Finance Minister Curtis Dickinson stated today that the Government’s decision to front the monies owed to Fairmont Southampton staff made redundant when the hotel could not produce the funds avoided what could have been “a perfect storm”.
Speaking at a news conference this afternoon (Feb 1) after the hotel owners covered redundancy payments for the 750 staff, he said staff were “already suffering from the extended layoffs because of the COVID-19 pandemic”.
The payment amounted to approximately $11 million, which was wired to the Bermuda Government’s accounts today.
In light of the fact that there was no guarantee on when the hotel would be in a position to pay their staff, the Minister said the Government had to step in.
“Action was required and the Government of Bermuda decided that it was unacceptable to allow this situation to continue unaddressed,” said the Minister, who also stated that Westend Properties would pay roughly a half a million dollars to cover the Government’s legal costs and consultancy fees “in the near future”.
“This repayment is an excellent outcome of the Government’s action which has eliminated the Government’s financial exposure in relation to the employee loans,” said Mr Dickinson.
He noted that Gencom had “secured further funding to allow Westend to continue with pre-development work”.
But he warned that any economic recovery in the wake of the global COVID-19 pandemic in Bermuda’s tourism industry would be “difficult to forecast and subject to significant risk” at best.
Despite the challenges that lie ahead, he said the Government remains committed to balancing Bermuda’s budget by the 2023-24 financial year.
“In that context, we understand Gencom is making progress with parties strongly interested in partnering to finance the redevelopment, and we wish them success,” said Mr Dickinson.
“We cannot brag on the one hand that the backbone of our tourism industry is the people who work to provide a quality visitor experience every day and then when they need us most, leave them and their families uncertain about their futures.”
“This repayment is an excellent outcome of the Government’s action which has eliminated the Government’s financial exposure in relation to the employee loans,” he added.
Moving forward, he said: “Gencom has secured further funding to allow Westend to continue with predevelopment work at the Fairmont Southampton.
“Redevelopment of the hotel will provide jobs and economic stimulus. The reopening will provide a significant increase in room and meeting space inventory, which could generate visitor demand and restoration of airlift capacity,” he said
“However, the timing and extent of recovery from COVID-19 in Bermuda’s hospitality sector is difficult to forecast and subject to significant risk.
“Further, while the Government is vested in and highly supportive of the redevelopment and reopening of the hotel, it must find ways to be supportive without further financial commitment as it focuses on its plan to support economic growth and balance the budget by 2023/24.
“In that context, we understand Gencom is making progress with parties strongly interested in partnering to finance the redevelopment, and we wish them success.”