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Club Med: One false dawn after another

T was back in May 1992 that the then-Shadow Tourism Minister David Allen suggested that the old Club Med building could be used to provide temporary accommodation for the homeless. More than 13 years later, St. George's Alderman Kenny Bascome was suggesting the same thing.

That fact is just a reminder of how long a huge building in a prime spot has remained empty and unused.

In the years in between, numerous developers have put forward plans for the site but their efforts have come to nought. Meanwhile, no homeless people have taken shelter in the 688-bed edifice ? well, not officially anyway.

Both United Bermuda Party (UBP) and the Progressive Labour Party (PLP) administrations have advocated redevelopment of the site. However, ground has yet to be broken.

Back in 1993, the late Frederick Wade, who was then Opposition Leader, proposed in the PLP's election platform that the site would be redeveloped to include restaurants, shops and entertainment facilities. He argued that St. George's would benefit from such a revival.

In all the years since, no one seems to have disagreed with Mr. Wade's sentiment. Making the vision a reality has proved problematic.

In December 1993, Jim Woolridge became the first in a string of Tourism Ministers from both major parties to claim that good news on Club Med was just around the corner.

Mr. Woolridge announced he had met with a group of businessmen from Massachusetts who had viewed the site and were interested in building a new hotel.

But before anything could move forward, the Government had to deal with the fact that Club Med still held the lease to the land on which the hotel stood.

In 1995, the French resort company proposed reopening 100 of the hotel's 340 rooms and simultaneously slashed its asking price for the building from $32 million to $13.5 million. Its argument was that it would be easier to sell the business as a going concern.

St. George's Mayor Henry Hayward urged the Government to back the plan. "It would make the hotel easier to sell, create jobs in St. George's and make available Club Med's many facilities, like a beach, restaurants and tennis courts," the Mayor said.

But the Government rejected the proposal, as Works & Engineering Minister Leonard Gibbons pressed ahead in taking Club Med to court to reclaim the property, arguing that the company was in violation of the terms of its lease.

When the matter went to Supreme Court in August 1995, Mr. Justice Meerabux reserved his decision on whether to send the matter to arbitration and legal proceedings began that were to continue, on and off, for two years.

months later, St. George's South MP Rick Spurling expressed a sentiment that would be heard often for a decade afterwards: "I consider it a sort of eyesore on the horizon."

Mr. Spurling described it as a "box-like '60s hotel" that should be razed to the ground. Even its scale was wrong for the site which it occupied, he said, advocating a high-quality cottage colony as a more appropriate replacement.

But in February 1996, Club Med approached the Government with a proposal to reopen the hotel by May of the following year. The Government set aside its legal action and compromise agreements were reached on relicensing requirements relating to fire safety, sewage treatment and room standards. Then Club Med decided reopening would not be possible until the spring of 1998.

Tourism Minister David Dodwell said Club Med was being backed by a "public hotel investor" and that this represented the best chance to run a successful hotel in the East End. Shadow Tourism Minister David Allen was not so impressed, however, and argued that Club Med was "stringing us along".

Again, the high hopes came to nothing, after Club Med finally proposed in March 1997 to reopen as a timeshare property. The Government responded by relaunching its legal action to take back the lease.

The arbitration that began at that time was expected to drag on for years. That it did not was due to the fact that Club Med had a change of heart and decided to give up the fight ? and the lease ? in September 1997.

company was still employing 11 people to look after the property and it abruptly fired them at the end of the following month, giving them four weeks' pay in lieu of notice, raising the ire of Bermuda Industrial Union (BIU) leader Derrick Burgess. It took more than a year for the fired staff to get a fairer settlement, but the $88,000 paid out to them came from the PLP Government and not from Club Med.

By the time more than 800 bargain hunters showed up to take advantage of a sale of Club Med's furniture in February 1998, the Atlanta-based Camberley Hotel Company was in the frame as the next potential developer.

Talks between Camberley and the UBP Government progressed well over the subsequent months and by July, the company had come to a labour agreement with the BIU and had set early 2000 as a target opening date.

As has happened so often with this site, a delaying factor emerged. A month before the November 1998 General Election, Camberley president Ian Lloyd-Jones said his company's $32-million revamp plan for the hotel would be put on hold until after the poll.

"I read the papers and I know that an election is imminent," Mr. Lloyd-Jones said. "We want to know who our landlord partner will be, what they will expect from us and what we can expect from them."

The PLP won the vote and Mr. Allen replaced Mr. Dodwell as Tourism Minister. Talks continued but by May 1999, the Camberley deal was close to collapse. This time the stumbling block was money.

Camberley had reportedly run into difficulties finding the necessary investors to put up the required $32 million. So the US company asked the Government to provide a financial surety, by guaranteeing a percentage return on part of the investment. The deal would have been for a limited period and would only have kicked in if the hotel failed to make a certain level of profit. The Government would have none of it.

"We have concluded that unless the Government is prepared to put up some kind of security to guarantee a portion of the equity, then it is probably not going to happen in the near future," the Camberley president said.

And, of course, it didn't happen.

By late 2000, as the island's tourism industry continued its prolonged downturn, Mr. Allen sparked some optimism by announcing that Malaysian development company Aman Capital wanted to redevelop the Club Med site and become "full partners in developing the full potential of Bermuda as a high-end destination for discerning visitors".

Mr. Allen said the group wanted to raze the old structure to the ground. He added: "The resort will have a substantial tourism component and development will be sympathetic to the nature and ambience of St. George's Parish, and in keeping with St. George's new designation by UNESCO as a World Heritage site."

It proved to be yet another false dawn, however, as by December 2001, the plans had effectively collapsed.

Mr. Allen said Aman Capital's plans did not, after all, include demolition of the hotel ? which Government had specified ? and that they actually intended to raise the height of the building.

"The bottom line is we've spent way over a year talking to Aman Capital and because they have not made proposals meeting Government's parameters, we've decided it's time to get some other irons in the fire," the Minister said.

Mr. Allen died in September 2002 after a short battle with cancer.

Three more bids to redevelop the hotel site were considered by Government. One of the competing groups got fed up with waiting for a decision by late 2002.

Steve Hostettler, of Dallas-based SteppingRock Developments, whose proposal was in partnership with Bermudian entrepreneur Patrick Bean, spoke out after Government's own deadline for making a decision passed.

"All we want to know is whether we are still in the game, because if it is not Bermuda, we are going other places," Mr. Hostettler said.

He cited several examples of lack of communication with different Government departments and said: "This lack of follow-up and lack of decision-making is extremely dangerous for the island."

If his remarks were designed to get things moving faster, they did not achieve the desired effect.

A full year went by before it was announced that Mr. Hostettler and Mr. Bean were indeed not "still in the game". Instead, the St. George's Renaissance Group, backed by the Toronto-based Quorum Group, got the nod for a limited-term exclusivity agreement.

The group unveiled its plans in November 2003 ? to demolish the old building and replace it with a hotel of at least 90 bedrooms, plus a cottage complex of 90 condominiums, designed in a European style with public squares and fountains.

Consortium leader Wanda Dorosz announced plans to use an underground theatre, seating 450-500 people, for cultural events. And she had gathered support from several overseas cultural institutions which could result in world-class theatre coming to the island.

She said the plans would cost around $80 million and the group wanted to be in business by 2005.

It didn't work out that way, but by March 2005, the plans remained on track, with a much-increased cost estimate of $210 million, and Ms Dorosz told the St. George's Chamber of Commerce that the Four Seasons hotel chain would manage the resort.

Negotiations continued and by August, the group believed they were close to striking a deal that could allow them to start work on the site by the autumn. That proved to be somewhat over-optimistic.

As the saga dragged on into 2006, the Renaissance group, with its $220 million of financing in place and primed to press ahead, was dealt a major blow, as it appeared that Government stopped talking to it.

Ms Dorosz said: "Our five-star hotelier remains willing to proceed pursuant to our executed letter of intent. Our collective remain willing to proceed, however negotiations seem to have stalled. We await the Government's next move."

That next move was unveiled by Tourism Minister Ewart Brown this week, when he revealed that talks had started with yet another potential developer, whose identity would be revealed by the middle of next month.

Dr. Brown did not reveal why the talks with the Renaissance Consortium had stalled, nor why he deemed it necessary to begin talks with yet another would-be developer.

A development the Government was excited about two years ago has apparently been dumped on the sidelines at the eleventh hour. And with the public left in the dark as to why that is, the motives behind the move will remain a matter for speculation.