Ritz Group’s hotel purchase opposed

Thursday, June 10, 2004

The Strata Plan of the Treasure Island Condominiums is strongly opposing the proposed purchase of Treasure Island Resort by the developer of the Ritz-Carlton Grand Cayman, complaining that the move will turn the hotel into a “subsidised housing project.”

According to the Strata Plan, it had been advised that the Ritz-Carlton Group was purchasing the property to be used initially for housing construction workers on the Ritz-Carlton project, and afterwards to accommodate the staff and families of the Ritz-Carlton Grand Cayman hotel.

It is understood that the sale on the 280-room Treasure Island Resort is still pending approval by a Cayman Islands court and formal acceptance by Scotiabank’s corporate office in Toronto.

Treasure Island Resort was put in receivership by Scotiabank last September, but has remained opened while a purchaser for the hotel was sought.

In a letter dated 28 May to receiver Bruce John of Scotiabank, a copy of which has been obtained by Cayman Net News, the Executive Committee of the Treasure Island Condominium Strata Plan expressed “serious concerns” about the pending sale and urged Mr John to reconsider the proposal.

“This proposed use of the Treasure Island Hotel as a subsidised, low-income housing project would destroy the resort complex that is currently made up of the Treasure Islands Hotel and the Condominiums,” the letter stated. “We have already had a significant number of complaints from our owners in terms of negative effects of the current housing of the Ritz-Carlton construction workers in the TI Hotel, including overcrowded parking lots, the use of hotel patios as storage and laundry areas, etc.”

Earlier this year, the Ritz-Carlton development company, after it terminated the services of project general contractor Fluor Daniel Caribbean and took over that role itself, arranged housing for its construction workers at the Treasure Island Resort.

The Strata Plan indicated that although it was prepared to live with the problems caused by the short-term usage of the hotel by the construction workers, it was unacceptable as a permanent situation.

Among the specific concerns of the Treasure Island condo owners are negative effects on both their property values and also on the ability of owners to continue to rent their condos to resort guests.

The Strata Plan also indicated that the sale to the Ritz Group would “destroy the value” that had been added by the condo owners with several million dollars of capital improvements in recent years. They also wrote that they felt the sale would be detrimental to the tourism product of the Cayman Islands in general, and to the southern portion of Seven Mile Beach in particular.

In asking for reconsideration of the sale to the Ritz-Carlton Group, the Strata Plan urged reconsideration of one of the underbidders who had proposed to convert the Resort into a high quality apartments that could be used for short term vacation rentals.

The purchase of a hotel for use as housing for another entity has a recent precedent in the Cayman Islands. Last year, St Matthews University School of Medicine purchased the 105-room Sleep Inn Hotel property on West Bay Road for usage as a dormitory for first-semester students. Reliable sources have indicated that St Matthews was also a bidder on the Treasure Island Resort.

The letter from the Strata Plan to Mr John was copied to the Minister of Tourism, the Hon McKeeva Bush. Contacted for comment, Mr Bush said that he did not support taking away any more hotel rooms from Seven Mile Beach. “I believe it would be damaging to the tourism industry,” he said. “I support tourism, and mixed tourism is OK, but I wouldn’t want to see Treasure Island Resort completely turned into housing. We’ve already lost one hotel to housing.”

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