assumptions employed in indicative financial projections. We also undertook a benchmarking exercise against known industry standards in order to confirm to the Client the reasonableness of the projections. Horwath HTL (South Africa) also reviewed and provided feedback to the Client regarding the commercial terms set forth in the management agreement presented by Hilton Worldwide.

The Client sought third party affirmation of the reasonableness of the indicative financial projections in order to motivate the investment and funding decision to their Client, the Botswana Public Officers Pension Fund.

Furthermore, our Client had not previously engaged with a hotel management company and therefore sought third party review of the commercial terms outlined in the management agreement. To this end, we provided the Client with our view regarding the fairness of the management agreement, and of particular concern to the Client, was that the Client was afforded favourable terms with regard to the operator’s obligations and the owner’s rights.

Project status:

The Client entered into a management agreement with Hilton Worldwide and the Hilton Garden Inn Gaborone, which is currently under construction, is scheduled to commence operations in 2018.