Airport deal settles old property row

Gov’t and Grupo Barcelo agree to jointly build a new airport in San Rafael del Sur to settle differences over ’93 land deal

The government of Nicaragua and representatives of the Spanish hotel chain Grupo Barceló announced on Wednesday a joint venture to build a tourism airport at the Hotel Barceló Montelimar, in the central Pacific municipality of San Rafael del Sur.

The tourism airstrip—the first that will build on Nicaragua’s Pacific coast—will be 75% owned by the government and 25% owned by Grupo Barceló, which operates two hotels in Nicaragua.

Tourism Minister Mario Salinas said the new airport will mean more tourists and possibly more international flight connections.

“With this new airport tourists can arrive directly, not only from within Nicaragua, but also on direct flights from other Central American countries, from Costa Rica, El Salvador, Guatemala or Panama,” Salinas said, according to official media.

The beach at Barceló Montelimar (photo/ Tim Rogers)

Nicaragua’s polemic attorney general also celebrated the agreement.

“The new airport will help tourism and help development in the Pacific coastal zone of our country,” said Hernán Estrada, who signed the accord on behalf of the government. “This will contribute to everything we have been doing in the past years, which is promote tourism and investment and promote judicial security for private businesses and also for the state of Nicaragua.”

A negotiated settlement?

Estrada’s generous assessment of his job performance promoting tourism and judicial security in Nicaragua might not be shared by all foreign investors who have dealt with his office.

Indeed, just four years ago Grupo Barceló claimed it was being “harassed” by the attorney general’s office after Estrada put a lien on the all-inclusive resort, claiming that the Spanish hotel company was in arrears with the Nicaraguan government for not paying in full for the property.

The original hotel facility, located on a sprawling beach property confiscated from the Somoza family during the revolution, was built by the Sandinista government in the 1980s to provide a socialist beach getaway.

Three years after the Sandinistas were voted out of power, the property was sold to Grupo Barceló for $3 million. Fifteen years later, when the Sandinistas returned to power, they contested the 1993 sale, calling the price that was paid for the hotel “ridiculous.”

Estrada argued that the $3 million paid in 1993 was meant to be a down payment and the rest was to be paid with 10 annual installments from 1996 and 2006. At the very least, Estrada argued, the hotel owes Nicaragua $1 million in back taxes. President Daniel Ortega went so far as to threaten expropriation if the hotel didn’t pay up.

Grupo Barceló cried foul and claimed the Sandinistas were wrong on all counts. The Spanish hotel chain said the deal they made in 1993 was to buy the entire property for $3 million, a fair price, they said, for a war-torn country with no infrastructure or tourists to put in the rooms. In addition, Barceló’s lawyer, Tomas Delaney, argued that the hotel had paid more than $9 million in taxes since 1993. He said the hotel company didn’t owe the government anything else.

Delaney said in a 2008 press conference that Grupo Barceló felt like the Sandinista government was treating them “like delinquents.”

Now, the new joint venture to build an airport in San Rafael del Sur (presumably where Somoza’s old airstrip used to be) appears to have settled the dispute between the government and the hotel group.

“This is an important day because it puts an end to the differences, which were resolved in benefit of everyone,” said Spanish Ambassador León de la Torre Krais.

 

  • Joe Jones

    I’m surprised an agreement was reached. Grupo Barcelo is a world resort developer and took a chance in buying the property in the first place. They converted into a beautiful destination resort and the Nicaraguan government almost took it away from them. I wonder what kind of “deal” was really made?

  • Hal

    I’ve been to the resort three times in the past 5 years. It is, indeed, one of Nicaragua’s great destinations. I love the place. The staff are excellent. I truly hope this agreement settles — for a very long time — any issues between the resort and the government. This is the right direction for the government, a direction I hope they never turn back from.

  • Kelvin

    This deal was inked back in June 2009 when a clause in the $30 million breach of contract settlement stated that “within 5 years of the settlement, an international airport must be built near the tourist area of Montelimar”. In fact, the clause also said that “the settlement agreement is invalid if they don’t”.

  • Martin

    That Hotel belongs to the Somoza family, the Sandinistas sold it to Barcelo illegally. I wonder who is going to sell Ortega’s stuff and to whom?

  • Michael

    It seems odd to do an international airport at Montelimar because it is only an hour drive from Managua. Also, besides Montelimar is there enough tourist attractions there to justify an airport? Maybe with Grupo Mariana putting in a beach resort but even that is a few years out. Seems like it would make more sense to put an airstrip in Rivas first.

  • ???

    Why on earth would they build an airport there? Out of all that Nicaragua lacks in tourist infrastructure, it boggles the mind that such emphasis is placed on these airport projects ie Ometepe, Gre/ay town, and now this, Montelimar. Seriously? Who charters in to an $80 a night, all you can muster to eat, all the warm beer you can drink, 30 year-old dive resort?
    No comprendo.

  • wilson

    I think more hotel investment will follow. It seems like Nicaragua tourism is very hot with the new ad campaign creating excitement. Maybe more large hotel chains will follow the excitement. It would be good to have the big brands for credibility and for a place for my expat friends to stay.

  • Jose

    The biggest problem in Nicaragua is that the guerrilla people who ruled the country in the 80′s and destroyed the whole economic infrastructure, steeled a lot of land from original owners and they have illegally sold the stolen lands (same parcels of land) several times to different persons, using corrupted judicial judges. Montelimar resort was built in land that belongs to Anastacio Somoza and it was stolen by the corrupted guerrilla regime. Therefore, buying land in Nicaragua is a very risky business because once you have paid, you will find out that the property you purchased will be, also, claimed by 10 more people then, and if you try to settle it down through the judicial system then, it will never be resolved because it is controlled by the same corrupted guerrillas people whom now, they are part of the organized drug cartels.Then, “investors” end up forgetting about the dispute and choose to loose their money instead of their lives.

    It has happened to hundred of foreign buyers of land down in Niucaragua.

    Before engaging in the very dangerous business of investing in Nicaragua, please read the US Dept. of State Commercial guide for Nicaragua.

    • http://www.accreditedbiz.com Andy William

      People who lost land during the 80s may obtain relief through the reclamation process. There is no evidence, or even a leaning, that there will be any type of repeat of that situation.

      It is clear that the administration has grown up and realizes that it can achieve success through moderate programs and avoiding conflicts with business. The present administration has not been harmful to businesses and has welcomed economic expansion.

      We believe that Nicaragua continues to hold myriad investment opportunities. Unwarranted fear should not be a factor when making these decisions.

      • Kelvin

        Andy, then please explain incidents like Punta Teonoste, or the Italian Matteo Cardella Costa, or the ex CR Diputado Luis Alejandro Román Trigo (and his border property of 768 manzanas) and Lomas del Vigía/Alto Iris S.A. SJdS.

        Big stories in the press these last few weeks and bad publicity.

        Of course Nicaragua continues to hold a myriad investment opportunities, but so do other countries that we are competing with.

        Any fears after reading these stories are not unwarranted. They are absolutely warranted by anyone doing due diligence as an investor, especially one with fiduciary responsibility for other peoples money.

        Anyone reporting back to “The Board”, so to speak, could not and cannot ignore some of these incidents.

  • Old Hand

    Have to agree with Kelvin. And he lists only a few of the many incidents. When you lie down with dogs, you get up with fleas. It’s that simple. Be careful, Barcelo.