A major restructuring of Barbados’ tourism product is on the cards to improve its competitiveness, Minister of Tourism and International Transport Lisa Cummins has announced.
This, as she also revealed that the BDS$70 airport service charge paid by Caribbean Community (CARICOM) travellers would be extended to include other regional travellers, and that there would be a further review of the underutilized Barbados Employment and Sustainable Transformation (BEST) programme.
Cummins was responding to questions during a State of the Industry Media update at the Barbados Hilton on Tuesday.
Cummins disclosed that “Cabinet has agreed that there is to be a 50 per cent reduction in airport service charge to regional travellers”.
“That brings us pretty much in line with what you have been hearing coming out of other markets – in particular the one market that has already announced, Antigua – that there is a 50 per cent reduction. Barbados, at the level of Cabinet, has also agreed to that significant reduction. That is meant to reduce the taxes on inter-regional travel,” said Cummins.
The airport service charge, which was introduced in 2018 as part of sweeping tax measures, is currently set at BDS$70 for travellers to CARICOM states and BDS$140 for other regional destinations as well as international travel.
“The request was made that the BDS$70 fee charged to passengers travelling to CARICOM states be extended to passengers travelling to other regional states. The Cabinet approved this amendment. Therefore, when the legislative process has been completed, all ex-CARICOM regional airlines’ passengers will pay the same service charge of BDS$70 as opposed to the BDS $140 that they are currently charged,” Minister Cummins later explained in a statement clarifying the adjustment in the charge.
“So, what was originally for the Caribbean Community, we have now expanded it significantly beyond that to include Cuba, Puerto Rico, the Dominican Republic, all of the BVI, USVI, Dutch Antilles…. [They] will have the extension of that 50 per cent discounted rate, bringing them into line with the Caribbean rate.”
The legislation to effect that change is currently before the Chief Parliamentary Counsel and will soon go before Parliament.
Cummins said her Ministry was going even further, pointing out that by next Thursday, she would be advancing the idea of carrying out “a full price-based competitors’ analysis for Barbados, where we will look at a comprehensive review of the industry”.
“What we have started to do is to look at the tourism sector as comprehensively as we can, both structurally as well as from a price competitiveness perspective. So we are preparing, and we have had the first draft of the papers being sent back for some further additions, [to] look at what is the price sensitivity of the Barbados tourism product, relative to our competitors,” said the Tourism Minister.
“That includes a range of analyses – how many flights are coming into the region by country and Barbados per day; where are they coming from; what is the cost of those flights; what taxes are applied in each country; what are the public health measures which are new; how do they layer further costs on intra-regional travel; and, ultimately, how does that create a competitive or uncompetitive position for Barbados.”
She said it was on this basis that recommendations would be made for changes to Barbados’ structure “as a destination”.
In terms of the BEST programme, Cummins pointed out that it was recently shifted from the Ministry of Finance to the Ministry of Tourism, and she was prepared to undertake a review.
“We will be coordinating with the various agencies. We are prepared to make further changes to the BEST programme now that it is being led by the Ministry of Tourism, and it will include the expansion of the oversight committee to include labour, so that there is a representation coming from workers,” said Cummins.
Started in September 2020 with an overall capitalization of $300 million to respond to the impact of the pandemic, the BEST scheme provides eligible tourism operations with funds to train and retain staff on 80 per cent of their salary.
It also provides a cap of up to $2 million for investment upgrades of qualifying facilities, by issuing preference shares to Government.
Up to the end of February this year, only about 40 hotels had been approved from the 55 that had applied.
Recently, the qualifying areas for training were broadened and changes were also made to make capital available for the purchase of items under the working capital component.
Cummins told journalists on Tuesday that her Ministry will be looking at how the disbursements were undertaken in the various elements of the programme.
“There are three elements of the programme we have started to review: employment re-engagement, the number of workers that have been re-engaged relative to the overall capitalization of the programme; the transformational investments, which are in the pipeline. There are approximately $16 million in transformational investments that are envisaged that largely include things like digitalization, waste management and disposal system, solarization.
“Then, of course, you have the working capital component. So we are presently breaking down the data to see how the programme is performing relative to its overall purpose and intent, and on that basis of the analysis we will be making recommendations on potential changes,” Minister Cummins explained.