Hotel & Motel Management / January 12, 1998
By Larry Luxner
ST. GEORGE'S, Grenada -- One of the most enduring reminders of the 1983 U.S. invasion of Grenada -- the former Marxist regime's bombed-out headquarters overlooking St. George's harbor -- will soon be torn down and replaced with a five-star luxury hotel.
The $140 million undertaking, which includes a 500-berth pre-stressed concrete and fiberglass marina for the super-rich, is being financed by Daventree Ltd., a Bahamas-based holding company controlled by Czech investor Viktor Kozeny.
"People are very excited about this project," says Winston Whyte, managing director of Blue Lagoon Real Estate Corp., which is supervising the effort. "Our marina will accommodate the best of the best. That's why we're planning a 180-room hotel, chateaus and villas coming down to the waterfront. It'll be absolutely beautiful. It'll be like a city on the water."
If the Blue Lagoon project comes to pass, it'll be a shot in the arm for Grenada -- where tourism is on the slow side and small hotels are struggling to stay afloat.
According to government statistics, stayover arrivals edged up 0.4% to 56,866 visitors during the first half of 1997, though the average length of stay dropped slightly to 7.09 days from the 7.20 days in the first six months of 1996. Meanwhile, cruise-ship arrivals dropped 1.12% to 140,292 visitors during the same period. Likewise, the number of cruise-ship calls decreased by 7% from 213 to 198, and cruise-ship expenditures during the first half of 1997 totaled US$2.5 million.
Broken down by origin, the number of stayover visitors from the United States -- Grenada's most important market -- dropped 5.34% and from Germany 19.6%, while arrivals from other Caricom countries rose 6% and from Great Britain 5.9%.
Nigel Gravesande, director of the Grenada Board of Tourism, says the island currently has 1,700 hotel rooms, but is aiming to reach 2,500 over the next five years.
"The government has taken the decision that tourism is going to be the lead sector of our economy as we approach the new millenium," he said. "The tourist sector can offer the greatest possibilities because we offer advantages the developed world doesn't have: excellent climate, unspoiled beaches and a rich cultural heritage."
Yet problems abound. The manager of an upscale resort on Grand Anse Beach claims his guests frequently complain about being pestered into buying handicrafts, drugs or even sex from itinerant vendors, who often verbally abuse tourists if they refuse.
To combat the problem, says Gravesande, "we will make the beaches a no-vending area by legislation. Vendors have been consulted and they're part of the process. I think they recognize that the sustainability of the tourist industry is inexorably linked to their own actions."
A more serious problem is the financial crisis being suffered by Grenada's small hotels. A recent forum on the subject concluded that low occupancy rates, poor management and lack of financing to refurbish properties and do extensive marketing were the main problems facing small hoteliers, at least 50% of which are on the auction block.
"The small hotels are virtually bankrupt and are up for sale," charges former Prime Minister George Brizan, a leader of the opposition National Democratic Congress. "Even the larger hotels are complaining that there are no guests. The occupancy rate is very low."
Rupert Agostini, an independent accountant and unofficial adviser to Prime Minister Keith Mitchell, says "over the last 10 years, both the occupancy level and the number of available rooms have been increasing. The problem with the small hotels has been due to the very high debt-to-equity ratio. I believe that is the main, substantial reason."
In the meantime, the Grenada Board of Tourism seeks to boost occupancy levels by marketing the island in the United States, though Gravesande wouldn't reveal how much his agency is spending this year on promotions -- insisting that number is confidential. He did say Grenada's biggest rivals are the Bahamas, Barbados and Jamaica.
Ann-Marie Marecheau, the board's marketing chief, says her agency is hoping for a 6% increase in tourist arrivals for 1998. To that end, Grenada has signed strategic alliances with American Airlines, American Express, Liberty Go-Go and other U.S. travel companies, and also plans to host a Spice Jazz festival next May.
Nevertheless, tourism is a "mixed bag," says Darryl Brathwaite, president of the Grenada Chamber of Commerce. "The large hotels have professional staffs, but small mom-and-pop operations are struggling. The third category is the cruise-ship business, which doesn't really bring a lot of money into the economy. If passengers don't take a day tour, they don't spend any money."
Gravesande says tourists rarely inquire about political stability in Grenada, an island that endured a Communist-inspired revolution in the late 1970s, the 1983 execution of Prime Minister Maurice Bishop by renegade Marxists and a full-scale U.S. invasion in 1983 ordered by President Reagan. These days, more pressing concerns are crime, high prices and whether or not the beaches are clean.
While tourist prospects are good for next year, remarks Whyte, this summer was very slow. "There is more competition than before for the tourist dollar," he says. "We have to be very careful not to price ourselves out of the market."
Whyte's hotel-marina project occupies 25 acres on land and 25 acres of sea along St. George's harbor. The hotel sit atop a hill now occupied by the ruins of Butler House, which was Bishop's headquarters before being bombed by the Americans during the invasion. Whyte says the project -- which Daventree is financing from the proceeds of oil ventures in Azerbaijan and the United Arab Emirates -- will employ 800 people once in full swing.
"We've had a lot of promoters come through, but few of them have the cash and the time to put a deal together," says Brathwaite. "We're usually very skeptical about projects until we see construction start, but we're 99% sure this Blue Lagoon project is going ahead. The investor already has the money."
A second large hotel project involves Ritz-Carlton. Businessman Enrique Luis Fuentes, Venezuela's former tourism minister, is financing the construction of a $60 million complex that features a 225-room, five-star hotel; 40 hillside bungalows/villas; a 54-suite beachfront clubhouse; 12 golf-course villas and an 18-hole PGA golf course -- Grenada's first. The project is to be located on 232 acres of land at Mt. Hartman and 84 acres on Hog Island; a bridge will connect the two. Permanent jobs would be created for 500 people upon the project's completion.