Sofitel Philippine Plaza workers will get nearly P300 million in separation benefits–hotel owner

PHILIPPINE Plaza Holdings Inc. (PPHI), which owns Sofitel Philippine Plaza, has allocated some P230 million to P287 million for separation benefits of its 500 employees. The hotel, completed in 1976 in time for Manila’s hosting of the International Monetary Fund-world Bank meetings, will be closed at the end of business hours on June 30, 2024.

In an interview with the Businessmirror, PPHI president Esteban Peña Sy said, “We are giving the employees more than what was provided in their union’s CBA [collective bargaining agreement]. It’s about US$4 million to $5 million.” He added that skills training will be provided to the separated employees in the “next month and a half, so we can better equip them, and we’ve also talked to DOLE [Department of Labor and Employment] to help in their placement, as well as the PHOA [Philippine Hotel Owners Association].”

With the current workers’ shortage in the hospitality industry, Peña Sy said the company is hopeful that their separated workers “will find jobs easily. We’re also asking Accor, because we have very good employees, maybe if they need workers in their other hotels abroad, to hire our separated employees .” international hospitality chain Accor has been managing the hotel since 2006, with its management contract renewed every five years.

‘An uncertain future’

THE PPHI executive confirmed BUSINESSMIRROR’S story that they are asking for an extension on their lease contract with the Government Service Insurance System (GSIS) for another 25 years, after its current contract expires in 2041. The pension fund for government workers owns the land on which Sofitel Philippine Plaza stands. (See, “Sofitel owner wants 25 years more on its lease with GSIS,” in the Businessmirror, May 10, 2024.)

He could not say, however, what the future holds for the iconic hotel, where dignitaries like US President Barack Obama, former US Secretary of State Madeleine Albright, and celebrities such as singer Erykah Baduh have stayed.“to be frank, the future of the hotel is very uncertain, because we don’t own the land. So we are still in the process of negotiating with GSIS, because if we want to renovate the hotel into a good condition, it will take a lot of investments. So the owners of the hotel are calculating, whether they can get their invested money back in a few years or what.”the proposed renovation will cost “roughly $150 million” or P8.6 billion ($1:P54.7) “so the owners are requesting if the lease on the land can be extended.”

Closed for ‘safety reasons’

PEÑA SY explained that renovations to the hotel are pressing, after having undergone several mishaps such as burst pipes, stalled elevators and escalators, leaking airconditioners, and a gas leak at its restaurant. “In the past two years, so many incidents have happened already. In fact, last September, we had to evacuate more than 1,000 guests and transferred to other hotels because the water pipeline burst. So, we want to close for safety reasons.”

He described the closure as “sayang [a wasted opportunity],” considering business has been doing well, with 80 percent of the 600 rooms occupied. But safety auditors contracted by PPHI confirmed that the“buildings are too old, defects are existing.” The stateowned Occupational Safety and Health Center, he added, had also said that “preventive and precautionary measures need to be adopted, as we cannot afford accidents.”

PPHI is fully owned by Allied Kajima of Hong Kong, a 50-50 joint venture between Allied Group of Hong Kong and the Kajima Group of Japan. Last year, GSIS President Jose Arnulfo“wick”ve los oh ad proposed swapping the fund’s future lease income with shares in the offshore development arm of Kajima and Allied.“this was only mentioned by President Veloso but there was no serious discussion yet. Maybe that will come later. I’m not very sure about this one,” said Peña Sy.

A government source told this paper that GSIS is asking for an “increase” in lease terms to protect its members. PPHI still has 17 years left on its lease contract with GSIS.