Premier confirms Government guarantee for hotel developers as funds raised for revamp
Financial guarantees will be given by the Government to the developers of the Fairmont Southampton after they secured $190 million investment for the project.
The Premier remained vague on how much the Gencom/Westend Properties companies would get in guarantees from Bermudian taxpayers.
But David Burt did reveal that the island’s biggest resort would receive an order as a designated gaming site, meaning it could have a casino.
Cabinet rows over the nature of guarantees for the project triggered the shock resignation of Curtis Dickinson last month, the former finance minister confirmed to MPs yesterday.
Closure of the hotel in October 2020 was a major blow to Bermuda’s economy, with the loss of more than 750 jobs as the Covid-19 pandemic gripped the island.
Originally, developers said work would begin this summer, with a reopening slated for the autumn of next year.
The Premier stated earlier this month that a $50 million guarantee had been agreed in principle in 2019, but had since lapsed.
Mr Dickinson told MPs that the Premier was incorrect in the claim, and indicated Mr Burt was adding to confusion on the guarantees issue.
Answering questions from the OBA in the House yesterday, Mr Burt said a guarantee would happen, but no figure had been agreed upon.
Mr Burt would not reveal what "economic or financial support" had been requested by the hotel owners – saying he did not wish to reveal the terms of negotiation in public.
Earlier, the Premier said that Bermudians will be given a chance to invest in the hotel.
As part of the deal signed between Government and developers, some profits from the hotel will go into a Bermuda Trust Fund.
Mr Burt told MPs: “That agreement has been set out in a Heads of Terms document and I can further advise this Honourable House that the document has been approved by the Cabinet.
“I can also advise this Honourable House that this agreement confirms the terms of the Government of Bermuda’s support for this vital project.
"I am extremely pleased to advise this Honourable House and the public that this agreement provides for profit sharing from the hotel’s operations.
“The Government will pledge the proceeds of this profit sharing to the Bermuda Trust Fund on behalf of the people of Bermuda.
“Though this is a time for hope, the agreement we have reached is the ‘end of the beginning’. There is more work to be done.”
Referring to a gaming order for the revamped resort, Mr Burt said such an order had been prepared in 2017 under the previous OBA administration, but "was not advanced".
Cole Simons, the Leader of the Opposition, said the order was expected and supported by the OBA.
A spokesperson for Westend Properties said yesterday “The funding for the Fairmont Southampton redevelopment is in its final stages with the announcement of an agreement being made between the Government and Westend Properties.
“Westend Properties has secured highly-reputable international lenders for the $190+ million redevelopment. Following the finalisation of the agreement with the Government, the repositioning of the resort can move into the development phase.”
The company said it had also invested in “extensive planning and predevelopment activities”.
Karim Alibhai, principal of Gencom, the managing partner of Westend Properties, said: “We are thankful to all parties who were involved in helping us get to this stage of the redevelopment, including the Premier, whose efforts were instrumental.
“The plan as of now is to break ground early this summer with the intent of the resort reopening by the fall of 2023.
“It has not been an easy journey, however, against the odds Gencom has continued to pursue this large-scale project.
“We believe with the right investment, the Fairmont Southampton will return to its former glory, attract a steady stream of revenue for Bermuda and create over 800 direct employment opportunities, and many more related jobs.”
President of the Bermuda Industrial Union, Chris Furbert said: “Having been involved and fought for the reopening of this hotel for the last two years, as it is not only crucial for my members but also for Bermuda‘s position as a premier tourist destination.
“It is the largest non-government employer on the island, the hotel rebuilding phase will create hundreds of construction jobs, and when the hotel opens Bermudians can take the opportunity to create careers for themselves.
“We believe with the new collective bargaining agreement already in place we can enter a new chapter in industrial relations between the BIU and the hotel management and work together to create jobs and careers for our members.”
December 2019: Hotel bought by Gencom, an investment firm based in Miami, Florida, with a major 18 month long overhaul of the resort planned.
October 2020: Fairmont Southampton shuts down with the loss of more than 750 jobs.
March 10, 2021: Government insists that it had not committed to any financial guarantee for the project.
February 4, 2022: David Burt, the Premier, signals that a deal with Gencom is imminent, telling MPs it could be struck that day.
February 14, 2022: Curtis Dickinson quits as finance minister just days before the Budget. A bust-up over revamp guarantees between himself and the Premier is believed to be one of the major reasons fro the departure.
February 15, 2022: Sir John Swan, the island’s longest-serving Premier, tells The Royal Gazette that “everybody knows” Mr Dickinson had reservations about the Fairmont Southampton deal. Sir John says Mr Burt has “a crisis on his hands”.
February 16, 2022: David Burt denies Mr Dickinson quit over the Fairmont Southampton. He says: “I don’t believe that is accurate to say.”
February 25, 2022: Mr Burt delivers the Budget statement, but says little about the Fairmont Southampton project.
March 3, 2022: Mr Burt reveals that a $50 million guarantee was agreed in 2019, but has elapsed - which contradicts the Government statement in March last year.
Mr Burt says the total cost of the hotel revamp will be $376.2 million.
March 4, 2022: The Bermuda Industrial Union backs a $50m government guarantee for the redevelopment of the hotel, the island’s biggest resort.
March 25, 2022: Developers announce they have secured funding for the project and expect work to being in summer with a re-opening in the autumn.
Wayne Caines, chairman of the Bermuda Tourism Authority, said reopening the hotel resort would be a major boost for the island’s attractiveness to visitors.
He said: “With the return of our marquee conference resort facility, Bermuda will be positioned to reassert our claim as a premier leisure, and group travel destination.
“More than just extra rooms into our inventory, Fairmont Southampton’s reopening will drive up our capacity for year-round group business and create consumer demand for our airline partners.
“What’s more, the redevelopment of the property will fire up the economy through construction in the short-term and reintroduce hundreds of tourism jobs for 2023 and beyond.”