SDO 'crucial' to tourism trade

They back the controversial plan for a Special Development Order to build new condos and hotel rooms on the hillside over looking Castle Harbour.

Norman Mastalir, who runs the Fairmont hotels in Hamilton and Southampton, said it would be a “tragedy” for Bermuda if the multi-million dollar development was allowed to fail.

And he urged legislators to do everything in their power to make sure Tucker’s Point survives.

Other hotel bosses also support the development, in spite of public concerns over the environmental impact. They believe the consequences of allowing the hotel — the only luxury development in Bermuda in the last four decades — to go under would be disastrous for the island’s economy.

One hotelier, who did not want to be named, warned Bermuda could be left with a plush empty building standing derelict — like the old Lantana hotel — as a stark warning to anyone thinking about building in Bermuda.

Mr. Mastalir said it would be a clear sign to potential investors that Bermuda was not a realistic option.

“It is critical. This is Bermuda’s newest, most upscale resort. It absolutely needs to succeed. They need to do whatever it takes to make sure that happens. To have that resort fail or falter in any way shape or form would be a tragedy for our industry.”

The number of hotel rooms has fallen from around 6,000 in the 1990s to roughly 2,700 today, according to hoteliers.

They say the decline is already affecting the number of airlines coming to Bermuda with JetBlue and WestJet trimming their schedules this summer.

Any further loss of rooms would fuel the downward spiral.

Another hotelier told us that the Tucker’s Point debate represented a huge dilemma for the island. He said the desire to protect green space and ‘keep Bermuda beautiful’ was an obvious cause to fight for.

But he added that the consequences of failure at Tucker’s Point would have repercussions on everything from employment to flight prices.

“The failure of this hotel at this critical juncture would be very damaging for Bermuda.”

Tucker’s Point president Ed Trippe said his hotel was the only example of luxury development in Bermuda in the last 40 years. And he warned that current and future investors, including developers behind the Park Hyatt project in St George’s and the Morgan’s Point resort, would be watching carefully to see what happened.

He said the publicity surrounding the SDO and the open scrutiny of the hotel’s financial viability was already scaring investors.

One buyer pulled out of a $6m purchase because of the furore, he said.

Mr. Trippe said the hotel’s long-term financial future is solid — if they get permission to expand.

He said they had been blindsided by a recession that had hit hotels across the Caribbean and the world and wiped 35 per cent of the value off the hotel.

But he believes an expected rebound in the tourism industry, combined with the new development, will keep them in business in the long term. He says they are not asking for handouts — just permission to build on land they already own.

Mr. Mastalir said: “It has been years and years since any new resort has been built in Bermuda, you can be assured that any potential investor is watching what happens with the Tucker’s Point project.”

He added that protection of green space was an important issue. But the public and the Senators, who will ultimately determine the fate of the SDO in a final legislative debate next Wednesday, would have to weigh that against concerns over the future of tourism in Bermuda.

“From a business standpoint, from the health of our industry standpoint and from the standpoint of respecting what Tucker’s Point have tried to do for the country, this is a very big issue and probably critical to their future success.”

He added that it was harsh to suggest that Bermuda should allow Tucker’s Point to go under and countered that its current problems were not necessarily of its own making.

“They built the kind of luxury resort the consumer is demanding today. It made sense when they did it [but] times have changed. We have very different circumstances than we had ten years ago.”

Unfortunate timing

He said the 2008 recession had struck the hotel industry hard and Tucker’s Point was a victim of unfortunate timing — but it retained the potential to be a success — and deserved support.

MPs have already approved the SDO in the House of Assembly. But the Senate has the power to block the order — potentially delaying it for at least a year.

Public opposition, fuelled by environmental protection groups like BEST and the National Trust, culminated in a ‘walkabout’ at the site on Sunday with most of the participants opposing the scheme Activists are now encouraging people to e-mail the 11 Senators to urge them to block the SDO.

With the five PLP Senators and three UBP Senators almost certain to vote on party lines, the balance of power lies with the three independent members — Carol Ann Bassett, Walwyn Hughes and Joan Dillas Wright.

Mr. Trippe admitted he was apprehensive about the backlash to the proposal and the potential for a ‘no’ vote in the Senate.

 “If the Senate says ‘no’, I don’t know what will happen. I’ll be frank, investors are already backing off.

“I can make strong assurances about our long term financial stability if we get the SDO but that is undermined if we have to wait another year and go through the legislative process again.”

He said luxury hotel operator Rosewood would be likely to pull out if the process was delayed.

And he believes the publicity is already hurting the hotel and influencing other investors.

“The problem is, you are trying to convince people that Bermuda is a sound place to invest. It has become a self proclaiming problem because this SDO process, which is designed to be transparent, has had the unfortunate consequence of opening things up and allowing other investors to look under your skirts. They are seeing how hard it is and they are backing off.

“Investors that were going ahead or were very close are all back on the shelf. They are not doing it until they see what happens here.

 “We have made a massive investment in Bermuda. We spent $450million and employed 800 different contractors. For four or five years this hotel development represented 20 per cent of the island’s construction industry.

 “If things go badly because we’ve done a bad job ourselves then that is one thing; if they go badly because of recessions or crises in the Middle East you figure out what you have to do to survive and go forward.”

He said the SDO would allow the hotel to renegotiate its loans and go forward. He believes it will be turning a profit by 2012 and in a strong position to pay off its loans in the long term.