The Adrian Loveridge Column – Implications for Barbados If Sandals is Sold
Originally carried as an ‘Exclusive’ by Reuters on Wednesday 10th May 2017 under the banner headline Caribbean resort operator Sandals explores sale it took barely hours to spread throughout the travel trade and public media.
According to Reuters Sandals Resorts International have hired investment bank, Deutsche Bank AG (DBKgn.DE) ‘to explore several options, including a sale of a majority stake in the company, the people said, asking not to be identified because the deliberations are confidential’. Adding, ‘the valuation of the company could not be learned, but the sources said it could be worth well over US$1 billion, including debt’. As Sandals Resort International and its various associated and subsidiary companies are currently privately held, there is of course no legal obligation to publish actual trading accounts or anything to indicate valuation.
My first question when heard the news was: in the case of Sandals Barbados, what would happen to the unilateral and unique 40 year tax concessions that this organisation obtained if a sale took place? Would any new owner inherit them, in which case then it would further push down the hill any attempt by the entire remaining tourism industry on Barbados to play catch-up?
Sadly, the vast majority of Barbadian taxpayers has absolutely no idea of the full extent of the concessions and exactly who they were granted to because two holding company’s CPH Property Holdings (CAIPO company registration number 37515) and Grand Cass Management (CAIPO company registration number 37513) were mentioned in the original Memorandum of Understanding (MOU).
There is also widespread speculation about who is the beneficial owner of the land that the two local Sandals are constructed on and again the taxpayer is completely in the dark over this element as well. If there is any increased value of the land would it be passed on to a new owner largely based on the benefits gleaned from the extraordinary concessions, would this be fair and reasonable?
Was there any provision in the MOU signed by Government to allow for this scenario and if not, why?
The Jamaica Gleaner reported a day later in a one-paragraph statement neither confirmed or denied whether Sandals founder, chairman Gordon ‘Butch’ Stewart is exploring a potential sale of the ‘hotel management company’.
‘CEO of Sandals Resorts, Adam Stewart, son of the founder, did not respond to messages regarding the (Reuters) report, while spokesman Stephen Hector requested time to respond’.
The next question we should all be asking, could any possible sale delay or nullify plans to build the proposed Beaches Resort on the former Almond, Heywoods resort?
Has Sandals or the actual beneficial owner already paid Government for this property? What provision has been put in place just in case the construction and resort opening does not take place because this has been heralded by the current administration as an integral part of economic recovery and job creation?
And the reason I raise this question again, if Government or another party has received full payment, why would a separate private company be leasing and operating part of the hotel?
One thing for sure, the travel industry does not thrive on uncertainty and unknowns and almost always it has a severe and immediate effect on forward bookings.
Clarity is needed.