Submitted by Adrian Loveridge
“Too big to fail’ was one of the many emotive headlines appearing recently and relating to the future, if any, for the Almond Resorts group. Of course the statement could be right. 836 rooms spread across three hotels, which gives the potential of a massive 305,140 room nights annually. Even at an average occupancy of 80 per cent, with two persons staying in each suite for 7 nights, that could amount to almost 70,000 long stay visitors per year.
Already for the summer, Barbados has seen a dramatic decrease in airlift with Virgin, British Airways and Air Canada all scaling back and perhaps more to come with American Airlines. Unless other existing properties, whether hotels, condominiums or villas could absorb what amounts to over 1,300 guests weekly, further flight reductions would be almost inevitable.
The question that seems still to be begging is how was the current Almond Resorts situation was allowed to get to this stage?
Perusing, a 32 page document entitled Circular to Shareholders dated 29th May 2007, so many reasons, some of them extremely evocative, were given why Neal and Massy Holdings Limited and The Barbados Shipping and Trading Company Limited, should in their words ‘merge’. These included: ‘the benefits that would be derived from the sharing of know-how and the creation of such a strategic relationship’; ‘capable of achieving substantial growth in the markets and industries in which the companies operate’ and ‘the new entity will hold top-tier positions in many industrial sectors (including) tourism’.
This document was supported by a three page Fairness opinion synopsis prepared by the highly respected ‘independent’ Miami based Broadspan Securities Llc., which describes itself as a ‘leading restructuring advisor in Latin America and the Caribbean’.
So again, I pose the question, what went so fundamentally wrong?
Many of us in the industry, were surprised to see what was the former Casuarina Beach Club, which recorded one of the highest occupancy and repeat client levels, lay idle for so long. We can only assume that delays obtaining planning permission for expansion was a major factor. The acquisition, whether in terms of ownership or management of another two large (by our standards) hotels in St. Lucia, also caught industry watchers attention. Perhaps the belief was that a sufficiently established and credible brand had been created already with the two original hotels and that this would help fill another roughly one thousand rooms.
Timing, of course can be everything and mitigating this scenario, it is easy to introduce the global economic recession into the equation. But other strong brands have not only survived, some are actually managing to flourish. What is also puzzling, is why the company when ‘merged’ with stated assets exceeding US$1 billion did not spend more on the Barbados based properties to at least maintain, let alone upgrade the plant. Yet, the costs of the legal and financial advisory services to ‘merge’ these organisations had a quoted cost of BDS$5 million alone.
It also became abundantly clear, from many of the TripAdvisor reviewers comments that a considerable percentage of guests did not feel their expectations were being met and this must have severely impacted on new bookings.
I understand a special shareholders meeting is scheduled for this week and let us hope in the interest of our tourism industry a meaningful and satisfactory solution is found to ensure the hotels stay open and staff employed.