One of the island’s major hotel chains said it was not fazed by the new taxes imposed on the tourism industry by the Mia Mottley-led Barbados Labour Party (BLP) administration.
In fact, Deputy Chairman of Sandals Resorts International (SRI) Adam Stewart has made it clear that the Jamaica-headquartered hotel chain was ready to play its part in rebuilding the Barbados economy.
“It is early days [but] we have made it clear that we are willing to participate in the new luxury tax on the hotel,” Stewart told journalists last night on the sidelines of a team member engagement dinner at Sandals Royal in Dover, Christ Church.
It was in her June 11 mini Budget that Prime Minister and Minister of Finance Mia Mottley announced that effective July 1, the hotel sector would attract a room levy of US$2.50, US$5.50 and US$10 per room per night depending on the room classification.
Mottley had also announced that effective July 1, there would be a 2.5 per cent tax on all direct tourism services, while the Value Added Tax on the sector will rise from the current 7.5 per cent to 15 per cent in January 2020.
Stating that it was too soon to determine the likely impact of the taxes on Sandals’ operations, Stewart pointed to the planned Beaches Resort development, construction of which is scheduled to begin in January 2019, saying Sandals was focused on increasing employment and driving economic development.
“The Government is going to do what they have to do [in terms of taxes] and certainly we want to continue to play our part. So the Prime Minister took the time to explain a lot of the economic facts of Barbados and we had an excellent meeting with her. We have not lost confidence at all in the country of Barbados and we gave her our full commitment that the Beaches resort is going ahead irrespective of some of the discussions and decisions they are having,” the hotel executive said.
“This is topical in Barbados now, but we have had different discussions like this for years in the Caribbean. Our Caribbean states for years have struggled economically. We are just happy that we are the company driving employment, driving training and development [in the tourism industry] and driving local consumption,” he said, adding that following a meeting with Mottley the hotel chain was “more than happy to hand over the numbers of our consumption” and to work with its partners and local farmers to help drive the economy.
In order to attract the renowned Jamaican hotel chain here, the then Freundel Stuart administration in 2013 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 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.
Sandals has come under tremendous pressure over the past five years from some industry officials and residents for the suite of concessions.
Earlier this month Mottley appeared to suggest that there was no transparency in the granting of the concessions, stating that the system was unfair, while telling a gathering of industry stakeholders that it had essentially created three classes of hoteliers in the country.
“Those like Sandals that get everything without consultation, . . . those who have to come to the Ministry of Tourism, and I believe every two weeks the Ministry of Tourism is taken up with having to push paper, which is nonsense, and then those who don’t even get anywhere near the Ministry of Tourism or anywhere near the concessions because their cash flow has been such that they had difficulties in being able to meet basic statutory requirements and as a result therefore they are precluded from being a beneficiary of any of those concessions,” Mottley said at the time.
However, Stewart did not directly address the issue of whether the concessions were justified or not, choosing to point out that the granting of concessions was not unique to Barbados.
“One of the things we have to understand is that concessions are something that happen worldwide. If we were to move our head office from Jamaica to New York, the city of New York would give us concessions to get there. So concessions are not a Caribbean phenomenon, and what we measure is total economic impact. So the direct employment that we have, the local linkages,” he said.
Choosing to focus more on the hotel’s contribution to the island and the known strength of the multiple award-winning Sandals brand, Stewart said the resort was helping to increase the visitor arrival numbers to Barbados, improve the product quality and experience of the guests.
He also pointed to the US$400 million Beaches property to be constructed at the old Almond Bay Resort in St Peter, saying it will be “the best work” that SRI has done to date.