Government’s BEST plan is anything but good for hotels veteran hotelier Gordon Seale has contended, suggesting it puts jobs ahead of hotelier’s debts.
Seale, who owns Bougainvillea Resort and Sugar Bay Barbados, argued Tuesday that the job-saving programme is funding losses and could possibly drive hoteliers out of business.
Instead, he would have preferred jobless workers to claim unemployment insurance until hotel business picks back up.
His two hotels which employ 480 people are “bleeding astronomically” and up to November had recorded a combined net loss of $450,000 each month, he told a luncheon at the Barbados Yacht Club on Bay Street.
He said the losses did not factor in the downturn in business as the coronavirus pandemic sent the tourism industry into a tailspin.
Back in September in the Throne Speech, Governor General Dame Sandra Mason announced that the Barbados Employment Sustainable and Transformation (BEST) plan, a $300 million stimulus package, would be rolled out to allow for thousands of unemployed Barbadians in the hospitality and tourism industry to be retained while earning 80 per cent of their salaries.
Dame Sandra noted that the resources would only be made available if tourism numbers and revenues remained below the levels required for the industry’s survival.
But Seale maintained that the plan was hurting hoteliers more than anything.
He declared: “The scheme is funding losses and will dilute ownership of the hotels.
“How can anyone who understands the programme claim that Government is looking after businesses at the expense of labour?
“It’s just a mystery and this is what has been put in the public all of the time.”.
“The BEST plan looks after labour while the hotels run up debt. Furthermore, having run up the debt the hotel still has a severance liability hanging around its neck.
“In other words those people who go into the BEST programme, they continue with the full severance and it’s a cost that we see has come up now and can come up again.
“The conversion of preference shares into common shares after the dilution of ownership, especially for the financially weak hotels, could result in a change of ownership of the hotels, possibly to Government.”
Seale suggested instead that he would have preferred for unemployment insurance benefits to be extended until the arrival numbers reached a pre-determined point.
He said this would have required a further extension of the 26 weeks for claiming severance.
But Seale said Government claimed it could not find the money to do so.
“It seems to me that this is more of an accounting problem than cash flow for the Government because they are willing to make $300 million available to pay this BEST programme,” he said.
Seale said hotels in Barbados are facing a significant severance payments bill.
He revealed that payments at Bougainvillea Resort was in the range of $2.4 million dollars.
He called on Government to assist hotels to prevent their businesses from folding.
Seale said: “The question is, should the hotels have been asked to pay out millions of dollars in severance when they had no control over this COVID event? The situation is unprecedented. Companies normally have to pay out small amounts of severance from time to time and in the event of a bankruptcy they would have been paid by the National Insurance.
“Hotels will be paying out millions in severance that would impact the upkeep of the product and any plans for upgrading or expansion will have to be shelved. The industry will be heavily indebted going forward.
“The hotels will need some grants to keep them from going under. Tourism businesses that have been severely impacted all over the world have been given some form of financial assistance by their governments in terms of grants. They are our competition and they will be able to continue what they need to do whereas we will be hamstrung by the debt.”
Seale said exactly how much help was needed would depend on the sector’s performance this winter and next summer.
(randybennett@barbadostoday.bb)
