Hoteliers can now seek to access the $50 million Hotel Refurbishment Fund which the Freundel Stuart administration announced during its Budgetary proposals last year.
Minister of Finance Chris Sinckler today announced during his presentation of the 2013-2014 Budget in the House of Assembly that the fund was now ready to receive applications from registered tourism accommodation establishments.
He added that the fund was currently being implemented through an expansion of the Industrial Credit Fund and Credit Guarantee Schemes administered by the Central Bank of Barbados.
“The Industrial Credit Fund channels funds to entities through qualified financial intermediaries operating in Barbados. Potential beneficiaries first approach a financial intermediary with a project proposal. The intermediary in turn submits a proposal to the ICF for funding.
“The ICF may advance up to 90 per cent of the requested loan amount. The Credit Guarantee Scheme provides commercial banks and other credit institutions protection against losses arising from the failure of eligible entities to repay their loans,” he said.
Sinckler said the National Insurance Scheme would assist with the financing of the expansion of the fund by periodically depositing surplus funds (at reasonable rates of interest) with the fund. He added this approach sought to spur much needed financing to the sector but minimized the risk to the NIS and addressed a number of incentive problems.
“The entities will remain under full private sector management: the disbursement of funds will be subject to the rigour of the credit assessment of private financial institutions and critically the debts will be due to private financial institutions and not to the state entities.
“Loans will be given at highly reduced rates with an appropriate moratorium on repayments of principal and interest while government will offer a special duty and tax waiver programme for any property owner accessing
the initiative over the 18 months. The Central Bank has already provided public information on the expansion of the Industrial Credit Fund and Credit Guarantee Scheme,” Sinckler explained.
The finance minister told the Lower House the initiative was being targeted specially at the major problem Barbados currently had of declining quality of its existing room stock. He said the aim was to see a major improvement in the quality of rooms and amenities of not less than 75 per cent of those properties in need of improvement.
He noted that Government, working through the BTII and with private investors in the hospitality sector, intended to make a substantial push to bring at least 1000 rooms back into production in the sector. He also said that Government would take the lead in initiating the purchase and rebuilding or refurbishment of two major properties that had gone out of business in the last few years.
“These will be the Almond Beach Resort which we have already announced and the Silver Sands Hotel. These will be done by accessing low-cost financing from the People’s Republic of China for the reconstruction of the properties which will then be sold and/or reopened under international brand name management.
“Work on both these properties should start in the latter half of 2014, regulatory approvals permitting, and will allow for the generation of close to 350 million Barbados dollars in investment with at least 600 jobs being created during construction,” he said.
Sinckler said it was hoped that, following the sale of the Four Seasons project to a preferred international investor, that work on that site would finally begin during the course of next year. He said requests for proposals to this effect had already been posted in local and international media and proposals were already streaming in.
“We expect a selection to be made during October 2013,” he said. (WG)