Money woes create rifts at club

The chairman of the St George’s Club Members Advisory Council is at loggerheads with the club’s management over the hospitality business’ financial future.

MAC Chairman Roy Van Brunt says the club, one of the last remaining timeshare operations on the island, is on the road to fiscal ruin and has consistently posted significant deficits and losses for more than two decades.

Mr Van Brunt, a 68-year-old retired account who at one time worked for the U.S. Securities and Exchange Commission and now lives in Florida, is pushing for government to intervene and change the legislation that governs timeshares on the island. Government, he said, should take a hard look at the practice of time sharing itself and whether it’s actually still viable on the island. The club includes 71 cottages.

“There’s a huge cashflow shortage and no one is doing anything about it,” he said. “They intentionally don’t bill what it costs to run the club.”

According to Mr Van Brunt, the club has consistently posted annual six-figure losses during the last 20 years. He said the total club deficit stood at $3.8 million on December 31, 2012.

Asked about if that $3.8 million figure was accurate, the club’s managing agent, John Kyle, said: “It’s open for debate. There’s a lot of old debt — about $1.2 million — that no one is responsible for. It’s one of those anomalies.”

Mr Kyle has spearheaded the management of the club, which employs about 60 Bermudians, with his wife Sally, who is the club’s developer, since 2007. The Kyles say Mr Van Brunt’s criticism is misplaced, that they inherited a debt-strapped organization in financial disarray and are doing well given the state of the economy.

Mr Kyle says the club has increased sales from last year, the grounds are meticulously maintained and the restaurant operation has turned around in recent years. 

“We’re still paying our bills and we’re operating,” he said. Mr Van Brunt’s criticism, says Mr Kyle, may come from a personal vendetta, an assertion Mr Van Brunt vehemently denies. 

“Clearly he has a slanted view,” he said of Mr Van Brunt. “He’s embittered for some reason. He doesn’t like me.”

Mr Kyle suggests Mr Van Brunt is not committed to Bermuda and that he is trying to rid himself of his club timeshares. Mr Van Brunt also dismissed such assertions as not germane to the problems facing the club.

“Is my forecast rosy?” asked Mr Kyle. “I would love to tell you it was. We’re going to keep plodding along. If you get this negative press, negative comments, it’s not going to help the situation. I’m hopeful that things are going to turn around.”

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f Bermuda decides the practice of timeshares is still viable, according to Mr Van Brunt, the law should require such operations to have a balanced budget. Failing that, he said, any deficit should be required to be billed to current owners immediately so the “true costs of ownership are known to both current owners and prospective buyers”. 

He is also advocating for input from the MAC to be required for club salaries and management fees. Right now, the MAC is an advisory board, not a board of directors.

Mr Van Brunt says the club will “either just atrophy or membership will drop” if nothing changes. 

“Either way, St George’s will be drastically effected. There are no ships coming in anymore,” said Mr Van Brunt. “Basically the only tourists who are walking around are those that stay at the club.”

Ms Kyle said some members are unable to pay their bills, so the club has a shortfall, but added that the club is making progress. They could close the deficit, said Mr Kyle, by raising the assessment fees, but that could prompt time share holders to “walk away” from the club altogether.

“We are in the biggest recession in history and Bermuda has been under great pressure, especially in the tourism sector,” said Ms. Kyle. “We tried initially to work with the MAC but they seem to have taken a negative approach and in fact the negative press also causes more issues because people are choosing to walk away and not pay their Assessments.”

She added: “We have been doing the write-off of bad debt in the same manner since 2006 and it is only because of excessive numbers of people going bankrupt in the US in 2010 that this became an issue.”

David London, a retired New England businessman who owns timeshares at the club, suggested the attitude of MAC members like Mr Van Brunt did not necessarily reflect how most members felt, something the Kyles echoed and Mr Van Brunt denies. Other club members voiced support for Mr Van Brunt yesterday.

Mr London said the club’s management has a sterling reputation on the island; he says the fact that the club is still standing and has not been put into receivership proves this.

He says he thinks Mr Van Brunt means well, but adds “They expected the club to act as though there was no economic challenge, no economic recession. The club has managed,” he said. “We are here now. The club is open and it’s being maintained beautifully. You can’t get blood from a stone.”

Through a statement, Tourism Minister Shawn Crockwell said: “We are aware of Mr. Van Brunt’s concerns and have been in active communication with him and other representatives of the Members Advisory Council on this matter.  The Timesharing (Licensing and Control) Act 1981 is currently under review with the objective to address any ambiguities and deficiencies that it may have.  Representatives from the Ministry of Tourism Development and Transport will continue to consult with the MAC and the owners of the St George’s Club during this process.”