Public Concern Regarding RED Hospitality and Leisure, LLC
 Turks and Caicos watersports operators are alarmed by the expansion of RED Hospitality and Leisure (RED) in the Turks and Caicos Islands. RED is owned and operated by a multi-billion-dollar US hedge fund, Ashford Inc., and presents a significant risk to local businesses and consumers. Allowing RED to form exclusive partnerships with hotels and resorts poses an immediate and significant threat to the survival of local businesses. Such monopolistic business practices will only hinder economic growth, stifle fair competition, create barriers for new businesses and limit consumer choices in the Turks and Caicos Islands.
In 2021, these concerns were raised to the Minister of Tourism, Hon. Josephine Connolly, however, our concerns were ignored. As RED continues to expand, it is imperative for our government to acknowledge and resolve our concerns promptly. We are requesting that our government take action to safeguard the welfare and livelihoods of our local businesses.
Who is RED Hospitality and Leisure
RED Hospitality and Leisure describes itself as the largest luxury watersports operator for hotels in South Florida, the Caribbean and Hawaii1. RED purports to be “a leading provider of watersports activities and other travel and transportation services in the USVI, Puerto Rico, Florida and Turks and Caicos.”2 It establishes “tour and activity concierge desks who solicit [their] catamaran and powerboat experiences”3, promoting their services not only to hotel and resort patrons, but also the wider public.
RED Hospitality is owned by Dallas, Texas based Ashford Inc that serves as the advisor to two NYSE-listed real estate investment trusts, Ashford Hospitality Trust and Braemar Hotels & Resorts. Combined they “currently own 85 hotels with more than 21,000 rooms and have approximately $7.5 billion in gross assets”.4 “Ashford Inc acquired a[n] 80.75% stake in RED Hospitality & Leisure for $0.97 million on December 11, 2017.” 5
In 2019 RED Hospitality & Leisure “completed the acquisition of substantially all of the assets of Sebago, a leading provider of watersports activities and excursion services based in Key West, Florida” a company operating there for over 25 years. Chris Batchelor, President of RED Hospitality, commented "this transaction represents the next phase of growth for RED Hospitality expanding into other strategic markets and becoming a leading regional provider of travel and tourism entertainment services in the hospitality industry." 6 These acquisitions illustrate the company’s vertical integration business strategy 7 and
.”8
In 2021, RED Hospitality “entered into an [exclusive] agreement to provide resort services that includes watersports, as well as beach and recreation operations to the new Ritz-Carlton Turks & Caicos resort”. Chris Batchelor, CEO of RED, stated “Turks and Caicos is a magical destination with tremendous unserved demand. We're launching a suite of luxury experiences and watersports activities that have never been offered before in the Turks and Caicos market.”9 RED moved the Lady Lynsey catamaran from its USVI operation to TCI and renamed it Lady Grace. They have since expanded their fleet to include Axopar centre console boats, one VanDutch motor yacht and a number of jet skis. The VanDutch was recently transferred to another market and replaced with a Boston Whaler.
In a letter dated June 17, 2024 addressed to watersports, tour and activity vendors, Red Hospitality announced an agreement with Grace Bay Resorts to provide them “the exclusive provisioning and booking of private charters, motorised watersports and other island-based excursions and activities”. This includes
  track record of successfully acquiring and expanding high-quality providers in niche, high-barrier, luxury
“proven
  markets

“the removal of all similar competitor vendor offerings, such as small private charters and daily excursions”10.
According to their website, RED Hospitality has 11 brands, 13 hotel partners, 65 assets under management and 265 employees across USVI, BVI, TCI, Key West, Key Largo and Hawaii and are expanding soon into Barbados, Puerto Rico and The Bahamas.
Key Points to Consider
1. The watersports sector is a reserved business category in Turks and Caicos. This restriction is intended to safeguard a crucial part of the economy that has traditionally been essential for the financial well- being of the local population in Turks and Caicos.
2. RED is owned by Ashford Inc, a Dallas based hedge fund with vast resources valued at $7.5B, providing them an unfair advantage over local businesses. The profits generated from RED’s operations will not remain in the local economy or benefit the local community.
3. RED is a watersports operator and provides concierge and tour desk services at resorts to solicit activities and experiences which are provided by RED.
4. RED implements a vertical integration strategy to streamline operations by owning processes internally, instead of depending on external contracts with local operators. This reinforces that the company’s strategy is to offer its own services rather than promoting and selling local operator services.
5. RED’s involvement in various countries and expansion into new markets shows its ambition for growth, making use of its own assets like boats, luxury SUVs, jet skis, and non-motorised watersports equipment.
6. In the past four decades, the watersports sector in TCI has grown organically to meet increasing demand and diversify offerings. It has evolved in line with the needs of tourists, born from companies like J and B Tours and Dive Provo in the 80s and 90s into what it is today.
7. Contrary to RED’s baseless assertion that it would offer luxury experiences and watersports activities that have “never been offered before in the Turks and Caicos Market,” local operators have been providing such services for decades to the same hotel and resort clients:
• There are existing operators offering luxury sailing catamaran experiences, two of which operate Goald Coast Cats – the same manufacturer as RED’s Lady Grace.
• Various local operators offer high-end motor catamaran experiences.
• At least eleven Axopars are operated by local companies for luxury small group charters.
• The market for high-end luxury centre consoles and cabin cruisers has expanded, providing a diverse selection of premium vessels that cater to different activities and experiences.
• Charter options furnished by local operators extend far beyond the snorkeling and sailing tours offered by RED. Local operators offer luxury yachting, fishing charters, towable watersports, jet ski tours and rentals, parasailing, out-island adventures and much more.
7. Most of the demand for local watersports tour companies comes from private and public charters for small groups, as well as daily excursions. Yet, the growth of RED Hospitality through exclusive deals with more hotels and resorts puts the survival of these local companies at risk and hinders the entry of new local operators in the industry.
8. RED is eliminating brochures and listings from partner hotels and resorts, which prevents local operators from securing direct bookings and limits the choices available to guests.
9. Local businesses are unable to match the marketing power of RED due to their extensive resources and funding. This further strengthens RED's dominance over hotel and resort guests.
10. Local operators who join RED’s program will not benefit. It is designed in a manner which prevents local businesses from setting competitive pricing due to commission rates and forces operators to
 
adjust pricing and/or reconfigure employee compensation. At the same time, RED can provide the same experiences at reduced pricing because it is not burdened by high commission rates. Program participants advise RED charges 27.5% commission and in other markets up to 30%.
11. Local businesses that have collaborated with RED can substantiate that participating in its program has in fact decreased revenues rather than offered any benefits.
12. A further indication of RED’s unfair market advantage is its access to sensitive and detailed competitor information including bookings, itineraries and inclusions obtained from program participants. RED has imitated successful local operators' programs by introducing its own services to rival them.
13. RED currently offers services to the Ritz Carlton, Wymara and Grace Bay Resorts. These properties represent a significant portion of the available accommodations in Providenciales. According to Experience TCI’s 2020 data, there were 4,114 room keys across 30 hotels in Provo.
o The properties of The Ritz Carlton, Wymara, Wymara Villas, Grace Bay Club, West Bay Club, Point Grace, Rock House, and Private Villa Collection, represent approximately 500 room keys.
o With the addition of Grace Bay Resort managed developments of South Bank and The Point, this will add another estimated 150 room keys.
o The team behind The Ritz Carlton is also involved in the development of the St Regis, which is expected to utilise their sister property's water sports provider.
o RED has experienced substantial growth in various markets by acquiring new businesses, expanding current partnerships, and increasing assets such as boats and watersports equipment - strategies they intend to implement in Turks and Caicos.
14. The TCI Watersports Association Chair and numerous members have observed that the TCHTA and its members have not reached out to discuss any market gaps or guest service needs that are not currently being addressed in the industry prior to hotels/resorts collaborating with RED. This suggests a misguided belief that local operators are unable to meet the evolving market demand.
15. Concerns have been raised regarding conflicts of interest and unfair advantage related to the reserved business license category and RED’s local partner, Alvin Hegner. Mr. Hegner serves as the Property Director at RED's Caicos Luxury Charters and is the Chairman of Experience TCI. He is also closely connected to Hon. Josephine Connolly, who serves as the Minister of Tourism and Watersports.
Conclusion
In closing, we urge our government to take swift action in removing or limiting the expansion of RED, a hedge fund owned operator based in the United States. This is imperative to maintain a fair market and foster economic growth within the local economy. RED’s assertion of serving unmet market demands is unfounded. Local watersports businesses in the Turks and Caicos Islands have been providing these services for years, leading to a thriving industry that has grown naturally over the past forty years. Furthermore, the TCI Watersports Association and local operators are prepared to continue to address any market gaps or customer service needs without the intrusion of foreign competitors who threaten the livelihoods of local businesses.