Devastated by tourism’s worst-ever crisis, small hoteliers are eager to emerge from months of closed doors but are unable to access the lifeline Government promised them just over two months ago, they have claimed.
But while the hoteliers said they were awaiting “further notice” on how to access the $200 million Barbados Tourism Fund facility, Minister of Tourism Kerrie Symmonds charged the hoteliers were the ones holding back.
The issue was among several raised during Wednesday’s 20th annual general meeting of the Intimate Hotels of Barbados (IHB), the 20-year-old non-profit company that unites roughly 50 small, independent, indigenously owned hotels and apartments.
Outgoing chairman Soni Kessuram said the small hotels have been gravely impacted by the deadly coronavirus since it was first detected here in March, and it made the challenges associated with the increases in the room rate levy, commercial water rates and land tax in 2018/2019 pale in comparison.
She recalled: “From the first week in March members reported cancellations of bookings, short stays and no shows. As the month progressed cancellations [skyrocketed] until we eventually went into full lockdown mode.
“We closed all our operations and unfortunately had to lay-off our staff. To this end, the IHB submitted a letter to the Minister of Tourism and International Transport on March 27 requesting relief for its members by waiving various taxes and levies for a three to six month period, as well as to access a working capital loan fund with a low-interest rate. This has since been announced as a COVID-19 assistance measure for small hotels and we look forward to receiving further notice on how to access this.”
But Symmonds countered that it was up to the hoteliers to come forward for the concessionary loans which are to be backed by local commercial banks.
Indicating that the commercial banks were somewhat reluctant about helping to raise the capital, he added that the Inter-American Development Bank (IDB) has already accepted the proposal “in principle”.
Symmonds declared: “I think you begin by coming and saying you want to express an interest in this. Let us keep the banking community at the table, we can then work through whatever the individual challenges may be or may not be, but to start by saying ‘I am going to rest on my laurels and kick this can down the road’ may create an opportunity for potential financiers to walk away.”
In addition to tax deferral for tourism for the rest of 2020 to 2021, Prime Minister Mia Mottley had announced at the end of April the establishment of the $200 million Barbados Tourism Fund facility in a $2 billion economic stimulus plan.
The fund, which is to be established with the assistance from IDB Invest, the private sector arm of the IDB, is to be a loan facility providing urgent working capital, investment loans, and where possible blended finance for the upgrade of hotels and tourism-related businesses.
Government had promised to put seed capital of $10 million in the fund towards bridge financing, as would ANSA Merchant Bank.
One main condition to access the financing is that companies should retain “as much staff as possible”.
Symmonds told the group: “Where have we gotten so far? We sat down with the Inter-American Development Bank . . . the Government’s proposal has been accepted by the bank in principle, where you will have a 4.5 per cent interest rate on loans that would run for ten years with a two-year moratorium on principal repayments”.
But, he said, his concern was that commercial banks were somewhat “lukewarm” on the idea of helping to raise the $200 million, and he feared they could walk away if hoteliers did not start to come forward to access the loans.
The tourism minister said: “I understand why they are a little cold. Many of them are not run from in Barbados, many of them do not understand that this industry is the heart-beat of this country [and] many of them are risk-averse quite frankly.
“We have demonstrated that we can think out of the box and that is where the idea of the Barbados Welcome Stamp comes about. We can get people to Barbados. We believe firmly that we can do this, but what we cannot afford to do is to have the banks withdraw from the $200 million refurbishment and working capital facility.
“We can’t afford for that to happen, because the IDB, to their credit, has said they are prepared to view the industry very broadly – looking at accommodations, restaurants, attractions, ground transportation and food suppliers.”
Pointing out that the opportunity might not present itself again any time soon, Symmonds added: “So what we really need is to have expressions of interest in the loans. I think that It would be a shame if hoteliers do not use this an opportunity to say let me step up to the plate and at least begin the discussions about how I can access relatively low term financing in order to do some of the refurbishment and maintenance that need to be done at the properties that you have.”
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