THE REQUEST FOR PROPOSAL FOR CRAG HOTEL

Crag Hotel was the first hotel on Penang Hill which is situated on a hilltop at an altitude of 2,400 ft. above mean sea level surrounded by cool, fresh, highland air with 360° panoramic view overlooking the island and mainland. It was first used as a hotel in 1929 and later converted into a boarding school under the name Uplands School in 1955. It fulfilled this function until a sudden increase in rental forced the school to be relocated to Burmah Road in 1977. Crag Hotel has not been utilised since then.

The State Government had issued a tender for the redevelopment of Crag Hotel on 1st June 2009. The tender was closed on September 1, 2009 but later cancelled due to financial and technical reasons. Since then various discussions were held and a decision was made to offer this redevelopment by means of Request For Proposal (RFP). This is to allow for creative and innovative ideas from companies participating in the RFP rather than to be restricted to certain specifications as stipulated in the tender documents.

Today the State Government of Penang is issuing a RFP for “The Restoration, Refurbishment, Redevelopment and Management of Crag Hotel at Lot 100, Mukim 17, Bukit Bendera (Penang Hill), North East District, George Town, Penang”.

This RFP is in line with the State Government’s vision to create a unique and prestigious tourism product that will raise Penang’s profile internationally and transform Penang Hill as a destination for high-value tourists. The Penang State Government wants to unlock the strategic value of state assets to generate revenue through the Public Private Partnership or PPP. Through this initiative, these investors and investments will have a multiplier effect on our economy and boost the tourism industry. This project will in return create job opportunities for our local professionals to gain international experience.

Other government land which are under utilized will be identified its potential and will be proposed for development too. Through this initiative both the State and Federal Government will benefit as income related to tourism industry is indirectly shared by both.

There are certain conditions that have been stipulated in the RFP and will be considered by the State Government. The project will be undertaken on a build – operate – transfer (BOT) concept. The State Government will enter into an agreement with the successful company for a period (30 + 30 years) under terms and conditions to be mutually agreed. The company shall pay to the State Government an amount mutually agreed for that period of 30 years (to be reviewed every five (5) years with an increase of maximum 20%).

Besides the lease period, the amount of investment the company put in to restore, refurbish, redevelop and manage Crag Hotel at Penang Hill would also be considered so that the project would be a unique, prestigious and world class tourism product that will raise Penang’s profile internationally.

The successful company will not be allowed to charge the land in order to obtain bridging finance for the project and is also prohibited from being use as collateral for whatever purposes. The land shall not be sub-leased or transferred to a third party. At the end of the term, the whole project shall be transferred back to the State Government at no further cost.

During the course of the implementation, the successful company will need to liaise with various parties such as stakeholders and other related departments and agencies. Since Crag Hotel is classified as a heritage building (Category II) under The Bukit Bendera Local Plan, the successful company is thus encouraged to incorporate heritage conservation and preservation elements with Green Building Index technology.

All proposal should include information pertaining to the company, the corporate capability, technical capability, financial capability, project to be implemented, project feasibility, physical design of project, the implementation schedule, cost estimates, financing and Return on Investment, tourism and marketing strategies as well as benefits to the State Government.

The State Government hence wishes to invite competent company(ies) to submit their proposals according to the requirements contained in the RFP documents. Since this project will incur huge investments, foreign and local company(ies) having a strong credit backing (minimum paid up capital of USD100,000.00) are eligible to participate. Participant shall bear all cost associated with the preparation and submission of its proposal.

The RFP can be downloaded from the Penang State Government portal at http://www.penang.gov.my/ beginning 1st June 2010 and submitted to the Secretariat by 30th August 2010.

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