Athlene,
While the realisation remains clear, I must say that I was surprised at how much you seemed to be attempting to catch at straws, in attempting to have Arbeedee Ltd embrace your JV agreement-busting posture, in its relations with FM Developments Ltd., as evidenced by your pronouncements at today`s Board Meeting.
Though I had heard some of the points from his own mouth, I was surprised that you were holding up Ryan Stockton`s opinions against Golf, as though they were utterances from God himself on Mount Sinai. Ryan may have known alot about 5 star standard construction, but he knew precious little about the financing and marketing of 5 star resorts. He told me also about having two hotels at Hampstead, and also about not having any Golf, or building the Golf Course later. But both St Regis and Ritz Carlton not only dismissed the latter suggestion, but made it clear that they wanted the Golf Course completed months before the Resort opened, so that they would have a major amenity for their guests from day one, and of course they did not want any disruption from earth-moving operations nearby, after the Resort had been officially opened.
THE HAMSPTEAD PROJECT IS NOT ABOUT HOTEL FOR HOTEL SAKE BUT ABOUT
SUBSTANTIAL DIVIDENDS FOR ARBEEDEE`S SHAREHOLDERS
From the marketing standpoint, what Ryan signally failed to understand, is that the cost per room of building up to 5 star standard is so high today, that for us to have anything like a 50% stake in a Resort project of about 100 rooms, (and the top operators like St Regis and Ritz Carlton would settle for nothing less because of the relatively high operating costs in the Caribbean compared to Asia) we must sell at least 50 to 60 branded villas to generate enough profits to help meet some of the massive costs and keep borrowings manageable.
As a consequence of this harsh reality, it is pointless building a couple hotels each with 100 to 120 rooms, plus obviously the attendant branded villas, because at best, you could thereby have created any decent pool of funds to distribute to shareholders. The resorts themselves, as veteran Bajan Corporate lawyer, Peter Evelyn told us at the start of our journey with FMD, make very little money and are very vulnerable during economic downturns, not even as bad as the present one. A Dominican Resort, with our air access difficulties may take 4 to 5 years to be stabilised, and if you get hit by a downturn before you `soway`, as Ma Robert would have put it, then dog eat your supper. You are likely to be facing the receivers.
Contrast that with the configuration enshrined in the JV agreements - a 100 to 120 room Resort flagged by a top operator, about 60 to 65 branded villas, an 18 hole Golf Course and about 200 to 250 luxury villas. The sale of the branded villas will have enabled you to financially stabilise the Resort and your stake in it, the 18 hole Golf Course will transform the real estate value of all project lands not blessed with a sea/ocean view, and opened up a wide area of an otherwise rather monotonous, unexceptional landscape, to some gorgeous, much sought-after, very valuable Golf Villas.
The profits from those villas will be substantial enough to transform the lives of most Arbeedee`s shareholders, and would provide vital added financial security for our stake in the Resort. This is what the children and grandchildren of Robert and Bernadette Douglas deserve, and if I may say so Tingale, much as I admire your enhancement of the Snackette decor, no amount of effort and creativity there, can deliver to all Arbeedee`s shareholders, the kind of dividends they have long waited for and have every right to expect, bearing in mind the quality of their inheritance from Bob and Ben.
Any self-respecting marketer of 5 star properties in the Caribbean like HVS or CRE will tell you, that the availability of Golf will add a premium of between 25% and 40% to a luxury villas price. Our ability to get on board an international operator of the calibre of Ritz Carlton would add a similar premium to villa prices. As I said in an earlier email, during the Lenders Forum at the Caribbean Tourism Organisation Investment Conference at the Hyatt Regency in Port of Spain in May, all the main lenders to the Caribbean Tourism Industry (Scotiabank, RBC, FCIB & a Consortium of Indigenous Banks) made it abundantly clear, that they would not look twice at an application for funds from a 5 star Resort project, which did not have a major villas component.
They went on further to say, that the main release of funds would depend on their seeing that there was about a 20% demand for the villas. So the feasibility and ultimate success of a 5 star project that allowed us a 50% stake, depends less on finding an oil sheikh with a bottomless pocket, than on putting together with our JV partner, an imaginative project with proven winning features, whose luxury branded and non-branded villas sold very well.
This point is absolutely vital in accurately grasping how far your argument that FMD haven`t got the money would go in a court of law. Any judge that understands this 5 star business, would realise that you were talking rubbish, when he/she looks at the quality of professionals which Jonathon agreed to employ, to plan and execute the project - WATG, ECOPLAN, Greg Norman Golf Design, TROON Golf etc. If as everyone recognises the villas market has entered the doldrums in the face of a world recession, and no one is quite clear when it will be revived, both parties can and will sensibly agree on a pause. But the unilateral rejection of Golf by your group, a key feature of the JV agreements, endorsed by 77% of Arbeedee`s shareholders, predates the collapse of Lehman Brothers and the takeover of Merrill Lynch by Bank of America, and the $85 billon + $35billion rescue of AIG by the US Government.
HOW MUCH OF AN ANTI-GOLF STAR WITNESS YOU BELIEVE RYAN STOCKTON IS?
Ryan Stockton obviously lacks a clear understanding of the financing of 5 star Tourism Projects in the Caribbean. But even in his own specialist area one has good reason to wonder about his level of competence. You already know the story of the woodants. But here was a guy brought in to transform Hampstead House into a 5 star project office, and in the early period a possible villa sales office as well. Jonathon has on two occasions that I recall, sent down all the funds required to complete the job, firstly US$175,000.00, the original estimate, and this very year a further US$60,000.00. Yet look how much still needs to be done on the House. It is true that some of the funds were used for other legitmate purposes, but on a project like this, if you are not getting on with the work quickly enough, other expenses will emerge to use up the funds.
He was recruited to be in charge of Construction and Development for the Hampstead project. Because of slack in the work, Jonathon had him visit FM`s other projects in Bequia and St Lucia, but his substantive post was Head of Construction for the Dominica project. Because his wife did not like Dominica, and wanted to move to St Lucia, he took it on himself to relocate to St Lucia, after FM had spent how much money to bring down all his furniture, dog etc to D/ca. The obvious fact is that Ryan lacked the driving singlemindedness needed to get things down well and quickly in respect of such a major project. His supervision left alot to be desired. He was too distracted by his family and he could never have adequately coped when the project got into its stride. He was polite and courteous but in all honesty the project needed much more than that.
SADLY IRRESPONSIBLE APPROACH TO MANAGING HAMPSTEAD JV PROJECT
Athlene I am bound to say, that I was amazed at the lack of knowledge, displayed by both yourself and Jacqueline at today`s Arbeedee Board Meeting, about recent events on the world`s financial markets and stock exchanges. The Hampstead Project is not a local restaurant or small guest house, but is totally dependent on international customers to succeed, both as regards its villas and its Resort. Even Dominica is awash with TVs and computers, to allow one to keep abreast of developments in the world of international business. I thought that it was grossly irresponsible of both of you to neglect to do your homework, and to be so manifestly out of your depth as regards an appreciation of the recent and current turbulence on the financial markets of North America and Europe, as well as a grasp of what other 5 star Tourism players in the Caribbean are doing. And yet, you all want to pontificate at a Board meeting and decide policy for this major international 5 star project, whose life blood is a stable and optimistic international financial climate!!!
Jacqueline`s behaviour was even more outrageous, wanting to voltijhay me from the JV Board, to take my place when she has never ever voted in favour of any aspect of the JV agreements,( including at the EGM authorising the extra 15 acres in No. 1 to accommodate the Golf Course), to enable us to get as far as we have got. Today she held out the prospect of the Hampstead House, which is officially under lease to the JV, being reorganised to enable it to accommodate the occasional batch of low budget French people, as though a l`heure chillay, it is that kind of business at Hampstead, we should look forward to, in the 20th year after RBD`s death, to give shareholders the kind of dividends they have a right to expect.
If you were following just the business news on CNN even occasionally recently, far from believing that Dominica had cornered the market in Eco Tourism in the Caribbean, you would see that Jamaica is into River rafting on a scale that dwarfs the Hampstead River`s potential in this area, that Grenada presently has a functioning River-turning wheel, like the one used for over 200 years in the Caribbean, in the manufacture of sugar. Yet both these islands, like all but the very tiniest islands in the Caribbean except Dominica still have Golf courses. You would know too, that the biggest resort in the Bahamas, the Atlantis Resort has this week, had to lay off 800 workers not because the developers don`t have money, or have thrown in the towel, but because the slumping markets with their reduced demand has dictated that course at this time.
The successful formula for the Hampstead 5 star Tourism project which I assume we all seek, will not be finetuned and sustained, if Board and other vocal family members, insist on blaring out obdurate opinions, devoid of any realistic linkage with the international market we have to operate in and the economics of the industry, still less can we succeed, if we allow ourselves to be lead by the nose by people, who seem determined to be guided by benighted prejudice and self-centred hunch when making policy decisions, and regretfully want to remain inveterate dabblers in an area of business they have refused to make the effort to properly understand and master.
Yours more in sorrow than anger,
Mac
