The Almond Resorts Collapse

Recent announcements by Neal & Massy of the closure of the Almond Beach Village in St.Peter at the end of April 2012 is tragic for all the stakeholders but most especially the employees and their dependents. We must work to get them re-employed elsewhere soon and certainly seek to provide them with some means of […]

By Peter N. Boos

April 17, 2012

Almond Beach Village Almond Beach Village

Recent announcements by Neal & Massy of the closure of the Almond Beach Village in St.Peter at the end of April 2012 is tragic for all the stakeholders but most especially the employees and their dependents. We must work to get them re-employed elsewhere soon and certainly seek to provide them with some means of support until jobs can be found.

Whilst Neal & Massy may have botched the recent communications, it is naïve and unreasonable to think that Neal & Massy would continue or could afford to pump money into Almond Resorts Inc. indefinitely.

Businesses need to earn a fair profit to be able to provide good sustainable jobs and to grow, to undertake their corporate social responsibilities and to pay returns to shareholders who take the business risk.

Some in Barbados seem not to understand that truth.

Some want Government to become the shareholder.

Let us not forget the outcome of the GEMS project. Government interventions of this type are very damaging to the wider economy in the long-term. They distort the market and provide unfair competition to successful well-managed businesses. Worst yet they drive away investors.

A level and transparent playing field and good economic policy with transparent management is what is needed.

Government’s role is to provide an environment in which making businesses successful is seen as a priority for everyone including the Civil Service and Labour.

Lest we do that we will continue to have to pay the price of repeated business failures-higher unemployment, diminished investment, higher Government deficits and National debt and Social instability.

Almond Resorts Inc. has lost money for several years and has a large debt load. It is also in need of a significant renovation investment to be able continue operating in its current form.

We are in a deep, prolonged economic downturn and the costs of almost everything in Barbados have risen sharply much as a result of poor public sector management and ineffective taxation policy.

Lets not blame our problems only on oil prices and recession.

To some, the Almond Beach Village closure came as a shock, including some shareholders. That too is surprising since, had those shareholders been following what has happened at Almond Resorts Inc., the Barbados hotel industry and Barbados in general there should be no surprise.

The lack of profitability and therefore investment in our hotel sector needs to be addressed urgently. If our major foreign exchange earner is unattractive to equity investors or commercial lenders (the Four Seasons scenario) we should be very concerned. Something is rotten in the state of Denmark.

It can be argued that Almond Resorts Inc.’s failure is comparable to the situation we face in Barbados.

Our economy is in crisis-the Almond collapse and the delays at the Four Seasons project are but two further symptoms of that reality. There is a longer list.

All of our productive sectors-Tourism, International Business, Agriculture, Construction and Manufacturing and struggling.

Anaemic growth, a dribble of investment, falling real estate values and no sign that scenario will change any day soon. Sure the global economy is weak but we have failed to fix the things we must and can and that will create a better investment environment now.

The October 2008 Government appointed Committee under chairman Winston Cox, made its detailed recommendations in late November 2008 after full consultation with all stakeholders. More than 3 years on most of those recommendations remain just that. We are suffering with a terminal case of Implementation Deficit Disorder. Combined with a failure to openly acknowledge our reality will be disastrous for us all.

A successful country, like a successful business, needs:

  1. a compelling National Strategy;
  2. excellent leadership;
  3. a Governance structure that is effective, inclusive, transparent and that harnesses the best resources available;
  4. strong, competent, accountable managers.

Constantly spending more than you earn (fiscal deficits) and borrowing more than the country can afford (excessive debt to GDP ratio) are a sure recipe for a major fracture (structural adjustment) at some point.

Senator Geoffrey Cave recently warned of the problem of our high national debt to GDP ratio. The third highest in the Caribbean after Jamaica and St.Kitts & Nevis. The latter recently defaulted on its debt and Jamaica is in an IMF programme.

The lessons from ARI and Europe are there for all to see.

There is no magic wand. Faced with our reality, like any well run country or business we must:

  1. reduce our national debt quickly(sell non-performing and under-utilised assets);
  2. cut Government expenditure significantly so as to generate a fiscal surplus to further reduce the debt. Interest and compensation costs and loss making Government enterprises and transfers make up the bulk of Government’s expenditure. We must tackle those costs at the strategic level. There are solutions. Use of NIS Funds to support bad policy will hurt us all eventually.
  3. dramatically improve the investment climate by making it very easy to do business; create The Entrepreneurs Island so that by 2020 Barbados will be the #1 entrepreneurial hub in the world.

Until we address these issues, investment and growth will only be things we read about happening somewhere else and Barbados will continue its current decline and will see more hotel and business closures.

All of us who live here and love this Country want to help get the job done and will work with all the stakeholders to do so.

Peter N. Boos

Chairman Emeritus Ernst & Young Caribbean (since 2004); Founding partner Business Barbados publication (1999) and the Barbados business web portal (2009); Co-Founder, Chairman and CEO Substance Abuse Foundation Inc. (1996 to date); Founding Sponsor (2009) and First Chairman (2009-2014) Barbados Entrepreneurship Foundation Inc.; Founder of the Peter Boos Foundation (2004), (supporting youth development, entrepreneurship, education, addiction treatment, environmental protection, arts & culture development, relief of poverty and support of various community and charitable causes); Founder, Patron and first chairman ASPIRE Foundation (Barbados) Inc. - 'helping charities help' to strengthen and expand the Barbados Third Sector (2014 to date).

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