Lessons from GEMS Hotels & Resorts Limited: Government is always bad at business, corrupt Government is worse.

Hotels & Resorts Limited product is so bad, the Barbados Government is having difficulty exiting the business

by Nevermind Kurt (with Clive & Marcus)

Barbadians have no idea how much money they poured into the doomed-to-fail-from-the-start attempt to nationalize the hotel industry known as “GEMS”, Hotels & Resorts Limited. When you include the “free” air subsidies and “free” marketing support from the Barbados Tourism Authority it is surely a billion dollars poured down that hole and probably much, much more.

Not to forget that all the while the other hotels on the island were having to compete with a heavily subsidized nationally-owned chain. And Owen Arthur wondered why no investors wanted to build new facilities! To compete against government subsidized hotels? Cha! What… you think foreign investors are crazy?

Corruption, Foreign Bank Accounts, ZERO Accountability

Then there was the matter of the supply chain for GEMS Hotels. For many years everything for all the hotels ran through central suppliers. Yup, sourced out of Miami and New York probably through a few little “handling” companies that took 5% of everything and forwarded the profits to the owners’ foreign bank accounts.

The goods never went through Miami though: only the invoices and payments. The goods were straight shipped from the real suppliers to Barbados. Miami and New York were only about the skim. An accurate audit of Hotels & Resorts would show that – but it’ll never happen.

When the chain started to suck so much public money that there was no way the BLP could continue with the rape, the government started selling off the hotels. First, they fixed them up with public money and then sold them off for secret amounts after secret negotiations. It was just amazing how often deals were announced before anyone knew a hotel was up for sale – in a little dance choreographed as carefully as any ballet.

The Real Tragedy of GEMS: Hotel employment became a government job

Nevermind the money stolen and wasted. Nevermind the damage to the Barbados brand because of sub-standard facilities and service.

The real tragedy of GEMS of Barbados is that an entire generation of young people came to view their tourism employment as secure and protected “government jobs”.

In the real world, businesses have to perform or the customers go away. In the real world, employees have to perform or they get sacked. Not so with GEMS of Barbados hotels – because it was too big to fail and the government kept throwing money into the hole.

The GEMS hotels were always “a good deal” for visitors because the entire operation from facilities to salaries to marketing was supported by public tax dollars. In the good old days, of course the rooms were full because for every person in the hotel the government probably subsidized a hundred dollars or more a day. It was a great deal for the tourists: just not for you and me paying for it all you understand.

And, with no expectation or requirement for profit, there was no need to maintain performance standards for anything.

GEMS Hotels: A Corporate Culture of “So what?”

With the entire operation artificially surviving by sucking on the public teat, it was inevitable that a corporate culture of “So what?” and “Doan bother me ’bout losses” would filter down to the staff. Nobody gets fired from a government job and working for GEMS Hotels became a government job.

But as the internet grew, so did the reports of filthy rooms and rude, uncaring staff. Before the internet, the ordinary tourist had no way of countering the glossy brochures and multi-million dollar BTA advertising budget. The internet changed everything: any offended tourist, any person whose vacation was ruined by a filthy room or poor food and the “attitude” of staff could communicate that to the entire world.

And communicate they do!

“This hotel should be condemned! The pictures are deceiving. I chose this hotel because of the location and price, but the whole experience with management and staff was horrific. After a 13 hour flight and waiting another hour for the room to be ready it still was filthy: the linen had cigarette holes, the bathroom was unsanitary. There were hairs…”

TripAdvisor.com recent review of Time Out at the Gap hotel, April 18, 2011

“The hotel is a beautiful place but they seem to be on cost-cutting mode at this time. There were hardly any staff around, service was always poor, the bathroom could be cleaner and the toilet flooded out the apartment. Food is very expensive. Breakfast was the same for all the days we stayed with cereal, bread, butter and jam being…”

TripAdvisor.com recent review of The Savannah Hotel

Two more GEMS Hotels go private sector

Barbados Today says that over 100 people are going to be sacked when Time Out at the Gap and The Savannah Hotel properties are turned over to a private corporation in the next few months. The DLP government is wisely divesting the taxpayers of a money pit, having realized that government doesn’t have the entrepreneurial culture or skill set necessary to successfully run hotels. Let’s face it folks, government couldn’t even make money running a brothel!

Ludo Marcelo and Bernard Weatherhead have leased the hotels and they’ll be sacking everybody and then hiring the best. Former employees will be welcome to apply, but alas – many will be offered positions and salaries that more honestly reflect their demonstrated skill level and work ethic, or rather, lack of.

There is every reason to assume that Ludo and Bernie will make a go of these two failed hotels and it is likely that Time Out and The Savannah will eventually become hotels that Barbadians can be proud of.

I can guarantee one thing for certain…

For employees at Time Out and the Savannah this is the end of the sullen, uncaring attitude and resentment of labour that seems to be a trait of government employment. The staff who are lucky enough to be re-hired will no doubt have a different attitude. When a tourist walks through the door hotel staff will be genuinely pleased to see them because they will know that the hotel’s continued existence (and their own employment) depends entirely on keeping the tourists happy and returning.

It will be quite a change for these GEMS Hotels.

Tomorrow: Afra Raymond weighs in on government in business

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16 Comments

Filed under Barbados, Barbados Tourism, Business & Banking, Corruption, Offshore Investments

16 responses to “Lessons from GEMS Hotels & Resorts Limited: Government is always bad at business, corrupt Government is worse.

  1. Anonymous

    It is good that the focus will again be on the idiocy of the former prime minister who went around pretending to be such a great economist and project analyst.
    It was well known that it is difficult for any government-run commercial operation to make money.
    Why would the former PM waste taxpayers money on such an enterprise?

  2. Boogie

    @anonymous,

    Dontcha get it yet? Half a billion dollars on and no one has yet answered what the original cost of the hotels were, what were their real market values before the ‘humanitarian’ takeover from those who owned them and how much has been spent into the suck well.

    Further, this current government has no intention of increasing transparency in government, so all’s well that ends well, money for everyone!

    By the way, what deal has been struck wiuth the current buyers, nice for someone else to pump money into refurbishing a hotel and then turn it over happily…no?

  3. William Skinner

    Bajans do have short memories. It was none other than Clyde Mascoll,(then DLP) who exposed the GEMS/JAWS corruption. Where is Mascoll now-sitting comfortably with the same political party(BLP) that created the GEMS/JAWS mess.
    Oh by the way I think he brought a no-confidence motion against them too before he switched. Wonder what he saying now.

  4. Adrian Loveridge

    Some outstanding questions:

    1) What is status of the Sapphire Beach project?
    Privately built condonmimiums built on taxpayer owned land.

    2) Where did the proceeds of the sale of Silver Rock Hotel and Eastry House go?

    Nothing short of a full financial disclosure and forensic audit is required, so the taxpayer can see WHERE their money was wasted.

    The former Chairman’s famous mission statement ‘Raising the standards of the South Coast’.
    Yet 53% of the TripAdvisor guests posting comments would NOT recommend Time Out at the Gap.
    I wish the new operators all the very best and if only ‘we’ could have spent that wasted BDS$200-400 million on building the entire tourism industry.

  5. Observer

    What role has Glyne Bannister played in any of this?

  6. Boogie

    @adrian loveridge,

    Sapphire Beach..forgot that former dover comnvention centre…..we were never told how that land changed hands….i guess we will have forgotten in twenty years and those involved walk away happily with pockets full….sickening.

    200-400 million…i fear that this may be conservative.

    As for mr.bannister, a good question..who exactly IS he? I thought he was Owen’s right hand….looks now that he has more power than any of them…marina now…

    Is he the REAL PM, before AND now…as nothing seems to have changed? Who is he really, where does his power derive?

  7. 167

    How else could poor men in politics realize their dreams of driving big rides, having nice homes and travel the world?

  8. Observer

    Glyne Bannister is quite a friendly and charming fellow who uses his disarming laugh to obviously good effect… A B yesterday while a die-hard D today, for all intent and purposes. Why not? It was none other than Errol Barrow who once said “Barbados is a friend to all but satellite of none”… in Bannister’s case one can say the same… a friend to all but satellite of none. He is a professional whose primary interest is making a living, and in his case if this means breaking bread with the politician regardless of their political stripe – a man has got to do what he has to in order to survive.

  9. rasta man

    @observer: At the expense of the poor taxpayer of this country ????

  10. Observer

    The unsuspecting taxpayer has to pay someone… if not Glyne Bannister is will be Mr. X… take your pick… I am in no way endorsing this way of doing business however this is the reality of the situation…

  11. what will they think of next

    Glyne Bannister is a businessman just as CO Williams.

  12. rasta man

    Yes, I guess he could also be classed as a self made millionaire.!

  13. MANJAK

    Sometimes one would like to be of the opinion that that venality and incompetence that pervades the Bajan political/business class can no longer shock. But the narratives of the corrosive stench of of corruption has been so manifold the past years makes it difficult. One can trace its major formation under the ramshackle regime of Owen Arthur/Mia Mottley/Billie Miller with Liz Thompson and others in tow.

    Alas there appears to be a continuum of such as the DLP blunders about these past two years like some blindfolded drunken political fool in Nelson Street.

    The article on Gems is truly shocking and quite disturbing. That the politicos of these two tribes BLP/DLP can so casually and with what appears to be a distinct disdain for Bajan taxpayers dispose of half a billion dollars or even maybe one billion (no one of course knows). They have treated Bajan people and their monies with an absolute lack of respect and their tax dollars with no accountability.

    Gems has been a washpan of dollars for the greedy, the gross incompetents, the politicians friends, the hangers on and the lazy ill mannered jobworths who saw employment at the Gems establishments as sinecures for life maybe.

    The vulgar odour that eminates from this rotton and scandalous behaviour and waste demands an independent investigation. Nothing else will suffice.

    The DLP from its inception at Black Rock has always liked to characterise itself as politically and socially somewhat different from that of its opposite grouping the BLP. Well here is a prime opportunity for it to demonstrate that significant difference it so often trumpets.

  14. 77

    Could CLICO be any different to Gems MANJACK? Just try and think about it,
    yes it was probably wasted taxpayers money ( yours & mine ), but then with the first it is hard working Barbadian money that have been sacrificed . So which is worst, I think and feel CLICO is worse, because the depositors have no case in HELL of getting their monies back, can’t do so unless you and I pay for it again!

  15. MANJAK

    Re .77
    You are right of course. Very little different of decision making of any substance to discern between Clico, Gems, the Oval, Hardwood Housing. The same stench of mismanagement, corruption and incompetence from these third rate political clowns who inhabit the power positions of the two major parties of Barbados. Ozzie Moor would probably make better informed decisions than these idiots.

  16. Mark L. Fenty Sr.

    “Just my personal perspective”
    As a proud West Indian, and one who is interest in the cohesive unification of the region of as a whole; I have nonetheless been trouble by a question that continues to baffle me for some time now. And that is, do West Indian people truly understand each other apart from the half-truths, stereotypes and innuendos that have been perpetuated throughout successive generations?

    In a region with a population that is estimated at some forty million people; with approximately some two thousand islands in it archipelago, forty of which are recognized by the world community as legitimate stable governments. Yet, in spite of this reality is appears that West Indian people still have a superficial understanding of each other. Let be pragmatic here, I’m not advancing a theory that calls for a utopian terrestrial paradise, but what I am say it that our pseudo organizations that are galvanized around the themes of Caribbean unity and cooperation is a joke.

    I think that we ought to ask ourselves the question, and that is, despite our academic and economic achievements; why is it that we can’t seem to define our Caribbean neighbors without reference to stereotypical generalizations?

    I don’t want to underscore the important progress that has been achieved since the collapse of colonialism. However critics have charge that most of what West Indian people understanding of each other; is grounded in stereotypes, innuendos, and haft- truths. It has been noted however, that but for a small percent of West Indians who contact with their follow West Indians came through the mediums of: academics, sports and politics we have no authentic understanding of each other.

    In spite of this reality if I may use our Jamaicans neighbors as a frame of reference to make a point regard our understanding of each other. It can be argued that for the most part that a significant number of Barbadians has view our Jamaican neighbors as backwards, and amount the most ignorant of all the west Indian people. But this view I can assure you has been shaped by the mass media in the Caribbean and the United States of America.

    I bear witness to the fact,- that before leaving Barbados some twenty five years ago; I held a certain prescribed perspective of Jamaican people as a great number of Barbadians still does today. However, this all change when I began to interact with my Caribbean neighbors on a personal level, and in the process I began to formed personal relationship with many of them; and it was then I realized the most of was I had believed about my neighbors were all grounded in stereotypes, innuendos and haft-truths.

    Many of the Jamaican people I know are hard working people who are of high social standings in their respective communities; and for one to unilaterally box all Jamaican people together serve no good purpose but to subvert the good those decent and respectable Jamaicans and doing.

    Nonetheless, these commonly held beliefs have been intricately
    intertwined in our West Indian culture constituting an intrinsic part of our unique indentifies. nevertheless, when people from different islands of the Caribbean don’t matter where there are from , ask me where I’m from, and I tell them Barbados; I hear the same phrase being reiterated over and over again and the is” I heard that you can’t bend down when you go to Barbados”. Nonetheless, it has been said, that in theory most things are possible, whether or not we see the importance of our interdependence is left to be determine. If we think that it is within the best interest of the region to advance this factionist and a unilateral agenda time will only unfold the results.

    Finally, I don’t know how to express this in a stronger manner, but if we want to develop real and meaningful relationships with our fellow West Indians, we must examine with a broad brush the content of our relationships. We should engage every opportunity, to want to go outside our comfort to try to acquire as much knowledge of our fellow West Indian as we can. Then I believe we will gain a broader insight that will surely enrich our understanding, and deepen our love and appreciation for our fellow West Indian.