Tag Archives: GEMS of Barbados Hotels

Barbados Hotels and Resorts debacle continues with another government loan guarantee. Where did all the public money go?

barbados-gems-hotel-scandal.jpgGEMS scandal keeps going and going and going…

Say ‘goodbye’ to your tax dollars as government guarantees a loan with zero hope of repayment.

Adrian Loveridge, small hotel owner.

Adrian Loveridge, small hotel owner.

Whatever was behind any honest intentions of the Hotels and Resorts Limited (HRL) or the “GEMS” debacle, it is difficult to imagine a worse outcome so far.

Government’s decision to guarantee yet another loan to this failed entity, despite the current austerity situation, frankly defies belief and clearly will not have a happy ending.

This latest loan is for BDS$5.55 million at an interest rate of 7.75 per cent, arrangement fee of $350,000 and monthly repayments of $55,000.

Included is a $300,000 overdraft facility which attracts an administration charge of $5,000 each month.

HRL now operate a single hotel – Blue Horizon with just 67 rooms. Another 50 additional rooms acquired at the time of purchase (1997) remain derelict all these years later. Savannah and Time Out at the Gap are leased and operated by private sector interests.

Where did the money go?

Three other properties originally in the GEMS portfolio were sold and it still remains unclear what price they realised and exactly where those funds went. Continue reading

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Filed under Barbados, Barbados Tourism, Economy, Freedom Of Information

GEMS of Barbados website slickly deceptive

click photo for large

Website implies GEMS still operates a chain of hotels – only operates one.

by Nevermind Kurt

We’re nearing the end of that failed adventure known as Hotels and Resorts and GEMS of Barbados hotels. The experiment in nationalizing the tourism accommodation industry now operates only one hotel – The Blue Horizon.

You’d never know that from their website though. True to form, it’s all show and no integrity as it deceives unknowing tourists into believing GEMS still operates The Savannah and Time Out.

The scandal of GEMS Hotels and Hotels and Resorts Inc. is a textbook lesson in how the political elites rape public funds and get away with it. Barbados tried to nationalize the hotel industry and lost hundreds of millions of dollars, perhaps over a billion dollars – who knows? They won’t tell us how much we taxpayers lost.

Predatory Pricing by Government… upon privately-owned hotels!

By using tax funds to support an unprofitable operation the Barbados government also kept out other brands and undermined private hotels large and small. The government even subsidized the GEMS hotels room rates to keep them lower than possible in the private sector.

That was decidedly hostile to outside and domestic tourism investors who soon got the message: “Don’t invest in Barbados where your main competition is the all-powerful government.”

As so many learned the hard way, it’s not a level playing field when the Barbados Tourism Authority pushes government hotels over privately-owned businesses.

Except the GEMS project failed just as everyone predicted and now the government is begging outside investors to renew our aging hotel inventory. The Government should have thought of that when they originally established a business climate that was poison to private investment in tourism accommodation.

Can you imagine if we’d have used that now-gone billion dollars to renew our infrastructure and professionalize and expand our police force? As a country we would now be cleaner, safer and more attractive as a tourism product. But no… we “invested” that money in buying run-down hotels, subsidizing years of losses and then selling the hotels at big losses.

GEMS of Barbados was a stupid thing to do… unless you were one of the inner circle personally profiting from the scheme…

… and then it was brilliant!

Further Reading

February 24, 2010: Barbados Government GEMS Hotels folly continues. Where did all our money go? Three remaining GEMS hotels valued at only $74 million!

May 17, 2007: What Happened To The Money From Hotel and Resorts Ltd’s Assets Sale? How Much Went Into David Shorey’s Pocket?

November 19, 2000: Nation News – The Question of Corruption, GEMS

Click to read in full size.

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Filed under Barbados, Barbados Tourism, Corruption