Hyatt dispute rolls on as hotel crumbles
(CNS): Almost five and a half years after it was devastated by Hurricane Ivan, the former Hyatt hotel remains a derelict crumbling ruin as a result of continuing legal battles between the insurance company and the owners of the hotel. Despite pressure from the previous administration and threats from the current government to significantly increase the daily fines for failure to maintain upkeep of a property, the owners say the issue is in the hands of the court as the insurance company has refused to pay the agreed settlement of over $18 million, ordered more than 18 months ago.
In a statement this week, the owners of the property, Embassy Investments, said that Houston Casualty Company’s co-insurers (including several Lloyds of London syndicates), Wurttembergische Versicherung AG and Ecclesiastical Insurance Office PLC have still not paid the settlement of US$18,223,474, which was, the owners said, agreed with them on 11 July 2008. The owners said that they have instructed Campbells, the hotel’s attorneys, to enforce payment of the agreed settlement in the Cayman Court as quickly and effectively as possible.
“It remains to be seen how quickly and effectively Campbells will actually be able to achieve this following the Cayman Court’s public statement about dealing with this matter properly and promptly,” a spokesperson for Grand Cayman Beach Suites, the hotel’s new name said.
Justice Alex Henderson decided in favour of the hotel regarding its 9 October 2007 application, which eventually led to the settlement figure being agreed with Houston Casualty Company’s co-insurers on 11 July 2008.
“People and businesses obviously pay insurance premiums on the basis that when they have a loss arising from a natural catastrophe such as Hurricane Ivan in 2004, insurers will honour their obligations under insurance policies and indemnify the victims promptly,” Bill Powers, the manager of the Beach Suites, said recently. “Here we have a situation where a settlement figure has been agreed with the insurers some time ago yet insurers continue to delay payment of the agreed settlement figure for several years, which simply has to be unacceptable as a matter of public policy, especially for an Island such as Cayman.”
The hotel has come in for severe criticism, not just as an eyesore but also as an environmental risk. Property owners around the area, especially at the Britannia development, have been particularly critical as they say the abandoned hotel is negatively impacting the value of their properties.
The owner of the hotel, including the renovated Beach Suites, is Asif Bhatia, one of the ritchest hotel owners in the world and a frequent name on the world’s rich lists.
The dispute over the hotel insurance settlement has been in the Cayman courts since the passing of Hurricane Ivan in 2004. Although the owners quickly cleaned, dried and renovated the Beach Suites on the south side of the property, the remaining 230 rooms on the north side of the West Bay Road, with some 230 rooms, has remained closed since the storm, fallng further and further into dereliction.
According to a letter from Campbells to the insurance firm’s attorneys, the issue seems to rest on a further related claim by Embassy, which the insurers had at one point insisted should be withdrawn before the payment regarding the actually property damage claim would be settled. The letter, however, indicates that the parties may now have agreed to sever the two issues and deal with the contractual claim in a separate forum, paving the way for the Grand Court settlement of $18 million plus to be paid to the owners.
Category: Business
More than just the Hayatt –
"…Interesting that after Ivan, Indies Suites was sold off and the timeshare people ended with the raw end of the deal, we didn’t see government protecting the rights of the owners but removed itself for the dispute as it was owned by an established cayman owner. Evidently what’s good for the goose is not good for the gander on this island…"
Interesting too that the Divi Tiara over on the Brac is in a similar limbo of attention deficit – – has the Cayman Government even bothered to contact those timeshare owners, let alone lift a finger to protect them in any way?
When one digs down into the Caymanian Laws, one of the things that you’ll find is that a Timeshare isn’t a hotel, so the hotel safety inspections are no longer required (FACT!). There simply is no provision for the Government to shut down an unsafe property. Visitors get invariably get hurt – and they will rightfully blames Cayman for their lack of safety standards.
Similarly, there’s no requirement for a business to be bonded (such as through Insurance) as a condition for selling multi-year service contracts. All it takes is one storm and the company disappears…with the money. Once again, the raw deal victim will blame Cayman for their lack of consumer protection laws.
In total, from the perspective of seeking to "…guarentee investors that their thier business is secure, viable and unencumbered…" – with the absence of any Caymanian Laws to prevent another Indie Suites raw deal and the like, the real question becomes: why would anyone in their right mind choose to invest their own money in Cayman?
Fool me once, shame on you. Fool me twice .. ain’t gunna happen.
How many more hotel/timeshare messes like this need to occur in Cayman before our fine "Leaders" finally figure out that they have a problem that they must solve through Government regulation?
Or does that hit too close to the wallets of the Good Olde Boys?
The government should not to step into the private sector and dictate demands regarding insurance settlement and business development. To lure potential large hotel brands and financial institutions to Cayman they need to guarantee investors that their business is secure, viable and unencumbered. Who knows if he is able to take the building down or refurnishedit, the insurance company may still have rights or it maybe its tied to further claim actions. Take for example a well known East End resort that tore down the hurricane ravaged buildings only to end up in court trying to prove that they needed to be removed, that action resulted in reduction of the insurance claim and has put the owner’s investment at risk. If the government wants to make the Hyatt an example he should also take look at the Courtyard, Dolphin Point Condos and many private homes that have not been repaired and have been left to deteriorate. This is still his property and he has the right to whether he wants to reopen it or make it another business. What is this nonsense that hotels are doing a yearly 70% occupancy, if that was truly the case hotel owners would be flocking to our shores to invest, don’t quote numbers unless you know the facts. What dictates that a hotel has to go there maybe it will be condos as long as it falls within the zoning laws he can do whatever he wants. Interesting that after Ivan, Indies Suites was sold off and the timeshare people ended with the raw end of the deal, we didn’t see government protecting the rights of the owners but removed itself for the dispute as it was owned by an established cayman owner. Evidently what’s good for the goose is not good for the gander on this island.
When children quarrel beyond reason, parents have to step in. Mr. Bush, you asked for the priviledge to play the parental figure. It is time to stop the posturing, step in.
Thank you.
?????????????????????
I am not buying this insurance settlement excuse. If you’re one of the richest people in the world and a giant in the hotel industry… do you let 230 rooms…
70% occupancy $300 a night.. for five years that’s $90 million in income…
Do you leave that $90 million on the floor… because you can’t collect an $18 million settlement…
How many local businesses and home owners ‘immediately’ began repairing thier homes and businesses… so they could have someplace to sleep and return thier businesses to positive cash flow… and then got the insurance check some weeks/months later.
This story does not pass the sniff test…
As for the property, it is a health hazzard and as such the government has had the option to go in at any time to effect whatever repairs were necessary to contain those hazzards… mold/rats… and then file a lein on the property for those improvements… those leins when unsatisfied could have been used to seize the property.
The cost of repair now exceeds the cost of replacement. That thing needs to come down…
well done, at least someone here is able to see through the smoke and mirrors?…pity the same can’t be said for the cayman media outlets….
HCC has over $9Bln in assets, why would they hold out on an $18mln payment? Gotta be more to this story. I agree with Marek.
What about the Marriott Court Yard? That will sit empty for the next five years also. Why not give that property a casino license and really bail out the government.
The best idea I have heard yet!
but the courtyard marriot was badly damaged by 40 mph winds…. absolute nonsesne…. cayman journalists – do your job, find out the real story!
Congratulations to Mr. Bhatia for standing his ground until the insurers pay up. He is absolutely right to leave the hotel as it is until he receives his court-ordered money. It would be just like an insurance company to wait until the hotel is torn down to present some ‘study’ stating that they think it could have been salvaged, giving them an excuse to not pay. Too many others would have been pressured into taking less than was owed, which is the real crime in the matter.
Discussions about the government considering taking over the property or looking into legislative changes to allow this should be treated with extreme caution. At a time when we are looking at encouraging all the inward investment we can get to pull this economy out of the mire, there should be no mixed messages about how those investors will be treated should they come, invest their resources and put people to work here. The government should be proving to the future investors that they are business friendly by showing support to Mr. Bhatia and his team.
LOL I was wondering why there was that bridge at the GC Beach Suites! Now I know the history! THanks CNS!
I am here wishing there was some kind of mechanism whereby the government could take over ownership and sell this as an asset to boost public finances!
There is, its called compulsory purchase. The problem with that though is Government has to pay the owner what it’s worth, which is what they would then sell it on for. So, no extra money to gov, a new owner, but still a derelict hotel.
This building is now a threat to public health! i’m sure it could be taken over by Government and razed to the ground, which is what has to be done with it.
As for having to pay what it is worth now, it is worth nothing except for the value of the land it is sitting on. So clear it away, put the land up for sale, when it is sold deduct the cost of the removal of the building and give the rest to the company that owns it now.
Further, introduce legislation for future use that if a Tourism property lays idle beyond a certain time it incurs a daily penalty and any concession the developer might have benefitted from when the property was built, become due to be paid to Government. The same stipulation would hold true for a change of use (such as from a Hotel to rental apartments)
Opportunity for all and everyone could benefit.
There is a great opportunity for the owner/seller of the Hyatt, the Govt. the new hospital developer, surrounding businesses in the area, Camana Bay and the peopke of Cayman in turning this structure into the new medical hospital facility proposed for mediacal tourism in Cayman. Why take 5 years to build an expensive new facility some where in the remote east of the island when the Hyatt structure could be used as the new hospital and would be in the centre of every thing. Lets face it, it’s not the greatest location for a hotel with the new highway running through it, however it would make a great location for the new medical facility and more than half the development is already completed. Naturally it needs to be gutted anyway so why not gut the structure and develop the new hospital. Visitor and family could be accommodated in hotels close to the facility and the same people would be right in the middle of everything during their stay in Cayman.
Cayman make it happen !
This is a very good idea and an example of proactive thinking. Have you thought of being in government? It certainly would be practical from the standpoint of any proposed medical facility or it’s investors.
I think what you are saying is a good idea but I would hardly call the Eastern part of the island "remote". With an island the size of Cayman nowhere is remote.
Great plan. The thumbs down must be the owners!
A hospital requires a different structure, wider corridors more egress points, different MEP installations – It would be cheaper to build from scratch than to try to turn this into a Hospital…Also would not even come clode to to 2000 beds…
Ask Mr Thomas how wise it is is to take an old structure built for one purpose and turned into a completely different structure with different building regulations….Thats what got him into his finacial mess…
On a scale of 1-10 in good ideas this is minus 10
you obviously have no idea this size and magnatude of a 2000 bed hospital. it will make camana bay look tiny, and you think that could be crammed into a space as small as the hyatt? oh, and the extra benefit of no parking for the approx. 1200 staff for the hospital…..and right at sea level instead of the 20 ft. elevations they would be at in east end….sounds like a brilliant idea!!!
Insurance Companies! Same old story! They like to take your money, but when it comes to paying out…it’s a whole other story!
I rememeber when the Hyatt was getting built. It was a beautiful hotel at it’s peak. The grounds were immaculate!
I hope they get it sorted out. I wouldn’t say it was any more of an eyesore than some of the other places. It’s not stopped the construction thats going on has it?
I sympathise with the owners who are legally trying to recover the insured sum from the insurers.
In the same light, the owners have to be good corporate citizens in the Cayman Islands. If the buildings are not salvagable, they should have it knocked down and the site cleared. That way it will not be an eye sore and an environmental hazard.
Please give this suggestion a thought
The legal wrangling over the insurance settlement on this property needs to stop sot that this unhealthy eyesore can be sorted out.
Can we do the same to private home owners in West Bay that have houses that are eyesores???
Be carefull Cayman, you may send the wrong message to Investors and Insurance companies, let the legal process take its place and all will be revealed…