By Jwala Rambarran From Caribbean News Now

It’s now old news that the prime minister of our twin island country wants to spend taxpayers’ money to build a mega-hotel resort on the controversially acquired Buccoo Estate in Tobago for a billionaire considered the second richest businessman in Jamaica. Prime Minister Rowley thinks the Sandals Tobago resort will inject new life into the distressed economy of our sister isle.

After spending just a day in August with World Golf Hall of Famer, Greg Norman, and a few caddies touring golf courses in Tobago, Rowley, an avid but mediocre golfer, proudly disclosed another nugget of information about his pet project… the Sandals Tobago resort will include the island’s third golf course.

We all want to see Tobago develop and thrive. We are Trinidad and Tobago, one nation state and anyone who calls themselves a patriot wants what is truly best for our two islands.

If you are reading this in Trinidad, consider the details about the Sandals Tobago mega-project carefully, based on the very limited publicly available information, not on rumshop talk. What does this project entail? Will it be worth your tax money?

If you are reading this as a Tobagonian, ask yourself if this proposed project from the mind of a son of Tobago is really going to benefit you, your family, your children and even your children’s children. How will the Sandals Tobago resort, the biggest construction project on the island since the Scarborough Hospital, help your sons, your daughters? Will they have job security as front desk staff, chefs, maids, bell boys, games instructors?

The sad but simple truth is that the Sandals Tobago project does not have a strong enough case in business, economics or just commonsense to work. Sandals Tobago is the very definition of a vanity project.

Let’s first take a look at the state of tourism in Tobago.

It’s no secret that under the Rowley PNM government, tourism, the mainstay of Tobago’s economy, is in crisis, a crisis inflicted by the sheer incompetence of Tobago’s own “we boy” to properly manage the economic affairs of the island. If passenger arrivals were to be used as a key indicator of the island’s tourism performance then the sharp drop in passenger arrivals to less than 20,000 currently compared with 80,000 a few years ago paints a gloomy picture.

Not surprisingly, occupancy rates have fallen dramatically at hotels, guesthouses and apartments, and several tourism-related loans have gone into default, leading to the shutdown of Sanctuary Resort hotel site in Grafton and the sale of the Manta Lodge in Speyside. The spectacular collapse of the sea bridge ferry service linking Tobago to Trinidad may sound the death knell for the badly wounded tourism sector on the island.

Against this chaotic backdrop, Prime Minister Rowley has been touting Sandals Tobago as the savior of the ailing Tobago economy, making way for a new tourism product, Golf… Sandals Style.

Why golf? Why did Rowley decide he wanted more golfers to tee in Sandals Tobago?

Golf tourism is not even mentioned in the PNM’s manifesto, which Rowley and his crony Cabinet colleagues made official government policy right after assuming office in September 2015. Apart from the four words “three major golf courses” on page 10, neither golf nor golf tourism forms any part of the PNM government’s draft sport tourism policy dated June 2017, which boldly proclaims it is the guiding document on how to grow an internationally competitive sport tourism niche in Trinidad and Tobago.

In fact, Prime Minister Rowley’s very own draft sport tourism policy makes the damning claim at page 9 that his PNM government is yet to do any study on existing and potential sport events, on target markets for new and enhanced sport tourism packages, and on sport segments that will yield the optimum return for the proposed investment.

Maybe it’s been secretly done, but in his usual arrogance, the prime minister does not feel the need to make a proper economic case to us, the taxpayers who are funding his vanity project.

While peddling the project at one of his, “Conversations with the Prime Minister” public relations sessions, Rowley who came in for heavy criticism last year for his misogynistic “a woman requires grooming like a golf course” remark said, “Tobago already has two golf courses, both of which require significant attention to bring them up to international standard and the one at Sandals will be the third. If we have three well-prepared and maintained golf courses in Tobago we can genuinely market Tobago as a golfing destination.”

This statement captures everything wrong with this vanity project. If this is the prime minister’s logic, he certainly resides by whim and fancy, and I’m not talking about the well-known five-bedroom holiday villa in Whim, Tobago.

There are so many existing broken things in our country from state enterprises to our infrastructure, why does the prime minister not condemn those and re-build from scratch? As he’s doing with Petrotrin, Rowley can’t think past his own interests and lacks the depth to be a prime minister. This is what Sandals Tobago tells us about him.

Our prime minister thinks it is best to spend more money we don’t have or to incur more debt to basically repeat existing weaknesses and failures in the Tobago tourism sector. I must ask, as surely we must all ask, would it not be cheaper to work with what’s there to bring them up to international standards, rather than building a mega-resort and golf course from scratch?

The Magdalena Grand Hotel and Golf Course was renovated in 2013. According to newspaper articles on its launch at the time over US$2 million would be spent to upgrade the golf course. One article from the Trinidad Guardian says, “The refurbishment project will upgrade the course to Golf Course Superintendents Association of America (GCSAA) standards… With the enhancements we are making, we look to attract golf enthusiasts from around the world as well as PGA tournaments and corporate events.”

This plan seems to be in alignment with Rowley’s golf tourism thrust for Tobago. But so far in 2018 there have been a handful of tournaments at this golf course. This could be because of the difficulty the golf industry is facing overall.

As an avid golfer and a man looking to get into the golfing industry, surely Prime Minister Rowley must know a few key facts about the sport he’s so passionate about. But, since he’s not been sharing much detail with us about the project, let me share a few with you about the real state of the golf tourism industry.

If the Rowley PNM government had done any research, they would have found the game of golf is struggling. Not coincidentally, when the career of golf legend Tiger Woods began to decline from 2009, he took the fortunes of the golf industry down with him, especially in the United States, the world’s largest golf market.

According to the National Golf Federation, widely regarded as the foremost authority in the golf business, the United States has lost around five million golf players over the last decade, and there are 500 fewer golf courses than in 2005. Basically, the golf industry has found itself with too many greens and not enough players.

Even more troubling is that golf’s appeal has faded among the millennial generation who, in our fast-paced, always connected world, don’t want to spend four or five hours of their leisure time playing 18 holes on a regular basis. And, unlike in the previous decade, there’s no Tiger Woods-sized celebrity to sell the game of golf to a VR generation.

Golf’s future depends on rebuilding but with more realistic aspirations. New golf personalities, such Jordan Spieth and Rickie Fowler, are taking the place of Tiger Woods, who is experiencing a rally at the moment, but the sport is looking to attract younger players by making the game faster, easier and more open, and it can’t do it quick enough.

This is where the lucrative US$25 billion golf tourism market comes in. Golf tourism seeks to attract golfers, mostly middle-aged men with above average incomes, who tend to travel more frequently, stay longer and spend more money on their vacation, playing golf many times a year. For most of these golfers, the quality of the golf course is the main factor motivating their destination choice. Nearly 60 million golf players worldwide can choose from a range of golf courses, situated in destinations in nearly in every country in the world.

According to the reputable Golf Digest magazine, golf courses in United States, Scotland, Ireland and Australia rank in the first top ten in “Top 100 golf courses in the world”. The reality is that most golf courses that feature in the World Top 100 table are household names that have become permanent fixtures. Some such as the old courses at St Andrews, Royal Melbourne, Augusta National, Pebble Beach and Muirfield are all championship venues with centuries of history.

In the Caribbean, the most popular golf locations are in the Dominican Republic, Puerto Rico, The Bahamas and Jamaica but,, according to the KPMG Caribbean Golf Overview 2015, none of these golf courses make the World Top 100 league table. These are serious, well-established golf destinations that Tobago would have to take on to even get a small piece of the golf tourism action.

While Prime Minister Rowley dreams of teeing off with his friends in Tobago after he leaves office in 2020, Jamaica is already aggressively positioning itself as the next big Caribbean golf tourism destination. The Jamaican ministry of tourism is leveraging Jamaica’s international brand recognition to market the country as a world golf destination, targeting a minimum of five million golf visitors annually and earnings from golf tourism of US$5 billion by 2021.

Jamaica has the potential to emerge as world-class golfing destination – boasting some of the finest championship golf courses, especially along the north coast from Runaway Bay, into Montego Bay (where the Sandals flagship resort is located) and Tryall. At the international competitive level, Jamaica has successfully hosted prestigious tournaments such as the Johnny Walker World Golf Championship, the Heineken World of Golf, the Mazda Champions LPGA Tour, and the PGA Tour Latinoamerica BMW Jamaica Classic.

In fact, from as far back as 2009, Jamaica was voted Golf Destination of the Year for the Caribbean and Latin America by the International Association of Golf Tour Operators.

Even though Sandals has developed a brand recognition that is unprecedented in the Caribbean and sees itself as a marketing machine, golf tourism for Tobago will be an uphill battle against the already established greens in the region. Yet the prime minister is gung ho about building a resort and golf course with taxpayers’ money for a wealthy, successful businessman. Sandals would boast as well, that Tobago will benefit, but will it really?

Sandals says it’s the most successful chain of luxury, all-inclusive resorts in the Caribbean. Founded in 1981 by Jamaican tycoon, Gordon “Butch” Stewart, from one Sandals brand and one resort in Montego Bay, Jamaica, today there are five Sandals brands and 24 properties spread across Antigua, the Bahamas, Barbados, Grenada, Jamaica, Saint Lucia and Turks and Caicos.

The Sandals all-inclusive resort offers the tourist accommodation, meals and recreational activities for a single fixed price that also covers airport transfers, service charges and gratuities. Tourists can be entirely carefree during their vacation without worrying about additional costs for such things as windsurfing lessons or the services of a tennis pro. Sandals, which hosts nearly a million customers annually, has been voted the World’s Best All Inclusive Chain at the World Travel Awards for 23 consecutive years.

Despite its popularity, a strong and frequent argument against all-inclusive resorts like Sandals is that little of the revenue generated by these resorts goes into the local economy. Leakage is a main cause of this problem. Leakage is the unwanted leaving of money from a country as a result of taxes, wages, imports and profits that are paid outside the country. In other words, instead of generating foreign exchange for the people of Trinidad and Tobago, Sandals may take out more US dollars than it puts in.

A 2002 study by the United Nations Environment Program states, “In most all-inclusive package tours, about 80 percent of travelers’ expenditures go to airlines, hotels and other international companies, and not to local businesses or workers.” This means that only about $20 will remain locally when tourists spend $100 on their vacation in the Caribbean.

Misaki Kondo from City University of New York, who did a 2015 study on the economic impact of all-inclusive resorts in Jamaica, describes the leakage in this vivid manner:

“Sandals Resort in Negril, Jamaica, demonstrates well the need for importing products from other countries. Dining and restaurants are one of the most important features of all-inclusive resorts, where guests enjoy unlimited food and drinks any time of the day. Like other resorts, Sandals Negril is proud of its six different restaurants and the food it offers: Jamaican, American, French, Italian, and Japanese. However, where on earth do they buy caviar for French dishes’ toppings, prosciutto for pasta, or dried seaweed for sushi rolls? It is clear that the resort needs to purchase those and many other products from companies in other countries, because Jamaica does not have the industries to supply these goods. As the resort purchases imports, much of tourism’s income leaves the country by means of leakage.”

It’s no wonder that, just one month after assuming office, Prime Minister Mia Mottley of Barbados sent out a warning in June 2018 to Sandals that it “got everything without consultation” but would now have to pull its weight just like every other Barbadian hotelier to support the Bajan economy, which is facing severe economic hardship. The IMF recently reached a staff level agreement with Barbados to provide US$290 million in financial assistance over the next four years, to support the government’s economic recovery and transformation plan.

Sandals responded to Prime Minister Mottley’s warning, issuing a media release which stated: “Sandals has become a key economic player in Barbados in just three and a half short years. Not only are we the largest contributor of foreign exchange but we have provided employment and training for some 1,000 persons in Barbados.”

Sandals also stated that its resorts bring large numbers of visitors with more spending power to the Caribbean, provide jobs and training for locals, and create a significant downstream impact for smaller hotels, local farmers, taxi drivers, entertainers, tour operators and other small business persons.

While Sandals rightfully believes its contribution to job creation and economic growth in Barbados might be unmatched, there is no independent, authoritative and credible study to validate this assertion either for Barbados, Jamaica or any other Caribbean country in which the Sandals resort chain operate.

This brings us to one of the most controversial aspects of Sandals throughout the Caribbean… the substantial tax concessions granted by regional governments to attract the Sandals brand. These tax concessions take the form of 25-year tax holidays in relation to duties and taxes on imports of construction materials, vehicles, food, drink, alcohol, furniture and equipment, as well as a 25-year tax holiday on profits.

Since the commercial agreements between regional governments and Sandals are secret, there’s no publicly available information on the value of the tax concessions granted to Sandals. It is, therefore, difficult, if not downright impossible, to determine the quantum of tax revenues regional governments have given up in return for Sandals attracting tourists to the islands and generating employment. Will Rowley really tell us what Sandals’ property tax would be?

So what does all this mean for Tobago?

In the case of the proposed Sandals Tobago, Prime Minister Rowley has indicated that his PNM government will build and equip the hotel to the specifications of Sandals, who in turn will “badge” the property and provide management expertise and access to their network. At 750 rooms, Sandals Tobago will be the largest hotel on the island and will have more than three times the room capacity of Tobago’s biggest existing hotel, the 198-room Magdalena Grand. Sandals Tobago is a huge project.

Based on the average construction cost per room for the country’s three large brand name hotels – Trinidad Hilton, Magdalena Grand and Hyatt Regency – construction costs alone for Sandals Tobago is likely to start at around 1 billion TT dollars.

To support the sizeable scale of Sandals Tobago, the Rowley PNM government would also have to spend a substantial amount of public funds from already weakened government coffers to upgrade Tobago’s airport, road network and water and electricity supplies. Building physical infrastructure is expensive and can easily run into hundreds of millions of dollars, and that’s not counting the usual corruption, waste and mismanagement on public sector projects.

How will the Rowley PNM government fund the massive billion dollar construction and infrastructure costs associated with Sandals Tobago? Will it again borrow indiscriminately, further pushing up public debt, which is quickly approaching the government’s soft target of 65 percent of GDP? Or will it consume a large chunk of declining revenues? Will tax concessions form any part of the commercial arrangements for the proposed Sandals Tobago resort?

Speaking at the Trinidad and Tobago Chamber of Commerce “Champions of Business” Gala in November 2016, Adam Stewart, CEO of Sandals Resorts International, indicated that the, “economic footprint of a resort the size we propose for Tobago, when you take into account payroll, taxes, local services and more, would be in the region of US$80 million annually.”

Of course, Stewart did not indicate how he calculated the projected economic footprint of Sandals Tobago, whether it was net of any tax concessions; who would get the lion’s share of the purported economic benefits – Sandals, government or Tobago – and how long it would take for the government to fully recover its costs on the Sandals project.

Public transparency has been severely lacking on the Sandals Tobago project.

While in opposition, Rowley and his PNM crew repeatedly complained about the secretive manner in which the former People’s Partnership government was treating with the Invaders’ Bay site, the largest undeveloped parcel of land in the capital city of Port of Spain. The matter even reached the High Court.

However, in their first three years in power, Prime Minister Rowley and his PNM government have elevated secrecy to a new height, whether it relates to Tobago Sandals, procurement of the Galleon’s Passage to service the sea bridge, or the fatal decision to close down the Petrotrin oil refinery.

Justice Peter Jamadar of the Appeal Court, in delivering his October 2016 ruling that ordered publication of the legal opinions that the ministry of planning had used to advance the Invaders’ Bay project said, “It may be worth reminding ourselves that whereas freedom, transparency and accountability are the hallmarks of participatory democracy, secrecy lies at the heart of dictatorships.”

Not only has Prime Minister Rowley failed to put forward a strong, compelling economic case to justify the proposed Sandals Tobago resort and a third golf course on the island, but he’s behaving as if Trinidad and Tobago is a dictatorship, not a democracy. In fact, I find it downright obscene to use taxpayers’ money to subsidize a private business decision that Sandals, by its very own admission, says is commercially profitable.

Tobago is likely to benefit more from an overhaul or even rebrand of the existing Magdalena Hotel, which incidentally has seen improved visitor reviews on major travel sites in the last year and has been making major investments in upgrades. Granting tax concessions to upgrade and expand the room stock of the smaller Tobago hotels and guesthouses and implementing an aggressive tourism destination marketing plan for the island would make more economic sense, rather than indulging in a mega vanity hotel and golf course project whose return is unknown to the taxpaying public.

It is simply not adding up. The prime minister seems to have an agenda and aside from the taxpayers paying for it, the collateral damage will be the very people on the very island of his birth that will suffer, as Sandals, if it is by some small miracle a success, would drown out smaller indigenous hotels.

So if you turn on your TV and stumble on the PGA Tour, pause before changing the channel. No, not to watch with bated breath as a guy in a sun-visor named Jordan or Rickie swings a mallet every couple of minutes in an intense effort to poke a ball towards a tiny hole, but rather to consider whether Tobago could do with a mega-hotel and third golf course on the island.

After all, when you talk to someone who just came back from seeing the fascinating, colourful underwater life of the Buccoo Reef or swimming in the rejuvenating blue waters of the Nylon Pool, you never hear them say: “Yeah, that was nice, but what Tobago really needs is a big hotel and another golf course.”

Jwala Rambarran was a former Advisor to the IMF Executive Director (Brazil Office) with direct responsibility for Haiti. He actively championed Haiti’s designation as a Heavily Indebted Poor Country (HIPC), making Haiti eligible for substantial international debt relief

For more on this story go to: https://www.caribbeannewsnow.com/2018/09/30/commentary-rowley-wants-to-tee-in-sandals-tobago/