Home News Local news Grand Beach Palace Resort to Close for Renovations

Grand Beach Palace Resort to Close for Renovations


July 1, 2004 – Grand Beach Palace Resort will close temporarily on Aug. 28 because the property needs an overhaul, the hotel's attorney, Derek Hodge, said on Thursday.
The closing will put all 293 employees of the Smith Bay resort out of work. They will receive one week's severance pay plus payment for accrued leave time.
Hodge said the announcement now of the hotel's closing date is to give the employees the 60 days' notice required by law. He also said he hopes the contractors for the renovations will hire workers who are losing their jobs.
Randolph Allen, United Steelworkers of America international staff representative, sees the situation differently. He said the hotel is closing to prevent the union from attempting to organize its workers. He said the employees will be terminated, rather than laid off.
"I was told they want to weed out some people who have a 'bad influence,'" he said.
Allen said he is awaiting a decision from the National Labor Relations Board on whether the union can hold an election before the hotel closes. If it does, and if the workers vote in favor of representation, he said, the hotel staff will be unionized when the property reopens, even if it has different employees. If the vote is held and the workers reject organizing, the union will have to start over again at ground zero, he said.
Also an issue for Allen is the fact that many Grand Beach Palace employees have worked at the hotel for as long as two decades under various ownerships and managements — including the Wyndham, Stouffer, Renaissance and Marriott chains. However, he said, since Palace Resorts has owned the property for less than a year, even those workers will get only a week of severance pay rather than the usual generous settlement for long-term personnel.
The Steelworkers union is representing three Grand Beach Palace employees who recently were let go. Allen claims they were fired because they promoted union activities. The hotel reportedly claimed that two of the three were supervisors and thus not eligible to participate in union meetings. Allen said they were not supervisors. The third reportedly was fired because she was absent for several days.
Allen said the National Labor Relations Board took testimony Thursday on the employees' cases and heard from both union and hotel officials about the closing plans.
Hodge said he does not know when the resort will reopen but expressed the hope that if all goes well, it could be back in business in about six months. Renovation work is expected to start in September. "We're doing architectural drawings right now," he said.
Low Occupancy, Dissatisfied Customers Cited
Hodge said the resort is in such bad shape that the owners have been forced to return hotel and airfare charges to dissatisfied guests. "It's hemorrhaging," he said. While initially declining to discuss occupancy rates, he later said the management is projecting occupancy of 10 percent for August and 1.5 percent for September. He said he didn't have the rates from last season but that they were low.
According to Hodge, if Palace Resorts, which owns the St. Thomas hotel, does not upgrade the property, its holdings elsewhere will be adversely affected. He also said Palace Resorts needs Economic Development Program tax benefits but has not yet applied to become an EDP beneficiary.
Palace Resorts bought the 290-room resort last November for $9.75 million from CTF St. Thomas Corp., which operated it as the Renaissance Grand Beach Resort. Hodge said CTF did have EDP benefits.
Since it was developed in the mid-1980s, the hotel has been one of the four largest in the territory. Marriott Frenchman's Reef Beach Resort has 408 guest rooms and suites; Wyndham Sugar Bay Resort has 300 and the Westin St. John Resort has 282.
Hodge charged that CTF let the property run downhill. He said the owners plan to invest $12 million for renovations to bring it up to the standard of the other 11 Palace Resorts hotels, all located in Mexico. He said three of those other 11 properties also are being closed for renovation.
The company also plans to build a 1,740-room hotel in the Dominican Republic, he said.
Beverly Nicholson, president of the V.I. Hotel and Tourism Association, said she learned late Wednesday of the planned hotel closing. But she said she been aware that Palace Resorts wanted to do a significant upgrade of the property.
"For several years they have needed to do some renovations," she said.
A call to the office of Luis Entrala, Grand Beach Palace Resort manager, was referred to Hodge.
Labor Commissioner Cecil Benjamin could not be reached. Staff in the Labor Department office on St. Thomas said he was on St. Croix. No one answered the phone at the St. Croix office.

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