Understanding Concessions

Submitted by Anthony Davis
Minister of Finance Chris Sinckler

Minister of Finance Chris Sinckler

A sweetheart deal between the Chefette chain of restaurants and the previous Owen Arthur administration has led to a fall-off in the revenue intake of Club Caribbean Airport Lounge.”

page 7 of “Barbados Today”, dated 19 November, 2013

My, my, my. The pot doth call the kettle black!

I wonder if the Minister of Tourism was standing in front of a mirror when he stated: “That is not bad policy; that is simply sinful,” and “it is really a low-point, in my view, of how governance is carried out in this country.”

Is that your mirror image, Mr. Minister?

That more applies to the sweetheart deal you and the Minister of Finance gave “Butch” Stewart – with a special waiver for food and beverage which not only set a precedent for the hotel sector in Barbados, but will deprive Barbadian food producers, and manufacturers  of much of the money they worked so hard to earn to keep themselves, their families, and their employees from dropping through the cracks that have opened up in these harsh economic times!

I note that the Minister of Tourism is already saying that he and the Minister of Finance will have to return to Parliament for another supplementary to cover the cost of paying out Chefette Restaurants.

However, I do not think that Mr. Haloute – who has several restaurants , and invests in, and sponsors many things in this country – is an unreasonable man who does not know the economic situation in our country, and would not act accordingly.

As for the Minister of Finance’s statement that “this sweetheart deal could not compare to the 40-year tax concessions granted to Sandals International,” I would like him to explain to me – as I did not go to UWI at the tax payers’ expense, and am not seeking to deprive others from so doing – how an 18-year sweetheart deal cannot compare to a 40-year one of such magnitude, and at such a cost to Barbados.

Six years of the Chefette deal have already passed. The project at the Heywoods property has not even started yet, and will not be finished before 2016/17!

How much money, Mr. Minister of Finance, have you pumped into the brand name hotels that were to be opened in St. Philip by now – especially the ones in Merricks, and its second one in Hastings – owned by Dave Ames of Harlequin Property? He conned many Britons out of thousands of dollars in Pattaya, Thailand by getting them to invest in housing lots that were not finished, and sometimes sold the same lots to different persons. How did he get to purchase land in Barbados when it was splashed all over the British newspapers that he was being investigated for fraudulent dealings in Thailand?

I checked Andrew Drummond’s website (w.w.w.andrew-drummond.com) and found this under the headline “Smart, new, blue island hopper for sale?” in a report dated 28 April, 2013:

Well, as I have been following the Harlequin saga, particularly with regard to the projects it initiated in Pattaya – later taken over by Briton Richard Houghton, former President of the Pattaya-Jontien Rotary Club – I should at least record here that Harlequin Property and Hotels has now gone into administration. So, others will have to sort out the mess.”

“David Ames’ Harlequin of course needs massive cash injections to survive having sold thousands of holiday homes in the Caribbean before they even had planning permission. Dave Ames was a former double-glazing salesman made bankrupt not once, as I reported, but twice according to the BBC.”

It seems as if Barbados could have some sorting out to do when this whole thing is finished – and that could take years. How much of the tax payers’ money was wasted here?

In a special report by Jon Austin, under the headline “BASILDON PROPERTY FIRM SOLD INVESTMENTS  ON LAND IT DID NOT OWN – Dave’s Caribbean dream is not all that it seems”, in the “Basildon Echo” in the U.K. it states: “Deposits for the land at Merricks in Barbados, where even the two show homes are not  finished, were paid in March 2006.”

“The Serious Fraud Office, Essex Police, and the Financial Services Authority are investigating following complaints.”

In the meantime we have been told that we will soon know who has taken over “All Seasons” for the umpteenth time, and it is becoming monotonous hearing/reading about it!

I would really like to know how much money – except the $60million plundered from the NIS Pensions Funds – has actually been dropped into that bottomless pit!

40 comments

  • Barbados seeks loan option after failing to tap bond markets

    By Paul Kilby

    Tue Dec 10, 2013 11:53am EST
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    NEW YORK, Dec 10 (IFR) – Credit Suisse is heard looking to syndicate a US$150m five-year amortizing loan extended to Barbados after the sovereign failed to successfully place a bond in October, according to market sources.

    The loan offers a margin of Libor+700bp, has an average life of 3.5 years and an 18-month grace period, said a source with knowledge about the deal. “It is going to be a bit challenging, unless you have big local banks buy it,” said the source, noting that the sovereign’s outstanding 2021s and 2022s are trading near 9%.

    According to a resolution posted on the Barbados Parliament’s website, the government has been seeking to borrow up to US$225m in an effort to cover budgetary needs, including infrastructure projects and the bolstering of foreign reserves.

    Credit Suisse AG Cayman Islands and First Caribbean International Bank are cited as joint lead arrangers and joint bookrunners on the US$150m loan, which carries a greenshoe option allowing the borrower to increase the size by an additional US$75m.

    The applicable margin steps up by 50bp for each downgrade below BB- by S&P and Fitch or below Ba3 by Moody’s. Alternatively, margins shrink by 25bp for each upgrade, provided that the rate does not go below the applicable margin established at the close.

    According to the resolution document, there is an arrangement fee of 75bp of the facility amount, and a participation fee of 75bp-125bp of the facility amount. The loan also carries market flex clauses. The loan comes in the wake of the sovereign failed attempt to carry out a new issue and liability management operation in October.

    At the time local institutional accounts declined to participate in a sovereign tender that involved taking an accounting loss by selling the country’s existing 2021s and 2022s below par.

    Barbados was looking to fund the up to US$250m tender through a new October 2025 benchmark bond, with initial price thoughts set in the 8.75% area. Deutsche Bank acted as lead, with CIBC coming in as co-manager. Expected ratings are Ba1/BB+.

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  • Having stayed at Sandals Casuarina recently I was surprised how few locally produced items were being used including NOT a single Barbadian brand of rum. Sandals website indicate they pour Appleton’s throughout the Caribbean but Sandals Barbados uses only El Dorado. All bookings and payments are processed OFFSHORE with the exception of incidental and extra charges by guests, so how is Government monitoring just how much of the Foreign Exhange earnings are actually coming to Barbados? I cannot imagine ANY other hotel on Barbados not serving Barbadian rum.

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  • The focus seems to be on the buzz which Sandals is generating among tour operators and the bullish ethos which now pervades regarding airlift etc.

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  • Can someone explained how concessions are crafted before reaching Cabinet? Is there some kind of business case or fit for purpose document.

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  • David,
    before Couples was re-branded Sandals it had 280 rooms. From 8th November (when the concession came into effect) it is now a Sandals, still with 280 rooms. When I stayed there last week it was operating at about 70 per cent , partially due to a number of rooms being out of use for re-furbishment. So to talk about increased airlift is a nonsense at this stage until additional rooms are added or they demonstrate that they can achieve a higher occupancy level than Couples would have. YES! I expect there would be lots of Tour Operater/Travel Agent interest, but there are still ONLY 280 rooms, which can be filled once each night.

    I believe Sandals plan to add 100 rooms, but with a working resort this will take time and Beaches St. Peter could be 4 or 5 years up the road.
    I really think that our policymakers should consider what they say more carefully. Predicting a bumper November, but faling to state that November 2012 recorded the lowest long stay visitor arrivals in that month for 10 years, is another example.

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  • David “The focus seems to be on the buzz which Sandals is generating among tour operators”

    It is an incontrovertible fact that Sandals will attract attention and will get Barbados the attention the BTA failed to attract in recent years.

    Sandals Barbados TV ads will soon be joining the ads we see REGULARLY on Toronto tv stations and on CNN.

    The other hotels in Barbados may benefit.

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  • PLANTATION DEEDS FROM 1926 TO 2013 , MASSIVE FRAUD ,LAND TAX BILLS AND NO DEEDS OF BARBADOS, BLPand DLP=Massive Fruad

    Everyone love to talk numbers , cost, cuts, gains, building, vat, more taxes,
    All will loose , when you all refuse to study the Land you sink your money into.
    Better make sure all sales and owners have CLEAR TITLE and not FRAUD GOOD TITLE.
    We see and know at the end of the Day more will loose, Get the money start the project, then to run off the Island with just a foundation done,

    All you investors very greedy and Greed is what killing them in their pockets
    Check the land , Before you write a CHECK ,
    BARBADOS is a money pit for suckers all of those big named crooks.
    Remember You Keep What you Kill. Money dead and gone. No court in Barbados will help you get a return on your investment .

    Barbados is built on liars , crooks , scumbags , and you all seem shy to call the Names,. All just want money money money and then go crying , Not even the police or the DPP cares, Seems everyone on the take.. Be ware of you lawyer, Ministers, and the bigger crooks with titles,
    CLEAR TITLE IS THE KEY, 90 YEARS CLEAR TITLE , NOT 20 YEARS GOOD TITLE . FRAUD- GOOD 20years DOES NOT = CLEAR 90 years , then you all will see the crooks , start with your lawyer.

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  • The Sandals deal should not solely rest on the ability to buy local foods and products just for argument sake. Yes, it sounds sexy in writing but once we take a closer look other points come to light.

    For example, this from a business owners perspective is unreasonable if the business owner needs to profit from his/her investment. The local products need to be of equal or better quality, readily available and simply competitive in price. Any business manager given the opportunity to make a profit will take it.

    The point of contention here is more the “devil being in the details” of the “sweet heart deal” between Sandals and the MoF. By that I am eluding to import concessions that put local farmers and businesses at a disadvantage before the first ball is delivered. Point being “will Sandals be allowed to seek existing products and services at cheaper rates to return greater profits in foreign markets?”. With “yes” being the answer then 40 years of concessions becomes a disaster to the locals since as I previously stated a smart business manager is going to take advantage of greater profits to benefit his organization. To put the locals at a 40 year disadvantage is problematic not just short term but for a generation. I think that the MF has yet to answer the questions surrounding the details of the deal when it comes to putting locals at a disadvantage from the 1st delivery. It is like allowing Sandals to bat twice in a limited overs game.

    The 2nd point of contention relates to other hoteliers being put at a disadvantage. What I heard so far is their insistence on similar concessions for the same period. I can only imagine the concern of their business managers all in the name of profits. Again the bottom line.

    Taking the politics out of it, we need those 600 rooms at “Haywoods” occupied to allow a critical part of the economy to be re-vitalized. We need our locals working there again. Good or bad deal something needs to happen quickly weather we agree with the MoF or not and to just sit by the wayside and be critical of every move that is made by the government is not being helpful with this economic gloom looming.

    My apologies to those who think that this “deal” is a disaster for Barbados but we are catching at straws right now and are in no real position to negotiate so we HAVE to cut the MoF some slack if we need to make an effort to get out of this slippery road that we are headed.

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  • @ David
    Can someone explained how concessions are crafted before reaching Cabinet?
    *************
    Did Bizzy not explain how this is done when he sought to clarify how the 3S contract was approved by Wuk fuh Wuk and the then cabinet?
    ….an early morning personal meeting with the minister……..to explain the benefits of the project….

    Obviously the other cabinet members will support whatever comes -on the understanding that when THEIR project comes……

    The REAL dummies are the brass bowls who continue to accept such a system….and allow it to be funded with their ever increasing taxes….

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  • @Adrian

    Therefore you do not expect spillover benefit as a result of the excitement? Wouldn’t demand from US and other markets drive demand for more airlift and as a result force airline negotiations?

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  • David, It was interesting to stay there as I really wanted to see what sort of people Sandals actually attract. In my eyes, it is a different market and personally doubt there will be a huge spillover effect.
    We are already down neary 60,000 airlines seats this year and thats before the loss of the American JFK flight stops.
    If a Sandals clients cannot get into the Barbados property, because they are full, are they more likely to book another Sandals or another hotel on the island?

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  • We wonder – as small as it may seem to some people using this BU network – why David likes to put images of these fools when any criticisms have to be made of them in posts by various posters using BU.

    This is the type of shameless deference vulgar fawning obsequiousness many journalists in Barbados have for these fools.

    Surely, not the PDC nor the CUP nor a growing number of people we know in this country.

    PDC

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  • Is Chefette a local company? Does most of the money it makes stay in BIM? Does the term TOURISM LEAKAGE RATE mean any thing to anyone in TOURISM? Is it not recommended that for a viable tourism industry that the leakage rate be low? Is not a low leakage rate in part facilitated by more local ownership of the means of service and production in the industry? Are we looking for a SUSTAINABLE TOURISM INDUSTRY that would include in that SUSTAINABLE definition financially sustainable? How can we have a SUSTAINABLE TOURISM INDUSTRY with HIGH leakage rates?

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  • Roverb, I am with you a 100 per cent there. I wonder if Government even considered leakage when they gave the concessions to Sandals and the potential negative effect it will have on our tourism industry.
    If the same concessions are not granted to others, then they only option left open to them will be to try and collect more of their revenue overseas to effectively lower their VAT liabilities. In that case perhaps only operational costs will be brought into Barbados to minimise VAT, corporation and other taxes resulting in less FX earnings, not more.

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  • Steupssss
    What is all this “reasoned” analysis and “serious” debate?….this whole sandals scam is obviously a lotta shiite…..
    …as Bushie said from the VERY start… The idea of buying a failed private sector hotel – which OBVIOUSLY failed because the foreign owners extracted profits instead of up keeping the property with needed reinvestments – is complete madness….

    Then knocking it down to use BAJAN TAXPAYER’S money to build a new one to GIVE to another foreigner is total shiite…..

    Then to GIVE him every shiite FREE of taxes is beyond shiite…. ….and to opt to COPY a foreign brand AT THE EXPENSE of a viable LOCAL brand….
    …and all this for a man who screwed us with Paradise FOR YEARS
    Steupssss

    Only a jackass brass bowl could even DREAM UP such damn idiocy…

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  • Hi Adrian- interesting point you’ve made on the Rum used at Sandals- FYI Appleton lost the contract at least 2, maybe 3 years ago (I do not recall the exact timing of said deal)- if you visit a Sandals in Jamaica, or Antigua, or St. Lucia you will find El Dorado- DDL, the owners, cut a deal with Sandals to be their “pouring” brand. Shows that Mr. Stewart is a pragmatic business person- home drums don’t always beat first- and he’s looking for the best for his business.

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  • AS, Thank you. But Appleton’s is still the featured rum on their website.

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  • Around sept 23 2012 Appleton was back at 17 sandals locations and Eldorado out .According to trip advisor quoting the CEO . the people spoke we listened, I guess nobody in Barbados has spoke yet.

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  • Lawson, as mentioned I spoke to Adam Stewart personally about the absence of Barbadian rum last week, but I should not be the lone voice.

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  • Hi Adrian,
    I stand corrected- Just spoke with someone from Appleton and they in fact ‘re took’ the contract from Demerara Distillers (El Dorado) late last year, after having lost it about 4 years previously. So the use of El Dorado in Barbados is a bit puzzling- could be the Appleton importer in Bim doesn’t have enough stocks to cover the supply as yet… as Appleton has gone through lots of changes having been bought recently by the Italian company, Campari.. and I know they had some alignment issues. I would expect the El Dorado to be replaced by Appleton in due course.

    Here is a press blurb about the Appleton brand getting back in to Sandals
    https://www.sandals.com/news/article/id/254/

    Point remains though- the business at Sandals on a regional level is up for grabs if you can make a good enough offer..!

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  • Lawson, I can guarantee you it was not a ‘the people spoke we listened’ deal- It was the best deal overall for the company… or they would be using Cavalier in Antigua and Bounty in St. Lucia- (and they would NEVER have taken on El Dorado for the time they did!)
    They cut a deal on a regional level to decrease as much as possible their first cost of said product, PLUS guarantee a certain overall spend in Co Op advertising.

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  • Good to read Chairman Elcock addressing the issue of TripAdvisor which is opposite to his predecessor. It appears there is now an appreciation for the role it plays in tourist selecting and offering feedback about a destination.

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  • Adrian I would not doubt a message was sent it would be a good idea to support your own, Barbadians from my experience are not as aggressive. Rum may not seem like an important thing but it is one of the trade marks of Barbados. If the oldest rum distillery in the worlds products are not good enough for their own govt subsidized hotel what does that say. Bush tea said it right …idiocy.

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  • David,
    the BTA Chairman might want to read some of the TA postings on Sandals Barbados. Glad it’s no longer considered a ‘menace’.

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  • What surprises me is the need for the sandals brand, the melia brand is 350 hotels not 17 I wonder if they were offered the deal that was offered sandals would they have said no.There must be other huge players that would have jumped at that deal. What makes sandals so special? Help me understand

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  • Hants said

    “It is an incontrovertible fact that Sandals will attract attention and will get Barbados the attention the BTA failed to attract in recent years.

    Sandals Barbados TV ads will soon be joining the ads we see REGULARLY on Toronto tv stations and on CNN.

    The other hotels in Barbados may benefit.”

    DD says

    “It is an incontrovertible fact that Sandals will attract attention to Sandals Barbados; and that Sandals Barbados TV and newspaper ads will soon be joining the ads we see REGULARLY on Toronto TV stations and on CNN and in the Toronto newspapers.

    But I am not convinced that Sandals ads will will have a spillover affect getting Barbados the attention the BTA failed to attract in recent years, to the benefit of the other hoteliers. Indeed, Sandals may be taking guests away from existing hotels; and, with Sandals‘ package including “everything”, there is unlikely to be much spend at existing restaurants etc.

    Adrain

    DD totally agrees with you that the rebranding of Casuarina from Couples to Sandals will have no immediate impact on airlift.

    Most of the folks representing the 70% occupancy were likely booked by Couples

    If Couples had continued to operate the property at 70% occupancy, with 2 guests to a room staying one week, they would be filing 392 air plane seats per week.

    If Sandals operates at 100% occupancy (not likely) they will fill 560 air plane seats per week.

    What airline(s) are going to add flights to accommodate an additional 168 guest per week.

    If 100 new rooms are added, (assuming speedy approval by T&CP). it is two to three years before they will be completed and occupied.

    Does anyone know if Sandals has closed the purchase of the Casuarina; or is it leasing the property. There is nothing in the Neal and Massey website stating that Casuarina has been sold. Only mention is that chief executive officer of the Neal and Massy group Gervase Warner reveled that “Neal and Massy has officially handed over the keys of the old Casuarina property to Sandals Resorts Limited.”

    TA reviews suggest that after a rough Couples/Sandals transition in the first couple of weeks, things improved as the Sandals folks settled in.

    The TA comment re GAIA does not help the Barbados Brand

    “Airport: the Barbados Airport (Grantley Adams International) is very unorganized & the majority of the people are just nasty, be sure to bring a pen with you for your customs information, they won’t let you use theirs.”

    I am sure Minister Sealy will get on that right away, and see that those nasty folks will become NICE folks; or they will lose their jobs. He could also provide Barbados promotional pens to fill out the forms.

    Lawson

    Melia indeed. Their presence would increase European exposure and airlift.

    But; Stuart, Sealy and Sinkler were looking for a quick fix.

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  • PLANTATION DEEDS FROM 1926 TO 2013 , MASSIVE FRAUD ,LAND TAX BILLS AND NO DEEDS OF BARBADOS, BLPand DLP=Massive Fruad
  • Very interesting to hear that Butch Stewart has entered the fray by suggesting concession his company got should be industry wide and he does not want to operate in a climate of conflict.

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  • Hey Carson Cadogan where are you man. Adrian Loveridge and the BLP yardfowls have gone into fourth gear with distortions, lies and unchallenged propaganda even ac has backed off. BU David as is his wont is giving them free reign to hammer GOB. You must re-enter the fray you without fail take on all of them and demolish their arguments, they fear your pen. Come on Carson we the Bajan loyalists want you back.

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  • millertheanunnaki

    @ Waiting | December 11, 2013 at 6:58 PM |

    How can the likes of you and Carson Cadogan ever fight the TRUTH and prevail? The truth about the deceit, LIES and the cover up of the nefarious activities of this incompetent DLP administration is now coming to Light.
    Let us hear you deny that thousands of public sector workers will be going home very, very soon or that the Transport Board and the NHC are on the chopping block as per IMF demands (not recommendations).

    Like

  • @Miller….. have you heard anything about Leroy ‘green verb’ Paris case in the appeal court today? Its about CIBC proposed closing of his $8million bank account.

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  • millertheanunnaki

    @ David | December 11, 2013 at 6:26 PM |
    “Very interesting to hear that Butch Stewart has entered the fray by suggesting concession his company got should be industry wide and he does not want to operate in a climate of conflict.”

    That is the position I have taken from day one. Grant the concessions on food and drink right across the entire hotel sector. Restaurants and other eating and drinking establishments outside the hotel circuit will not be entitled to concessions. People who are resident in Barbados (not checked in as guests from overseas) would be expected to pay the full rate of VAT on goods and services provided by the hotel- all-inclusive or otherwise.

    Butch is morally correct. Such a move would never go down well in Jamaica.

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  • In recent years, the President of the National Union of Public Workers, Mr. Walter Maloney, was actually heard by us saying words to the effect that in 1991/2 the public workers bore the burden of the structural adjustment and stabilization program, and that it was not going to happen this time around in cases where the political economy and services industry sectors of Barbados had to be seriously stabilized and restructured.

    One wonders what he is saying now after these idiotic BLP and DLP governments have – between 1994 and 2013 – been the two entities that have been primarily driving this country’s political economy and services industry sectors “into the ground”, and now, where it is so clear that under this very backward model of development that is practiced in Barbados, that many more public servants will have to go home.

    PDC

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  • No hotel on the island that is not taxpayer owned, should be given concessions, particularly at the expense of taxpayers, most of the money earned by the foreign owned hotels does not go into Barbados.

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  • Who heard the President of the BES suggesting that the tourism industry does not have a clue what it contributes to forex inflow.

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  • This video on the true state of the Barbados economy and the IMF visit was very recently recorded and is being circulated around the world.

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  • It’s very clear that these tax dodgers who have to pay 24% taxes in Canada and absolutely refuse to pay 3% up from 2% in Barbados to help the economy, have absolutely no care for Barbados or it’s people…let’s see how the DLP government handles this mess…the upside is THEY CANNOT TELL ANY MORE LIES…..LOL

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  • @ Adrian Loveridge

    They probably ran out of Barbados Rum during your stay. They would have had to man. I can’t believe they don’t serve the finest rum in the world. Maybe it is because the hotel is a 2 star hotel and can’t serve 5 star rum. This is embarrassing. Thanks for sharing it. They would never get another reference from me. I recently gave a reference to an acquaintance that was looking for a cool spot to visit on the island.

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  • Both the DLP and the BLP must be permanently removed from the political landscape of this country.

    PDC

    Like

  • I think this is among the most significant info for me. And i am glad reading your article.
    But wanna remark on some general things, The website style is ideal, the articles is really great :
    D. Good job, cheers

    Like

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