Govt to review tourism aid scheme

Government has gone back to the drawing board on the Barbados Employment and Sustainable Transformation (BEST) Plan that offers aid to hotels and tourism facilities to weather the crippling downturn in business triggered by the COVID-19 pandemic, Prime Minister Mia Mottley has revealed.

She said that the initiative which has attracted limited buy-in is under review.

“So far we have had just under 30 hotels apply. We always knew that the hotels that were owned by multinational corporations were unlikely to come in because of their structure of preference shares but we recognize that after entreaties from the Barbados Hotel and Tourism Association that there may be some hotels who prefer to take ordinary debt rather than to have preference shares and we are reviewing that now,” she told the Caribbean Economic Forum hosted by the Central Bank of Barbados on Tuesday night.

The revelation came on the heels of strong objections raised by hotelier Gordon Seale earlier that day that the BEST plan was a debt trap that could possibly drive hoteliers out of business.

Seale, who operates Bougainvillea Resort and Sugar Bay Barbados, told a luncheon at the Barbados Yacht Club:  “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.”

Under the BEST Plan, which is intended to protect tourism jobs while providing balance sheet support for companies by way of a class of shares that mirrors preference shares, businesses are expected to re-hire all of their workers on 80 per cent of their normal salary for up to two years, should the need arise.

Workers entering the scheme will not lose their existing rights to severance pay if they are laid off again at any point over the next 12 months.

Mottley explained that her Government opted for this approach to provide job support for the workers while ensuring that the island’s hotels remain open, rather than seek to recapitalize the social security system.

She noted that Government has so far paid out millions of dollars in unemployment benefits that amount to just over one and a half per cent of the Gross Domestic Product (GDP).

“In our own case in Barbados, we spent over 140 million in unemployment benefits, that’s just over one and a half per cent of GDP, just on unemployment benefits alone. That does not carry us to the issue of severance, nor does it carry us to other programmes,“ Mottley said. (SD)