Hey Boss! I just got a great idea for a new tax!
Our thanks to Bajan Poppets!
Hey Boss! I just got a great idea for a new tax!
Our thanks to Bajan Poppets!
According to a recent Travel Weekly (TW) article a total of 30 cruise ships will be sailing in the Caribbean this summer with Carnival alone offering over 1,600 cruises in the region across the entire year.
Hindsight is a truly wonderful thing, but it would have been difficult not to predict the massive over-capacity estimated at 19 percent, that has been created in 2014. Kevin Sheehan, CEO of Norwegian Cruise Line, described the ‘Caribbean train wreck’ as a product of a ‘lemming theory’. He went on to add ‘we all sat in our rooms and did our itinerary planning – on our own, or course – and we all concluded it made sense to go into the Caribbean’.
Ken Muskat, MSC’s senior vice President was equally candid, describing the situation as ‘oversaturated with inventory’.
“Whether you describe this scenario as over-capacity or under-demand inevitably the result has lead to dramatic price discounting, with daily all-inclusive rates lowered than US$43 per person/day on some cruises.”
“Land based tourism accommodation providers do not stand a ‘snowball in hell’ chance of competing with these rates…”
Probably what at least partially influenced the key players into redeploying more vessels to the Caribbean this year was the poor performance of its ships in Europe between 2010 and 2012, due to weak economies and the reluctance of many North Americans to pay higher transatlantic airfares. Continue reading
“Last year unemployment in Barbados stood at nearly 12%, but it the rate is forecast to rise to 15.6% in 2015, according to the IMF.”
According to the International Monetary Fund, RBC, CIBC and Bank of Nova Scotia are dominant players across the region with about 60% of total banking assets, almost as strong as their position in Canada. But are those players starting to question their enthusiasm in the face of the regions worrying economic malaise?
Canadian Imperial Bank of Commerce warned last week that it will take a $420-million charge to goodwill related to its subsidiary CIBC FirstCaribbean, which it blamed on “persistently challenging economic conditions and our current expectations for conditions going forward.”
With unemployment in the U.S. still stubbornly high, the middle class seems to be taking more modest holidays, with far fewer traveling to the Caribbean. The developed world is starting to recover from the turmoil but the numbers suggest that’s not the case in countries like Barbados and Jamaica.
… much more in the Financial Post: How the Caribbean is not so sunny anymore for Canadian banks
“We’re encouraging people to look for opportunities beyond Barbados and there are Caribbean territories that require that skilled labour. A lot of skilled labour from Barbados come here (to T&T). They go back and forth, and we are encouraging them to look for those opportunities.”
Barbados Finance Minister Christopher Sinckler speaking to T&T bankers
We’ve seen the cycle repeated for a long, long time. Barbados has way more people than this little rock can accommodate in space, resources and economy – so anytime in our history when there is a pull-back in the economy (as there is now), thousands of Bajans leave for better circumstances.
That happened when the Panama Canal was being carved from the jungle at the cost of 500 dead Bajans per mile, and it happened in the 1950’s and 1960’s when the lure of working in the UK took thousands of our best and brightest people away – most never to return.
Who leaves Barbados during these migrations? Continue reading
“Has Barbados Crop Over become less attractive?
Should the blame be on higher airfares, especially in the case of T & T – or are there other mitigating factors?”
July 2013 recorded the lowest number of long stay visitors (47,953) during the same period for 13 consecutive years, so I find it not at all surprising that our policymakers have discussed dramatically curtailing certain events for Crop Over 2014. However, I believe a better analysis is needed to explain away the reasons behind this dismal performance. If you look at the principal markets in the last two years, the figures will reveal that the biggest losses in July 2013 were from the USA (down 10 per cent), Trinidad and Tobago (down 9.2 per cent) and what are defined as Other Countries (down 12.4 per cent).
In all, July 2013 recorded 3,318 less stay over visitors than 2012. This was on the heels of a loss of an overall 6,984 visitors when compared with July 2011. In July 2012 the largest declines were USA (down 18.1 per cent), Trinidad and Tobago (down 10.2 per cent), Other Caricom (down 20 per cent) and Other Countries (down 13.1 per cent). So for the last two years a combined decline of over 10,000 stay-over visitors for the month of July alone.
Has Barbados Crop Over become less attractive? Should the blame be on higher airfares, especially in the case of T & T – or are there other mitigating factors?
Perhaps more of a surprise is the announcement by Sandals Resorts to delay the re-opening of their Barbados property to 28th January 2015. With the frequently discussed dearth of construction work it would beg the question, why could the vaunted US$65 million renovation project not be completed on time – specially when you take into account that the additional lost six weeks covers what the hospitality industry considers the most profitable and highest occupancy period of the entire year?
At published rack rates that could equate to a revenue deficit of between US$7.7 and US$19 million for the 42 day additional closure! As it has been already established the vast majority of Sandals earnings are collected offshore, so the ‘real’ amount that Barbados will lose cannot be easily calculated.
Of even more concern nationally is the roughly 3,000 airline seats, which may not be filled as a result of the prolonged shutdown that could influence frequency and will detrimentally impact overall long stay visitor arrival numbers. While not openly discussed, some thought has to be given to neighbouring accommodation providers in the immediate vicinity of Sandals Casuarina and the economic negative consequences that ten months of construction will have on occupancy. Possibly Government has factored in some sort of relief for these disadvantaged properties with exemption of land taxes for the period.
While the summer may be the ideal time to undertake this work, I am sure very few hotels could afford to write off all or part of a peak winter season as a result of prolonged redevelopment with its associated noise, dust, discomfort and disruption.
Case in point: RedJet
If Caribbean people can’t travel, they can’t do business, can’t have holidays, can’t spend money – can’t spread wealth. Aviation, or the lack thereof, is holding the Caribbean back.
And what is the result of governments owning airlines? They protect their own. Therefore, we have almost zero competition on intra-Caribbean air routes; between LIAT and CAL/AJ, they’ve got it all sewn up: you go here; me there. And never the twain shall compete.
Case in point: RedJet. What a fiasco – or travesty, more like it. Here was a bold new entrant to the Caribbean aviation scene, the region’s first genuine low-cost carrier. A project developed by a bona fide Caribbean investor; putting (lots of) his own money where his mouth was. How long did RedJet last – six months? And why did it meet such a sad and untimely demise? Of course, no real reasons are given by the perpetrators; one can only surmise…
… from an excellent article by S. Brian Samuel: Crashlanding in Toxic Taxation
“Government will eventually have to decide what it wants – Tax the industry out of existence or put in place the reforms discussed over decades that clearly have made a significant difference for a solitary player.
Or, apply the reforms uniformly to alleviate the current national imbalance.”
Hotel layoffs the natural result of Government failure to keep promises
It is now a full six months since companies trading under the Sandals Resorts brand were granted unilateral extraordinary concessions never before seen in the long history of our tourism industry. Despite repeated assurances given to the tourism sector, once again implementation is sadly lacking and as we enter the long eight summer months the industry is left floundering to second guess pricing and marketing strategies that will help it survive yet another year.
Criticism is leveled again at some hoteliers for not passively submitting to the prices dictated by tour operators, which ultimately has led to further airlift losses from a market that is especially attractive in terms of average duration of stay. But pray tell me, how can any Government official expect a single accommodation provider to agree fixed contract rates up to eighteen months ahead of arrival date when they have no overall idea on what those rates are based on?
It really has to reflect the height of lunacy when the remarks are uttered by someone who holds the ultimate power together with his cabinet colleagues to return the industry to viability. Until this is done the chance of competing with many other Caribbean destinations at the same level remains only a distant dream.
Surely by now our policymakers understand the basics of how the travel business is structured and the timing required to put programmes in place. Continue reading
Current 17.5% VAT killing tourism
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.
So what has gone wrong? Is this once again a case of implementation deficit?
Originally the measure was announced in the 2013 budget submission, so does it really take so long to process registration applications? Continue reading
There are more than a few folks I know looking forward to barrels from friends and family abroad.
(Is is Christmas yet? No? Send them anyways!)
Things are going to get very very bad this year and next.
Hey you lot over there… please send some barrels.
Barbados Minister of Agriculture David Estwick should stick to doctoring crops
I like to watch those drug ads on American TV in which the part at the end that starts with “Do not take such-and-such if you are, etc…” takes longer to recite than the part telling you about the benefits of the product at the beginning.
During this part of the ad you are warned of imminent serious side effects or even death from taking said drug if you happen to have any one of perhaps a dozen other ailments besides the one it is supposed to treat. But at the same time there are scenes of the happy patient enjoying a sunny life with his or her family, obviously not having any of the grim preconditions being read out as fast as possible by an anonymous voice.
I was reminded of these ads when reading the presentation to the Cabinet by Minister of Agriculture Dr. David Estwick, the text of which was published recently in the NATION.
The symptoms were outlined: Patient Barbados broke, mired in debt, can’t pay bills. Diagnosis: It needs a lot of money fast. Prescription: Swallow US$3 billion from the United Arab Emirates and wake up feeling a whole lot better in the morning.
… read the full Broad Street Journal article by Patrick Hoyos: Take three billion and call me in the morning
Butch wins! Disproving “Too much weight on a race horse, it can’t win.”
Nice work if you can get it: Stewart chides other Barbados hoteliers for not getting the same tax concessions as Sandals…
Sandals’ Chairman Butch Stewart says…
“The fact is if you put too much weight on a race horse, it can’t win. When you burden an industry by overtaxing, you cannot do enough business. The real fallout is not so much the fact that you are not doing business is the condition of the properties because there is not enough money between the competitive rates today, paying taxes and at the same time being able to improve, expand and modernise the hotel.”
Noting that cruise ships are able to avoid the same tax levels as land-bound tourism providers, he nonetheless stated, “The cruise ships are a vital part of the tourism industry; it is not the cruise ship that is at fault. The growth of the cruise sector has to do with not having to pay taxes – taxes and exports don’t mix.”
In terms of concession, the hotelier highlighted, “Our criteria is transparency, so everyone knew we got concessions. In Grenada we spent [money] developing and building a hotel that we would not have been able to do if we were not able to look at the long-term 25 years of concessions and spend money based on long-term thoughts. We plan to do much the same here in Barbados because as we have a long-term view.
“The same way a company negotiates with government and gets concessions I believe that the business community, if you believe as strongly as I believe, that anything to do with export taxation impacts business, you have a responsibility to do [or] say something about it.”
Adrian Loveridge says…
“Put it in simple terms. For my hotel to buy a 750ml bottle of Johnnie Walker Scotch would cost me sixty US dollars. Sandals are able to pay ten dollars.”
“Unilateral concessions to Sandals immediately destabilized the other 120 hotels on the islands, not to mention the condos, villas, apartments and guest houses. Completely destabilized the industry.”
How is it possible that we are here? Begging the EU, begging China, begging anyone to help us keep the lights on and the water flowing?
Leadership – that’s what got us into this mess, and the same leadership says it can take us out of the mess: but only if we beg and borrow…
BRIDGETOWN—The European Union says it is willing to provide Bds$100 million to Barbados in grant funding. A statement issued following talks between Barbados and EU delegations, noted that the funds would become available once certain macro-economic and public finance criteria were fully met. It said Bds$65 million could become available to Barbados this year. The European Union last year released Bds$28 million for the Barbados Human Resource Development Programme, while another Bds$15 million was provided through the Barbados Renewable Energy Programme, all in the form of non-reimbursable grants. The EU delegation was led by Ambassador Mikael Barfod, while Finance and Economic Affairs Minister Chris Sinckler led the Barbados team. “The EU would like you to know that it could assist Barbados in leaving the present crisis behind,” Barfod told Sinckler.
Like my old pal from Pull-Push, I also am not an Economist, but instead I wish to provide someways and means I have been mulling in the hopes Barbados would flourish once again, if they are used or adapted then at least progress is made – everyone is operating too close to the chest, as they seem to want to be the sole savior, Barbados needs to open up and thus advance in making the way forward as clear as possible!
DISAPPOINTMENT: BLP FAILS ALSO!
It is sad that David Estwick changed his mind so drastically from Saturday at 2 p.m. We may never learn what fair means or foul were used to achieve the base result which leaves more bitterness in many Bajans’ mouths already soured by the gall of hardships that continue to appear so odd when compared with the rest of the world, which appears to be mending at a steady pace…
The chance for either side of Barbadian politics to redeem itself saw the Grinch winning late last year when Mia Mottley failed to cut her own salary on Black Friday when the loss of 3,000 in the public sector was foreshadowed. She could have chosen to emulate, and even create a Bajan precedent, by doing like Nevis, Bermuda & St Vincent when their new leaders chose wage slashing as their first act in Office. Vance Amory chose to give his fellow Nevisians a savings of EC $70,000 a year for the next five years off of his salary; while Craig Cannonier in Bermuda did like Ralph Gonsalves in St Vincent – 10% for himself and 5% for the rest of Cabinet.
… continue reading this article at The Bajan Reporter
But then I started to think “How can it be that a couple and their adult son are all hired into juicy NHC jobs all within the same time period 5 or 6 years ago?”
Barbados government lay-offs start to hurt
by passin thru
A little human interest piece in The Nation initially invoked my sympathy where three family members in the same household lost their jobs at NHC on the same day.
The house income instantly went from $7,000 a month to nothing. We can feel for these folks. $7,000 a month sounds like a lot of money, but in a house with three adults and two other children, there is not much left over once everyone is fed, clothed, sheltered and transported to work and schools.
“I don’t have a job. I owe the credit union. I owe the bank. I owe for the stuff in here and I have my son to support. What am I going to do?” said the woman, and I do feel sorry for her.
But then I read further and started to think “How can it be that a couple and their adult son are all hired into juicy NHC jobs all within the same time period 5 or 6 years ago?”
It could be luck, I suppose, that they all applied for NHC jobs and each was hired. Could be, I suppose.
But I know my Barbados too well. I know how things work around here.
This layoff of an entire family should be news and discussion for more reason than they are on the breadline.
There is another story here, and I don’t think that the island news media will cover it or ask the right questions.
Something to think about!
Read The Nation article here, but we have to print it all because you just know how that paper changes history!
Family Loses Jobs
ON FRIDAY MORNING, Hallam Gittens, his girlfriend Andria Brathwaite and stepson Kishmar Brathwaite were sitting on a monthly income of about $7 000 amongst them.
That sum was stripped down to zero in a matter of hours, through no fault of their own. Continue reading
“Value-for-money is probably the most discussed subject amongst our cherished guests. Many simply cannot understand why a piece of locally available fish cannot be cooked, garnished and served in moderate surroundings for around BDS$25-30.”
Killing the messenger – or listening!
The blogs can of course be a double edged sword. The anonymity allows, if the contributor wishes, comments to be made without risk of targeted personal attacks and political labeling, while still being able to express an opinion whether constructive or not.
Sadly, if you chose not to hide behind the veil of ‘anonymous’ it holds the risk of the messenger being castigated, rather than evaluating any merit in the message itself.
For those of us who hold democracy dear and have personally experienced alternative regimes, it goes with the territory and if it helps maintain responsible freedom of speech then personally I have no problem.
A recent blogger, writing under the name of ‘Fisheye’ put forward 16 points to improve our tourism offerings.
Online Immigration Forms… Why not?
To me, one suggestion especially stood out and that was to allow our visitors to complete the required immigration form online.
Bearing in mind the rapid trend in online transactions, whether for banking, bill payment, shopping, airline or hotel check-in, car rental registration or whatever, it seems a very simple but effective way to capture important marketing information.
It may also speed up the collection of this information to allow the Barbados Statistical Service (BSS) to make it publicly available in a timelier manner. It can often take the BSS ages to post arrival information on their website and even then, months like August 2013 are not available at all.
Compounding the difficulty in accessing up-to-date information is the fact that the Ministry of Tourism does not currently have a functioning website.
Other ‘Fisheye’ suggestions included the issuing of local driver’s licenses at the Barbados Tourism Authority’s (BTA) airport office and ensuring widespread availability of lower priced SIM cards to save our visitors from expensive roaming charges. Continue reading
I’m about half way through this video of SoCo Hotel owner Ralph Taylor talking to a BLP meeting last Sunday the 12th of January 2014.
Mr. Taylor tells it like it is, but so far his analysis is missing two factors:
1/ There’s no money left after 20 years of BLP and DLP larceny, neglect and stupidity.
2/ Investors aren’t staying away in droves just because of the numbers: they know that Barbados governments have burned many foreign investors through broken promises and non-payment.
Nonetheless, it’s worth listening to Mr. Taylor, who starts in with how bad things have been in Barbados in terms of declining hotel rooms (and thus declining investment) for the last 34 years…
Number of Hotel Rooms 1980 and 2014
Country 1980 2014 Average Growth Hotel Rooms
Jamaica 10,000 30,000 486% for Jamaica, Cuba, St. Lucia
Cuba 7,226 57,000
St. Lucia 1,245 4,900
Barbados 6,680 5,400 -20%
“We are still not getting new hotel development. We must ask ourselves, why are we not getting this new development?
The reality is that investors are looking firstly for adequate returns on capital, and then all other factors are considered.
When there was a big hue and cry over the concessions to Sandals, my contribution to that debate is that I have long advocated that tourism is an export industry, and therefore its input costs must be free of duty. Continue reading
How the world received two different bond offers…
Barbados forced to withdraw bond offer
“Cash-strapped Barbados’ efforts to raise urgently needed money on the international markets have suffered a major setback with its withdrawal of a bond tender offer and buyback for up to US$250 million (BDS$500 million).”
October 4, 2013 Govt move to raise money hits a snag
Bahamas bond offer over-subscribed by factor of 20!
The Bahamas has received “a huge vote of confidence” after the Government’s $300 million foreign currency bond issue was 20 times’ oversubscribed, with investors accepting an interest rate almost one percentage point lower than anticipated.
James Smith, the former minister who is now a key Ministry of Finance adviser, yesterday confirmed to Tribune Business that the $300 million sovereign issue had received “a fairly robust response” from the international capital markets.
“I think they were closing the offering some time yesterday [Monday] afternoon,” Mr Smith said, revealing that it had attracted subscriptions worth $5-$6 billion – more than 20 times’ the amount sought.
January 15, 2014 Gov’ts $300m Bond Issue Oversubcribed ’20 Times’
“The ultimate piece of bad news for ordinary Bajans, as they call themselves, is that their Social Security fund has essentially invested about 80 percent of its assets in Barbadian public debt, which is now almost worthless. And so, you know, we’re looking at a major social catastrophe in paradise here…”
December 7, 2013 – James S. Henry: Barbados debt crisis and the “offshore haven” industry
Barbados is Sinking
There is no room for hubris, arrogance, false pride and ignorance …
“Government’s chronic crises of excessive debt, high fiscal deficits, falling foreign exchange reserves and overstaffed and outdated institutions for delivering public services are only a part of the deeper problem.”
by Peter N. Boos FCA
Recent events and public pronouncements both locally and internationally have confirmed the very poor state of the Barbados Economy.
Government’s chronic crises of excessive debt, high fiscal deficits, falling foreign exchange reserves and overstaffed and outdated institutions for delivering public services are only a part of the deeper problem.
This is not a crisis like any we have ever experienced and it requires a response like nothing we have done before.
Waiting for recovery is not an option. Many countries already have strong growing economies. In Barbados all of our productive sectors are under-performing.
Barbados is in a deep structural vortex and it will take great leadership, courage, new thinking and teamwork to dig us out a step at a time and build a strong sustainable economy.
This crisis has been in the making for many years.
Whilst spending less is critical, our fiscal and monetary deficits are symptomatic of the many underlying weaknesses that retard growth and investment.
Our limited export sectors, our outdated education system, the dysfunctional Legal Justice System, our poor labour productivity, pitiful business facilitation, lack of private sector innovation, absence of good leadership and management skills are all areas needing significant improvement.
“Cutting costs by laying off people will not fix the problems and create a competitive economy. It could in fact do the opposite if the result is social unrest.”
Increasing taxes will create further corruption, unemployment, business failures, mortgage defaults and bankruptcies.
For those same reasons a devaluation will cause pain with little gain and will deliver a severe blow to our ‘national brand’.
The Barbados reputation for conservative, prudent, financial management has been decimated. Lost reputations are difficult to recover. Continue reading