Investors who bought “apartments” in Palm Beach Club have just received a nasty surprise. Excel Hotels & Resorts S.A. (“Excel”) the Sole Director (“Administrador Único”) of their investment company has sent out accounts for the year ended 31 December 2019 showing significant losses. This is a terrible result, especially considering that 2019 was a good year for tourism. We can only wonder what 2020 will bring.
The Palm Beach Club investors originally thought that they were purchasing an apartment. However, they have been left owning Spanish companies, that in turn own 52 weeks of timeshare. Even if the legal form of the investment is not a valuable apartment – at least the investment would give significant income. After all, Palm Beach Club is a popular beach-front hotel in a prime location. Right?
Wrong! In 2018 this seemed to be the case. Look for example at the profits made by three Palm Beach Tenerife investment companies that year; they posted profits before tax of €15,452, €15,270 and €9,214. But, the shocking news is that in 2019, these companies all posted losses: -€5,235, -€4,938 and -€3,249.
What explains the change in fortunes?
Looking at the profit and loss account, you can see that “Other expenses of exploitation” has increased from €436 to a massive €21,104. There is no explanation for this in a management report and until now Excel has not provided an explanation of what these costs are.
An inherent conflict of interests
The individual investment companies, that are supposed to correspond to individual apartments, are managed by Excel – the Sole Director. This is the same company that manages the Palm Beach Club hotel. Excel makes more money by paying the property owners less.
Although we can´t see the breakdown of the huge “Other expenses” in 2019 it is obvious that currently the Sole Director of the investment companies can approve and pay invoices that come from itself!
Make sure you take action now to protect your investment
If you think you own a property in Palm Beach Club or if you have investment in a Spanish Company that owns timeshare in the resort (A “Company Participation”) – make sure you contact the Nordic Consulting with details of your ownership.
In the meantime, we highly recommend you do not blindly sign any documents that approve the management or accounts for your company when pressured to do so by Excel Hotels and Resorts S.A.
We can advise you on the questions you should be asking your company´s Sole Director. We can also advise you on how to appoint an independent person to this role to protect your investment.