Gencom refunds $11m to Government for redundancies
The owners of Bermuda’s biggest hotel has paid $11 million to the Government, which stepped in to cover redundancy payments to hundreds of staff after it shut last year, The Royal Gazette can reveal.
Westend Properties, a subsidiary of US-based firm Gencom which bought the Fairmont Southampton in 2019, confirmed it would also foot the Government’s legal bills as well as “consultant and other fees”.
A Westend spokeswoman said: “It is due to relentless efforts made by all parties that the funds have been secured and reimbursed during this difficult time.”
She added that the past ten months had been “an incredibly trying time for the hotel industry” and the firm was “truly sympathetic” about the impact on the island as well as on employees.
The alternative to repayment, a condition of the Ministry of Finance deal with the ex-staff, would have been a class-action lawsuit by the workers against Gencom.
The Government would have paid the legal costs if legal action had gone ahead.
The company said it remained committed to the redevelopment of the resort, which was announced as an 18-month project when the hotel was shuttered last October.
The biggest mass redundancy in the island’s history – about 750 people – came after the coronavirus pandemic crippled the global tourism industry.
Curtis Dickinson, the finance minister, said earlier that the Government was in talks with the company over compensation for the payouts.
But he admitted in the House of Assembly that there was no agreement with Gencom on how it would be repaid.
Gencom at first announced a payment date of November 20 last year for the staff, which included about 500 Bermudians.
But the firm, which also owns the Rosewood Bermuda in Hamilton Parish, was unable to meet the deadline.
Mr Dickinson announced early in November that the mass layoffs had a “searing impact” on staff and the Government had to step in.
Litigation to recover the money, which the ministry said was “a last resort”, included options such as the Government taking over redevelopment of the site.
The spokeswoman for Westend said: “As the largest hotel and private employer in Bermuda, its contribution to the island’s economy cannot be overstated.
“Pre-Covid, it accounted for approximately one quarter of Bermuda’s hotel room inventory and approximately 35 per cent of its air visitors.”
Karim Alibhai, Gencom’s founder and principal, admitted it had been “an unconventional path thus far” for the refurbishment of the hotel.
But he highlighted that Gencom had “a wealth of experience in this arena and a successful track record worldwide”.
Mr Alibhai said the company was still committed to returning the hotel to “its former glory as Bermuda’s premiere resort for both locals and visitors”.
He added a “close and constructive relationship with the Bermuda Government” would continue.
The company pledged a $180 million property renovation in 2019.
The Westend spokeswoman said: “Despite these tough economic times and very challenging financial markets, a significant amount of planning and pre-development work for the extensive $150-200 million property renovation has already been completed.”
The Fairmont Southampton, which opened its doors in 1972, had staff who had worked there for decades.
The decision to step in and cover the redundancy payments came at a political cost to the Government.
Cole Simons, the Leader of the Opposition criticised the move after Mr Dickinson said in the House last November that there was “no agreement between the Government of Bermuda and Gencom” over reimbursement of the payouts.
But Mr Dickinson added he expected dialogue to continue with the company “in the spirit of partnership”.