Property Matters – Hotel Reservations

The concerted attempts to sell the Tobago Sandals project were driven by high-level Public Officials who repeatedly assured the public that the existing arrangements for the three State-owned hotels were working satisfactorily. So much so that we should be pleased that the existing arrangements were to be adopted for the new project. The two main promoters were PM, Dr Keith Rowley and the Minister in the Office of the PM, Stuart Young.

Of course, we now know, due to the unplanned publication of that Tobago Sandals MoU, what were the terms and conditions on which the State intended to engage that project. No other hotelier had ever had a deal like that.

But there is a deeper series of official conversations on these existing State-owned hotels which need to be spotlighted so that a better view can be had as to ‘Who is Who and What is What’.

I am relying on the official records in this one, with my sparing commentary shown below –

Hyatt Regency Hotel and Conference Centre

paulascoon-in-senateThe Minister of Trade & Industry, Senator Paula Gopee-Scoon, told the Senate on 1st May 2018 that the Hyatt Regency Trinidad had made these net profits after tax in the previous five years:

The profits realized by Hyatt based on audited account are as follows:
For the year 2013, TT $75.7 million;
For the year 2014, TT $76 million;
For the year 2015, TT $66.3 million;
For the year 2016, TT $51 million;
For the year 2017, TT $60 million;
All told, TT $329 million.

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….”
(pp. 4-5)

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

Note that the Minister of Trade & Industry has ETeck within her portfolio which is responsible for Trinidad Hilton and Magdalena Grand. Hyatt Regency is under UDECOTT which is under the Ministry of Housing & Urban Development. So, this all begs the question as to how come the Minister of Trade & Industry came to be giving the Parliament a report on an entity outside her portfolio. A report on which the Minister was either unable or unwilling to answer basic questions.

Trinidad Hilton and Conference Centre

Public Accounts (Enterprises) Committee hearing on ETeck of Wednesday 6th April 2016

[Then Senator David] Small: …I want to ask a question directly about the Trinidad Hilton upgrade…why are we doing these projects? What is the rationale? When I look at it on a pure financial basis…it comes back as a massive negative return.

So…when you decide to do projects, what is it based on? Is it that the Hilton is an infrastructural project of the Government and we are effectively subsidizing Hilton?Because there is no cash on a financial pure discounted cash-flow analysis, there is no return to the Government of Trinidad and Tobago on the $500 million investment for the next 15 years. Is it that the Cabinet tells you to do so and that is all you work with? And if that is the case then someone should say, well, this is purely an investment project, the Hilton is an investment project and we are subsidizing Hilton.

I would like to understand what is driving these decisions…if my money is going to support Hilton international, and the only benefit that is coming to the Government of Trinidad and Tobago is jobs and taxes, but the money we spend we will never get it back. So, one, what is the basis for your decisions?…
Mr. Salandy [then ETeck President]: I can just simply say that the decision to refurbish Hilton was not eTecK’s decision; that is a Cabinet decision; and we are guided by the Cabinet decision. That is all I can add at this point in time…”
(pp. 45-47)

Well I tell you.

Magdalena Grand Hotel and Conference Centre (formerly Tobago Hilton)

Public Accounts (Enterprises) Committee hearing on ETeck of Wednesday 6th April 2016

Ms Shamfa Cudjoe [then serving as Minister of Tourism]: …In 2014 Magdalena would have boasted about being totally self-sufficient, and now two years, or should I say a year and a half after that claim, I want to know how did we move from being totally self-sufficient to now being totally dependent on e TecK? What would have happened from 2014 to now 2016?…”
(pg 48)

The Minister of Tourism requests a report.

Dr. Gopeesingh: …when Hilton sold over to Vanguard what was that cost and
then Vanguard sold over to Magdalena, what was that cost? And then how much
money was spent to refurbish…
Mr. Karim (Director of Policy & Strategy at the Ministry of Trade & Industry): Well, Hilton had shares in Vanguard Holdings as well as Tobago Plantation. When the Government took the decision in 2008 to purchase the hotel it paid the equivalent of TT $138 million for the shares which Trinidad Hilton had in Vanguard Holdings…then approximately $160 million was the full cost of renovation to get the hotel opened in 2012…”
(pp. 55-56)

$138 million to rescue the private shareholders and a further $160 million to fix the building.

Joint Select Committee of Parliament (JSC) hearing of 9th April 2018 into Eteck

Mr. Chairman [Senator David Small]: …It is abysmal, 10 years of consecutive losses; over $400 million in losses over the 10-year period…What you find with Magdalena is that for every dollar revenue it earns, its operating cost in 2017 was $1.70. It was $1.68 in 2016, $1.60– so that there is something wrong in the way in which the core business is operating…you spend more to run the business than you make in revenue…even the years when you had relatively good occupancy…”
(At 1:47:21)

All the while, our Public Officials trying to tell the public that those arrangements were satisfactory and so on. But some of us still read and reflect.

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4 thoughts on “Property Matters – Hotel Reservations

  1. wonderful
    keep up the civic expose..of ALL GOVT Deals since they now need full scrutiny
    from dragon to sandals to heritage to galleon to austal to chinese all MOU and govt deals

    I suggest that all govt deals and plans should be laid in parliament under full disclosure and scrutiny before approval and binding on taxpayers of many future generations.That is good governance.
    after all they came in on anti corruption promise .. now the perceived as more corrupt and still no political party financing disclosure bill.. becuz monkey cyah see d end of its own tail?

    once again I call for a comprehensive forensic audit NEEDED of THA from orville london era with neil wilson & anselm london THA era to current .. as their appears no central govt accountability evidenced
    ( 3 stooges – ?)
    and new amended THA bill is a recipe for bigger political corruption without parliamentary scrutiny and approval and accountability at TRiNIDAD central govt / taxpayers expense.
    THA should have NO (EXTERNAL) BORROWING power that BINDS CENTRAL GOVT ( IE T&T TAXPAYERS)

    Should these Politically exposed person( PEP UNDER FIU) not be investigated for their finances by at least FIU and Integrity commission..?

    AFRA …WHERE is TBGO transparency voice in all of this?

    as global anticorruption reports show

    MONEY laundering and political corruption are entwined with failing democracies( SEE TI latest CPI report)
    ( hence is new ” THA bill” hidden agenda to to make tobago ” moneylaundering / corruption capital of the world? via secret MOU and failed Mega projects ? I ask..for that is perception with these MOU

    why is THA not under parliamentary scrutiny- from 2005 to now .. from orville london PNM led THA era ?

    The reason that Sandals ( like Alcoa before it) left the shores was simply put.. that once the ” secret” MOU were exposed by intelligent civic citizens.. and the extent to which the tribal political directorates( both sides when in govt) were acting against national interest (profiteering at taxpayers expense )
    they were morally shamed into departing …at least they had shame

    the pen remain mightier than sword

    pb

  2. The masses are misled to believe that our elected and other administrators do their best for this and other countries. Many suspect that wrongdoings are natural to such persons and we allow them to enrich themselves and their associates. We seem to think that we will benefit from the calm that masks the turbid undercurrents of corruption.

    Every public sector is mismanaged and every administrator has oral explanations, few provide substantial proof and when confronted by researchers like Afra, they do everything else, but the right thing. The pen’s might is a fallacy if we read history. It is the literate among us that create and sustain and protect most of today’s ills. Even those we call holy texts are cited by many who manipulate their dictates. All constitutions champion the masses in theory, Few are we who benefit from those rights and freedoms. I wish I had the answer. It remains an elusive quest.

  3. Thanks again for your work Afra. I took the time to read The link with David Small’s questioning of the Eteck officials. It is always interesting to me how we try to demonize these companies like Hilton. The name at the top of the hotel is Hilton and these companies are extremely protective of their brand. Costs of upgrade and refurbishment are for the owners I.e. the government ‘s account. That hotel was in need of serious upgrade even before the opening of the Hyatt when it was the only game in town. Our government in it’s wisdom chose to own 2 luxury hotels within miles of each other. The inevitability Was the cannibalization of revenues with the Hilton refurbishment being a necessary but ultimately money-losing project.

    This has nothing to do with subsidizing Hilton and everything to do with the government operating in the private sector where it doesn’t belong. Here’s hoping that these assets are sold soonest and the government concentrates on its core functions.

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