Adrian Loveridge - Hotelier
Adrian Loveridge – Hotelier

Whatever was behind any honest intention of the Hotels and Resorts Limited (HRL) aka GEMS debacle, it is difficult to imagine a worse outcome so far. Government’s decision despite the current austerity situation to guarantee yet another loan to this failed entity frankly defies belief and clearly will not have a happy ending.

This latest loan is for BDS$5.55 million at an interest rate of 7.75 per cent, arrangement fee of $350,000 and monthly repayments of $55,000. Included is a $300,000 overdraft facility which attracts an administration charge of $5,000 each month. HRL now operate a single hotel, Blue Horizon with just 67 rooms. Another 50 additional rooms acquired at the time of purchase (1997) remain derelict all these years later. Savannah and Time Out at the Gap are leased and operated by private sector interests. Three other properties originally in the GEMS portfolio were sold and it still remains unclear what price they realised and exactly where those funds went.

Despite repeated pledges of transparency and accountability apart from a tiny private shareholding, the sole owner of HRL (the Barbadian taxpayer) is left almost completely in the dark. Statutory corporations appear not to have any obligation to publish their annual audited accounts, unlike publicly traded companies.

Let’s just look at this particular latest bailout first. To meet the monthly commitment, based on a typical 60 per cent average annual occupancy, interest and capital repayments alone will amount to $49.75 per occupied room night. Put another way, 23 per cent of the rooms have to be filled at published summer rack rate (before taxes), just to meet the new debt burden. That’s before any operational or maintenance expenses. Unless a substantial proportion of their room stock is heavily discounted and sold through tour operators its implausible occupancy levels will improve as direct booking consumers become more aware and use benchmarks like TripAdvisor (TA) to monitor previous guest’s satisfaction level.

Blue Horizon is currently positioned at #74 out of 102 Barbadian Hotels on TA with a reviewer’s first hand experience rating of just 49 per cent out of a maximum 100 per cent achievable. Simply expressed, over half of previous guests who have posted their personal observations would not either return or recommend this hotel to a friend. Clearly from comments made the property urgently needs to be upgraded.

What other economic liabilities are in the GEMS closet?

In an article headlined ‘Reports free of scandal’ published in the Nation on 28th March 2013, Senator Maxime McClean stated ‘that the Government of the day by way of an Agreement dated 22 July 2002, loaned Hotels and Resorts Limited more than $145 million’, adding ‘that was not being serviced and the Cabinet had agreed to debt relief for HRL by way of a write-off of $160 million’.

By January of last year, the Auditor General’s report to Parliament contained the following comments, ‘Given the poor finances of this entity, it was always unlikely that repayments would have materialised’. ‘The outstanding balance on this loan was reported as $85.4 million at 31st March 2012 with accumulated interest of $30.4 million’. So even after the previous massive ‘write-off’ there still remains this huge deficit.

Back in February 2010, then Minister of Economic Affairs, Dr. David Estwick, placed an estimated book value of all the GEMS owned properties ‘at only $74 million’. Under current trading conditions, it is doubtful that ‘value’ has increased, or the circumstances improved sufficiently in which to service any more debt.

So why is Government guaranteeing the loan?

17 responses to “Bad News for Barbadian Taxpayers, JAWS has Returned!”


  1. @ This is a further example of governmenteal incompetence. Blue Horizon is a scrappy plae, which poses a real danger to clients.
    People can access it from the streets without security being even aware. A couple years ago I was booked in there by the Commonwealth Secretariat, but stayed privately. One reason was fear of attack.
    The other is that at about 10pm one night a groups of us were drinking and talking normally in the bar when a neighbour started shooting out about noise. It was a group of mature, professional people, not teenagers.
    Government should lease the hotel out, preferably to its staff, and hold on to the freehold.
    Running hotels is none of the government’s business. The IMF must insist they get rid of this baggage.


  2. Let’s not forget that Hotels and Resorts Limited (HRL) aka GEMS was the brainwave of the great Owen Arthur.


  3. Imagine if you will the saviours of the country we love are Caswell Franklyn, Boos and the private sector. May God have mercy on us.


  4. Remember when Mascoll campaigned about Gems? Whatever happened to those arguments?


  5. @ Hal Austin
    When Mascoll moved from leader of the DLP Opposition over to the BLP he was too busy Brown Nosing Owen Arthur and didn’t have time for criticising Gems.


  6. The countries leaders, both parties, pardon my language “DON’T HAVE A F _ _ CKING CLUE.

    Only potential savior on the horizon unfortunately is FULL IMF CONTROL of the countries financial, economic and labour portfolios.

    From Riches to Rags.


  7. There was nothing wrong with the idea of government owing hotel plant. It would encourage further local ownership and help reduce the leakage of money out of the country. However the problem with this project as with most projects in BIM was poor management. We have too many poor managers in BIM even with all the high level qualifications. Too much dishonesty exists. Too much deceit in how we manage. We also have too much selfishness that exist. It

  8. PLANTATION DEEDS FROM 1926 TO 2014 , MASSIVE FRAUD ,LAND TAX BILLS AND NO DEEDS OF BARBADOS, BLPand DLP=Massive Fruad Avatar
    PLANTATION DEEDS FROM 1926 TO 2014 , MASSIVE FRAUD ,LAND TAX BILLS AND NO DEEDS OF BARBADOS, BLPand DLP=Massive Fruad

    Everyone want to make money , but no one wants to work for it, When deals are made , Money change hands and no work begins, After the money get to their hands on a crooked deal they hold on to the money as if it belongs to them ,
    We need to even look at the rate of many more of these crooked deal that litter the land like headstones to a grave yard.Everyone want to be in construction and no one finish what they started and still getting more deals.Ministers and lawyers all the same people shaking hands and taking your money in office, Delays and delays until the buyer is dead.No , court, no laws , no DPP for recovery , no charge by police , Depending who you are, and how far you live from the Island to keep flying back and forth till you give up for you lawyer is on both sides and some time in the same office of the person you are suing


  9. All of those GEMS hotels were owned by BLP supporters. The more things change the more they remain the same.


  10. Another derelict hotel about to happen. It will fit right in with the other derelict hotels along the same street. Worth $74 million. Are you kidding me. It is worth what you can get for it. There have been for sale signs on hotels along the same road for 10 years or more. So if they cant sell them what are they worth. The Government had to give away Almond Beach for free. Nobody is going to buy this run down poorly secured and furnished cash sucking crappy hotel which is not even beach front. Cut the losses now.


  11. The idea of government owning anything these days is looked upon as a curse.


  12. Governments should stay far away from business except in situations where Governments are SEEKING mature professional counsel from knowledgeable, successful mature Business people.

    This should be engraved in BRASS everywhere.


  13. Adrian said:

    This latest loan is for BDS$5.55 million at an interest rate of 7.75 per cent, arrangement fee of $350,000 and monthly repayments of $55,000. Included is a $300,000 overdraft facility which attracts an administration charge of $5,000 each month.

    So, HRL/Government, is paying $60,000 pa (12 X $5,000) to have a $300,000 Line of Credit available. That is 20% of the amount available, plus the 7.75% interest on the amount actually borrowed.

    That is loan shark cost of funds.

    And $350,000 arrangement fee!!!!!!

    Adrian also said:

    “Back in February 2010, then Minister of Economic Affairs, Dr. David Estwick, placed an estimated book value of all the GEMS owned properties ‘at only $74 million’. Under current trading conditions, it is doubtful that ‘value’ has increased, or the circumstances improved sufficiently in which to service any more debt”

    This is a Nation article cut from a BFP blog dated February 24, 2010 submitted by Adrain titled Barbados Government GEMS Hotels folly continues. Where did all our money go? Three remaining GEMS hotels valued at only $74 million!

    “Let Go of GEMS!
    by ALBERT BRANDFORD
    SELL THEM!
    That’s the “bold” advice from Minister of Economic Affairs Dr David Estwick to Prime Minister David Thompson on the future of the remaining properties within the controversial GEMS hotel chain.

    Estwick supported his advice with the revelation yesterday that the GEMS parent, Hotel & Resorts Ltd., which has benefited from Government loans totalling $145 million, now had accumulated debt of $229 million, while the book value of the properties was only $74 million.

    That debt, he added, comprised a principal of $160 million and accumulated interest of $69 million, while it also owed the Barbados National Bank (BNB) another $2.3 million.

    “Even Gearbox [the late popular street character] would know what to do,” Estwick said, “because if you don’t [sell the properties], it will continue to be a drain on the Treasury.”
    The minister was speaking in the House of Assembly during debate on a $9.014 million supplementary resolution, of which the largest portion – $3 million – would be used to provide assistance to HRL.
    Estwick disclosed that HRL had requested $6 million in support from Government for this year because of the dire financial situation of what he termed “an ill-conceived project”.

    In a time of crisis, he noted, this administration has to look for $6 million – $3 million in this supplementary resolution and another $3 million in the next financial year starting April 1.

    Estwick recalled that it was the Barbados Labour Party (BLP) which, during a time when there was no crisis, started to sell off the GEMS properties, including Silver Rock, Worthing Court and Eastry House in 2005, and was looking for a buyer for the Savannah Hotel, Time Out and the Hilton Hotel.

    The St Philip West MP said if this Government does not pump $3 million into HRL this financial year, it would not be able to meet wages or pay creditors.

    “To come here for $3 million to keep HRL afloat,” he added, “is a clear indication why Government should get rid of HRL. I will not back off my advice to the Prime Minister.”

    Estwick also said HRL, which was created to bailout all of the non-performing assets of Barbados Labour Party Party families and friends, could not carry out any audited financials because of the patchy nature of its accounting.

    In March 2009, he noted, HRL requested $3.5 million because it was out of cash and, by June, it was facing the possibility of forced closures and widescale layoffs if Government did not bail it out after it had been given millions of dollars. (AB)”

    Apparently Dr Estwick’s reward for not backing off his “bold” advice to the Prime Minister, which in hindsight was sound economic advice, was to be relieved of his duties as Minister of Economic Affairs and assigned to Agriculture.

    Four years later, and HRL is back to the trough for another $5.55 million. How much was borrowed/guaranteed in the intervening 2011, 2012, 2013 periods?

    DD recommends that the Prime Minister relieve the MOF of the Economic Affairs portfolio and reassign it to Dr. Estwick who certainly made the right call in 2010.


  14. PS
    Four years from now, when (if) the taxpayer learns the cost of borrowing $500 million from the Chinese to build Beaches Heywood for Butch, the cost of this $5.55 million lifeline to HRL/Blue Horizon. will look like a trifling amount.


  15. David on 06/01/2014 at 10:05 am

    All of those GEMS hotels were owned by BLP supporters. The more things change the more they remain the same.

    After such a revelation I am surprised that you David….perpetually hail Owen Seymour Arthur as Barbados’ most TRANSPARENT Prime Minister.

    The more things change…the more they remained the same !


  16. Interesting article Crane Turns to Jamaica in the Nation at
    http://www.nationnews.com/articles/view/crane-turns-to-jamaica/

    Butch turns to Barbados’ taxpayers to fund the cost of building Beaches.

    HRL turns to Barbados’ taxpayers to fund its losses

    Paul Doyle turns to private investors to help fund the cost to get the Beach Houses at Culpepper [St Philip] started. What a novel idea – a private placement. Wonder if Butch will pick up a piece of that action

  17. PLANTATION DEEDS FROM 1926 TO 2014 , MASSIVE FRAUD ,LAND TAX BILLS AND NO DEEDS OF BARBADOS, BLPand DLP=Massive Fruad Avatar
    PLANTATION DEEDS FROM 1926 TO 2014 , MASSIVE FRAUD ,LAND TAX BILLS AND NO DEEDS OF BARBADOS, BLPand DLP=Massive Fruad

    To bad it had to come to this LEVEL , for most now to be in the same book , but not Yet the same page, We will get there , For something had to happen in order for us to be at this JUNK-tion
    The World Bank , Moodys , IMF S&P had to hit people in their head with Numbers for them to wake up and RATES to get FUNDS .
    So as We can see , Words lie , Numbers dont lie and NOW people are looking at the Numbers and the Price and the Cost of the New DBLP GOVERNMENT .
    YES , where did all the money go? Whos Bank accounts, and How Much .AND THE ANSWER IS ALL the MONEY GONE , where is it hiding?
    There was no FIRE or was there a FIRE SALE ?
    Maybe if we made the people with the old money show up to change for the NEW money we will see who is holding what?
    Them ask them for source of FUNDS

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