Majorca Property News

The Curse of the Palacio de Congresos de Mallorca

Barceló Group, awarded the construction project, suspended the works and waiver of the issue by "legal and economic insecurity."


The future of the Palacio de Congresos de Mallorca is reeling after the concessionaire company, controlled by 95% by the hotel chain Barceló, made public on Thursday, leaving the project because "the legal and economic insecurity," which does not make it "viable." Barceló has ordered construction to halt temporarily the Acciona June 5 construction work.

For its part, the board of the public enterprise of the Palace of Congresses, which met yesterday, has given the firm to continue the work and ensured that they have not generated any additional cost to the initial budget.

The genesis of the conflict dates back to late 2006, when the Balearic Government, then headed by Jaume Matas, has opened a tender to build and operate the future conference Mallorca.

The grant was awarded in February 2007, a society in which Barceló Group participated with 50%, while the remaining 50% was shared between several partners: Globalia (20%), Sampol (15%), Iberostar ( 10%) and Acciona (5%), whose participation would be gained by Barceló when complete works in 2011.

Solares
The initial project included the construction of the Palace on three lots, property of the Council of Mallorca. "When we were going to deliver the works to start, it was discovered that one of them was owned by an individual, who is going to do a swap with other solar Consistory," explained sources Barceló. However, "the public interest expressed by the Administration to start work as soon as possible and expressed willingness to resolve the irregularity" provided a guarantee to go ahead with the complex.

With the construction underway, there was a series of modifications to the project, which basically were that it would be done in two lots and not three as originally planned.

"We had to re-build the project because only two sites involved in dispensing with one of two hotels and the planned reduction of parking spaces, and consequently a decline in revenue that would have as much as the palace at Barceló exploit "claim from the group, which is slowly being left alone in the grant, by assuming the participation of Globalia, Iberostar and Sampol, who left the project.

Almost a year and a half after the award, Barceló has grown tired of waiting and has submitted his resignation. Why? "Although the City of Palma as promised, today the project would not have given a city, so our situation is very fragile," he argues Barceló. But there are also several economic reasons.

On the one hand, that the final budget of the complex was shot and has grown from the initial 125 million euros to 150 million, estimated Diario de Mallorca, which the City Government should assume the concessionaire. Second, delays in payment of the grant of 30 million provided by the Administration. Of the 21 million for the first charge, Barceló has received only 20 million, and the timetable provided for the payment of a second term, of six million, paid in May 2009. Yesterday, Barceló had not received the amount.

These reasons led to the signing hotels to communicate to the Administration, on April 6, leaving the project. Almost two months after the official notification, Barceló Acciona has informed the decision to suspend work. This is a temporary two months in which Barceló expects to resolve this situation.

"A confrontation over a judicial review would delay for six to eight years, thus preventing completion of the project. Our resolve is firm, but we are willing to collaborate to build the palace and to negotiate the exploitation of the complex," says Barceló . Allow me to move on to the government.