Category Archives: Tourism

BU brings you the up to the minute news about the #1 sector in Barbados and the Caribbean.

What is the Status of 7.50% VAT?

Adrian Loveridge - Hotelier

Adrian Loveridge – Hotelier

When Government announced last year that it was passing a bill to allow the lowering of Value Added Tax (VAT) to 7.5 per cent for qualifying hospitality partners my initial thought that it was a wonderful opportunity to at least partially address the frequently quoted high costs of our tourism product. The criteria did not appear too ominous. That the entity had to be registered with or a license from the Barbados Tourism Authority, Barbados Hotel and Tourism Association or Small Hotels of Barbados Inc, it was in compliance with all statutory obligations of the Income Tax, NIS and Social Securities Act and was able to demonstrate to the satisfaction of the Comptroller and generates at least 75 per cent of total earnings annually in a foreign currency.

In our 26 year experience the vast majority of guests pay via credit card, I would not have thought this was difficult to verify. These imposed conditions would seem quite reasonable and for most attainable.

Why then have so few seemingly eligible tourism partners registered successfully and applied the lower rate of VAT. After all, 10 per cent of the final cost to the consumer is not an insubstantial reduction. Looking at menus posted on the websites of many of our hotels with in-house restaurants or stand alone establishments 17.5 per cent VAT is still shown, which includes some of the big names and unless they have yet to be updated state owned accommodation providers are included in this. Interestingly, this applies even to businesses where their owners or managers sit on the board of the national marketing authority.

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Sandals, Almond, Butch, Bernie…Decisions, Decisions, Decisions

Adrian Loveridge - Hotelier

Adrian Loveridge – Hotelier 

I have been following the various views expressed, vested or otherwise, over the last few weeks comparing the merits of proceeding with the stated non-binding Memorandum of Understanding signed between the Sandals group of companies and Government or allowing the current operator of Almond Beach Village to take over the entire property. What appears dismally lacking is any comprehensive analysis detailing the potential financial benefits of both options for the short, medium and long term. With Sandals now closed, at least until December, the majority of fiscal activity will be generated by construction, where virtually all materials used are imported and require foreign exchange to pay for them.

Even with just 160 rooms out of a total of 396 currently open, Almond St. Peter will continue to earn somewhere around BDS$2 million per month at 85 per cent occupancy. With all rooms fully functional that amount would increase to approximately BDS$6 million. Meaningful employment would not only be retained but substantially grown year round increasing NIS and tax contributions to Government. And on the subject of tax, the current Almond ‘managers’ still pay VAT and from what I understand largely source the majority of consumables locally.

Then there is the critical airlift support question. Nearly 16,000 seats this year have been lost with the closure of Sandals. Almond is helping to fill around 300 of these per week, based on current room availability which could climb to nearly 800 weekly, if the entire hotel was open, based on an average 7 night stay. When, as planned, Almond then closes again on April 2015, it will be years before a new Beaches adds any additional or replacement airlift. Whether during the interim this leads to even more reduction in air services, either in frequency or curtailment of routes, only time will tell.

Meanwhile another 240 rooms remain empty, abandoned and unproductive at the derelict Sam Lords Castle, as the CLICO debacle slumbers on and on. The current administration has been less than candid over what amounts of NIS, land and other taxes are still outstanding by the owners of this property. As a preferred creditor in this case, it is also puzzling that over $100 million can be found to buy Almond, but not a lesser amount to acquire and restore, what is in many respects, an equally attractive location with tremendous land potential for expansion.

The site lends itself to building a new conference centre, providing over two hundred truly 4 star suites and the possibility of enticing a world brand to manage it. There is probably no better location than Long Bay to attract substantial numbers of incentive or motivational groups either.  Despite the open hostility frequently directed at hoteliers on Barbados the general public perhaps tend to forget that Government is in fact already the largest single owner of accommodation room stock on the island.

Very few of us in the private sector consider this desirable or even sustainable, but until our political directorate levels the playing field, as has been repeatedly promised for months, this is very unlikely to change in the near future.

Accessing Tourism Internet Portals to Win Deals

Adrian Loveridge - Hotelier

Adrian Loveridge – Hotelier

While it is probably most hotelier’s dream to fill their property every night of the year at published rack rates, the reality is quite different and that is where marketing creativity becomes even more crucial. Our larger hotels are predominately tour operator dependent but that comes at a price, being forced to contract rates well below direct booking room prices that may appear on their websites.

One alternative is to look for smart partnerships with established global entities like Luxury Link IncQuoting verbatim from their own website ‘With more than half-million targeted, sophisticated travellers a month, the Luxury Link Travel Group is the only online travel company focused on matching consumers with the right hotel through marketing, promotions and cross-channel exposure. This unique business model provides lead generation, advertising, branding and distribution services to luxury and upscale hotels, cruise lines, tour companies and villas around the world’.

As someone who has used their services on several occasions, the attraction is obvious. A guaranteed high standard of hotel, four or five star at an overall price always well below published rates and usually a number of ‘extras’ included.

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Getting Hitched to Technology to Woo Tourists

Adrian Loveridge - Hotelier

Adrian Loveridge – Hotelier

If I had mentioned the name Airbnb a few months ago, I wonder, hand-on-heart, how many people could claim that they knew much about the company. Perhaps hardly surprisingly, as not that long ago it sold novelty cereal boxes to stay afloat to now emerge as a major threat to the hotel industry and ‘close to becoming one of the world’s most valuable startups’. If quoted plans materialise, private-equity firm TPG and boutique investment advisors, Dragoneer Investment Group, who are already in advanced talks will raise capital to put a value on what has been described as ‘the upstart home-rental site’ of US$10 billion. Mutual funds are being sourced through the strategic research platforms of entities including T Rowe Price Group and Fidelity and are also in discussion to join the group.

To put that it context, the combined share worth of Airbnb would equate to US$2 billion more than the entire InterContinental hotel chain. Last month Airbnb reported ‘that reservations were growing fastest in more exotic locations including Barbados, Marrakesh, the Bahamas and Greek islands’. It demonstrates graphically that travel was one of the first industries to be transformed by ecommerce during the first dotcom explosion.

Quoting from the Financial Times, ‘Airbnb’s rise has been meteoric. Founded in 2008 by roommates who rented out beds to help pay for their San Francisco loft, the company said at the end of last year that it had hosted more than 11 million guests in 34,000 cities and 192 countries around the world’.

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Bizzy Williams Supports Butch Stewarts’s Sandals/Beaches NOT Bernie Weatherhead’s ALMOND Suggestion

Local entrepreneur and the other member of the Williams dynamic duo Bizzy Williams has thrown his support behind Butch Stewart and Sandals/Beaches at the expense of local tycoon Bernie Weatherhead. Bizzy Williams letters to the local newspapers have gone under the radar this week but given the importance of tourism, the washpan of concessions to Butch Stewart and the success of Bernie Weatherhead as a homegrown businessman it is worthy of discussion.

Read Bizzy’s letter to the traditional media:

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Notes From a Native Son: The Addiction to Tourism is one Reason Why we Cannot Get Out of our Economic Mess

Hal Austin

Hal Austin

Introduction:
As we as a nation dig deeper and deeper in the economic sinking sand that somehow we have found ourselves in, there is a growing demand fore tourism to come to the rescue. The truth is that it is wishful thinking: at the top end, the requirements of the high net-worth traveller are not met in Barbados, as we have a single-minded idea that passes for a policy. There is no adequate two and three star hotels which would meet the needs of people travelling from down the islands and those coming from Europe and North America to see relatives and friends, but who need the privacy of their own accommodation. Further, there is no public evidence of a comprehensive tourism and leisure policy over and above the clear need to just get tourists to spend their money as if it was going out of fashion. At the top end, people do not only require top class accommodation, boutique and five-star hotels, and decent private accommodation, but also need an acceptable level of leisure activities to occupy their time during the day when they are out of the water and at night, other than the Caribbean cliché of listening to local singers or watching limbo dancers perform.

Macroeconomics of Tourism:
According to the United Nations, the world population is expected to grow from the current 6.5billion to 9 billion by 2050. Most of this growth will take place in less developed countries, with China and India more than doubling the rest of the world. In population terms only, the future is Asian. But this is not all. At present the world population grows by about 1.1 per cent, with six countries accounting for more than half this growth – India, China, Pakistan, Bangladesh, Nigeria and the US. By the mid-century, India will become the most populous nation on earth with a population four times that of the United States, outstripping China whose population will start declining from about 2025, due largely to the one-child policy. China’s working population will reach about one billion by 2015, then steadily decline. Most developed economies will see a fall in population as deaths outstrip births, with the exceptions being Australia, the US, Canada and the UK, all of which will continue to see a substantial rise in replacements through growth in immigrant populations.

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Is the Caribbean an Attractive Option for Chinese Tourists?

Adrian Loveridge - Hotelier

Adrian Loveridge – Hotelier

A lot of discussion has taken place over the last year or so about the importance of attracting Chinese visitors to Barbados and few will disagree that it is a potential massive market that cannot be ignored. Let us though take a minute to look at the practical reality. Using Great Circle (shortest route by air) distances, Beijing is a mind-boggling 8,775 miles from Barbados. Shanghai is some 9,381. Even if current aircraft could fly those distances non-stop, it entails a minimum flying time of 17 to 19 hours and then there are all sorts of crewing and equipment challenges.

Air China is presently the only airline to operate non-stop services from Beijing to New York (JFK) with11 flights weekly by B777-200 aircraft and a flight time of around 13 hours. China Eastern Airlines operate Shanghai to JFK at least daily. In an extensive interview recently when questioned about direct flights into the Caribbean, Dr. Zhihang Chi, Vice President and General Manager of North America for Air China stated that was not an option. However, he said ‘that China’s flag carrier would instead be targeting more flights to North American hubs and striking up partnerships with local carriers to funnel traffic into the Caribbean’. Adding ‘that the airline has ordered an incredible US$10.7 billion worth of new aircraft that will help it to achieve this end’! Since Dr. Chi took up his current post seven years ago, Air China’s traffic to North America has doubled.

This to me seems our lowest risk option in partnership with JetBlue. Another alternative could be the non-stop flights from both Beijing and Shanghai flown by Air Canada into Toronto, with possible connecting flights to Barbados.

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Caribbean Tourism: Coming Together for the Benefit of ALL

Adrian Loveridge - Hotelier

Adrian Loveridge – Hotelier

According to figures released by the Barbados Statistical Service January 2014 recorded the second highest long stay visitor arrivals from the United Kingdom in the last 12 years, with 18,134 persons. Only January 2009 exceeded this number with 20,911 persons. Having said this, there is still a mountain to climb especially if you look at the situation in perspective, January 2009 performance has to take into account recent past performance. In 2012 our single largest market registered a decline in every consecutive month of that year, ending with an overall fall of 15,631 stay-over visitors.

2013 finished with another 4,786 arrivals down over 2012. Over the last two year’s we have already more than 20,000 ‘lost’ British visitors to make up for. February 2014 United Kingdom figures continued with what hopefully will be an ongoing trend with a 10.2 per cent increase when compared with the identical month a year ago.

Sadly though the decline across other markets resulted in an overall fall, registering the lowest stay-over numbers for any February during the last 11 years. More than any, the second month of the calendar is often the barometer of whether the winter season is going to end successfully or not.

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Butch Stewart: Public Relations and Truth

Adrian Loveridge - Hotelier

Adrian Loveridge – Hotelier

While it was very tempting to write about any subject this week other than the Butcherisation I received at the recent Barbados Chamber of Commerce monthly luncheon, that would have been the easy way out and certainly not in my character. First for the record, I had no intention of offending anyone. In fact I made it abundantly clear in my opening remarks that many of us greatly admire Mr. Gordon ‘Butch’ Stewart and the hotel empire he has spearheaded. I am not so remotely naive to believe that any one person can achieve this alone and a great part of the success is attracting the right people around you. This equally applies whether it is a small or large business. Perhaps what surprises me more than anything is that a person who has received everything he has asked for within weeks and possibly more than we are aware of is so unwilling to respond to legitimate concerns. Especially, while so many who actually live on Barbados have toiled to build the destination’s tourism industry over several decades while being consistently denied similar extraordinary concessions.

Equally baffling were the number of persons present at the event who over the last months had, albeit in the shadows of anonymity, literally moaned about their inability to solicit business from Sandals Barbados but were now cheering their new found ‘super hero’. There is the temptation to name and shame these persons but they know who they are.

Are we really such a Nation of hypocrites?

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BTPA+BTMI = BTA

Adrian Loveridge - Hotelier

Adrian Loveridge – Hotelier

Currently before Parliament are the Barbados Tourism Product Authority and Barbados Tourism Marketing Inc bills. Not surprisingly, considering the protracted time it has taken so far getting legislation to this stage, many industry partners may have forgotten about them altogether.

Given the infrequent holding of Parliament, the late starts, early finishes, extended lunch periods and volume of non-constitutional subjects discussed, whether it is now realistic to have the required readings of these bills in both houses and passed into law by the stated 2nd April 2014 date seems rather ambitious.

The Barbados Tourism Authority as we have known it will cease to exist and replaced by the two new entities. What does this mean? Will some current employees be severed and if so how many? Government’s stated moratorium, ‘no new hiring’ will surely limit staffing the new statutory corporations. So what is the plan?

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