As officials of the Butch Stewart-led Sandals Resorts International gear up to start construction of their Beaches property here, Minister of Industry, International Business, Commerce and Small Business Development Donville Inniss is firmly defending the sweep of concessions given to the company back in 2013.
Making his contribution to the debate on the Land Tax Amendment Bill in Parliament on Tuesday, Inniss argued that incentives were necessary for hoteliers to have low operations costs.
“I have been hearing, long before I came into politics, that one of the challenges related to the hotel sector has been the cost of operations and some overheads, such as the land tax that is payable,” he said, adding that just as Government could not afford to compromise on the regulation and standards of the sector, so too it could not compromise on incentives.
His comments follow Stewart’s revelation last week that an estimated 1,800 new permanent jobs and an investment of US$400 million would come to Barbados with completion of the Beaches Resort.
Speaking to reporters at the newly-opened Sandals Barbados Royal Resort at Dover, Christ Church, which is one of two luxury properties currently operated by Sandals here, Stewart added that the Beaches, which will replace the existing Almond Resort in St Peter, was expected to create about 2,000 jobs during its construction, which he said should officially get off the ground by September this year.
In light of those promises, Inniss has stoutly defended the Sandals concessions, which included a 25-year tax break. In fact, he said that just like concessions granted to the rest of the sector, they were necessary in order to drive down operation costs and create jobs.
“Without this . . . they [hotels] would find that they would have to increase their rates or find other ways to reduce costs, whether in labour or whatever, which then places the entity in a position where it can compromise on service,” Inniss said.
“There is a lot of hullabaloo about concessions granted to Sandals and I am being very candid on this matter. It may not please everybody. I hear the Opposition people always talks about Sandals concessions and what not . . . . The simple reality about it is that perhaps it is a bigger cost when you do not grant incentives, to when you grant them.
“If you don’t grant them you may find that you may not get the level of investment necessary to grow out an economy, whether it is domestic investment or foreign direct investment. That is why, on a matter of principle, I stood firmly in support of the incentives granted to the Sandals group, and we have seen the benefits,” he said.
Inniss pointed out that the Sandals chain, which recently completed its second property here, was employing a significant number of Barbadians.
He said while some may argue that the concessions granted to the rest of the sector were not enough, “the reality about it is that when you look at the incentives granted to restaurants and those properties with restaurants onsite that certainly ought to make a difference in the cost of the product that you are offering at some of these facilities”.
In order to attract the renowned Jamaican hotel chain here, the Freundel Stuart administration offered a 25-year tax holiday that included waiver on all imported duties, taxes, impost and levies on capital goods, such as building materials as well as food and beverages.
The controversial deal also included waiver on 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.