On 2 February 2018, the Ministry of Tourism announced its upcoming symposium – ‘Digital Transformation within the Tourism Sector‘ – as a major event on Friday 23 February 2018, in conjunction with Massy Technologies and featuring speakers from Microsoft and IBM.

This is an ambitious project intended to examine big-data, the cloud, the digital customer experience and the prospects of the hospitality industry in our country. As such, these proposals should have our principled support, but there is real cause for a pause here, given the distinct reluctance of the State’s agencies to answer our queries on the agreements and performance of the large State-owned hotels.

The three largest hotels in our country are State-owned – Trinidad Hilton; Magdalena Grand (formerly known as Tobago Hilton) and Hyatt Regency – comprising about 45% of the established hotel rooms, at the better end of the market. The amount of Public Money invested via capital outlay in those hotels is estimated, from the public record, in the first sidebar. But what is of deeper interest to me is that far larger sums of money are generated in the operations of those hotels than the capital spent to create the actual facilities. Those sums are spent on rooms, meals, drinks, rentals for functions and so on.

We almost never get any real open discussion on the actual revenues of these hotels or the arrangements for sharing those monies between the State as property owner and the hotel operator.

The only two glimpses which disclose the operating revenues of these hotels were,

  1. firstly, the statement to Senate by then AG Anand Ramlogan on 10 June 2014 in which he disclosed that Hyatt Regency had been able to withhold the monies due to UDECOTT between its opening in January 2008 and June 2014. Some $334M was recovered by UDECOTT as a result of the actions of the then AG. It seems to me that we were only able to get a glimpse of the sums of money involved as a result of Ramlogan’s political motivation to score points against the late former PM, Patrick Manning, and his chief operator, the departed Calder Hart. What a glimpse it is! The State’s share of the earnings from Hyatt was $334M in a six and a half year period, about $51M per annum.
  2. Secondly, we can consider UDECOTT’s Financial Highlights, at the penultimate para on this webpage –

    “…In 2008, UDeCOTT became the owner of the first and only five-star hotel in Trinidad and Tobago. Revenue from the successful operation of this hotel experienced a significant level of growth from TT$168 million in 2008 to TT$282 million in 2013, a 67% increase as at December 31, 2013…”

Even if one makes the very conservative assumption of the first five years (2008 to 2012) being static at the stated initial figure of $168m and the subsequent five years (2013 to 2017) also being static at the higher figure of $282m, the total revenue from this single hotel can be estimated as follows –

(2008 to 2012) 5 X $168M =   $840M
(2013 to 2016) 5 X $282M =  $1,410M
                                    TOTAL    $2,250M

The Hyatt Regency earned a minimum estimated at $2.25 Billion in ten years, so it is certainly a lucrative venture. But, apart from those two glimpses, we are being denied the performance details for those hotels. The question is why? More to the point, how can we be headed to an age of virtual or digital tourism if the prevailing secrecy is maintained?

But it is not just a question of secrecy, since the reports which are available, the ones on which we ought to be able to rely, are themselves of dubious quality.

As State Enterprises, both UDECOTT (which owns Hyatt Regency on behalf of the State) and ETECK (which owns both Trinidad Hilton and Magdalena Grand on behalf of the State), are required to submit annual audited accounts to the Parliament as an essential part of their accountability obligations.

In the case of UDECOTT, the Parliament website shows its Consolidated Financial Statements for the years ending 31st December 2007 and 2008. In both cases, the Independent Auditors Report, was issued with a stern Disclaimer of Opinion –

  • Year ending 31st December 2007 – PWC stated –

    “…Because of the significance of the matters described in the basis for disclaimer of opinion paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, we do not express an opinion on the consolidated financial statements…”

  • Year ending 31st December 2008 – KPMG’s 2008 Report made an identical statement, but went on to conclude its ‘Emphasis of Matter’ section as follows –

    “…A letter of financial support from the GORTT (the government) would confirm its continued financial support of the Group as no reliable subsequent financial statements and cash flow budgets are available…”.

In the case of ETECK, the Parliament website shows its Consolidated Financial Statements for the years ending 30 September 2010 to 2016. In 2010, PWC issued qualified accounts and in 2011 also issued a Disclaimer of Opinion, which is considered to be significantly more severe than qualification. In the period 2012 to 2016, KPMG issued qualified accounts. In the entire period, key issues were noted with both the Trinidad Hilton and Magdalena Grand (Vanguard Holdings) properties.

Well I tell you.

Which makes me question the approach to this Digital Tourism symposium. Will it be possible to make progress in this important work if the crucial details on these largest hotels are suppressed?

APPENDIX: Capital costs of State-owned Hotels in T&T

Hotel Rooms Costs Comments
Trinidad Hilton, POS 418 $634M Opened in 1962 – the costs cited are being incurred in an ongoing refurbishment which started in 2008. 52 luxury suites were created by remodelling – no new rooms were added.
Tobago Hilton, now Magdalena Grand 198 $388M Opened in 2000, this hotel closed in 2008 for extensive renovations required by seablast damage.
Hyatt Regency, POS 428 $516M (original)
$122M (2016 refurbishment)
Opened in 2008 as part of the International Waterfront Complex
TOTALS 1,044 rooms $1.66 Billion
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4 thoughts on “Property Matters – Digital Transformation in our Tourism?

  1. why does the state need to own these hotels? Why not sell them to the public on the stock market and use the money to pay down debt or fill holes in the budget. Why the constant creation of new and unaccountable state corporations to aquire assets and manage inflows? We need massive downsizing. Let’s start with the Hyatt and Hilton.

    1. Stephen, as a Professor of Accounting and Brother Trini, I would be very interested in your views on the point I have unearthed on the use of either Qualified Audits or Disclaimers of Opinion in these circumstances…
      Thanks

      Afra

  2. You are spot on Mr. Salter. Surely the bigger issue is that the government has no business owning hotels, tv stations, flour mills etc. We have politics without ideology. Neither the unc nor the pnm has anything different to say about state company participation in the private sector. Afra is a national treasure for what he is doing. However other than lamenting the travesty of the lack of disclosure, which is a recurring theme for the state sector, I am truly interested in hearing his views on whether the govt should be in the business of owning business hotels and generally the concept of taxpayer funded companies which in my view has proved to be an unmitigated disaster.

    1. Hello Gerard,
      In my view, the State was compelled to make those large-scale hotel investments at the time they did, given the reluctance/unavailability of local investors to do so…of course the situation is different now, so there ought to be some shift in those investment models…the issue I am probing has to do with the actual management agreements/contracts and the performance of the hotels…

      Thanks for joining-in.

      Afra

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