Government: Stay Out Of The Hotel Business
If these are to be the terms for the re-opening of the hotel it would be better for the Bahamas if it remained closed.
We were horrified to read in The Tribune's Business section on Tuesday that Prime Minister Perry Christie says his government is prepared to go back into the hotel business.
According to The Tribune report government is "prepared to take an ownership stake in the still-closed Royal Oasis Resort and Casino to ensure the property re-opened and that thousands of Bahamians were re-employed, in a bid to ease rising discontent on the island."
If these are to be the terms for the re-opening of the hotel it would be better for the Bahamas if it remained closed. There is no government - neither PLP nor FNM - that can successfully manage a hotel. Of course government will enter into a management contract with a reputable hotel chain, but the fact that it will be part owner will give Cabinet the right of interference: The foreign management will have to face the reality of how things are done in the Bahamas - an attitude of mind that commissioners heard so much about in 1997 during the inquiry into the operation of the Hotel Corporation of the Bahamas, and which they found "totally unacceptable".
For example when the hotel corporation was formed to acquire the government-owned hotels, "the Bahamian people were promised an autonomous corporation accountable to them through normal business accountability and through parliament," the commissioners reported. However, said the commissioners, Paul Adderley, who, for a time was chairman of the corporation, "exhorted the Commission not to concern itself with the Act as written, but instead to come to terms with the way in which, he said, things 'were done in the Bahamas. He emphasised that we must realise that Bahamians would know that, in spite of the Act, the government would retain control over the corporation."
The commissioners were disgusted. "This disregard for the enactment," they said in their report, "is totally unacceptable."
Lehman Brothers, who as creditors are the virtual owners of the Royal Oasis, has, according to Mr Christie, agreed that government should partner with it to ensure that a purchaser is found quickly for the Royal Oasis. It is important that a partner should be found urgently, but under no circumstances should anyone agree to government becoming an active part owner-even for five minutes.
Lehman Brothers should get a copy of the Commission of Inquiry Report on the Hotel Corporation of the Bahamas, February 1, 1997, to fully understand what it would be facing.
The hotel corporation was established in 1974 when foreign investors walked out leaving government with five hotels that were on the verge of closure. If they had closed thousands of Bahamians would have been without work. Government took over the hotels to save their jobs. This is the same reason now being given for taking over Royal Oasis.
At that time foreign investors walked out because the Pindling administration, with its attitude of "this is the way we Bahamians do things", made it impossible for them to operate.
Hoteliers found themselves confronted by letters from government MPs instructing them to employ persons whose only skill was their ability to mark an X on election day against the name of the letter-writing MP. If investors valued the work permits of their qualified foreign staff it would be more than they dared do to refuse the request.
Hoteliers also found themselves writing off more government official entertainment than their resorts could afford. Eventually in disgust, they gave notice and left.
And so for the next 18 years the Treasury haemorrhaged until the Ingraham administration came to the rescue and put the now worthless hotel properties on the market. It was only after these properties were privatised and hoteliers were free to introduce proper business controls that the hotel industr; made a comeback. It is now in the top spot in the Caribbean.
In describing the origins of the hotel corporation to the commissioners, Mr Adderley acknowledged that the "tourism industry is everything to the Bahamas." He said the corporation came into being when the "Lucaya in Freeport was in the doldrums, Cable Beach as well as Ambassador Beach was for sale, and the Emerald Beach was hardly worth the name."
According to Mr Adderley "government considered that the corporation could be an innovative income-generating, employment-enhancing structure, because private enterprise wasn't filling that role." Private enterprise wasn't filling the role because, surrounded by all these Bahamian attitudes, it could not operate as a business. And because the Pindling government subscribed to and encouraged "the way Bahamians do things", neither could the corporation.
In a memorandum to the corporation's deputy chairman, George Suhr, a recognized expert in the tourism and hospitality field, had this to say: "Neither the business acumen nor expertise is present in the corporation to manage hotels or even dispose of those it owns."
After listening to the evidence, the commissioners came to the "inevitable judgment that those in charge of this overall programme - whether at the political, civil service or statutory corporate levels - were only paying lip service to their responsibilities".
Editorial from The Tribune, Nassau, Bahamas