America’s Cup Should Benefit All!

December 10th, 2014 by De Onion

As an international business worker I feel that I will be left out in the cold while the benefit of the Cup instead flow to:

– Tradesmen, the carpenters, masons, electricians who build the facilities for the Cup.

– Hospitality workers who will feel an influx of tourists both over the next two years thanks the frenzy of the Cup and over coming years and decades as Bermuda’s image is permanently enhanced by all the exposure.

– Taxi drivers who will be busy ferrying the visitors around the island and sharing our landscape and history.

– Musicians and entertainers who will find themselves playing for packed houses of visitors and thousands of YouTube viewers hungry for Bermudian culture.

– Gombay troupes who will undoubtedly find fame from their amazing displays.

– Dockyard (obviously)

– St. Georges which will see a flood of visiting yachts for the Cup and the great sailing.

– Landlords who will not only find benefits from renting to the high-end visitors coming for the Cup but also more modest accommodations for all of the teams and support staff.

– Landscapers, photographers, and videographers who will play their part to make the island look beautiful to the world.

– Minister Grand Gibbons who already has everything in the world but has now outdone even himself and been a true credit to Bermuda by bringing this event to our shores.

– Entrepreneurs who see the opportunities that will come to sell Bermuda’s art, culture, and lifestyle to the world. Here are 4 opportunities that anyone except a reinsurance accountant could do:

    – Bermudan books. With the rise of the Kindle and iPad it is easier than ever to self-publish a photo book, cookbook, anthology of Bermuda stories, etc.
    – Bermudian clothing. There’s no doubt that people will be looking for the complete Bermuda shorts and blazer and with modern contract manufacturing it is easier than ever.
    – Bermudian art. Millions will see the natural beauty and beauty of our people and many will fall in love and want Bermuda art in the form of photographs, painting, sculpture, and even custom Gombey masks.
    – Bermudian experiences. Each of us has unique knowledge of our island that we can share with guests from tours to home cooked meals.

Meanwhile I and other international business workers will be stuck picking up the crumbs from the Cup in the form of a half dozen Dark N’Stormies and some hors d’oeuvres at a corporate tent while the caterers, waiters, bartenders, liquor wholesalers, and taxpayers reap the bulk of the benefit.

Tucker’s Point Bankruptcy

September 13th, 2013 by De Onion

It should come as no surprise that an 88 room hotel with $150m in debt is in receivership.

88 rooms, $150 million in debt = $1.7million per room. Debt service costs of roughly $300 per night per room.

Average room price of say $595 per night, 70% occupancy = revenue per available room of $416 per night on average.

So with the cost of financing eating up ~70% of hotel revenues you’re never going to be able to make a profit.

I know Tucker’s Point has the club and other revenue generators but even so the underlying numbers are so awful that we should never realistically expect new build hotels to make money in Bermuda unless there is some radical change in the economics. It is also a vindication of BEST’s economic argument against the SDO and another slap in the face of the PLP Ministers who seem to have fallen hook, line, and sinker for bad arguments for granting the 2011 SDO.

The Folly of Tourism Numbers

February 14th, 2012 by De Onion

So today we learn that tourism arrivals were up 12% – a jump in the number of cruise ship visitors alone. The thing is that we should feel this in the economy, and yet the continued implosion of Bermuda’s economy and suffering of the working class only shows to illustrate what folly it was to invest heavily in boosting the headline numbers through cruise ship visitors. At least new tourism minister Wayne Furbert isn’t following in his predecessors’ footsteps and loudly proclaiming this to be a huge victory, especially since next year will undoubtedly show a large drop thanks to cruise lines cancelling cruises.

I’ve updated the air arrivals graph with this new data.

Air Arrivals 1970-2011

February 2nd, 2012 by De Onion

Been playing with some data. Special thanks to Denis @21 Square.com

Tucker’s Point SDO

February 19th, 2011 by De Onion

The Tucker’s Point SDO – let’s call it what it is: A license to break the law. It gives the developers the ability to use land that would otherwise be illegal.

The question needs to be asked – what happens if Tucker’s Point fails to receive an SDO? The answer seems to be that the bank will foreclose on the hotel as they did with Newstead and aim to find a new buyer to run the hotel. That buyer will be free of the crushing debt service cost racked up by the original developers making their job of running the hotel profitably a much easier one.

For years rumours of mismanagement have flown around Tucker’s Point and there’s no doubt that huge amounts of money were squandered. That’s just bad business and the consequences for the developers should be a loss of their investment and someone with better management skills should buy the hotel to run it profitably. If the hotel is in any way viable then this solution is far superior to paying off the incompetent management’s debts through a bailout from the people of Bermuda.

How do they do it with a straight face?

October 27th, 2010 by De Onion

There’s not really much more to say. After the oddly familiar airport terminal I thought nothing could produce a bigger facepalm… and then this, a pirate themed waterpark.

Who pays the architects to draw up these plans? Someone has sunk a lot of time and money into these white elephants before we see them. There is zero hope that they’ll be profitable, they just don’t work in an economy like Bermuda’s… who has deep pockets and is that bad of a businessperson other than the Bermuda Government?

How to tell when a CEO is lying.

October 20th, 2010 by De Onion

Well, given Ewart Brown and the PLP Blog’s regular pronouncements of grand successes and record of dismal failure this has some relevance: How to tell when a CEO is lying.

Lying CEOs also tend to use a lot of words that express positive emotion — things are fabulous and fantastic and extraordinary.

Here’s what Enron CEO Kenneth Lay said when he addressed his employees at a time when the company was about to implode: “I think our core businesses are extremely strong. We have a very strong competitive advantage. Of course, we are transferring this very successful business model and approach to a lot of new, very large markets globally.”

Words like that can be a form of overcompensation.

“If all my speech is ‘fantastic,’ ‘superb,’ ‘outstanding,’ ‘excellent’ and all my speech sounds like a big hype — it probably is,” Larcker says.

Yeah.

What gets me bent out of shape is that we all wanted Ewart Brown and the PLP to succeed as Premier and Tourism Minister. We all wanted tourism to do well, we all wanted full-employment, we all wanted Bermuda to flourish. We’re not critical because we’re “haters”. We’re critical because he did a bad job. We’re critical because tourism dropped dramatically during his time in office, because air arrivals fell, because hotels closed, and the bottom of Bermuda’s society suffered while those with unearned privilege sold inherited to property at a wildly inflated price.

Bye Dr. Brown

October 1st, 2010 by De Onion

Dr. Ewart Brown, Bermuda’s outgoing Premier continues his self-promotion tour by receiving a tourism award. I have to ask: Who gives these things out? For years those who follow Bermuda’s tourism product have followed the spin and dishonesty with which Dr. Brown has tried to hide his failure as Tourism minister. Here’s commentary from Vexed Bermoothes and 21square.com commentary from 2009, and Larry Burchall’s recent column.

Not to mention the scandals surrounding the cruise ship docks and Correia Construction, GlobalHue’s advertising shenanigans, the Music Festival, Port Royal golf course, gambling, criticism from the Auditor General for general political incompetence, Faith Based Tourism, etc. All of these point to a long pattern by Dr. Ewart Brown of hair-brained ideas, dishonesty, and outright corruption. Yes, Faith Based Tourism was unabashed corruption – a multiple hundred thousand handout from the Bermuda taxpayer to Dr. Brown’s now indicted campaign manager Andre Curtis.

Phil Perinchief has never been a friend of the Premier and the two have reportedly come close to blows in the past so it’s not entirely surprising to see him coming out with guns blazing. The big question is “Why now?”. We knew years ago that Dr. Ewart Brown was both a bad executive and cannot be trusted.

For the good of Bermuda it’s time for the PLP’s wall of silence to come down – and I’m very hopeful seeing Terry Lister, Dale Butler and to a lesser degree Paula Cox all campaigning against the PLP of the Brown years. If only they had done it before we had a billion dollars in debt, young men in body bags, and international business sliding toward the exit.

Airport White Elephant Post #1

May 31st, 2010 by De Onion

The proposed new Bermuda International Airport terminal has already elicited summary commentary from Vexed and politics.bm.

IMHO this rendering reflects everything that’s wrong with both architect’s understanding of Bermuda and the Bermuda Government’s lavish proposals.

The key things wrong with it:
– Incredibly expensive.
We’re looking at a cost of 300-400 MILLION dollars… which given the Bermuda government’s record in contracting really means 600 million dollars. Assuming they don’t manage to go over budget then it’s between a 22 million and 30 million annual payment amortised over 30 years – and I think it’s correct to look it as an amortised expense not capitalised because we’re almost certainly going to pay for it with more debt on top of the billion or so dollars already racked up.

– Terrible use of land.
In most of the island it’s worthwhile to build multi-story car parks to maximise the amount of available space. The same is true of government land, even if we pretend it’s worthless the reality is that virtually the entire buildable land of Bermuda faces economics more like the downtown of a major city – see: London City Airport. It shouldn’t be an architect’s wet dream of a sea of palm trees and grand indoor spaces. We have a land use crisis in Bermuda that stems in large part from government inappropriately using land (Morgan’s Point, Club Med, etc.)

The problem with “iconic” buildings is that they have a nasty habit of looking the same everywhere in the world and of becoming dated with time. Being an iconic builidng is a bit like being a respected politician – if you have to tell people you’re one then you’re probably not.

This is what an iconic Bermuda building really looks like:

For today make it cheap, make it work, and make it efficient – ie. maintain and renovate the existing building as necessary.

We will need to build a new airport in the next 100 years as sea level rises somewhere between a few inches and a few feet… that’s where we should be pointing this incredibly large chunk of our resources.

Gambling Math

May 13th, 2010 by De Onion

I’m disappointed with the behavior of almost everyone on the gambling debate with the exception of the UBP and the PLP back bench. On Facebook the BDA likened the harm of gambling to the harm of alcohol and said that:

The truth is however that addiction problems will develop in a small proportion of people….whatever the “substance”. We recognize that alcohol is the most common substance of abuse/dependence, yet there is no debate over making this illegal in Bermuda.

This is true, but nor do we consider legalising and taxing cocaine production for the financial and tourism benefits, despite similar levels of long-term addiction as a percentage of the population who has partaken. Indeed, legalising drug use would do WONDERs for our tourist business.

Anyway, enough hyperbole and back to the reality of gambling:

Based on the government’s own numbers of an average of over $22 million dollars will come out of local pockets and into the pockets of the casino operators.

Depending on the assumptions we make about the number of locals who gamble the per-person annual losses range from $32,745 at 1% of locals gambling to $3,275 per person for 10% of locals gambling

22,266,666/680= 1% – $32,745 per person
10% = -$3,275 per person.

Needless to say, a small fraction of all gamblers are responsible for the majority of the financial losses. In any case, let’s pretend that we’re dealing with average gamblers.

During a 20 year gambling career that’s an average transfer of wealth from each gambling local to the casinos of between $64,901 in our 10% of locals case, and $654,901 in the 1% case.

In addition, gambling problems overwhelmingly affect young men of low income… you know, the same ones who are currently hurting the most and most at risk for drug problems, arrest, jail time, etc. Normal gambling debts incurred by problem gamblers is between $50,000 and $90,000 dollars – to say nothing of the lost income, retail consumption, and family support lost… and one of the big reason that people get beaten or chopped on this island is (you guessed it) – unpaid debts.