Property Matters – Sandals MoU? Part two

Sandals MOU_ (3)

The previous article updated readers on my attempts to obtain the Sandals Memorandum of Understanding for the proposed high-end, large-scale resort development in Tobago. That proposed development is said to be a significant part of our country’s diversification efforts so it requires our sober attention if we are to understand what is at stake.

The model for this project is one in which the State either pays for or guarantees the financing of the new resort. The State would pay for the cost of design, financing, construction, fitting and furnishing of the new resort, all to the standards set by Sandals. The completed resort will then be operated by Sandals under a management agreement. T&T is unique in the Caribbean in that our largest hotels were funded by Public Money with the operators working via Management Agreements.

That is the model which has been used thus far in our State-owned hotels. That fact has been cited several times by the PM, quite likely to offer a degree of comfort to those who are unsure about this project. After all, we have done this model before, so what could be the harm if we go along the same road once more?

That approach to a major investment of this type does not offer me any comfort at all. Since September 2016 I have been pursuing a detailed research program into the State-owned hotels, with my colleagues from Disclosure Today and we have been solidly resisted. In my view, we do not have enough information about the existing State-owned hotels – Trinidad Hilton (1962); Magdalena Grand (originally Tobago Hilton, opened in 2000) and Hyatt Regency (2008) – to be confident about this approach.

The Management Agreements

The management agreement for only one of those three hotels is publicly available. That is the Trinidad Hilton one, which the Registrar General’s Department records as a registered lease.

In the case of Magdalena Grand and Hyatt Regency our efforts have been solidly blocked with all kinds of unsustainable objections. How could it be acceptable to publish the management agreement for a 418-room Hilton, yet it is somehow commercially unacceptable to publish the same details for a 198-room hotel?

Performance details and accounts

Apart from the missing management agreements, there is no willingness on the part of the responsible State Enterprises to release any audited accounts, management reviews or reliable figures. Our attempts to get those details have been solidly blocked.

Which is not to say that we have no information at all. Far from it, we have sporadic statements, released in a convenient timing and with a degree of fuzziness which can offer little confidence.

For instance, the Minister of Trade & Industry, Senator Paula Gopee-Scoon, told the Senate on 1st May 2018 that the Hyatt Regency Trinidad had made net profits after tax in the last five years of –

Year Net profit after tax, millions TT$
2013 75.7
2014 76
2015 66.3
2016 51
2017 60

Further questions were put to the Minister

“…Sen. Hosein: …Having regard for the decline in the profits from the period 2013—2017, can the Minister indicate what is the reason for this?
Sen. The Hon. P. Gopee-Scoon: I am not able at this time to give any concrete reasons as to why, but you should note as well that between 2016 to 2017 there has been at least a 20 per cent increase in the profits.

Sen. Obika: …Could the hon. Minister inform the Senate what dividends—because we have the profit figure, we understand the Government being a shareholder—applied to the Government for the respective years?
Madam President: No, I would not allow that question. Next supplemental question.
Sen. Mark: Could I ask the hon. Minister of Trade and Industry whether these net profit figures represent from your perspective, as the Minister, adequate returns on our investments at that particular enterprise?
Sen. The Hon. P. Gopee-Scoon: That evokes a subjective answer from me and I am not prepared to do that….”

Of course, in the absence of audited accounts, there is no clarity on Hyatt Regency Trinidad’s overall turnover or performance. You see?

In the case of Magdalena Grand, which is part of Eteck’s portfolio, the 9th April 2018 hearing of the Joint Select Committee of Parliament received these statements –

  • for every dollar earned by the Magdalena the operating cost was $1.60 or $1.70…this was the case even when the hotel had good occupancy in 2014 and 2015.
  • some may consider the Magdalena a three or four star resort, the physical condition did not say that.
  • the revenue per available room (RevPAR) for Magdalena declined from US $98 in 2014 to US $55 in 2017 which was “really below par.” other hotel groups operating in this country…had an average RevPAR of US $131…

It is beyond me how anyone could derive confidence in these situations, far less to propose that we proceed further on this basis. Well I tell you.

The Sandals MoU

On 11th May 2018, the PS at the Office of the Prime Minister replied to confirm that the MoU contained trade secrets and so could not be released, despite the clear statements by Sandals that there are no secrets. That reply was stamped ‘Immediate and By Hand’, yet it was mailed (from Piarco), so it did not get to me until Monday 18th June 2018.

My 15th June 2018 email to Sandals to ask them for the MoU, which they had stated to be no secret, received this reply…

From: xxxxxxx@sri.sandals.com
Date: Mon, 18 Jun 2018, 7:07 p.m.
Subject: Re: Request for Memorandum of Understanding with Sandals Resorts
To: afraraymond@gmail.com 
 
Dear Ms. Raymond,

On behalf of Mr. Stewart, who is currently traveling, thank you for your 
email.

We have reviewed your request and advise that the above captioned document 
is presently in review with the Government of Trinidad and Tobago and as 
such we are not at liberty to share.

We do appreciate your keen interest in the matter and ask that you contact 
the respective government officials for further details.

Sincerely,

EXECUTIVE ASSISTANT TO ADAM STEWART, Deputy Chairman

Next week, I will delve into the Mia Mottley intervention on the Barbados Sandals and the four page Sandals response to those concerns.

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5 thoughts on “Property Matters – Sandals MoU? Part two

  1. Local construction professionals [architects,interior designers, engineers and quantity surveyors] have very little, if any, inputs into these projects in which foreign professionals are engaged and paid for with taxpayers funds – should the government not insist on greater local participation similar to the energy industry so that we can gain some technical experience from these projects and thus a more sustainable human development?

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