Corinthia Agrees To Pay €1 Million To Local Councils As Part Of Six-Star Hotel Project In St George’s Bay
Cover photo: IHI’s design for themed suites as part of its proposed six-star hotel project
The Corinthia hotel chain has agreed to pay €1 million to the Pembroke and St Julian’s local councils as part of its conditions to develop a luxury hotel and residency complex in St George’s Bay.
This payment forms part of the €51.4 million in compensation that the International Hotel Investments (IHI), which owns Corinthia, has agreed to pay the government in return for the lifting of a waiver which forbids them from building residences on the land.
This social corporate responsibility didn’t form part of an initial memorandum of understanding that the government and IHI signed back in 2015 but was included in a presentation the Tourism Minister Konrad Mizzi showed a parliamentary committee last week.
“Since being tasked with taking this project forward in 2017, the Ministry for Tourism has reengaged in fresh negotiations with Corinthia,” the presentation reads. “These negotiations have brought considerable improvements on the agreed conditions of the 2015 MOU.”
Indeed, the €51.4 million in compensation represents a significant improvement from the €38.7 million listed in the MOU of three years ago.
IHI plans to replace the Corinthia and Marina Hotels and the adjacent Radisson Blu Hotel, which it bought in 2015, with a six-star hotel targeted at luxury-seeking tourists and a five-star hotel targeted at business travellers, as well as residences, underground parking and luxurious leisure, entertainment and retail outlets. More than half of the site will be landscaped “so as to ensure a luxury environment over the whole of the peninsula”.
These plans have long been in the pipeline but required the renegotiation of the deeds which IHI had entered into with the government during the early 1990s. The government back then was seeking to boost tourism to Malta and therefore granted public land to IHI at a favourable price but subject to the condition that the developments are touristic in nature.
However, times have now changed and IHI wants to use its land to build residences and commercial outlets while the government’s vision for tourism has branched into attracting more wealthy high-spending tourists.
“The government’s vision is to attract higher-spending tourists and to target the US, South American, Chinese, South Korean, Japanese and Indian markets,” Konrad Mizzi’s presentation reads. “Indeed, arrivals from the US increased by 30.9% in 2018 and offers significant potential.”
“The [Corinthia] project tallies with the government’s vision to head towards a more qualitative level of tourism based on value rather than volume, through the creation of a six-star luxury environment, so necessary for Malta.”
Mizzi added that the project will have multiple tangible benefits to Malta – including the spillover economic benefits of high-spending tourists and the addition of 220 new full-time jobs.
The Corinthia Hotel in St Julian’s
The land’s market value, used to calculate Corinthia’s compensation, was calculated by audit firm Deloitte, using the same formula it had applied when determining the land value of the adjacent Institute of Tourism Studies prior to its sale to the db Group.
The db Group, which also plans to build a luxury development, has argued that the formula resulted in it paying a historically high price per square metre of public land for a major project.
Now that the government and IHI have come to an agreement, the proposed revision of the deed will be discussed in parliament ahead of a potential parliamentary resolution.
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