The Adrian Loveridge Column – Thomas Cook Could be a Match

It was fascinating listening and watching online the Appropriation Bill and Estimates 2019 from parliament last Monday, which I understood to be under the auspices of the Standing Finance Committee.

The ground breaking gathering within parliament of several leading private and public sector tourism decision makers will hopefully help our elected representatives acquire a better overall understanding of the industry.

It was clear that many of the members asking questions were doing so in the specific concerns of their constituents, rather than in the national interest, but that should not minimize their contribution, as that is what they have been elected to do.

One of the subjects discussed was the development possibilities of new-build, transformation or re-opening of existing or additional hotel plant. The Minister of Tourism brought up the subject of the now derelict Silver Sands Hotel which has remained idle and unused for several years. The Minister, also raised, what I thought was a very good point, that Government (any) should not consider investing in a project that would be unprofitable for private sector involvement.

For those of us deeply affected and disadvantaged by the Hotel and Resorts (GEMS) folly, where somewhere around $600 million was squandered, this new policy is music to our ears, if seriously effectuated.

The final insult to the GEMS disaster was witnessing at least two of the taxpayers owned properties being sold off at far below valuation and building costs, again dramatically impacting on the viability of private hotel operators, who had been forced to pay realistic property prices.

Also mentioned briefly, was a proposed upcoming tourism investment conference, which later I discovered is to take place on 24th April 2019. While no further details were publicly available up until the time of submitting this column, I sincerely hope that time will be taken to specifically target potential smart partners who may be tempted to commit to Barbados.

Thomas Cook Airlines currently operates seasonal flights from Gatwick and Manchester offering a lower cost alternative to the United Kingdom from the year-round established carriers like British Airways and Virgin Atlantic. From their website, it appears they will not operate in November this year, which for one month alone is a loss of 1,600 seats. It may not be common knowledge that the Thomas Cook Group has announced further new openings of another 20 own-brand hotels between now and the end of 2019, taking its portfolio to over 200 hotels with 40,000 rooms, making it one of the top 40 largest hotel groups in the world.

These are currently mostly in the greater Mediterranean area but they also have a presence in Egypt and Gambia. While recent doubts have emerged concerning the company’s trading losses and possible disposal of the airline division, the hotel division looks like it’s in for the long term.

Enric Noguer, Thomas Cook’s chief of hotels and resorts, stated ‘Expanding our own-brand hotel portfolio is success to the whole business. Operating and overseeing a group of well managed and high quality hotels that our customers recognize and turn to for better service and reliability they experience is an important part of our strategy as a group’. So could a Thomas Cook, branded Silver Sands Hotel, present a match made in heaven, while at the same time help retain and seasonally expand the airlines flights to Barbados.

The Adrian Loveridge Column – Blue Horizon Hotel ‘Given Away’ to Bjerkham

If I have one single regret over the last thirty years, it is that after former Prime Minister Owen Arthur was gracious enough to grant a personal meeting to discuss our small hotel sector and in particular, the then planned GEMS project I did not push hard enough to persuade the PM to abandon what was destined to become probably the biggest tourism policy disastrous decision in recent history.

After writing off hundreds of millions of dollars of accumulated bad debt through totally inept management and systematic predatory pricing, we seem to have finally come close to a conclusion of this almost endless nightmare with the recently announced sale of Blue Horizon Hotel at the fire sale price of a quoted ‘around BDS$ 5 million’ to Blue Development Inc.

Usually reliable sources advised that the Land Tax Valuation was $17 million.

I could not find a company under that name registered with the Corporate Affairs and Intellectual Property Office (CAIPO but there was one registered on the 29th September 2015 under Blue Developments Ltd (#39858).

On the 24th February 2010, the Nation published an article appraising the remaining Hotels and Resorts Ltd properties at $74 million, with accumulated debts of $229 million. That would have valued each remaining room at $303, 278, so more than seven years later to sell Blue Horizon at less than $50,000 per room gives validation to the phrase ‘fire sale’ me thinks.

Again, according to reports in the media the hotel will eventually become one of the Hard Rock branded hotels. While wholeheartedly appreciating the desire to have big brands appealing to all demographic markets, just a cursory look at the Hard Rock Hotel website, seems to indicate that this location is so far removed from the current offerings in other destinations, it is extremely difficult to imagine that it would add significantly to their current product offering.

Bearing in mind the named developers, while mentioning other taxpayer and private sector projects, Sapphire Condominiums and the proposed Hyatt, perhaps the plan is to rebuild the structure to 8 or even 15 floors high. The Nation article stated ‘The Hard Rock project is expected to mirror that at Sapphire Beach’.

Even then it is still on the wrong side of the road, unless once again the people are not aware of any outline planning permission having already been granted without any public consultation.

The current average size of a Hard Rock Hotel is 600 rooms with Punta Cana (DR) the largest having 1,787 rooms and the smallest, Palm Springs with 163.

It appears most of the other properties within the Hard Rock Hotel group are all-inclusive, which raises the question again, will yet more concessions be granted to enable refrigerated containers to be imported duty and tax free? As their website proudly boasts the most competitive room rates are obtained by booking directly giving added opportunity for the potential to keep payment and revenue offshore. And lots of mentions of casino’s in other destinations.

Will this be another ‘compromise’ to attract investment?

The other question which must be asked, is did any other interested party place an offer for Blue Horizon, and if so, what amounts were proffered?

Maybe Government weighed the overall potential benefit and decided on a lower offer, but are they truly qualified to make that judgment, or was this simply yet another opportunistic land grab by property speculators at dramatically below market value?

Call for Immediate Forensic Audit into the Operations of GEMS


Rodney Wilkinson in handcuffs

The news that the bagman has been arrested on 67 counts of fraud is big news in Barbados. In BU’s opinion it ranks in the top three memorable moments since our Independence because of his high profile status given his connection to high profile politicians. Time will tell if our competent legal system will work to make at least 25% of the charges ‘stick’.

Those who wonder if the bagman would have had to suffer the same public ridicule as the former Prime Minister’s brother Richard Arthur had a different administration been in office, probably not. The scenario playing out gives hope to the optimists that the wheels of justice may yet turn on one of its own.

Rodney Wilkinson was the CEO of GEMS/HRL project that included at the time Savannah Hotel, Blue Horizon, Time Out, Eastry House and Silver Rock properties. The W in JAWS is for Wilkinson?

BU will be labelled as being foolishly optimistic by some to expect the justice system to wheel into motion to work like it is suppose to in the matter of Wilkinson versus Globe Finance and NASSCO.  The Auditor General has been unflattering in several reports regarding the management of Hotel Resorts Limited aka GEMS. In light of recent events BU is calling for a forensic audit into the operations of Hotel Resorts Limited in the period when Wilkinson was CEO.

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Bad News for Barbadian Taxpayers, JAWS has Returned!

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.

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#1 Sector Managed Under Veil of Secrecy

Adrian Loveridge - Owner of Peach & Quiet Hotel

Adrian Loveridge – Owner of Peach & Quiet Hotel

In the editorial column of another publication recently, the writer seized on what I thought was a very pertinent question. ‘How much of the enormous government taxes tacked onto flight tickets actually go toward the maintenance of our airports?’.

In the case of our own airport, Grantley Adams International (GAIA), the taxpayer may never know the answer, because even though the facility is wholly owned by Government, it feels no obligation to publish its annual audited accounts for public scrutiny. A polite request made a few days ago for their latest fiscal statements, met with a deafening NO!

While its difficult to draw any direct similarity, I wonder if ‘we’ the taxpayers had been able to view the accounts of another Government entity, the ill-fated Hotels and Resorts Ltd (GEMS) in a timely manner, perhaps then more pressure could have been brought to bear to prevent the haemorrhage of hundreds of millions of dollars. So to try and calculate any comparison between the amount of taxes paid by departing passengers and what proportion GAIA Inc., retains towards operational and capital costs is almost impossible.

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What Needs To Happen Is This…

Adrian Loveridge - Hotel Owner

‘What needs to happen is this…we have to get out of this notion that the Government is here to prop up every business’ –  – David Rice CEO/President – Barbados Tourism Authority (Barbados Advocate – 24 February 2011)

From a tourism perspective that is of course unless your business is called Hotels and Resorts Ltd (GEMS). In which case you will receive almost unlimited support to ‘prop’ you up, including a reported BDS$247 million (losses) or nearly three times the annual budget of Mr. Rice’s organisation!

The majority of our small hotels have been left floundering while GEMS has for over ten years been ‘propped-up’ by Government and allowed to practice persistent predatory pricing.

No part of the BTA’s nearly BDS$100 million budget is dedicating to marketing the majority of our small hotels and there is still no functioning committee to support this sub-sector with the private sector trade association (BHTA).

The BTA chairman, Ralph Taylor is quoted on StarCom news this morning that were ‘looking for value-for-money’, yet three weeks after being awarded the ONLY hotel on Barbados to be recognised as one of the 11 Best Value Caribbean Hotels, our property has not been highlighted by the BTA at all.

Mr. Rice has given the impression that there has been previous support for the majority of our small hotels by stating ‘Local businesses in the tourism sector need to take on the responsibility for marketing their own product, and no longer rely on the government for support in tough times’.

At best this statement is entirely erroneous.


Adrian Loveridge - Hotel Owner

My deepest sympathy goes out to Mrs. Mara Thompson, her daughters and entire family. I would like to hold onto my special memories of the late Prime Minister and recall one of our few exchanges. Soon after his illness was announced, you could see the strain on his face, and in a simple attempt to bring a smile, I emailed him a YouTube extract of a BBC ‘Yes Prime Minister’ episode. In his inimitable style, a few minutes later, a message came back, ‘Adrian, Thank you, it’s my favourite programme’.

Every time I visit the Hilton, I leave thinking the same thought. Didn’t ‘we’ miss an incredible opportunity?

Whether it was a decision taken due to financial restrictions or simply lack of vision, perhaps we will never know. The location must be one of the most spectacular on Barbados. It has all the ingredients anyone could wish for. A protected beach, the long crescent shaped Carlisle Bay and both the Garrison Savannah and capital within comfortable walking distance.

Architecturally and structurally, I would have thought that it could easily have been incorporated, in the basement or on the roof. A single meeting space on one level of at least 10,000 square feet that has the functionality of sub-division.

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The Three Remaining GEMS Hotels Valued At $74 Million!

Submitted by Adrian Loveridge

According to an article carried in the Midweek Nation Wednesday 24th February, 2010 ‘the book value of the (GEMS) properties was only $74 million’.

How is this figure arrived at?
Reading from their own website, Savannah has 98 rooms, Time Out at the Gap, 76 and Blue Horizon 70. So a total of 244 rooms or a stated ‘book value’ of $303,278 per room with ‘accumulated debt of $229 million’. Put that in context to our little hotel of 22 rooms and it would value us at around $6.672 million.

One big difference of course, we have no outstanding debt and have been profitable for a consistent number of years. Both Time Out at the Gap and Blue Horizon need extensive refurbishment, if they are going to live-up to their stated ‘3star’ rating.

No private sector in their right mind would take on the massive debt burden over the equity value, so where does Government go from here?

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Over $150 Lost For Every Occupied Room Night

…at the four operational GEMS hotels up until December 2001.

482911378439951.jpgBased on a total inventory of 309 operational rooms and allowing for a higher than national average annual occupancy of 60%, Hotels and Resorts Ltd (GEMS) managed to lose more than $150 for EVERY single night each room was occupied. This is just one of the staggering facts revealed in the Barbados Business Authority and Broad Street Journal article ‘A Gem of a financial report’ by Pat Hoyos today.

What has happened after December 2001, of course is anyone’s guess, as the company has not submitted any accounts for 2002, 2003, 2004, 2005, 2006 and 2007. In this article, Pat Hoyos, mentions another capital injection of $150 million, then another $10 million to meet interest commitments.

It is no wonder that the Government is so reluctant to release more up-to-date figures!

Adrian Loveridge

12 November 2007

Related Stories

A Senior Barbadian Journalist Gives A Rare Insight Into The Challenges Of The Local Media Extracting Information From Government Regarding GEMS

Barbadians Do You Want To Discuss The Financial Statements Of Hotel And Resorts Ltd, AKA GEMS?



482911378439951.jpgI have been off the island for a few days, so it has taken a little while to catch-up on the news. It was with absolute incredulity I read a Nation headline dated Monday 17th September 2007 emblazoned Gems Glow – Mascoll: Properties can now turn a profit’. The article went on ‘The huge investment Government placed in the controversial GEMS hotel project has paid off where some of the properties can now be sold at a profit’.

A ‘profit’ after what! After writing-off what could be hundreds of millions of dollars of debt?

I will accept that the land value of the properties may have increased, but certainly not the properties themselves. You only have to take a look at Blue Horizon Hotel to see evidence of that fact.

What about the 20-30 rooms that are still left derelict and untouched?

It is very difficult for serious tourism industry players to follow the varied and at times 360 degree opinions of Mr Mascoll, but these comments beg disbelief. To draw the conclusions he has arrived at in this article must mean that he has studied in detail the latest audited accounts of Hotels and Resorts Ltd., something sadly the hard pressed Barbadian taxpayer has not been fortunate to. Mr Mascoll also made no mention of exactly where the funds from the sale of Eastry House and Silver Rock Hotel have gone too either. A question that the Minister responsible for the GEMS project has skilfully managed to avoid for sometime!

To infer that the GEMS project is glowing is a gross insult to every Barbadian, whether he or she has even a basic understanding of the tourism industry.

Adrian Loveridge

27 September 2007