Grand Hotel du Louvre S.A.

MIGA has issued a €1.8 million guarantee to Louvre International Ltd. of Mauritius to cover its equity investment in Grand Hotel du Louvre of Madagascar. MIGA’s guarantee is for a period of up to five years and covers against the risks of currency transfer restriction, expropriation, and war and civil disturbance.

Louvre International’s project in Madagascar involves the acquisition of Grand Hotel du Louvre, which operates the Hotel du Louvre, and Société Immobilier d’Antaninarenina S.A., which owns the building and land where the hotel is located. Hotel du Louvre is an existing 3-star hotel situated in the heart of the Malagasy capital, within 100 meters of the Presidential Palace and the Ministry of Finance. The acquisition has brought the hotel operating company and the building under the same ownership, which will give the new owners further incentive to modernize and upgrade the hotel.

The current supply of accommodation in Antananarivo, the capital of Madagascar, does not meet the growing demand of tourists visiting the country—up 58 percent in 2004 compared with 2003. The hotel’s target clientele includes business travelers and tourists from France, Mauritius, and Asian countries.

The acquisition, modernization, and expansion of the hotel will provide business travelers and tourists with higher-quality accommodations at a reasonable price. This will have a demonstration effect as other hotels in the city also improve their standards to remain competitive, thereby attracting greater numbers of tourists to the country.

In addition, the modernization and expansion of the hotel is expected to have a number of direct and indirect benefits for the local economy. The expansion of the hotel is expected to create more than 35 permanent jobs, the majority of which will be filled locally. The project is expected to generate an estimated €735,000 in taxes during the next five years.

The hotel will also support the growth of local industries like transportation, food and hospitality, and tour operation. The modernization and expansion of the buildings will be carried out with locally available materials and the local workforce.

MIGA’s guarantee complements Madagascar’s Country Assistance Strategy, which focuses on promoting broad-based growth by encouraging private sector growth in the country. MIGA’s participation in the project is also aligned with several agency priorities, including the promotion of South-South investment exchanges, improving access to financing options for local SMEs, and supporting IDA-eligible countries in Africa.