Gory details of Fairmont Southampton deal
“Bad news isn’t wine. It doesn’t improve with age”— General Colin Powell
The specifics of the Fairmont Southampton “done deal” are slowly emerging. It points to why there was so much secrecy involved in the first place and realises our worst fears as to why the former finance minister resigned. It is an understatement to say this scheme is far worse than I thought. It is as if word has gotten out that Bermuda is a jurisdiction with a gullible government bereft of ideas to move our economy forward.
Imagine if you were to go to a bank and say, “I would like to borrow money to renovate the broken-down Fairmont Southampton hotel.” The bank then said, “No way, that hotel wasn’t making enough money in the first place to stay open, which is why they allowed it to run down and close. Besides, it would be worthless for me to take ownership of it if you stop paying the loan and default on it.”
But what if you can counter the bank statement with, “I promise you that I will not default because I have concessions to operate without having to pay government taxes for 15 years. Our business model cannot fail because we will be operating the hotel at a fraction of the actual cost of our competitors. I know this sounds incredible, but I have the legislation to prove it”.
You further tell the bank that, “the concessions are as good as gold because our private loan will be paid for with the taxes from the Bermudian people. We will collect the taxes from our holidaying guest; however, we get to keep all of it while Mr and Ms Bermuda will be taxed at even higher rates to pay the loan on our behalf”.
You continue, “It is estimated we will be able to keep $200 million in our business while the people of Bermuda and their children will pay the loan for us. The legislation is etched in stone and binds Bermudians to pay our loans.”
As if this was not enough, you further tell the bank, “Let me add, those generous Bermudian taxpayers will also provide us with an insurance policy in the form of a “guarantee” in the sum of $75 million that will compensate us if our business model fails. Therefore, your loan to us is very secure and this scheme we have worked out with the Premier, David Burt, and the Progressive Labour Party is a sweet deal for us.”
At this point one would expect the banker to be shocked and ask, “Why on earth would any government enter into such a deal? What is in it for them?”
You would be in a position to say, “the beauty of it is that David Burt and the PLP are not doing this for the betterment of the Bermudian economy in the long term. They have made the decision that this deal will work in their favour at the next election. They fully expect to have pulled the wool over the voters’ eyes once again with this short-term scheme while dragging the national economy farther and farther into the abyss.
“Even if the opening of the hotel never occurs, or if it lasts only but a short time, the purpose of the deal will be served. They expect and are banking that voters will sweep them back in at the polls for the jobs that will be created in the short term of renovations, even if it is at an economic loss to the same voters.”
The conversation ends with the words, “the voters will get over it, it is politics”.
Bermuda, all of this debt, guarantees and higher taxes have been saddled on us by the PLP government instead of developing homes and other guest properties across the island with sensible Airbnb loans. It could be done at a fraction of the cost of this hotel redevelopment and would make Bermudians stakeholders with the blueprint to rebuild our tourism economy.
This would be a project with multiple economic spin-off effects through this partnership between the Government and Bermudians. It is a wonder why the PLP government, which claims to be the champion of the people, would choose to risk hundreds of millions of taxpayer money on one company rather than support hundreds of entrepreneurs with the opportunity to enter the Airbnb market.
Airbnb could be the new cottage industry, which — if properly managed, supported and regulated — would create a whole generation of entrepreneurs. It would result in a much needed facelift to our country, which is a significant part of our tourism brand.
Imagine the number of vacant apartments that could use this stimulation to get that apartment back on the market. Imagine the houses that are derelict that could use the resources provided to get the home back on the market. Imagine the homeowners with enough yard space that can add a pool house and a pool, and get that into the market. Just imagine how this could improve the real estate market, which has been stagnant if not depressed for more than a decade.
It is sad to listen to the detractors who cannot see the huge opportunity that this represents for the people of Bermuda and the tourism industry. It is even sadder that they are our political leaders and representatives who are happy to provide hundreds of millions to one company and foreign investors but not provide any opportunity to hundreds of Bermudians to become entrepreneurs.
This initiative would also increase the value of their homes and help to improve the declining state of the real estate market in our country. It would also put many small to medium-size contractors back to work and increase the level of employment opportunities among the working class.
The economic boost this would generate would then be the impetus to attract significant investment to build a new generation of hotel accommodations compatible with upgrading the Bermudian brand. Other complimentary projects would follow to enhance and revitalise our tourism product, and our overall economy, which has been destroyed under the leadership of David Burt’s PLP.
• Vic Ball was a One Bermuda Alliance senator from November 2014 to July 2017, and more recently a candidate in the 2020 General Election in Smith's West (Constituency 9)