What are the underlying commercial arrangements in relation to our State-owned hotels? Is there any reason to think that these arrangements operate to our benefit, or is there genuine cause for concern?
My efforts to sift the evidence are ongoing in the face of this carefully crafted confusion.
Hyatt Regency is reputedly the most successful of the three State-owned hotels, so one would imagine any government would be eager to share news of those good results. The total Public Money invested in Hyatt Regency is $854M to date and that hotel opened in January 2008, so what return has the State earned on that investment? Certain limited tax and performance details for those hotels emerged after I started in 2016 to question the widespread unawareness of the underlying commercial arrangements in our State-owned hotels. I am not querying those taxation or profit details, indeed how could anyone, in the absence of audits or tax transparency?
These few details have been intentionally presented so as to hinder any real analysis, one has to wonder why.
The main question of how much the T&T State is paid by the hoteliers for the use and occupation of these State-owned hotels has been studiously avoided.
‘Hyatt makes $242m profit in four years‘ was the headline of the Trinidad Guardian article on Thursday 13th June 2019 on the latest disclosures on our State-owned hotels. For whatever reason, that article is not available online, which is a pity considering the shocking assertions it contains.
‘…The Hyatt Regency Hotel is a 428-room hotel which was opened in Port-of-Spain in 2008 and is owned by the T&T Government…’
‘…The Trinidad & Tobago Government is the sole shareholder of the Hyatt Regency in Port-of-Spain as well at (sic) the Hilton Trinidad…’
Apart from the fact that the Government cannot own shares in anything, as it is merely a management committee, albeit a very powerful one, the actual situation is wrongly described. The State can own companies and so on via its agencies, all of which are managed by the Government.
The actual arrangement in relation to these State-owned hotels is that the State pays for the design, construction, fitting and furnishing of the entire facility which the hotelier then operates under the terms of a management agreement. Those are large-scale Public Private Partnerships (PPPs). The real shareholders of Hyatt Regency and Hilton Trinidad might be surprised to read that all their shares are owned by our government. But the mischief did not end there, not at all.
The same day, at 2.19 pm, the ‘PNM – People’s National Movement’ Facebook page posted an image of that article with these statements –
…The Hyatt Regency – which is 100% owned by the Government and People of Trinidad and Tobago – realized a total operating profit of $242m during the period 2015-2018.
Your hotel. Your business. Your profit.
#knowyourbusiness #wedoingthistogether #onwardsandupwards #pnmonthejob…
The comments were predictably upbeat with several in praise of the vision of the late PM, Patrick Manning etc.
Consider the four revelations on the underlying commercial arrangements at the Hyatt Regency –
- On 10 June 2014, the then Attorney General, Anand Ramlogan SC, told the Senate some sobering facts (Hansard: 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 June 2014 and ended with $334M being paid to UDeCOTT. 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.
- Minister of Trade & Industry, Senator Paula Gopee-Scoon, told the Senate on 1 May 2018 the net profits after tax between 2013 and 2017 (Hansard: 4-5). The Minister did not take any further questions on the figures presented, as shown in these extracts –
…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….
- Minister Stuart Young on 30 April 2019 disclosed the VAT and PAYE only for the period 2015 to 2018 (Hansard: 25-26). Those were totals, so no analysis is possible. In addition, there was no statement on Business Levy & Green Fund, Hotel Accommodation Tax, NIS or Corporation Tax, so once again the disclosure does not allow any analysis.
- At the Senate sitting of Wednesday, 12 June 2019, Senator Allyson West replied to Senator Obika’s formal question as to the TTD value paid to the State from surplus on operations for each year during the period 2015 to 2018 (Hansard: 14-16). Senator West repeated the profit details given in May 2018, adding details only for 2018 of a total surplus of $65.3M. Obika asked for the amounts paid to the State from the surplus, but West only stated the surplus.Here is a final extract to give the flavour of this thing –
…Sen. The Hon. A. West: Madam President, reading the question:
“Can the Minister inform the Senate as to the TTD value paid to the State”—
So I responded in accordance with the terms of the question, Madam President.
Madam President: Sen. Obika?
Sen. Obika: Thank you very much, Madam President. Can the hon. Minister indicate the timing of the payment, if all came in their respective years?
Madam President: I would not allow that question, Sen. Obika…
Well I tell you.
Hyatt Regency Trinidad profit after tax
|Year||Net profit after tax (millions TT$)|