Taseco Airs shareholders have approved a plan to terminate an co-investment agreement on A La Carte Halong Hotel.
The divestment was agreed upon at the recent general shareholders meeting, ahead of its scheduled expiry.
Taseco Airs withdrew from the project as its investors had decided to raised the hotel's investment capital to $108 million, and as a result, the company would have to contribute $19.3 million to the project instead of the initial plan of $8.6 million.
In addition, the company claimed such a large-scale five-star hotel with about 800 rooms as A La Carte would exceed the management capacity of domestic hotel company and Taseco Airs.
It is also difficult to avoid significant losses in the first two or three years when the hotel comes into operation despite its expected potential in the long run. The losses would greatly affect the business results of the whole company and short-term investors.
The company's board of directors decided to end the investment contract ahead of its expiry and withdrew the contributed capital of about $6.5 million.
A La Carte Halong Bay is now under construction in Halong Marina - a billion-dollar township project developed by BIM Group in Quang Ninh provincial capital city of Halong.
Wydham Legend is the only international brand hotel in operation in the area at present. However, more hotels are expected to open soon, including a Double Tree by Hilton and a Citadines by The Ascott.
Taseco Airs is operating an A La Carte hotel in Danang that earned over $8 million in revenue and over $1.6 million in after-tax profit last year. However, the company expects a lower revenue of $6 million and profit of $650,000 this year due to stiff competition in Danang hotel market with many more hotels opening.