Says hard choice to close was forced�
PELICAN--The new owner of Simpson Bay Resort and Marina said Wednesday that despite being forced into this difficult action, it still hoped a quick remedy would be found and a solution brokered between all parties that would allow it to commence operation of the resort in a financially responsible manner.
In a statement issued on Wednesday, the PR firm representing the new owner said that to operate the resort in a financially sound and responsible manner, the new owner could not take the same operational approach that had led to the cash shortages and ultimately the second downfall and second foreclosure on the property (land and buildings) of Pelican Resort Club.
"In contemplating whether or not to operate the resort, instead of closing it until another buyer is found, the new owner realised that the budget deficit for 2011 was greater than ever; namely, in excess of US $4 million.
"The endeavour continues to be challenging due to all the negative publicity from a small group of dissatisfied timeshare owners who are unhappy they lost their indirect 'ownership' of the property, but at the same time were unwilling over the years to keep supporting and investing in Pelican Resort Club so that it could remain operational," the statement read.
"Despite these challenges, which are, in principle, enough for any lender to simply close the resort until a buyer is found, the new owner opted to commence operation of the resort on January 26, 2011."
The new owner contends that this decision was based largely on social and economic reasons, with consideration of the impact the closure would have, not only for the 200 people that worked at the resort directly, but for the additional approximately 200 people employed by the independent tenant businesses that had operated out of the resort and for those working at the restaurants, shops and casinos throughout Simpson Bay that are all dependent on the tourist traffic attracted by the largest timeshare resort in St. Maarten.
As the cost of employment constituted approximately 50 per cent of the operational fees of the previous resort owner, "the new owner had no choice, but to responsibly address this disproportionately high percentage in order to reduce the resort's operational deficit and increase its efficiency.
"Although every option was thoroughly evaluated, it was simply not possible to take on the debts of the previous owner that built up over 30 years in order to sustain the long-term viability of the new property.
"The general public should know that the resort is presently running with 55 workers employed by the new operating company and approximately 120 service providers working four days per week. Previously, the resort was running under the old owner with 200 full-time employees of Pelican Resort Club, The Management Company N.V. and approximately 90 additional service providers working four days per week," the statement read.
"One should ask oneself: how it is possible that the resort can function in peak season perfectly with the number of people that are currently working there? The answer is simple: more employees are not needed. This means that the resort can operate effectively and efficiently with closer to 100 employees, versus the 182 employees WIFOL is demanding the new company hire."
The new owner said the WIFOL collective labour agreement had productivity standards far below what a person should reasonably perform in a normal workday. The Tenants Association of Pelican Resort Club (TAPRC) chose to accept the union's terms in 1996 and the resort and all the timeshare owners "have been paying the price ever since."
According to the statement, hotel and timeshare properties throughout the Caribbean and the entire world have been forced to reduce employment to cope with the global recession. "It is a decision that no management company enjoys making, but it is an unfortunate necessity, as businesses need to remain viable in order to sustain their operation in the long term and continue to provide any employment opportunities."
The PR firm said that the ruling of the St. Maarten court dated February 8, 2011, had created another new and unforeseen challenge for the new owner.
"In addition to facing an operational deficit in excess of US $4 million, it now immediately incurred an additional liability and debt of over US $4.1 million ? a liability that must be paid when terminating a labour agreement, further contributing to the lender's overall debt ? bringing the total 2011 budget deficit to more than US $8 million. This is on top of the US $30.5 million it bid to purchase the resort as well as millions of dollars of loans to the previous owner that it has yet to recover."
"The court's recent decision directing employment of all 182 union workers under identical terms as the previous employer ? if upheld ? would add an additional burden of approximately US $1.5 million to the resort's annual budget deficit. It is obvious to any casual observer that these debts are unsustainable," the statement read.
The new owner, the statement continued, has valid concerns regarding the wisdom of employing workers who ? as a result of the breakdown in negotiations with WIFOL and negative feelings that have been fanned by the continued negative publicity efforts of the TAPRC board ? it must anticipate may not be willing to make a positive contribution to the resort.
"The 50-plus employees of the previous owner who did come to work for the new owner are performing at high quality levels and with excellent attitudes," it said.
"A small number of timeshare owners led by the new board of the TAPRC have continued to sit on the sidelines, criticise and allege all types of conspiracy theories, without taking constructive action to work towards a positive future for the resort, its previous employees, timeshare holders and St. Maarten.
"The simple reality is that no one, except for the new owner, has been willing to invest the large sums of money in the Pelican Resort Club required to keep it in operation, including the timeshare owners themselves, who've enjoyed annual maintenance fees that are on average 30 per cent less than neighbouring timeshare resorts'," the statement read.
"It is easy to sit on the sidelines and throw stones when one does not have a major investment at risk and is unwilling to aid the resort by reaching into their own pockets, but the new owner, having already invested millions in the resort prior to the December 16 auction, does not have that luxury. In order to operate a financially sound and secure business, one must be able to pay its debts and expenses."
It was stated that the new owner simply had not budgeted for and did not have the financial resources to pay the unforeseen liabilities and deficits. In addition to these mounting debts are years of deferred maintenance that the previous owner TAPRC was unwilling to pay for and that must now be addressed.
"Without the ability to make ends meet, at least without obtaining additional financing, the new owner is left with no choice but to cease operations, effective February 20. This is the only reasonable and, frankly, responsible course of action.
"The new owner deeply regrets the stress the situation has caused for the workers of the previous owner as well as the timeshare holders whose vacations will be affected, but it simply cannot operate the resort at a loss without any strategy or ability to reduce its budget deficit and increase productivity in the foreseeable future. The new owner is also distressed by the impact these events have had on the people, business owners and government of St. Maarten," the statement read.
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