Resort faces huge lawsuit -US lawyers plan to file mulit-million class action against Beaches “within days”
HUNDREDS of holidaymakers who fear they were overcharged by the TCI’s biggest resort have come forward to join a potential class action which lawyers say could see the company forced to fork out millions in compensation.
Attorneys in Miami told the Weekly News they had been contacted by several hundred former Beaches guests within 48 hours of issuing a call to the public on Monday (April 29).
Some families could be owed thousands of dollars in "overpaid” accommodation tax, lawyer Michael Winkleman believes.
Beaches rigorously denies the claims which it described as "baseless”.
But the controversy once again places the embattled Jamaican resort giant under fire, the latest in a series of tax rows for the Sandals chain which employs 10,000 people across the Caribbean.
Winkleman said a decades-long "sweetheart deal” between Beaches and the TCI Government entitled the resort to a 40 percent concession on accommodation tax levied onto local hotels.
But despite only paying the Government a rate just over seven percent, Beaches added the full standard 12 percent onto guests’ bills, he claimed.
He estimates the figure owed to customers to run into tens of millions of dollars.
"Beaches essentially got a kickback which should have been tax revenues for the TCI Government. Our intention is to hold them accountable for it,” Winkleman said.
"Beaches is not a low-end property and large family trips could have cost people tens of thousands of dollars.
"Beaches essentially told guests they had to pay 12 percent tax but they were pocketing 40 percent of that – and even more in cases where the group had a child under 12 who is exempt from accommodation tax.
"There are likely to be thousands of people affected.”
Most of the potential claimants to date hail from the US but around 10 percent are from as far away as Europe.
"We have a full spectrum of people to represent,” Winkleman confirmed. "Some were at Beaches just a week ago, others a decade ago.”
The attorney said he planned to file the case in Miami "within days”.
"I like to say the wheels of justice turn slowly but in a case like this, the desire is to move something quickly,” Winkleman continued.
"After it’s been filed, the company will have the opportunity to respond to the allegations.
There are likely to be some interesting jurisdictional issues; the judge may send the case to be litigated in TCI where the legal system is very different to the US.
"I want it to be heard right here in Miami. We have some pretty harsh penalties in the US.
The company could be made to pay triple the amount of what they took from guests, plus attorneys’ fees,” Winkleman added.
A Sandals spokeswoman told the Weekly News the company was known as being the "gold standard” in the islands in which it operates.
"This is completely unsubstantiated and these allegations are baseless and without merit,” she added.
The spokeswoman declined to elaborate further but the TCI’s Opposition Leader Washington Misick said the concession dated back to 1997 – agreed by the then PDM administration – when Beaches first opened in The Bight.
"It was what I would call a constructive contract. I have always said, if Beaches collected the full tax then they should pay the full tax to Government,” Misick said.
The PNP leader admitted the agreement had been ratified by himself in 2014 when he was finance minister.
"I was advised by senior public servants that there was already a written agreement in place,” he said. "It was a compounding of errors.”
Misick said Beaches had been raising concerns at the time about high operating costs in the aftermath of the global financial crash.
"We had to hand out some concessions to Beaches to keep the hotel open. It was all part of a renegotiation of their terms,” he explained.
Premier Sharlene Cartwright Robinson told the Weekly News she had no comment to make.
Meanwhile, Beaches is set to close its 750-room Providenciales resort in January 2021 claiming, conversely, that the TCI Government owes it millions in overpaid taxes.
That news has been met with dismay by tourism chiefs including Todd Foss, TCI Hotel and Tourism Association president, who estimated Beaches accounted for around half of tourists arriving to the Islands by plane. He expressed concern about the knock-on economic impact.
Beaches was recently offered a $76 million tax write-off as part of a waiver extended to dozens of companies by the TCI Government. But a statement issued soon afterwards confirmed the resort’s intention to press ahead with a lawsuit against TCIG to recoup the cash it claims it is owed.
Beaches also declined to comment further on that.
But it is the latest instance of the company, owned by Butch Stewart, being at loggerheads with regional governments.
In Barbados, Sandals’ demands for extra concessions on a proposed $400 million Beaches resort is threatening to put the brakes on the development.
Prime minister Mia Mottley says the hotel chain already benefits from generous agreements sealed with the last government.
And in St Lucia, contention erupted last year amid claims the company owed the government more than $24 million in withholding taxes – a claim Sandals vehemently denied and which was later written off.
Sandals has also been embroiled in vociferous spats in recent years with the Antigua & Barbuda government relating to historic sales tax commissions.
As of January 2017, the company has been required to pay the full tax rate in a deal which also saw the Antiguan government waive around $37 million it claimed Sandals owed.
See Turks & Caicos Daily News article . . .