As Barbados prepares to welcome new hotel chains and revive its tourism product post-COVID-19 pandemic, one economist is calling for a complete overhaul of the island’s tourism sector.
Kemar Stuart, Director of Business Development, Finance, and Investment with Stuart & Perkins Caribbean argued that if Barbados was to remain competitive in the tourism industry several changes had to be made.
“One must tackle the structural issues that the Barbados tourism product faces,” said Stuart.
Pointing to Government’s $300 million Barbados Employment and Sustainable Transformation (BEST) programme, he said this only allowed for hotels to enhance their infrastructure and retain employment “to a certain extent”. However, he warned that an urgent and closer look at the tourism industry was necessary at this time.
“After the pandemic clears there will be fierce competition for visitor arrivals in almost every country that focuses on tourism.
The demand for travel to Barbados from source markets will be subdued due to the new travel protocols which will be in place, the legal impediments which may arise from Barbados’ move to take a republican status, unemployment, and reduced incomes in all economies from wherever the country attract visitors,” he said.
With the island set to welcome the Hyatt and Wyndham hotel brands between this year and next year, Stuart insisted that the structure of how hotels operate “must be relooked”.
He argued that it could no longer be business as usual where “subsidies, allowance of discrimination of unionized workers, changes in labour laws to benefit employers, tax holidays, no or low import duties and large concessions are used as tools to bring down the cost of tourism entities”.
“Many Caribbean countries attempt to outdo each other in offering sweetheart deals to woo big investors in which residents are then allowed to get jobs within the tourism sector.
However, the drawback of this practice is causing Governments around the region to lose hundreds of millions of dollars in tax revenue that can be collected.
This practice also leaks foreign exchange as these entities use international vendors to supply themselves whenever they set up shop in Barbados and other economies across the Caribbean,” he explained.
“I, therefore, suggest that Barbados, in the context of an International Monetary Fund programme, recognize its exposure to tourism and tackle the structural economic issues associated with the tourism industry.
The Barbados Economic Recovery and Transformation plan rallies around a strong performance in tourism but given the pandemic, it calls for a revamp of how tourism services are delivered as the entire survival of the economy is too overly dependent on the arrival of tourists in the country,” he said.
Earlier this year the economist joined others in calling on the government to move with urgency in building out other sectors rather than continuing to focus heavily on the now less than vibrant tourism industry.
Describing the Barbados tourism product as expensive, Stuart said officials must do what was necessary to reverse the island’s declining market share of tourism in the region.
Stuart argued that the increase in Value Added Tax from 7.5 to 10 per cent on the sector, the airline and tourism development tax on air passengers, an increase in property tax on hotels, the room rate levy, and the tax on Airbnb only served to “increase the cost of travel to an already expensive Barbados”.
However, while indicating that he could understand the rationale for the taxes “due to large concessions in the sector”, Stuart said he was still concerned that several factors including high airfare, accommodation costs, fuel, and food prices would “continue to put Barbados out of the reach of the average tourist”.
(MM)
