LEFT OF CENTRE: Jury out on Four Seasons
Sea, sand and sun, attractions in abundance in Barbados, weren’t the only reasons why the original investors flocked to the Four Season resort plan at the outset.
Yes, it was an opportunity to enjoy the best of what Walmer Lodge, the site of the project, Freshwater Bay to the south, Batts Rock to the north, Paradise Beach to the east, and Pile Bay had to offer – but it was also a chance to earn a sizeable return on investment.
What the early planners and investors didn’t bargain for was the collapse of the United States financial system and damaging economic declines across Europe, all of which spawned the worst global financial crisis since the Great Depression of the 1930s.
The upshot: Barbados’ economy went into a tailspin; the well-laid plans of a 110-room hotel and a resort community of private residences designed to feed into each other came to a screeching halt.
Hence, the Barbados Government’s recent determined effort to kick-start the stalled US$137 million project with a sizeable non-sovereign loan between US$60 million and US$70 million from the Inter-American Development Bank in Washington.
Sounds good so far. But that’s not all. Private promoters of Four Seasons are asking the National Insurance Scheme (NIS), Barbados’ robust pension scheme, to put some of its large surplus funds into the project. That money is needed because the IDB financing deal won’t be sufficient to get the job done.
Just as important, the bank has made it clear that its interest was in the hotel alone, not the private residential villas, and it is has demanded that a US$30 million “B loan” or co-financing be arranged to complement its funds. That’s where the rubber hits the road.
This patchwork of financing raises an essential question: is the Four Seasons project worth saving?
Another question: should NIS money go into it? The jury is out on both of those issues.
Take the requested NIS loan. Before the scheme’s board led by chairman Tony Marshall makes a decision, its members should consider some key factors.
The first is that a sound NIS investment strategy must be a priority and that means putting the interest of the nation’s pensioners, present and future, at the top of the list.
Questionable investments that could jeopardize the NIS’ financial health should be avoided like the plague and the Four Seasons seems to be one of them.
We should learn a lesson from the CLICO debacle and where it has left many OECS countries.
A few weeks ago Baldwin Spencer, Antigua’s leader, told THE NATION in New York that because they invested in CLICO, some national insurance schemes or social security systems in the OECS were in danger.
That should be enough to force the NIS to pause and perhaps say no to Four Seasons.
Then there is the hotel’s viability. It isn’t clear that a hotel with such a relatively limited number of rooms would eventually pass muster as a profitable venture.
As one analyst put it, there are unanswered questions about critical mass in the hotel project.
As an international hotel brand, Four Seasons has an excellent international reputation for service and high-quality luxury accommodation, and its presence in Barbados would add considerable value to the country’s image as a destination.
But as an investment in the current economic climate, it remains questionable.