Loren Group CEO tells us unusual tax concessions allow them to develop the iconic site – without any loan guarantees from Government
(Chapter 1 above, scroll down for additional chapters)
The Loren at Elbow Beach will look very different from the present, decaying hotel.
The iconic building atop the hill will be gone, replaced by a smaller 75-room clubhouse much closer to the water, complete with rooftop dining, along with 27 combined tourism and residential units across the landscape.
Mickey’s beachfront restaurant will return, and the developer expects to create more than 150 new job opportunities when the hotel opens in 2029.
The deal making all this possible is also distinct from what has been offered to other developers. However, it potentially places less risk on the taxpayer.
In an extended interview, Stephen King, CEO and founder of The Loren Group, elaborates on the background of the unique deal, merging their existing Pink Beach hotel with their development at Elbow Beach, giving both sites 15 years of tax concessions usually reserved only for new developments.
The Loren at Pink Beach, Bermuda’s first new hotel in nearly half-a-century, opened in 2017 with five years of tax and duty concessions. Some concessions were extended for a further five years in 2022.
Mr King says reducing the tax burden at Pink Beach enables his team to channel increased revenues from their operational hotel into the development at Elbow Beach – and he emphasised that he is not asking for more than that.
“Pink Beach is going to take its profits and it is going to invest them in Elbow”, Mr King says.
“The more profits there are, the more we can invest in Elbow… getting our cost of capital, our cost of construction, everything to be as optimal and efficient as possible is what enables projects like Elbow to come into existence. Otherwise, that could sit fallow for many, many years more while somebody tries to raise debt and equity…”
“…in return for that, I was very clear with Premier Burt that I wasn’t going to ask for other things… we’re not getting any government guarantees. We haven’t asked for anything else… can we just please have a tax concession that allows us to operate Pink and Elbow as a single entity, and apply the returns from one to help fund the development of the other.”
In an extended interview with Gary Foster Skelton, Mr King gives us more detail about The Loren Group’s plans for the Elbow Beach site, and their efforts in sustainability.
The former investment banker also talks about what made him change careers just over a decade ago, and how he believes the awareness of Bermuda as a tourism destination is growing – giving him confidence to double down on his local commitment.
‘MY DAUGHTER CAME UP WITH THE NAME’
Stephen King talks about his transition from investment banking to luxury hotel development – and how some people questioned his decision.
He adds that, when he started The Loren Group, it was his daughter who came up with the name.
DOING BUSINESS IN BERMUDA
We reflect on the impact of the COVID-19 pandemic on Bermuda’s tourism industry, employment in accommodation services in particular.
Mr King also believes Bermuda has changed since they first opened The Loren at Pink Beach, and we are far more visible to the US East Coast – our most important source of tourism.
DEAL OF THE DECADE?
Mr King responds to our questions about the substantial tax relief the company is receiving, and he explains how it allows them to channel revenues from Pink Beach into the new development at Elbow Beach.
He also affirms The Loren Group’s commitment to employing locals. He says, “the bedrock really needs to be as many Bermudians as possible…many of our staff here have been with us since the very inception of this hotel [Pink Beach].”
