November: Left out in the cold
The Bermuda Government paid out $11 million to cover redundancy payments to workers left unemployed by the closure of the Fairmont Southampton.
The hotel’s owner, Gencom, promised to reimburse the Government and move forward with renovations at the landmark hotel, but the November 10 announcement sparked questions of the future of the property.
Gencom, a Miami-based real estate investment and development firm, purchased the property in December 2019 and quickly announced that it would invest in a $180 million refurbishment.
But the sharp downturn of the tourism industry caused by the Covid-19 pandemic left staff at the hotel facing redundancy.
In September, staff were told the hotel would be closed for 18 months from October 23, resulting in the layoffs of 714 employees – about 430 of them Bermudian.
The workers were expected to receive their redundancy payments on the day of the hotel’s formal closure, but the money was not sent.
In early November, with their personal expenses mounting and some facing eviction, the hotel workers went to the Bermuda Industrial Union in a desperate attempt to apply pressure on management after they were told they would not receive their redundancy payments until November 20.
Days later, Curtis Dickinson, the Minister of Finance, said it was “unspeakable” for the hotel to leave the workers in the dark and that the Government would pay staff what they were owed.
Mr Dickinson said: “The challenging operating environment does not remove the obligation of hotel management to make payments to employees, as they elected to make staff redundant.
“The Bermuda Government, through the ministries of finance and labour, have been engaged with stakeholders to ensure that the hotel owners meet their obligations to the workers.”
The One Bermuda Alliance questioned the Government’s handling of the matter after Mr Dickinson confirmed that there was no legal agreement with the hotel owner to repay the funds.
It was later revealed that, as part of the payment to hotel employees, the workers agreed to pass their case on to the Government’s legal arm to pursue claims against Gencom’s local entity, Westend Properties.
It allowed lawyers to go after the firm, either on behalf of individual employees or in a group as a class-action lawsuit, to recover the severance money.
In early December, Gencom broke its silence to say the company would repay the Government as soon as possible.
The company also said it fully intended to move forward with the upgrades to the property “once funding has been secured”.
Karim Alibhai, the founder and principal of Gencom, said: “Simply put, the iconic Fairmont Southampton, which is such a large contributor to Bermuda’s tourism, cannot fail, and unlike other properties that may not have come to fruition, structurally the hotel is sound and ready for its long-anticipated facelift.”
The company statement added that the hotel had not been fully operational for more than eight months because of the closure of the island’s borders to combat Covid-19.
The company added: “The ownership group has had to fund significant losses due to the hotel’s closure throughout 2020, and the unanticipated early closure of the hotel impacted the financing of the redundancy payments, which were accounted for in the original renovation schedule for 2021.”