Friday, April 12, 2024

TOURISM MATTERS: Little room for let-downs


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It is now more than two months since the former Casuarina Beach Resort was rebranded as Sandals Barbados and Government granted the company unprecedented extraordinary concessions, creating probably the single largest unlevel playing field the private sector tourism industry has encountered in its long history.
Timing sometimes can be everything, and following nearly two years of long-stay visitor decline, the anticipated revenue generated through the critical two week Christmas and New Year period, perhaps has never been so pivotal to the survival of the industry, as we enter 2014.
On reflection, it appears to me that there has been a degree of gambling behind the recent decisions made.
Few can doubt that the Stewart family has built an enviable hotel empire with all the trappings of success, including a private executive jet, with a replacement value of over US$20 million. Yet it must have been a huge calculated risk to acquire a property that clearly was not up to the standards of other Sandals hotels and so close to Christmas. Reading carefully through the initial hundred or so TripAdvisor guest reviews the phrase that stands out, almost above all others is “in transition”.
Time will tell what collateral damage, whether permanent or temporary, has been done to the brand and, consequentially, the destination.
Again, reverting to timing, this whole exercise going on when another hotel is in transition in Grenada. Against normal practice, Sandals Grenada has inherited the many positive TripAdvisor reviews of the former La Source, rather than starting afresh in ratings. But despite this, some of the personal guest experiences are far less than complimentary, in some cases describing the property as a “building site”.
When airlines and hotels are charging peak seasonal rates, it must be abundantly clear to all involved that the level of expectations is at the highest and there is little room for consumer disappointment.
Our Government, too, has gambled that the long term gain in attracting Sandals to Barbados will more than make up for the perceived short to medium term alienation of the remaining entire accommodation sector. I am still struggling to understand the logic. There has been no immediate increase in airlift, arrivals or room stock and it will be years down the road before additional capacity is added in new construction.
Yes, there may have been some new jobs created, but how many, when you factor in the reported 150 work permits? Compound the very limited use of locally made products and you have to question, what is the real gain?
The other major concern is that investors, both local and overseas, some of which have been building their businesses for decades, have been almost overnight, disadvantaged to a level where they cannot compete with the new kids on the block, even before Sandals invoked widespread discounting.
Perhaps to a point where they have already reappraised any further investment until parity is restored. Clearly they will also be looking at creative ways to minimize the imposed detrimental effects caused by the unilateral concessions. This may include collecting a larger percentage of direct and tour operator lodging revenue offshore to reduce the level of Value Added Tax and corporation tax payable locally. Will this be monitored by the Central Bank?
Some tourism entities may also consider re-registering their companies in less hostile tax havens like the British Virgin Islands, Cayman or Bermuda.I am sure our policymakers have taken all these factors into account, and Cabinet concluded that the overall long term tourism earnings would increase rather than fall as a result, but it needs to be explained.


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