Biras Creek Resort suddenly closed its doors on Tuesday, but the Virgin Gorda resort’s owner and operator are disputing the reasons behind the decision.
He claimed that the Biras Creek business model had become “unsustainable” and that he has lost some $10 million in the property since he signed a 10-year lease for the resort in 2006.
In explaining the reasons for those losses, he cited the global economic collapse, American Airlines’ decision to pull out of the territory, and the advent of “Internet tourism.” Taken together, he said, these factors resulted in more than a 50 percent reduction in room rates and the “collapse of the historically successful business model of Biras Creek.”
Mr. Johnson also claimed he urged the resort’s owner, Bert Houwer, to inject capital into the business, and repeatedly attempted to buy the property so he could make the necessary investments himself, but his proposals were unsuccessful.
Mr. Johnson added that his ultimate goal had always been to purchase the property, and the short-term lease was one of the reasons the resort’s general manager, Craig Stolzenfels, resigned.
“The general manager of Biras Creek recently resigned for personal reasons, including the fact that there could be no future with the current structure of the lease,” he stated.
Owner’s view
Officials from Smiths Gore, the real estate company that manages the Biras property on behalf of owner Bert Houwer, disputed Mr. Johnson’s claim that a short-term lease was the primary reason Biras Creek had to close.
“Mr. Johnson’s lease is scheduled to come up next year, and he has the option to renew it,” said Derek Dunlop, who works in Smiths Gore’s commercial property division.
Mr. Dunlop added that Mr. Johnson’s option is one way, meaning that the decision to renew the lease is at his sole discretion.
Mr. Dunlop also disputed Mr. Johnson’s claim that he had intended to purchase the property ever since he leased it in 2006.
“When Mr. Johnson got the lease, he was fully aware that Mr. Houwer bought the property and renovated it to keep within family,” he said. “There was never any question of selling it.”
Mr. Dunlop added that the closure came as a surprise.
“It’s come up out of the blue for us,” he said yesterday. “I haven’t had a reaction from Mr. Houwer yet as to where we should go from here.”
About a month ago, Mr. Johnson informed the owner that he might give up control of the resort, Mr. Dunlop said. When that happened, Mr. Houwer reportedly asked for Mr. Johnson to give notice as to when he intended to relinquish control, but he never received any such notice.
Mr. Dunlop explained that his client wanted notice so that they could explore their options to replace Mr. Johnson and keep the hotel up and running.
“Now, out of the blue, we get this situation where the hotel is closed down,” he said. “Our big concern is the staff.”
Mr. Dunlop declined to comment on Mr. Johnson’s allegation that Mr. Houwer refused to invest in “new product,” but said, “When [Mr. Johnson] took over 10 years ago, it was a successful resort and had a positive cash flow.”
Lawyers will be reviewing the terms of the lease to see if Mr. Johnson was within his rights to close so abruptly, Mr. Dunlop added.
Mr. Johnson declined to be interviewed for this story.
Transitions
Premier Dr. Orlando Smith released a statement on the closure, stating that he understands that 18 of the Biras Creek employees will be transitioned to Mr. Johnson’s Oil Nut Bay property.
Dr. Smith added that he asked the Ministry of Natural Resources and Labour to help the other workers transition to new jobs. He also said that the government has asked the Immigration Department to allow expatriate workers “appropriate time to seek and find other job opportunities.”
All the employees will continue to receive wages through Aug. 15, including those who are owed redundancy benefits, Dr. Smith said.
The premier added that the government “shall be engaging with the resort’s owners to discuss the possibilities of having the resort re-opened.”
“I am hopeful that we can find a way to re-open the property in the fall,” he said. “Indeed, I am optimistic and my government will work with the resort’s owners, through their local representative, to explore all avenues to do just that.”