Property Matters – Checking-out State-owned hotels

In the previous article, I dismantled the false narrative as to the satisfactory ‘Underlying Commercial Arrangements‘ for our State-owned hotels. To do so, I used the official records of the Parliament and its Joint Select Committees. Those records actually tell this sorry story, but it is possible to rely upon the sheer mass of material to effectively mask reality.

The defenders of these rotten arrangements are unable to rebut the official record, so some have now taken to claiming that the accounts do exist and that I should admit my errors. Well I tell you.

In between the political loyalists who have a unique way with facts and the very shortage of those facts, one needs to establish certain cardinal points if we are to make sense of all this Carefully Crafted Confusion.

So here are my cardinal points to understand this puzzle –

• Capital Expenditure is all ours – every cent is our Public Money;
• Repairs and Maintenance – Ditto;
• Returns to Private Sector – These are obviously at or above target rates, since both Hilton and Hyatt have persisted in their POS operations. If the returns were below target, those operators would have exited, which is what Hilton International did in Tobago in 2008;
• Returns to Public Sector – Unknown – since there is no commitment to accountability or transparency, despite the periodic claims to the contrary from various high-ranking officials;
• Private Sector Audited Accounts – We can be sure that those exist at the Private Sector level and are made available in a timely manner to the shareholders and stakeholders of those companies. No Chief in that arena could survive a failure to produce audited accounts in the required manner – that would be grounds for instant dismissal, for cause and without compensation. Of course there is no way a Private Sector Chief could ever refuse to provide those records to its shareholders and stakeholders;
• Public Sector Audited Accounts – These are never available, for whatever reason. The Public Sector Chiefs routinely fail to produce these records and even when formal requests are made via the Freedom of Information Act, those are refused. No Chief in that Public Sector arena has ever been removed or disciplined for their flagrant failure/refusal to account;

Please note that Public Money is to be managed and accounted for at a higher standard than Private Money, the underlying rationale being that Public Money is gathered by a non-voluntary process. But that is not the standard we are following in these large-scale Public Private Partnerships, not at all. The Public Interest as both Shareholders and Stakeholders in these PPPs has been eclipsed by a blinding degree of political loyalty and a solid consensus between both parties that the public simply has no need to know. That is all.

Here is a closer look at the state of the accounts for those State-owned hotels, starting with the ‘flagship‘.

Hyatt Regency Hotel

In the previous article, I cited the puzzling attempt by the Minister of Trade & Industry, Senator Paula Gopee-Scoon, to give a report on the financial performance of the Hyatt Regency. Minister Gopee-Scoon was purportedly reporting on the profit after tax in the five-year period 2013-2017, based on audited accounts. It was mystifying not only that the Hyatt Regency report was given by this Minister, but that the Honourable Senator seemed unable or unwilling to answer basic questions on the very matter on which she was reporting – i.e financial performance.

What is even more mystifying is that the Hyatt Regency is held in the portfolio of UDeCOTT and features in the ‘Financial Highlights‘ of that State-owned entity –

“…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…”

So, we are in February 2019, but the website of UDeCOTT is only updated to 2013 in relation to Hyatt Regency. As a sidebar, please note that the parent company, UDeECOTT, has not issued audited accounts for itself since 2007 – see JSC Report into UDeCOTT of June 2016 pg 30. A full decade, spanning both political sides, for those who still believe in that kind of discourse.

But there are further questions arising here –

• 2013 – UDeCOTT stated the Hyatt Regency revenue at $282M and the Minister stated the audited profits after tax to be $75.7M. That is a strong 26.8% profit on turnover. We were not told what percentage of that was paid to the State as shareholder.
• 2017 – The Minister reported a profit of $60M, which is a decline of 20%. What was that decline attributable to, a decline in turnover or a fall in the profit rate? We were not told.
• The audits would answer these important questions, so when are those to be published?

On 10 June 2014, the then Attorney General, Anand Ramlogan SC, told the Senate some sobering facts (pp 221-224) about the way that management agreement with Hyatt International had been operating. That hotel was opened in January 2008, but due to an alleged error at our end, an important agreement was missing. Hyatt International was able to use that missing agreement to withhold payment of monies due to UDeCOTT under the management agreement. That issue was not resolved until an arbitration was triggered by Hyatt in 2011 and that procedure ended with some $334M being paid to UDeCOTT after the agreement was signed in June of 2014. So, for 6 and a half years the Hyatt Regency was thriving, with the majority of the high-end business in our capital, yet UDeCOTT had received no money due to an alleged lapse at our end. Until Ramlogan’s statement to the Senate, I had been entirely unaware of any such situation in relation to what seemed to be a very successful State-owned hotel.

Even I would agree that Hyatt Regency seems to be the best-operated of the State-owned hotels, but the actual basis is still unclear.

There are even more serious questions in regard to the other State-owned hotels, but that is for another article.