Property Matters – The Sandals MoU (3)

Two weeks after the publication of the Tobago Sandals MoU yet there has been no cogent defence of these detrimental provisions. The stark analysis is that the provisions of that MoU all favour Sandals’ interests, so much so that I am frankly wondering if they were the authors. Serious and inescapable questions of professional responsibility arise, given the eminent named persons and State Agencies said to have been involved thus far.

The reputable economist Dr Vanus James, writing in the TapiaHouse blog on 10th December 2018 described the Tobago Sandals MoU as ‘A road-map to economic ruin’.

The starting-point for me was to tackle the question put to me the morning before by a media colleague from Tobago as to my being ‘a Trinidadian‘ and my role in questioning these proposals for what is certainly the largest-ever single development in Tobago. The simple fact is that ours is a tiny Republic such that those positions hardly seem to be credible. After all, if one were to adopt such a position we could end up excluding the Charlotteville opinion for a Buccoo proposal. More seriously, that position is entirely incompatible with our Regional aspirations – after all, why should we in T&T bother with Grenada which is 90 miles away or even Barbados, which is a whole 270 miles away. You see?

The main provisions are in this table.

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33 comments

  • It seems all these leaders once elected by the people and given titles, suffer with the same DISEASE….they apparently ALL lose the ability to NEGOTIATE contracts to benefit the PEOPLE WHO ELECTED THEM..

    The problem as can be seen island to island is that Caribbean leaders LOVE TOO MUCH BRIBES….and it is time they start going TO PRISON…for their LOVE OF BRIBES…a message has to be sent that business people robbing Caribbean treasuries and pension funds will no longer be tolerated …these are clear thefts and highway robbery by business people.

    Cause it’s very clear if Sandals wants to build a mega hotel to create low paying jobs while getting decades of concessions. ..SANDALS SHOULD BE FUNDING THE PROJECT…not taxpayer’s money.

    “The stark analysis is that the provisions of that MoU all favour Sandals’ interests, so much so that I am frankly wondering if they were the authors. Serious and inescapable questions of professional responsibility arise, given the eminent named persons and State Agencies said to have been involved thus far.

    It seems clear that the State will have to borrow the funds required for these large-scale Resorts. So what will those borrowings cost us? Have we agreed any provisions to ensure that our returns on this investment are at least enough to cover the cost of the borrowings? In my view such provisions are fundamental and must be included. “

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  • No Rule of Law when crooks are in charge hidden by the Media, 30 crooks down and 30 more to go! Next elections

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  • Vincent Codrington

    @ David Bu

    I hope the BU Household is getting a free lesson in how the modern financial and economic system really works. This is a ringside seat at how financialisation is shifting wealth from the poor to the greedy and rich. I hope the BU bloggers will revisit their inputs to the comments they made on the Hotel Corridor Blog yesterday.

    There is always more in the mortar than the pestle.

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  • @Vincent

    The more things change they more they remain the same.

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  • Vincent Codrington

    @ David Bu

    AND YES
    It is rocket science. The latter is not difficult. It is a systems methodology. One examines and quantifies the risks. Many risks cannot be quantified but we need to be aware of them and take appropriate guard.

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  • Of interest is Donald Trump used the same approach in building his empire in NY.He used the existing tax laws and conned the State into giving his group big concessions.There was the time Butch used to sell stoves and refrigerators.He conned the Jamaican Government into giving him control of Air Jamaica and promptly sold the seats cheap and filled his hotels while Air Jamaica went further south into more unsustainable debt but Butch was building his empire at taxpayers expense.The days of Sirs Edward Cunard,Ronald Tree,Roderick Brinkmann and the monied class which brought its investments,are over.The investors are now the man in the street,the tax payer and the politicos are living high off the hog likei Stinkler and Dem so.
    Hotels like Coral Reef,Crane,Paradise,Caribbean,Royal et al,made Barbados the gem of the Caribbean.Not people like Butch the stove salesman .

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  • The Sandals model is one that sees too much money stuck offshore. To many concessions have to be offered. The upside is that the brand is strong and there is benefit to the country that translates in savings in marketing dollars.

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  • @Vincent,

    Plse give us a masterclass in how the modern financial and economic systems work.

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  • Butch and Sandals are bottom feeders, just like the low class wannabe hoteliers and con men in Barbados…they are not in the islands to grow the economy OR enrich the citizens, they are there to exploit, tief and enrich themselves…all of them.

    Jamaica allowed him too much latitude and so did the other Caribbean islands that is why he thinks he can say and do as he feels. in the islands …he sure was not expecting to be put firmly in his place when he decided he had some right and could say what he wants to turn bajans into poverty and suffering people with no welfare to ease the suffering.

    … he should not have been allowed back into Barbados ever again after the Paradise mess, but when ya have weak governments and even dumber government ministers, that is what happens..

    Liked by 1 person

  • Vincent Codrington

    @ Hal at 12 :53 PM

    My days of tutoring and lecturing are long past. You will have to learn by osmosis. Please review the submissions of fellow bloggers above. Many of them appear to understand the issues raised by Afra Raymond.

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  • @Vincent,
    If the knowledge you demonstrate on BU is typical of your lecturing and tutoring, then I am glad I have never been one of your students. My great fear is the level of understanding of financial and economic matters demonstrated not only by BU, but also our political masters.

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  • Isn’t this hotel to be OWNED by the GORTT though, and Sandals paid a management fee?

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  • “The stark analysis is that the provisions of that MoU all favour Sandals’ interests, so much so that I am frankly wondering if they were the authors. Serious and inescapable questions of professional responsibility arise, given the eminent named persons and State Agencies said to have been involved thus far.”

    Maybe that is why Afra and others want to know…as citizens who have the RIGHT TO ASK….why in their MOU..that Sandals seems to be benefitting much more than the taxpayers whose money will be building a mega resort…

    Trinidad already has the Hyatt brand, lovely experience for those who HAVE been there…. it is not like they need Sandals to manage any hotels for them..so why the greed…questions must be asked and ANSWERED.

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  • Isn’t Hyatt Trinidad, Hilton Trinidad etc all based on the same model–GORTT builds them and the international chains manages/operates? #alwaystalkingwithnofacts

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  • Hyatt is downtown , Sandals is intended to operate in a different segment. This comment is away from the financing model.

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  • David

    My comment relates to someone talking about the money remaining overseas. It have not commented on tax waivers or nothing of the ilk. All I am pointing out is that GORTT owns Hyatt etc and will own Sandals if it is built.

    https://www.trinidadexpress.com/news/local/b-hyatt-hitch/article_9f653139-c0bc-5977-98c0-a6ec214a9525.html

    https://newsday.co.tt/2018/01/31/govt-splashes-7-5m-into-hilton-pool-renovation/

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  • Vincent Codrington

    @ Enuff at 5:17 PM

    I share your understanding of the model used by the chain of hotels mentioned. It has been so for decades.

    Hotel chains are not interested in real estate. They are interested in profits.The value of real property fluctuates violently in the capitalist system. The GoB built and owned The Barbados Hilton since 1966. I am unsure whether it ever yielded an acceptable rate of return for the taxpayers.
    The subtle point being made is that if local entrepreneurs construct a hotel ,it does not have the same impact on the locai economy as Foreign Direct Investment. Local entrepreneurs borrow or raise funds in the local market but the funding of imported inputs into the construction is a charge on the country’s foreign reserves.
    Hence the relevance of the question :Where were the promoters of the Hyatt Hotel sourcing the funds for its construction?
    I hold the view that the T&T experience can be instructive to us in making similar decisions.

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  • @Vincent,

    What about the theory of comparative advantage?

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  • Vincent Codrington

    @ Enuff

    Would you indicate for my edification what the mnemonic GORTT is?

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  • …if the TT government is spending taxpayers money building the hotel…if Sandals is the management…they are NOT SUPPOSED TO BE MAKIG MORE MONEY OR BENEFITTING MORE FROM THE PROJECT THAN THE TAXPAYERS WHOSE MONEY BUILT THE HOTEL..

    …not everyone ACCEPTS being robbed…and then claiming, well we got robbed, but we own the hotel….

    so how does that help…lol…

    ….and ah know Afra does not want to hear that he should not complain that Sandals would be ripping off the people, that he should be glad THEY ARE GETTING SOMEONE TO RUN THE HOTEL…..that level of ignorance IS found ONLY IN THOSE WHO ARE USED to being victims…AND VICTIMIZED.

    Liked by 1 person

  • Vincent Codrington

    @ WARU at 6:20 PM

    I agree with you 100%. The GoB share of the of the revenues should be higher. But as I am wont to say one must first seek to understand the game and the rules of the game. Trust but verify.
    The original objective was that Hilton was supposed to have a demonstrative role as to what can happen in tourism on the South Coast.

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  • Vincent…I heard about that, but it appears it is the norm……..rip off the taxpayers VIA government ministers whose egos are inflated with titles….and then everyone acts like the thieves are doing the people a favour…a real. big favour..

    ….that is why Barbados cannot progress…all this ACCEPTANCE OF THE PEOPLE BEING ROBBED…then bowing and scraping to the thieves…while literally .begging them to do it again…AND NOT A FELLA SEES ANYTHING WRONG WITH THAT.

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  • Y’all mind real one-tracked eh. Once again you’ve been shown up as a purveyor of wrong information. When cornered you pull the default button–thiefing. You trumpeted the success of Hyatt ($320m in after tax profit over the last 5 years by the way) and stated Tdad did not need any outsiders to run it. I merely pointed out Hyatt is in fact managed by outsiders. I have long been arguing for a Caricom investment framework that promotes a collaborative approach to FDI and eliminates the one upmanship practice that benefits the likes of Sandals. But you may carry on…I guess I am a PNM yardfowl now plus the blog canonises false prophets.🤣🤣🤣

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  • Vincent Codrington

    WARU
    I know that you know what game is being played. And how it is being played.Understanding teaches wisdom.

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  • Enuff…Ah said Trinidad did not need Butch Stewart….in that context it would mean to ROB THEM… unless someone else told you the same thing…I would not exactly call Stewart an outsider….but he is not a nice person…so in that context…I am correct..one need only ask Antigua’s prime minister Gaston Browne about Butch…just do some research eh…if ya had seen the video…ya would not have made that comment.

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  • Vincent…what makes it vey ugly…most Bajans don’t know the half.

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  • Did the Antiguan government build the Sandals hotels in Antigua?

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  • Enuff…it does not matter who builds the hotel…as long as taxpayers money is INVOLVED…the TAXPAYER’S SHOULD BENEFIT JUST AS MUCH OR MORE…since concessions are given sometimes 40 years into the future and the taxpayers are ALWAYS SHORT CHANGED….and…the GREEDY always want more and more concessions…so the greedy will always be SHIFTING THE GOAL POST…after the life of the contract….

    ….if ya look at it from that point of view instead of looking at it that those who manage hotels have a right to concessions AND more benefits than taxpayers.

    it is not ROCKET SCIENCE..

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  • In this instance here, there is ABSOLUTELY NO REASON for any business in Barbados to ask for anymore concessions from taxpayers via government ministers, neither old business nor new businesses, hotels in particular, should be getting another dime of concessions in Barbados…new start ups need tax breaks…established companies do not need to be hanging on to the treasury and pension fund.

    Their corporate tax was REDUCED from 30% to a sliding scale of 1%- to 5%….let them get their lazy parasitic asses up and produce to export…stop sucking on taxpayers…they have STOLEN ENUFF….it is a measure that should be COPIED ACROSS THE CARIBBEAN TO DETER CORPORATE THIEVES.

    https://barbadostoday.bb/2018/12/21/were-not-out-of-the-woods-yet-stephen/

    “Stephen pointed out that progress in 2019 would also depend on the private sector changing the way it does business from being locally-driven to export orientation, following the Prime Minister’s recent decision to lower corporation tax from 30 per cent to a sliding scale of one to five per cent.”

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  • @Gabriel
    The thing of being anonymous on this or any forum like BU is that you can write total crap and nonsense and get away with it. I refer in particular to your submission made December 20, 2018 at 12:06 PM

    I was employed at Cunard Paradise Beach Hotel many years ago at top Management level. Being a part of Cunard they were able to legally submit accounts to the Barbados tax authorities showing marketing costs that in my opinion were extremely inflated. This meant that their tax burden was significantly reduced. This hotel, like all responsible companies on the island used every means possible to reduce their tax liability.

    Some years later you will remember that many prominent doctors, lawyers and others took loans from the Barbados Development Bank and invested in apartment hotels. This was especially true for the Sunset Crest area. Although apartments, the tax benefit was accrued if these properties included a working restaurant. In most part, this was ignored and no one ever reminded them or forced them to operate one.

    The fact is that the Government (read tax office) does not have any kind of meaningful control over the hospitality sector. To my knowledge they do not to this day employ staff with hotel management knowledge who have the capability of being able to break down a hotel rate to ensure that the correct tax is paid. Far be it for them to understand the intricacies of an all inclusive rate which may include transfers, room, food & beverage, water sports, excursions, service and tax etc. They need to have persons who are knowledgeable and qualified and are prepared to do battle with a hotel´s financial controller to show that their tax demand is correct and viable.

    This lack of knowledge unfortunately affects not only the Treasury but also the unions as service charge to their members is paid on food and beverage and room revenue. A reduction in revenue is a reduction in service charge.

    When hotels collect their revenue offshore and then decide themselves what monies they should to the island, it is near impossible to check in any meaningful way. BUT, there are ways and if you follow the exchange in Antigua between the Government and Sandals, you will see that Antigua lost millions of dollars in uncollected tax revenue.

    Liked by 1 person

  • WARU
    The key difference is that GORTT would own the property, therefore unlike Bdos etc they would not be depending solely on taxes, jobs and free marketing, but also profit/ROI. They must have weighed up the impact of the Sandals and Beaches brand on Tobago’s tourism product against the lost of revenue in taxes (wouldn’t the government entity be paying the taxes?) and believe that on balance, the concessions are small. Still believe a more collaborative mechanism for FDI in the region is required though.

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  • Yep..and nuff, nuff DIVERSIFICATION…

    Liked by 1 person

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