From the Belize Times
Sunday, February 18, 2007

Is Ara Macao Too Big for Belize?
By Godfrey Smith

Ever wondered why Belize, a country twice the size of Jamaica, does not have a Ritz Carlton like Jamaica? Ever wondered why Barbados, roughly the size of Ambergris Caye, has a Hilton and we do not? Ever wondered why microscopic Nevis with a population of 15,000 people has a Four Seasons on a rolling estate and Belize does not? If having these brands means nothing to you, then you are satisfied with the status quo in overnight tourism. If you want Belize to enjoy a bigger market share of overnight arrivals, then you might have to think brand and think big. Tourism, after all is a business, not a hobby.

Belize has experienced no shortage of would-be-investors with grandiose plans for its development. After a while, one learns how to size up the fly-by-nighters and avoid inhaling too much smoke from their pipe dreams. Mr. Paul Goguen, the man behind the Ara Macao project, cuts a noticeable contrast. He has invested fairly heavily in the ground in Belize, withstood our now characteristic battering of investors, personally studied the local culture, sensibly recruited reputable experts and displayed tenacity and flexibility. If properly implemented and regulated, Ara Macao could very well be a catalyst that brings about “the next phase” in Belize’s overnight tourism sector-the domino effect.

Flashpoint: Aldous Huxley once remarked: “If the world had any ends, Belize would certainly be one of them. It is not on the way from anywhere to anywhere else.” Why did you choose Belize for the Ara Macao project?

Paul Goguen: Belize is fast becoming the exotic place to be on the Caribbean Sea. Baby boomers and other adventure travelers are being lured to Belize to explore its unique blend of history, geography, environment and culture. IoVest, the Developer of Ara Macao, believes that Belize is rapidly approaching a critical turning point in its history, best described in a recent national bestselling book by Malcolm Gladwell entitled The Tipping Point. Gladwell describes how certain fashion trends, products, social habits and other cultural phenomena move from relative obscurity to mainstream almost overnight much like when a balancing scale suddenly tips to one side.

Flashpoint: Belizeans have seen many foreigners with grand proposals for tourism projects in Belize that have come to naught. Why should Belizeans view Ara Macao any differently?

Paul Goguen: IoVest has invested over $22 Million in cash to date. This includes land acquisition, engineering, architectural design and environmental clearance from the Department of the Environment. We have been very careful with our expenditures and as of this interview we are essentially debt free. Few developers have come this far on a project of this size. If we can come this far, we should be able to achieve our goals. Certainly, we would not walk away from this opportunity or our investment.

Flashpoint: You have been granted environmental clearance for this project, but people have lingering doubts because of the sheer size of the project. Is Ara Macao simply too big for Belize?

Paul Goguen: Ara Macao is going to be phased in over a period of about five years, which means that given a projected total 1,000 units for the project, its zone of influence area would be absorbing about 200 new households each year. The project’s zone of influence is an area having a 12 mile radius emanating from the Ara Macao Property, which reaches as far south as Big Creek, as far north as Hopkins and as far west as San Roman. Approximately 4,000 new residential resort units are currently under development or being planned for development within this 12-mile circle including Ara Macao. Many of these units will be coming on stream within the next 2 or 3 years. So on balance, Ara Macao represents only ¼ of the new development planned for the area. Inherent in the question of “Is it too big?” is the question of “How will the Ara Macao project impact local infrastructure and community services?” The answer is that the zone of influence is presently woefully under-serviced. Reliable water and sewage systems do not exist. There is no fire protection to speak of. Existing solid waste disposal facilities are a blight on the environment and pose a serious health hazard. Many roads are not paved. Outlets for retail goods and services are sparse and lacking in inventory. Effectively, there is no infrastructure. By contrast, Ara Macao will bring much-needed infrastructure to the area not only for itself but also for the benefit of others. When ioVest executed the Environmental Compliance Plan with the DOE, it committed to provide all of the above listed physical plants and services to the project and many of its neighbors.

Flashpoint: How is the financing for this project being put together? Is there room for Belizeans to invest?

Paul Goguen: Through equity, debt and joint ventures. Much of the equity for the project has been raised through private investors. Debt funding will come in the form of a construction loan. Joint venture opportunities are open to everyone including Belize citizens, U.S. citizens and other foreign nationals. IoVest would welcome investment from local citizens to build out and operate individual stores and other businesses within its retail centers. We see opportunities for all consumer goods, automobile services, health services, professional services, art and crafts, produce, meat and fish and many more.

Flashpoint: Ara Macao could seriously change the demographics, culture and dynamics of the south, how will southern-based Belizeans, and Belizeans in general, benefit from this project?

Paul Goguen: We are taking unproductive land, primarily swamp land, and turning it into a producing asset for the Belize government through increased tax revenues and foreign exchange, for the Belize people in the form of jobs, training and improved lifestyle and for Ara Macao’s stakeholders in the form of profits. Upon full build-out of the project, Deloitte & Touche projects the following economic benefits: new direct jobs-2,678; direct annual salaries-$37.4 Million; new indirect jobs-5,355; indirect annual salaries-$32.0 Million; annual foreign exchange-$34.0 Million; annual hotel tax revenues- $12.6 Million.

Flashpoint: Will Ara Macao take away business from smaller hotels and resorts in the area?

Paul Goguen: Under the concept of agglomeration, the more similar businesses that come together in a given area, the more likely a destination will be created. As a destination grows, the greater will be its ability to attract its fair share of the overall tourism and retirement market. No one who comes to a resort likes to stay in the resort night after night. Instead, they typically want to go to different locations within driving distance to experience different restaurants and nightlife. Moreover, guests will always want to have a shopping experience during the day and the village of Placencia is and probably will always be the perfect venue.

Flashpoint: How long before Belizeans see construction occurring and how long will the whole project take?

Paul Goguen: If the protracted aspect of the EIA process had a downside for us, it was that the construction of the project was delayed by about a year. The good news is that we are rapidly working to complete the pre-construction elements of the project including engineering, final architectural design and blueprints, construction bid documents, pre-construction marketing and other project components. We project that we will be ready to break ground in earnest by the third quarter of this year. From there, we expect to develop the project in equal phases over the next five years.

Flashpoint: How do you see the future of tourism in Belize?

Paul Goguen: I believe that there are many opportunities to leverage the tourism business into a major breadwinner for the people of Belize. For all the reasons mentioned earlier and many more, Belize is absolutely unique in the marketplace of the Caribbean Basin. It will be very important, however for the people and their elected officials to continue to legislate a friendly incentive-charged climate for both developers and their retirement and tourism customers. With technology continuing to flatten the world, people with money to spend know they have a choice and they will always choose friendly people and value for their dollar.