Tuesday, April 13, 2010

Banyan Tree ends Bahrain resort deal

Owner allegedly fails to pay $1.12m in outstanding fees

RESORT operator Banyan Tree Holdings has terminated its management contract for the Banyan Tree Al Areen resort in Bahrain, after the owner of the resort allegedly failed to pay Banyan Tree an outstanding debt of some $1.12 million.

Banyan Tree had signed a settlement agreement with the owner, Al Areen Holding Company, in November 2009 to settle the outstanding fees.

However, after Al Areen allegedly failed to make the payment, Banyan Tree then filed a petition in Bahrain in March 2010 to wind up Al Areen Holding for the outstanding amount.

On April 8, Banyan Tree served a notice of intention to terminate the hotel management agreement. The next day, Al Areen took over resort operations, further breaching the management agreement, Banyan Tree said, adding that it will be taking legal action against Al Areen for this further violation of the management contract.

‘A two-week period for orderly termination is required under our management contract,’ said Ariel Vera, Banyan Tree’s group managing director. ‘However, upon issuance of the termination notice, the owner decided to further breach the contract and immediately take over the resort on April 9. This has resulted in infringements on our brand rights, and inconvenience and confusion to our guests and associates, travel partners and suppliers. We have no choice but to immediately cease our involvement with the resort.’

Banyan Tree Al Areen first opened in Bahrain in 2007, after the two parties signed a hotel management agreement in March 2005.

The group said that the termination of the agreement does not have any material impact on the net earnings per share and net tangible asset per share of Banyan Tree for the financial year ending Dec 31, 2010.

Source: Business Times, 13 Apr 2010

No comments:

Post a Comment