Submitted by Due Diligence
In July 2012 ARI/N&M sold Almond Beach Club, to Fairweather Holding Co., which operates Elite Island Resorts for $33 million, the proceeds of which was used to pay down bank debt that had been incurred to keep ARI afloat.
It is not clear who owns/controls Fairweather/Elite, January 4, 2013, the Jamaica Gleaner reports that Couples is finalizing negotiations to purchase Casuarina.
“Couples Resorts is finalising a deal to acquire a hotel in Barbados, making it the first Jamaican resort group to venture into that market. It’s also Couples’ first venture outside of its home market. Couples chief executive officer, Glenn Lawrence, confirmed plans on Wednesday to purchase the 280-room Almond Casuarina Beach (ACB) Club in the eastern Caribbean island. “We are involved in firm negotiations,” said Lawrence, adding that the deal was expected to conclude on or before January 31, at which time more details would be forthcoming.”
For undisclosed reasons, Couples did not purchase the property; but January 29, 2013, announced it had agreed to manage Casuarina (it turns out) under a lease.
In an article in the Trinidad Guardian about N&M dated May 22, 2013, included “The group continues to unwind its hotel properties. The Jamaican-based Couples Hotels have leased Almond Casuarina Beach; the lessee has an option either to acquire the hotel by September 30, 2013, or enter into a long-term lease arrangement.
Based on a couple of articles about Couples (see following), it appears that Couples simply did not have the money to exercise the option to “acquire the hotel by September 30, 2013”. In a July 13, 2011 article at the Jamaica Gleaner reported that”
“The Elias ‘Lee’ Issa-owned Couples Resorts hotel chain is seeking US$50 million (J$4.3 billion) in financing from the International Financial Corporation (IFC) for working capital and refinancing of debt. The investment would represent support of “small” and “family-owned” businesses in Jamaica, IFC said in project disclosures on its website. In reality, Couples is part of the House of Issa, a medium-sized player in a market dominated by larger Spanish, US and local chains.
The investment programme is estimated at $50 million and entails refinancing US$45 million of existing debt obligations with various banks and replenishing US$5 million in working capital,” the IFC stated this month on its project listing. The refinancing component converts to J$3.8 billion at spot rates. The IFC is the lending arm of the World Bank Group based in Washington, DC.”
DD could find no reports that Couples received the IFC (World Bank) loan. In a September 19, 2012 in an article in the Jamaica Gleaner reported Lee Issa’s Couples Resorts has offered to buy John Issa’s SuperClubs’ Breezes Grand Negril.
“The two hoteliers have confirmed in a release that they are both involved in firm negotiations concerning the 220-room resort, which has been under the SuperClubs umbrella for the last 25 years. Both parties are expected to conclude the negotiations on or before November 30, 2012, says a joint statement posted on the Couples.com website. Breezes Grand Negril is the only SuperClubs property left standing in Jamaica. The hotel chain continues to operate its flagship Hedonism II, which is also up for sale. The chain has two affiliated resorts – ROOMS Ocho Rios and Negril under its umbrella.”
Couples was not able complete the proposed purchase.
Given its (apparently) unsuccessful efforts to refinance $50 million of debt through IFC; and its inability to complete the proposed purchase of the Breezes Grand Negril property it would appear unlikely that this “small” and “family-owned” business from Jamaica could arrange the financing to exercise its option to purchase Casuarina from N&M.
THE Jamaica Gleaner recently reported that Neal & Massy has reportedly sold the former Couples Resort Barbados to Sandals Resorts International (SRI) for an estimated US$42 million. DD has seen nothing from either of the N&M or SRI, confirming a sale of the Casuarina property. N&M is a public company, that promptly reports material developments. Until they report they have sold Casuarina, to whom and on what terms I am not convinced that Sandals bought it for US$42 million.
A press release dated April 23, 2013 from Blue Diamond Hotels and Resorts included the following concerning the Breezes property that Couples had tried to buy.
“Negril, Jamaica – April 23, 2013
Blue Diamond Hotels & Resorts is pleased to announce the acquisition of Breezes Negril Resort & Spa, located in Negril, Jamaica, as of April 17, 2013.
Commanding one of the Caribbean’s most desirable locations, the all inclusive resort’s 210 premium rooms and suites will continue to welcome guests with no interruption to its renowned level of service.
“After much consultation with our tour operator and travel agent partners and based on feedback from loyal repeat guests, we are pleased to announce that the resort will continue offering many of the unique and friendly features that many of its guests have been accustomed to, including its extensive food and beverage program,” affirmed Jordi Pelfort, Managing Director of Blue Diamond Hotels & Resorts. “Furthermore, the resort will remain adult focused and will continue to only accommodate guests over the age of sixteen.
An enhancement process that will lead to a complete revitalization and renovation of this popular beach resort has now been fully planned and will be executed in stages over the course of the summer. There will be no disruption to the operation of the hotel or to its guests over this period.”
You may be asking yourself, as I was wondering, Who is Blue Diamond Hotels and Resorts. A Jamaica Gleaner report on the Blue Diamond transaction included
“About Blue Diamond Resorts:
Blue Diamond Hotels & Resorts is an innovative hotel management company that specializes in creating differentiated brands to suit each market’s demands. It currently operates well over 5,000 rooms in all inclusive resorts in six outstanding Caribbean destinations under its “Memories Resorts & Spa”, “Royalton Luxury Resorts” and “Grand Lido” brands.”
The Gleaner also quoted the Jamaica MOT saying “Blue Diamond is part of the Sunwing family which is itself partly owned by TUI, a major player in travel and tourism at all levels.” You may know that Sunwing is a Canadian company with interests in various tourism activities. At one time Sunwing operated flights and vacation packages to Barbados.
This is from a June 18, 2012 Sunwing press release
“Sunwing Travel Group Once Again Ranks as One of Canada’s Fastest-Growing Companies
TORONTO, ONTARIO–(Marketwire – June 18, 2012) – Sunwing Travel Group is pleased to announce that it has once again made the list in the 24th Annual PROFIT 200 Ranking of Canada’s Fastest-Growing Companies by PROFIT Magazine. Sunwing Travel Group, which employs over 1,700 employees, ranked at #94 in 2011, boasting a 521% growth.
“We are delighted and very proud to have made this impressive list once again,” stated Stephen Hunter, President and CEO of Sunwing Travel Group. “We are grateful to our team of employees whose efforts have helped us achieve this recognition. To be featured in this unique selection of Canada’s most successful and forward-looking companies is a real accomplishment and a testament to our innovative value propositions.
About Sunwing Travel Group: Sunwing Travel Group, one of the largest integrated travel businesses in North America, is comprised of Sunwing Vacations, the leading leisure tour operator in Canada, Sunwing Airlines, Canada’s premier leisure airline, Signature Vacations, one of Canada’s leading tour operators for package vacations, SellOffVacations.com, a retail travel division, Blue Diamond Hotels & Resorts, an innovative hotel management company, operating resorts under the ‘Royalton’ and ‘Memories’ brands, Vacation Express, a growing tour operator in the United States, and Caribbean Nexus Travel, which provides destination management services to individuals, agencies, tour groups, corporate businesses and tour operators. This is a 2009 Sunwing announcement at http://www.sunwing.ca/newsstory.asp?id=205
29 Sep 2009 – Sunwing Travel Group and First Choice Canada to create strategic venture
Sunwing Travel Group and First Choice Canada to create strategic venture Sunwing Travel Group and TUI Travel PLC have agreed to a proposed strategic venture with their respective Canadian tour operations and retail divisions. The venture will see an amalgamation of tour operator Sunwing Vacations, a wholly owned subsidiary of the Sunwing Travel Group and First Choice Canada’s tour operator Signature Vacations along with retail division SellOffVacations.
Over the last five years, the Sunwing Travel Group, owned and operated by the Hunter Family of Toronto, has seen revenues increase from C$30million to C$660million and maintain underlining profitability throughout while First Choice Canada has seen their losses grow over the years to over C$20 million in the first half of the current financial year.
The proposed amalgamation of tour operators will create a stronger company better able to compete against Canada’s leading tour operators while offering a broader range of travel destinations to the travelling public. The proposed company will be in a position to improve its product range and offer competitive prices with increased efficiencies resulting from the transaction.” said Colin Hunter, Chairman and majority shareholder of the Sunwing Travel Group.
Under the terms of the deal,TUI Travel PLC will contribute its Canadian operations plus $101 million and Sunwing Travel Group will contribute Sunwing Vacations. In consideration, TUI Travel PLC will receive a 25% voting interest and an overall 49% interest in the Sunwing Travel Group.
Stephen Hunter, currently Chief Operating Officer of Sunwing, will take over as President and CEO of the Sunwing Travel Group while Colin Hunter will remain as Chairman of the Board.
Commenting, Stephen Hunter said, “As one of Canada’s fastest growing companies with combined revenues of C$900 million along with the improved operational efficiencies, complementary product mix and a growing retail distribution, our business will be well positioned to continue the growth and profitability curve we have achieved over the years”. The deal is subject to customary regulatory approvals. Scotia Capital acted as exclusive financial advisor to Sunwing on this transaction.”
TUI Travel PLC is a public company, with shares listed on the FTSE. According to its 2012 Annual Report, TUI Travel PLC is one of the worlds leading travel groups operating in approximately 180 countries worldwide and comprising over 240 brands. It serves more than 30 million customers across 31 source markets making it a global player in a growing industry. Headquartered in the UL, it employs over 54,000 people, and operates six airlines consisting of 141 aircraft.
Revenue in 2012 was GBP 14.5 billion.
For information about TUI Travel PLC, see its 2012 (160 page) Annual Report at: http://www.tuitravelplc.com/investors-media/reports-results-presentations. If you have read this far, you are probably asking yourself “And the point of all this Sunwing/TUI stuff is what?
TUI is a significant minority shareholder in privately owned Sunwing. Sunwing through its subsidiary Blue Diamond Hotels and Resorts is investing in Jamaican tourism. Barbados was faced with a major problem when N&M decided to sell or close three Barbados Almond properties representing a very large percent of its tourism room stock. Barbados decided it did not want to have the 25 acre site sold to Doyle because:
“This proposal is quite similar to the existing Crane model, which involves building accommodation based on sales and may therefore take a full decade to fully realise its potential. It will therefore fail to achieve increased visitor arrivals in the next few years and will be unable to assist Barbados in protecting its airlift.”
Instead they opted for Sandals, with its “marketing might” as its White Knight as a quick fix to protect its airlift and “create 1,500 jobs”. The White Knight’s only concern is that there is enough airlift to fill his Sandals/Beaches properties.
Well Sunwing Vacations, Signature Vacations and Selloff Vacations have marketing might in Canada; and TUI has marketing might in the UK and Europe. Did anyone, Stuart, Sinkler or Sealy think to talk to Sunwing or TUI, or any other major player when looking for a solution to the Almond problem? Or did they just say lets call Butch and kiss and make up for the Paradise disaster; and build him a new Beaches, and arrange to have Couples step aside so Butch can have Casuarina?
DD does not know the answer; but suspects the latter – lets call Butch.
DD managed to identify a couple of options in a couple of days of Googling. Surely with all of the civil servants at the MOT and BTA and MOF they have the resources to do some research and due diligence to identify many other options? If they did not seek out alternative options to solve the Almond problem, they should be fired for for gross negligence.