The Adrian Loveridge Column – Tourism Investment Strategy Needs an Overhaul

A leading local hotelier reminded me recently of a column I wrote several years ago naming an incredible 37 hotels that had closed their doors and it raised a commonly held but frequently ill-informed public view, that the tourism sector attracts limitless concessions.

The reality – apart from a chosen few – is something quite different.

The simple response is to pose the question- if our hotels are in fact receiving disproportional fiscal assistance, why is it that so many properties have closed and in practicality failed?

Various administrations have not fared any better and while the taxpayer is still one, if not the largest owner of hotel rooms on Barbados, the disaster called Hotels and Resorts Ltd or GEMS, where hundreds of millions were written off or lost, reminds us that Governments should have very limited participation in the industry.

I believe there is an urgent need to look carefully again at our investment framework. Local investors need to be able to access loans at affordable and sustainable interest rates over realistic re-payment periods.

Overseas investors need irrefutable assurance that properly registered foreign funds and a transparent scale of return-on-investment can be repatriated without Government hindrance and delays.

The whole investment mechanism should be brought under one department, where all involved are fully aware of existing and any new bilateral treaties which have been drafted and legally implemented.

Having spent a lifetime as an entrepreneur, I gave up many years ago trying to understand the ‘rationale’ of banks and their decision making process. My conclusion was that business people, especially smaller ones, and banks speak different languages and occupy contrasting planetary space. Each largely functions in a totally different environment. One with a 9 to 5 or 8 to 4 pm working days with most weekends off and little or no associated work related risk.

The other requiring long often unsocial hours and needing a great deal of personal dedicated commitment to ensure there is a reasonable possibility of success.

Recently one of our largest banks declined a loan facility to a potential purchaser on the grounds that they could not justify their minuscule participation because the hotel had been closed for some time and was not currently trading. It seemed futile at the time to remind that same bank that when we purchased the property in 1989 that it had been derelict for several years.

Within two years we transformed the hotel into one of the highest occupancy boutique lodging options on the island and our guests propelled us into the much coveted #1 rated TripAdvisor position above 106 other graded hotels. This, despite being severely impacted by the fall in the value of Sterling, prior to completion, which dramatically restricted our ability to carry out planned renovations and improvements.

Ultimately, at the end of the day, even the banks must comprehend that it is only the private sector which will ensure there is any meaningful national financial recovery. By creating illogical barriers to growth and business development, how on earth will they ensure they themselves survive and flourish?

41 comments

  • Interesting press conference from minister Symmonds, look forward to hear former minister Sealy to respond- if he can- to the severe critique of the industry.

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  • In fact a better comment is if the tourism industry is in such poor state why have we not heard an outcry from the BHTA, BPSA and other private sector companies?

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  • NO CLEAR TIMELINE FOR TAX REFUNDS

    Says minister of finance Ryan Straughan
    This govt campagain strategy was to do better
    Now running on fumes and PR stunts and a loud talk of daily babble called excuses

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  • Robert MacDonald

    Adrian: Perhaps your opening sentence gives the answer to why the banks may be reluctant to lend money to the hotel industry. I am not a banker, but by looking at the unfinished hotels scattered around Barbados I can understand why. The government should not be directly involved in the hospitality industry, their responsibility is to encourage tourism. I might add the new taxes may have the opposite effect.

    Liked by 1 person

  • …..if the tourism industry is in such poor state why have we not heard an outcry from the BHTA, BPSA and other private sector companies?
    ++++++++++++++++++++++++++++++++++++
    What do you NOT get about brass bowls David?

    When the idiots were assembling on the upper decks of the Titanic to rearrange the chairs and listen to the band playing soca music …. do you imagine that they were discussing the extent to which the lower hull was open to the sea?

    It is just a DIFFERENT kind of brass bowlery we are now entering under the BLP…

    The DLP morons – (with Mariposa -type intelligence deficit) steered us to destruction with their greedy, bribe-taking, low-minded, albino-centric actions.

    We Bajan Brass Bowls sat idly by …for twenty LONG years, while the good ship was abused, misused, undermined and insulted.
    Shiite man David …. EVEN when the albino-oriented DEMONS directly stole the individual savings of the BBBs via CLICO and the various statutory corporations, NO response was forthcoming – except for a few grumbles here and there…

    The BLP jokers have now assumed control of the ship – and are busily setting out the music program for the band, and the new deck-chair arrangements… The ONLY reason they are mentioning the chaos going on below deck is to ‘clear their name’ when the post mortem and film is made about the fate of HMBS Titanic.

    The SINGULAR problem that we face is a NATIONAL attitude of unrighteousness – the predisposition to do that which is SELFISH, SPITEFUL, HATEFUL and WICKED.
    This problem is NOT solved by fiscal incentives, by bank loans, by articles written on BU, or even by shiitehounds ‘preaching’ in the mock church…. These have ALL only resulted in further downgrades.

    Bushie proposed a BUP plan that would see Caswell take up the role of Chairman of the National Supervisory Committee …and all o’ wunna laugh…. yet, we are all happy to continue doing shiite on the top deck – when the BIG problem is below the water line…..

    There can be only one ending….

    Liked by 2 people

  • Agreeing with you Bush Tea, there is a spiritual vacuum that these people trivialize the importance, dismiss even all the while quoting from Chaucer, Socrates and the other big mout scholars, philosophers literary giants of past.

    Liked by 1 person

  • NorthernObserver

    The equally interesting question is why let the hotel close, instead of hiring people to keep it going. The value today is land and buildings, the goodwill is gone. It is not a going concern. It is ‘very usual’ for lenders to apply significant risk premiums in such situations.

    Liked by 1 person

  • More semi-educated waffle.

    Liked by 1 person

  • Robert MacDonald,

    Spot on. It is not the job of government to save zombie, badly managed, often family-owned hotels. Let them go to the wall. That is what the market is all about. Government’s job is to encourage people to visit Barbados, where they stay is not government’s responsibility. The hotel sector is a massive scandal – the fraudulent transfer of wealth from poor taxpayers to relatively wealthy, family-owned hoteliers in the form of rebates, tax breaks, etc.

    Liked by 1 person

  • pieceuhderockyeahright

    @ Adrian Loveridge (who i know cannot/will not respond to me – cause de ole man doan suck up to wunna)

    And

    @ Robert McDonald

    The writer of this blog wrote and I quote

    “…Ultimately, at the end of the day, even the banks must comprehend that it is only the private sector which will ensure there is any meaningful national financial recovery.

    By creating illogical barriers to growth and business development, how on earth will they ensure they themselves survive and flourish?..”

    Both of you have missed the boat completely and I, while not a hotelier, in fact while not anything at all, will explain to wunna why the single cylinder engine of tourism is in “ducks guts”.

    1.the country is nasty and the tourism plant needs a refresh.

    2.the destination is too expensive and that coupled with #1 exacerbates the problem since no arrivals means no revenues means no hotel.

    3.You and the BHTA or the BSPA ent got a clue bout marketing Barbados

    Wunna does collectively spend close to $150 million a year to get the product or there.

    De ole man and me grandson can do this more efficiently for 1/10th of that budget.

    IT IS AUGUST NOW AND, EFFING WUNNA WAS TO ENGAGE DE OLE MAN & me granson NOW, I CUD GET TINGS UP AND RUNNING BY DECEMBER

    and give you gents a bumper 2018/2019 season in spite of the nastiness of the island.

    As my Brother in Arms Bush Tea is bellowing ALL WUNNA IS DOING IS REARRANGING CHAIRS ON THE DECK OF THE TITANIC.

    You ALL 37? OF YOU ( ALBEIT MUCH LESS NOW) are all fishing from the same pool yet you are wondering why the banks are being circumspect with their deposits?

    Dis is why I does stay way from Loveridge mendicancy articles and the prattle that obsequiously attends his dribble

    Steupseee

    Liked by 1 person

  • Hal could not have said it better!
    The Hotel sector have an attitude if entitlement because they hire a handful of people when compare to the govt sector
    Last govt did almost everything possible in stopping the hotel industry from collapsing during the years of the financial global starting in 2008meltdown that had take a negative effect on the hotel industry. Past govt got actively involved in commercial advertising in international markets via TV !radio social network and news prints
    Govt work with major airline industries in helping to expand the flow of tourist to visit barbados from other countries across america an area where tourist market for barbados was in decline
    Govt gave the hotelier money as a loan to improve their room stock at a gracious tax incentives and the list grew longer because as govt gave it was not enough
    I feel no sympathy for them now Mia has drive a hot iron up their prostrate branded taxation and gave to the hotelier
    Loveridge was one having a field day with his poison pen articles of loaded demands and accusations for past govt
    The one which comes to memory was Loveridge tirade of rants abd raves asking for his tax refund now Lol he got to go begging cup in hand to Mia for tax breaks
    Too sweet for words jumping for joy .
    Whoopie

    Liked by 1 person

  • Guess loveridge realise he cant win this round and he gone for cover

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  • Bernard Codrington

    @ Adrian

    Does not the individual investment strategy of each hotel add up to the whole?

    Are the business plans presented to the banks internally sound?

    Do these business plans take into consideration the risk of credit and market risks?

    The banks are financial intermediaries . They lend the hotel sector the collective savings of wage and salary earners. Should they not execute their fiduciary responsibility to their depositors/ customers?

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  • Bernard Codrington

    I meant to type “excercise’ not “execute”.

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  • Bernard,

    Do the retail banks not also ‘print’ money when they lend?

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  • Now with Charles Hubert the gran wuzard of the Private Sector and saboteur of past govt plans out if the way
    The blp hands are free to do what ever they dam please not favourable to the hotel industry in a conservative formula
    One would think for all the time in existence and a caravan of concession having past govt bending over backwards to please them. The hotel industry. would be the last to be uttering a word against any govt policies that does not give them special treatment
    Just like every tax payer have to bear the burden so should the hotel industry
    Furthermore after nauseating years if complaining “it is not enough” it is time for them to share the load and shut up

    Liked by 1 person

  • Bernard Codrington

    @ Hal

    Let us not get into academics. Banks can only print money if they are allowed to do so by the regulating authorities. Most regulators monitor the ratios of loans to deposits.

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  • @Bernard

    You could have added the risk appetite of finance houses to lend to the hospitality sector given penetration?

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  • Is Loveridge comparing the lending environment of 1989 to today? I just wasted a whole minute of my life that I can’t get back.

    Liked by 1 person

  • Bernard,

    I am sure for your degree you have attended seminars on retail banks and ‘printing’ money. Let me explain: when an individual or business goes in to a bank to borrow, the executive makes a decision one way or the other. If s/he decides to lend, they open an account, give you a cheque book or other authority to withdraw money – all without any ‘real’ money passing hands. The borrower can then go to the cashier and start spending. That is what is called printing money by retail banks.
    There is nothing academic about that; it is basic financial economics. The waffle about risk appetite and penetration can b ignored.

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  • Bernard,

    “There are several conflicting ways of describing what banks do. The simplest version is that banks take in money from savers, and lend this money out to borrowers. This is not at all how the process works. Banks do not need to wait for a customer to deposit money before they can make a new loan to someone else. In fact, it is exactly the opposite; the making of a loan creates a new deposit in the customer’s account.
    More sophisticated versions bring in the concept of ​‘fractional reserve banking’. This description recognises that banks can lend out many times more than the amount of cash and reserves they hold at the Bank of England. This is a more accurate picture, but is still incomplete and misleading. It implies a strong link between the amount of money that banks create and the amount that they hold at the central bank. It is also commonly assumed by this approach that the central bank has significant control over the amount of reserves banks hold with it.
    We find that the most accurate description is that banks create new money whenever they extend credit, buy existing assets or make payments on their own account, which mostly involves expanding their assets, and that their ability to do this is only very weakly linked to the amount of reserves they hold at the central bank. At the time of the financial crisis, for example, banks held just £1.25 in reserves for every £100 issued as credit. Banks operate within an electronic clearing system that nets out multilateral payments at the end of each day, requiring them to hold only a tiny proportion of central bank money to meet their payment requirements” (Quote)

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  • Off topic
    Pirates of the Caribbean with a deadly twist, The Washington Post is reporting on piracy in the Caribbean alleging that the Pirates are operating from Venezuela and Trinidadian fishermen are their primary targets but there have been incidents off Guyana and St. Lucia.

    This against the background of Ecstasy and the assumption that maritime activity is being monitored throughout the Caribbean.

    The Post has a paywall but I believe everyone has access to the articles provided they don’t exceed a predetermined monthly limit.

    https://www.washingtonpost.com/graphics/2018/world/pirates-return-to-the-caribbean/?utm_term=.9fec7f9ff64d

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  • Bernard Codrington

    @ David BU at 1:07 PM

    Your point on market penetration or saturation would have been included under market risks in the Business Plan submitted to the Bank.

    @ Hal

    I worked on both sides of the Money , Banking and Finance counters. That is in Regulatory Institutions and in banking and finance. Even after retirement I keep up to date through reading, attending conferences and following financial developments world wide.

    Thanks very much ,however ,for your efforts . But we are hijacking Adrian’s submission. We should debate within the parameters set by his article.

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  • Thanks Bernard, Northern Observer made the good point that to push start a stalled hotel property compared to a going concern must have colored Adrians application. Boutique hotels have a niche if well presented. Maybe Adrian should covert to AnB!

    Liked by 1 person

  • “The Bermuda Tourism Authority (BTA) says visitor spending has risen for the tenth consecutive quarter.”

    http://www.nationnews.com/nationnews/news/185426/visitor-spending-bermuda-rises-10th-quarter-row

    What is Bermuda (20.5 RH sq miles population 63 779, GDP $5.6 billion) doing that effing Barbados (166 sq miles, population 277 821, GDP $4.6 billion) not doing?

    When are we going to admit that we are full of BS?

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  • @Ping Pong

    Please watch the press conference posted above from Symmonds, your answer will be discovered.

    Liked by 1 person

  • Sorry whenever I listen to politicians for more that 5 minutes I get a rash! Stop the talk and act!! Follow success eg Bermuda, Iceland,
    800 000 passengers visited Barbados and we earned $57 million while Bermuda got 300 000 passengers for this year so far earning $96 million.

    Bridgetown looks like a dump.Start there.

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  • And a world heritage site to boot!

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  • Sandals got concessions, people are employed and getting the necessary skills.Food on the table. Sandals is going to soon commence investing in another property on the west coast even with all the dark economic skies on the horizon.Employment, Skills , Food on the table. We will benefit from more exposure via Sandals’ marketing efforts.
    Remember all the negative talk about Sandals on BU. The fire crackers and little star lights gone silent. Remember all the negative talk about Mark Maloney ? He is going to get his Hyatt too…more silence………….firecrackers land in water; starlights as usual burn out quick.

    In the mean time we can read this column………….

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  • @ Ping Pong August 13, 2018 4:30 PM

    “The Bermuda Tourism Authority (BTA) says visitor spending has risen for the tenth consecutive quarter.”

    http://www.nationnews.com/nationnews/news/185426/visitor-spending-bermuda-rises-10th-quarter-row

    What is Bermuda (20.5 RH sq miles population 63 779, GDP $5.6 billion) doing that effing Barbados (166 sq miles, population 277 821, GDP $4.6 billion) not doing?

    When are we going to admit that we are full of BS?

    The answer may simply be the right thing for the moment. Its folly to compare Barbados and Bermuda? We are a former and they are a present British colony. The hidden hands that guide Bermuda are not evident in Barbados. Having less persons with fewer special interest may allow Bermuda to do stuff they embark on. Bermuda is about the size of CH CH. think about only governing CH CH it maybe al lot easier than having ot add ten other parishes.

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  • In a nutshell you are saying that we have failed to train our minds correctly in the post colonial period.

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  • Sirfuzzy

    Maybe we are too bright for our own good!

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  • David August 13, 2018 7:07 PM

    I will use a bible story(or truth) to highlight why i think Barbados is where we are at now. The bible says that the crowd was given the choice of Barrabas or Jesus. Jesus the perfect man with no sin; and one who demonstrated he was a healer; an honourable person; full of integrity etc , Barrabas was considered a terrorist; probably a fraudster; thief etc. We know who the crowd chose. Morale of story. when faced with difficult but often clear choices we the ppl of Barbados and our leaders have chosen to follow the wrong path.

    You often say the political party say one thing on the campaign trail to get the vote and then worry about governing if elected. Often they do the opposite thing said on the campaign trail. I do’nt know about you but that is a disconnect. You may say that all and sundry(politicians) does that; it called modern day politics. etc. But i repeat there is a “disconnect”.

    How can we expect any thing other than what we practise to be the “modulus operandi” of the society. As RPB said ” if u plant potatoes you cant expect to reap casava” But then again if you are about fooling ppl you will just say that and expect some to believe u?

    Bajan adage. “too honest to poor” i cant understand wha that is meant to instill into anyone ; to me it says corruption is good. sometimes we need to forget some of the “BS” the older folks espoused as “wisdom” and relearn what we want for our country and ourselves as a nation..

    Liked by 1 person

  • @sirFuzzy

    We have had discussions on BU over the years about what is a democracy in the context it is practiced by Barbados. Whether a benevolent dictatorship is not what is ideal to eliminate the army of occupation and clutter of civil service bureaucracy. The point here is that there is no perfect system, our challenge as a SID country is to determine the setup that will work optimally for us. Look at China, that system works best for them given their set up. It is not about them operating a communist system but more one fit for purpose. A controversial perspective to be sure. The struggle continues!

    Liked by 1 person

  • Ping Pong August 13, 2018 7:21 PM

    Maybe we are too bright for our own good!

    I have never being told that before. But i am old enuff to know that there was a song when I was a teenager or younger that said ” I was a sheep; some years ago but i am not a sheep any more. meek mek mek mek meekkkee etc”

    I was told to go to school and learn, it was my passport. I did take in as much free education as i could , but i am no scholar by any stretch of the imagination.

    I think we are sheep(citizens) on a pasture we are not supposed to be a thinker. We are to have blind and complete faith in a leader. Maybe the soca song from TNT’ “Follow the leader” should our new anthem.

    Barbados is not a failed state, but more like a floundering state. A fish that is caught i a situation where he has insufficient water to survive. As opposed to working together to find deeper water we are busy building gallows; selecting jurors and constructing the new courthouse to put on trail “ourselves” for letting the water out of the fish bowl. We got this ass-backwards. Get yourself into deeper water then consider the before mentioned activities..

    Just my take.

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  • Look at China, that system works best for them given their set up. It is not about them operating a communist system but more one fit for purpose. A controversial perspective to be sure. The struggle continues!

    However; u need to know what you really want. Give it a try and deteremine what tweeks are necessary.

    My dad often told me when he was a live and i was younger. “if you Fool me once; i will probably forgive you, but when you(meaning me) fool yourself your are well fooled”.

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  • Piece Uh De Rock Yeah Right

    @ the Honourable Blogmaster

    Your assistance please with a comment to Sir Fuzzy, thank you

    Like

  • ” At least 7 000 visitors came to Barbados during the just ended Crop Over festival using the growing Airbnb option.

    The figures made available to THE NATION on Monday by an Airbnb official showed that an increasing number of visitors

    are by-passing the traditional hotels.”

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  • @Hants

    Recall advising Adrian to explore carving his property to participate in AirBNB. Lease parts of the property if it can be partitioned?

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  • So Adrian is back in business? Did he not close operations and put his property up for sale about two years ago after complaining about not getting his tax refunds, no financial help, etc?

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  • Piece Uh De Rock Yeah Right

    @ the Honourable Blogmaster

    I had submitted a comment to SirFuzzy as it related to the dual jobs that Senator Lisa Cummins has on two? tourism related entities, that of Chairman the Port and the other one tha Kerrie Symmonds created on something that i dont remember now.

    I had queried what his wise father might have cautioned him on nuff jobs and being drawn in multiple directions at the same time.

    I mean after all, if i have 4 jobs which demand 1/4 of my time does that mean that i get 1/4 of the pay?

    Ohhhhhhh I sorry it is only the rabble and sheeple that getting the cuts, during the IMF stipulated requirements, my apoloigies

    Like

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