Is Hilton taking advantage of shareholders disputes to rebrand Ubumwe Grande Hotel?

By Jean d’Amour Mugabo
On 16 October 2017 at 08:56

Hilton Hotel, a global hotel franchise, is putting final touches on the deal to rebrand a Kigali city-based Ubumwe Grande Hotel to DoubleTree despite unresolved disputes among the property’s shareholders who are following legal procedures.

Media reported the disputes after the hotel opened in September last year as Ubumwe Grande Hotel while it was developed as Zinc Hotel, a brand introduced by CG Corp Global which holds the majority shares and was contracted to manage the 153-rooms hotel for 15 years.

Despite the reports on the disputes, Patrick Fitzgibbon, Hilton’s Vice President for Europe, Middle East and Africa, told the media on Wednesday that he has no information about the disputes in the facility he confirmed last week to be rebranded under the upscale DoubleTree by Hilton starting next year.

During a press briefing on the sidelines of African Hotel Investment Forum (AHIF) in Kigali on Wednesday, IGIHE’s reporter asked Fitzgibbon if he is aware of the ongoing disputes in the facility he is preparing to acquire and he answered, “I have no information about that. Go to ask those who told you that.” “I am sorry,” he added when the reporter tried to inquire more.

Was he deliberately lying to media? Pretending to have never heard of the disputes? Or is Hilton ignoring the case which has been under court of law since last year?

Being referred to shareholders, IGIHE looked for Rahul Chaudhary, Director of CG Hospitality Holdings Global who is overseeing the businesses of his father, Binod Chaudhary, a Nepalese billionaire who owns CG Corp Global. Rahul revealed that he has always informed Hilton management starting November last year when he talked face to face with Fitzgibbon and alerted Fitzgibbon of the news reports highlighting the ongoing disputes and his family’s part ownership of Ubumwe Grande. Rahul was also attending the AHIF which ended on Thursday at the Kigali Convention Centre.

Shortly after the interview, CG released a brief statement on Hilton and Ubumwe Grande news expressing their disappointment in the developments.

“It has recently come to the attention of the CG Hospitality Holdings Global (CG) that Hilton may have entered into a franchise or management agreement for the Ubumwe Grand Hotel. This information came as a surprise and disappointment to CG,” reads part of the statement which went on stating,

“At no time has CG been made aware of any negotiations for such a deal despite (1) CG’s status as a representative of the majority shareholder in the company that owns the Ubumwe Grand Hotel and (2) ongoing disputes relating to the management of this hotel, which have previously been reported on in the press. CG is seeking legal advice in relation to these developments.”

Essence of the disputes

The $40 million Ubumwe Grande Hotel is owned by three partners namely CG Corp Global and the Mukwano Group who own a combined 80% stake; and Robert Bapfakurera who owns a 20% stake, The East African reported last October.

The hotel, which was part of a global chain, Zinc, owned by Nepalese billionaire Binod Chaudhary, changed its name to Ubumwe Grande before it opened the doors. Mukwano Group changed the hotel’s name when it neared completion despite a court order barring it from doing so and cancelled the management contract of the hotel without the consent of Zinc, the company contracted to run the hotel for 15 years.

CG Corp Global/Zinc went to Nyarugenge Commercial Court to nullify the cancellation of the management contract but Mukwano appealed the decision at the Commercial High Court. According to Apollo Nkunda, the lawyer representing Zinc, the Commercial High Court ruled that the case be reviewed.

Despite the disappointment in his first investment in Rwanda, Rahul said CG Corp Global is still seeking to grow businesses in Rwanda and the region.