Hoteliers granted concessions but with conditions
After waiting for nearly a year, hoteliers will, from next week, start accessing tens of thousands of dollars in tax breaks, similar to those granted to Jamaican hotel chain Sandals.
But in delivering the good news to hoteliers at the third quarterly general meeting of the Barbados Hotel and Tourism Association (BHTA) at Hilton Barbados this morning, Minister of Finance Chris Sinckler warned that failure to meet a list of conditions would result in them losing the concessions.
He also put them on notice that with taxpayers footing the concessions bill, $100 million being spent in marketing the industry and developing its product, and more than $400 spent annually to facilitate their investments and operations to make them more profitable, they “had better deliver”.
“Not only will we be expecting more Sandals-like investments but more jobs, more foreign exchange earnings, and definitely more meaningful linkages with connected domestic sectors like agriculture, manufacturing and the cultural industries as well,” Sinckler said.
“If the people of Barbados are going to be so generous and trusting of you as to grant you tens of thousands of dollars in concessions of the type and character that you’ll be getting, you and your members, Mr President, will have to step up to the plate and deliver. No excuses. You have said this is what you need to turn this industry around and you have got it.
“Now, I will be waiting with bated breath over the next year to see who is who and what is what,” Sinckler warned.
Although the proposed changes to the Tourism Development Act, under which the concessions were to be granted, do not come into legal force until next month, Sinckler said that tomorrow he would instruct that the appropriate letters be issued to the relevant Government agencies, under Section 67 B of the Income Tax Act, so the concessions could take effect from next week.
“I have agreed to meet with the leadership of the BHTA . . . the Ministry of Finance and others next week to ensure that all administrative arrangements are put in place to fully execute these concessions and to allow industry players to have full access to those concessions,” he stated.
Sinckler said In return for the concessions, hotel properties must meet seven conditions:
• Hotel properties must be approved tourism products or products in receipt of valid licences issued by the permanent secretary in the ministry of tourism
• Benefits are for the specific purpose of hotel operations to ensure that the intention of the Government to make hotels super competitive is realised
• Each hotel is required to provide the ministry of tourism with an electronic information leaflet or data set pertinent to the size of the plant, number of rooms, number of employees, as well as the items usually imported. Hotels must also file with the ministry of tourism, new items, inclusive of food and beverage, that would be imported under the new regime
• All hotels benefitting from the relief will be subjected to inspections to ensure that the items bought duty-free are at the particular hotel properties. Failure to have these items on the applicable property will result in penalties.
• Hotels must also agree to adopt Triple A (AAA) Standards for the hotels that use the Diamond classification and use Zagat ratings for their restaurants
• Hotels must agree to the training of staff in accordance with programmes identified by the BHTA and ministry of tourism
• Hotels must sign a negotiated Memorandum of Agreement (MOU) with the Barbados Agricultural Society (BAS) and the Barbados Manufacturers’ Association (BMA).
That last condition has been a point of contention for the BHTA.
Reacting to Sinckler’s announcement, the association’s president Sunil Chatrani said he welcomed the relief but expressed concern about having to sign the MOU in order to access the breaks.
During question time at the meeting, Sinckler softened on the condition, saying that hoteliers would still receive the relief, with or without signing the MOU.
However, he urged them to sign off on it as a means of building trust with the BAS and BMA and to make the arrangement tidier.
Meantime, operators of restaurants that are not attached to hotel properties, and therefore will not benefit from the concessions, have been assured that Sinckler will work with them to address that particular challenge.
The plight of those restaurants has caught the attention of the Opposition spokesperson on tourism, Santia Bradshaw, who said those establishments would be disadvantaged.
She suggested that whenever Government plans to offer concessions in the future, it should carefully examine all the implications.
Concerns were also expressed by some hoteliers, and acknowledged by Sinckler, about the possibility of a black market trade developing with imported produce under the duty-free regime.
However, the minister promised to closely monitor the situation to ensure that all imported produce was used for the licensed purpose and did not end up on supermarket or shop shelves.