The Carambola Beach Resort on St. Croix, long considered one of the most neglected properties within the Marriott portfolio, is finally poised for a major overhaul. A $50 million redevelopment plan, heavily subsidized through local legislation, is expected to shutter the failing resort by summer. The story behind Carambola is not just one of poor maintenance; it’s a cautionary tale of financial mismanagement and questionable public investments.
A History of Mismanagement
Carambola’s decline began when the U.S. Virgin Islands government employee pension fund invested $15 million into the resort during the 2008 financial crisis. An audit by the Virgin Islands Inspector General later deemed this arrangement illegal. Intended for renovations to meet Marriott Renaissance standards, $6.8 million was allocated, but the hotel ultimately defaulted. Instead of cutting losses, the pension fund lowered interest rates, took full ownership, and absorbed an additional $12 million in unexplained liabilities.
The audit uncovered evidence of gross financial mismanagement, including payments for nonexistent work and missing records for $7.6 million in wire transfers. Despite these issues, Marriott continued to operate the property under an unbranded status after pulling the Renaissance flag due to its deteriorating condition.
A Failing Property Propped Up by False Promises
For years, Marriott falsely advertised “renovations underway,” promising guests a return to Renaissance standards while Bonvoy elite members continued to receive benefits at the failing resort. In reality, Carambola remained in dire shape: guests reported filthy conditions, broken amenities, pest infestations, and a neglected lime-green pool. The hotel also collected large insurance payouts without reinvesting in the property, further exacerbating its decline.
Legislative Intervention and a New Future
The impending redevelopment is driven by Bill 36-0259, an amendment to the Hotel Development Act. This legislation allows developers to retain hotel taxes as a means of recouping investments exceeding $25 million, provided they expand room capacity by at least 25%. The funding comes from an unnamed “major international hotel chain with operations in Europe and Canada,” suggesting Carambola may not return under the Marriott flag.
Despite the pending closure, Marriott continues to accept bookings through its website, leaving travelers at risk of a substandard experience. The redevelopment, while seemingly more certain than previous failed promises, remains unconfirmed until the deal is finalized.
The Carambola case highlights the risks of unchecked public investment in failing private ventures. It also underscores the ethical issues of continuing to operate a severely substandard property while redevelopment plans are underway.
