Not the answer
I was flabbergasted to read of the Ministry of Tourism’s proposed plan for the acquisition of the Almond Beach Village property and its trademark at a cost of nearly $108 million.
Fortunately, I escaped my exasperation when I discovered that the Ministry of Finance and Economic Affairs is likely to veto the well intended but ill-advised scheme.
The reputed Government-led rescue plan for Almond, for all its noble objectives, is likely to guarantee nothing but an immediate US $54 million outflow of foreign exchange in return for a tired, antiquated hotel plant sitting on prime real estate. Yes, the $21 million renovation plan will stimulate some desperately needed economic activity, but is it enough to restore Almond Beach Village to its former glory? I think not.
There are other pertinent financial questions that demand concrete answers. For instance, what will be the recapitalisation budget for operational cost and marketing? What is the expected return on investment? How does the internal rate of return of this public sector proposal compare with the IRR of alternative potential public sector projects?
How much capital is likely to be raised from share ownership of former employees? On what basis does the Government expect the general public to have an appetite for purchasing shares in a reconstituted Almond Resort; a hotel that was losing tens of millions of dollars under esteemed management with a hitherto impressive track record of producing an enviable product despite a decrepit plant?
The hostility of the global conditions which compromised Almond’s business mode have not abated sufficiently to warrant the Ministry of Tourism’s enthusiasm. What safeguard would be put in place to avoid another “GEMS” fiasco.
An Almond quick fix does not serve Barbados’ national interests. How effective is a quickie? The Ministry of Tourism’s proposal could best be described as an expensive frolic in expediency and sentiment. Don’t panic, Minister Sealy. A private sector solution funded by foreign capital is still the best option on the table.
The fact that they are three reputable private sector proposals under review by Neal and Massy augurs well for the revitalisation of a profitable tourism product on the prime St. Peter site. Based on the information in the public domain, both the Bjorn Bjerkhamn and Paul Doyle plans are likely to inject hundreds of millions of dollars in foreign exchange to redevelop the properties. Those plans represent the type of private investment that the economy so desperately needs.
The resulting economic stimulus will yield value added in construction, retail and wholesale, financial services and professional services. Government also stands to benefit from the ensuing tax revenues generated by such an economic infusion.
Of course the construction jobs created will be replaced by more sustainable direct and indirect job creation resulting from the creation of a striving high-end tourism and leisure product on the St. Peter site. Future tourist arrivals and foreign exchange are more likely to be boosted by a top rate property that compliments Barbados’ tourism portfolio.
I am appealing to the Cabinet of Barbados to let the creative destruction take place at the north-western property. Patience is a virtue. The government Ought to focus its efforts on facilitating a private sector solution to the Almond problem. If the Sandals Resort International proposal is in fact the preferred bid, it may be more constructive to negotiate an incentive package with Sandals and Neal and Massy at minimal cost to the State. Sandals’ US $800 million investment over five years would be an incredible boon for the economy.
On another note, I was heartened by Jeff Broomes’ decision to cooperate with his transfer to the Parkinson Memorial Secondary School without rancour. It is to be commended. He did well to take his daughter’s advice. It is time to turn over a new leaf. Broomes has an opportunity to restore his legacy and he has chosen to grasp it with open arms. Hopefully the BSTU-represented teachers will follow suit. It’s time to move on. The Stuart Administration has finally gotten it right.
* Carlos R. Forte is a Commonwealth Scholar and Barbadian economist with local and international experience. C.R.Forte@gmail.com