£5.65M HOTEL THAT STANDS HALF EMPTY
Loss-maker on isle with worst airport
A LUXURY hotel on an island subsidised by UK taxpayers has received £5.65million in public cash as it stands half empty.
The Mantis St Helena has struggled to bring in guests since it opened in 2017 along with a £285million airport Britain helped fund.
The airport was dubbed “the world’s most useless” after it was constructed on St Helena, a tiny British Overseas Territory in the South Atlantic.
Big planes could not use its windswept runway and those serving it from South Africa, 2,000 miles away, had to be near-empty to avoid crashes.
Now it has emerged the luxury hotel owned by the St Helena Government (SHG) is still struggling for guests.
The hotel, which has 25 rooms and five suites, charges £225 a night. And a report revealed that during a sixmonth period, occupancy rates were only 50% of what had been forecast.
Last week £200,000 more was earmarked to subsidise it, bringing the total spent by the St Helena Government to £5,853,000.
Its private operators, the Mantis Group, are still receiving £36,000 a year to run it. A report before the island’s legislative council revealed the SHG is looking to offload the hotel, which it has described as a “significant burden on public finances”.
The report read: “Reasons for the hotel operating losses are well documented, including a high cost and inefficient workforce structure, high utility costs and low room occupancy.”
Chief Auditor Phil Sharman added: “SHG demonstrated evidence-based decision-making when pursuing this investment, however was ultimately let down by overoptimistic forecasts.”
The SHG blamed flawed predictions of an influx in visitors that the UK’s Department for International Development said would take place.
The report said: “These tourism projections should no longer be used as a basis for decision-making.”
A separate UK-based report said there were forecasts of up to 29,000 visitors a year within two decades to the island, which has a population of around 6,000.
Between April 2019 and March 2021 the UK Government will give a further £32million in aid to St Helena.
Another £15million is scheduled for investment in economic development.
About half the island’s day-to-day spending comes from UK aid while the rest is generated locally.
The DfID said tourism had been increasing before it was disrupted by the coronavirus crisis, adding: “The UK Government recognises its duty to support its overseas territories.
“We’re helping St Helena to build up its tourism industry to support the economic future.”