Barbados: Hotelier warns more Sandals-like tax breaks could lead to mass closures
(BARBADOS TODAY) – The controversial Hyatt Centric Resort planned for Bay Street, The City, and the Wyndham Grand Resort on the site of Sam Lord’s Castle in St Philip may be given tax concessions similar to that received by Sandals, one local hotelier has suggested.
However, owner of Sugar Bay Barbados Resort Gordon Seale is warning that if this happens, local hotels will not be able to compete and could be forced to shut down.
“We will not be able to compete, if, as rumour has it, Hyatt is given the same things that Sandals was given and Wyndham would get those and the new Beaches [Resort] gets it as well. You will effectively knock out a lot of the local successful hoteliers. The chances of us being able to survive … are very, very slim,” Seale warned today during a panel discussion at Lloyd Erskine Sandiford Centre on the topic, The Importance of Local Direct Investment in the Tourism Industry. The discussion formed part of the fourth quarterly meeting of the Barbados Hotel and Tourism Association.
The concessions given to Sandals have been controversial from the start, with local hoteliers complaining that the playing field had been rigged in favour of the Gordon Butch Stewart-led property.
In order to attract the Jamaican hotel chain here, the Freundel Stuart administration offered a 25-year tax holiday that includes a waiver on all import duties, taxes, impost and levies on capital goods such as building materials, as well as food, alcohol and beverages.
The waiver also extends to duties on the importation of motor vehicles and personal and household effects for senior hotel staff and non-Barbadian workers.
When the tax holiday period is over Sandals will only be required to pay half the “applicable rates and taxes prevailing” for another 15 years.
In late November 2013, just days after Sandals opened its doors at the former Almond Casuarina in Dover, Christ Church, Minister of Tourism Richard Sealy said the tax holiday was not exclusive to the Jamaican hotel chain and that any other all-inclusive hotel making a heavy investment here could get the same concessions.
However, Seale said today when he sought to get similar tax breaks under Cap 67B of the Tourism Development Act he got the runaround and a denial.
“This thing [Cap 67B] is not working in the way that we are being given the impression that it is working. We now have about 450 employees and not a single duty-free vehicle. I did apply and I was refused by the minister,” Seale said.
“I think it is very unfair to the local investor . . . I don’t see how it is possible to cherry pick and say that you are going to give one company or another company such major advantages. The concessions that have been given to Sandals are so extensive if we had to go that far to get Sandals here then clearly there is a much bigger underlying problem,” he stressed, while adding that unless there was a level playing field local hoteliers would sell to “one of those international investors”.
Similar concerns were raised by Paul Doyle, the owner of Crane Beach Resort, who explained that local hoteliers simply did not have the budget to make in one go, the level of investment required to qualify for similar incentives.
“We will do it over time but we can’t do it all at once. So if you’ve got a regulation that takes us all out of [the equation] I don’t think that is good public policy. I am all for ‘let’s give everybody a chance’. I am not talking about handouts, I am saying give everybody a chance,” Doyle said.
Pointing to the exit of some major companies from the local hotel business over the years including Massy, Doyle suggested that they left because the current regime was simply not working.
Meantime, though not dismissing their concerns, Chief Executive Officer of the Barbados Tourism Investment Inc Stuart Layne was careful to point out that both local and foreign investors in the sector were benefiting from Government concessions.
Defending the current regime, Stuart said the Tourism Development Act provided the local hoteliers with an advantage, saying it made it easy for them to add items to the list for concessions.
“The legislation is our servant . . . we sit down and make this thing relevant for us. If it isn’t working for us we say, ‘well it is not working and we make the amendments,’” Stuart said.