HOCOSA (EMHOSA III)

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Project Number: 
PR1037A-03
Expected Consideration Date by the Board: 
10/08/2013
Date Posted: 
08/22/2013
Company: 
Hoteles Contemporáneos S.A. (HOCOSA)
Sponsoring Entity: 
Emprendimientos Hoteleros S.A. (EMHOSA)
Financing Requested: 
Up to US$4 million
Sector: 
Hotels and Tourism
Location: 
Asunción, Paraguay
Country: 
Scope Objective: 

HOCOSA is a Paraguayan company created to implement a hotel project involving an estimated investment of US$10 million. HOCOSA will own the future facilities (building, furnishings, and fixtures) housing the Aloft Hotel Asunción. The hotel will be run by Aloft, one of the Starwood hotel chain’s more recent and innovative brands. The hotel will be located in the Eje Aviadores del Chaco section of Asunción.

The project will involve the construction and outfitting of a 15-story building that will house the Aloft Hotel Asunción, a 4-star, 120-room hotel. It will have a total floor area of some 6,900 m2. The IIC will finance approximately 40% of the total investment, equivalent to approximately 62% of the total financing required to move forward with the investment.

Environmental Review: 

Environmental and Labor Issues

This is a category B project according to the IIC’s Environmental and Social Sustainability Policy because it could produce certain effects that may be avoided or mitigated by following generally recognized performance standards, guidelines, or design criteria. The main environmental and labor issues related to the project are: efficient resource use and pollution prevention, workplace and labor conditions, and community health and safety.

HOCOSA prepared an environmental impact study, which it submitted to the Office of Environmental Management (Dirección de Ordenamiento Ambiental del Territorio), under Paraguay’s Ministry of the Environment (SEAM).

Land Use: The hotel will be built on a 1,036 m2 piece of developed land in Asunción that was formerly the site of a building that housed a restaurant (since demolished). The land was purchased by HOCOSA’s shareholders in the real estate market. Therefore, no people or businesses have been displaced. The company opened the project to a public consultation, giving citizens an opportunity to review the environmental impact assessment (Relatorio de Impacto Ambiental–RIMA) and submit their observations, comments, and objections to SEAM and the municipal government of Asunción. HOCOSA engaged the services of the GA&W construction company, which has extensive experience with construction projects of this type. There are already similarly tall buildings in the vicinity of the hotel construction site, and several projects are under way that well exceed the projected height and occupancy capacity of the HOCOSA project. The hotel is therefore not expected to have a significant visual impact.

Origin of Hotel Building Materials, Furnishings and Fixtures, and Human Resources: The policy of the shareholder group is to maximize the use of local materials in the hotel’s construction, limiting purchases of imported articles exclusively to those not available in the necessary quantity or whose quality is not up to standard. Therefore, most of the building materials and a significant portion of the furnishings and fixtures for the rooms are expected to be sourced locally. Most of the personnel hired for the construction and operational phases will also be local. The majority of GA&W’s managers, technical personnel, and other employees (approximately 250 people) are Paraguayan. The managers and personnel in charge of hotel operations (approximately 45 people) will also be local, the only exceptions being any managers that Starwood hires under the management agreement.

Use of resources: The hotel and its operations have been designed to conserve resources and reduce the environmental impact. The architectural design includes bioclimatic features to curb the use of air conditioning, electricity, and lighting, with priority given to high-efficiency LED light bulbs for the latter. The use of materials that minimize environmental liabilities is also encouraged. The refrigerant used in the central air-conditioning system, R-410A, does not harm the ozone layer.

Water Supply and Effluent Management: HOCOSA obtains its water from the public water utility (Empresa de Servicios Sanitarios del Paraguay S.A.–ESSAP). ESSAP does not anticipate water supply problems from the higher local demand stemming from the urban development concentrated around the hotel. As part of the Starwood chain, it will be hotel policy to set water conservation goals, which are built into the design of the facilities. In addition, the hotel will use eco-friendly cleaning products.

Effluents from the hotel will consist of domestic wastewater. During the construction phase, chemical toilets will be used and their maintenance outsourced. During the operational phase, the hotel will have a grease and oil separation system, with wastewater channeled to the local sewerage system. ESSAP has plans to treat the entire city’s wastewater.

Air Emissions: Significant air emissions will be generated only during the construction phase and will consist of the exhaust from machinery motors and truck engines, as well as the dust raised by heavy vehicle traffic over unpaved ground. In order to mitigate these effects, it is necessary to ensure that the vehicles and machinery used are properly maintained and in good working order; engines and motors are turned off when not in use; loose materials are covered with tarps during transport; and roads at the construction site are hosed down. To avoid disturbing neighbors, areas will also be set aside for the storage of loose construction material, which should be protected from the wind and rain to prevent runoff.  In addition, screens will be used to prevent particulate matter from escaping the work site.

Noise: As in the case of air emissions, the risk of noise exposure will be present only during the construction phase, and its mitigation, again, will involve proper equipment maintenance, complemented with the appropriate use of mufflers. Work that generates high noise levels will be scheduled for times when it will not disturb the sleep of area residents. Workers that operate noisy machinery, as well as anyone in the vicinity of that equipment, will have and use the necessary protective equipment. The dust screens will also serve as noise barriers.

Solid Waste Management: In both the construction and operational phases, solid waste management must conform to SEAM standards. The company promotes the sorting of solid waste into recyclables (paper, cardboard, plastic, glass, metal, wood, etc.) and nonrecyclables (primarily organic waste). Recyclables are processed through an NGO, while nonrecyclables are sent to a municipal dump. Hazardous waste handling will take place mainly during the construction phase and will primarily involve the disposal of cans of paint, adhesive, solvents, etc., which will be outsourced to a company specializing in the treatment of solid waste.

Personal Safety and Emergency Response: Fire-prevention and fire-suppression systems comply with the guidelines of the Starwood chain and are based on U.S. NFPA standards. The hotel will be equipped with a sprinkler system supplied by a 48 m3 rooftop water tank, another reserve in underground tanks, and portable fire extinguishers throughout the building. All administrative, service, and security personnel will receive training in prevention and emergency response. For the construction stage, the builder has a security officer tasked with training company and subcontractor personnel and ensuring compliance with security regulations at all times.

Labor Practices and Social Issues: HOCOSA complies with national labor laws. Mandatory core labor standards include: social security benefits, freedom of association, organization of workers’ unions, prohibition of forced labor and exploitative and abusive child labor, and nondiscrimination in the workplace. Workers and their dependents receive medical coverage through the Social Security Institute (Instituto de Previsión Social–IPS). Compensation is based on the market wage and some additional benefits (training, flexible work hours, meals, etc.). The shareholder group is involved in the community, collaborating on specific projects with organizations such as schools and NGOs through event planning, telethons, etc.

Monitoring and Reporting: HOCOSA shall prepare an Environmental and Social Action Plan (ESAP) satisfactory to the IIC to ensure compliance with national regulations and the IIC’s environmental and workplace safety and health guidelines. As part of the ESAP, an annual report shall be prepared with updates on environmental and occupational safety and health parameters.