Sandals 9 month closure another blow to Barbados economy and employment

Adrian Loveridge, tourism expert

Adrian Loveridge, tourism expert

So entirely contrary to all the heady rhetoric that the introduction of Sandals brand will drive additional airlift: in fact the exact opposite will happen from their closure on 1st April for major renovations.

At least until the re-opening slated for December 2014.

Quoting their own projected occupancy of an average of 85 per cent with a typical stay of 7 nights and two persons per room, that’s almost 500 lost airline seats per week or a mind boggling 16,000 plus by the end of this year.

Will this further destabilise the remaining carriers that continue to service Barbados and lead to yet more airlines cutting routes or reducing capacity? Tour operators, already unable to match demand with the high cost of doing business here, are considering switching flights to other destinations where they can glean a profit.

Once again citizens are left speculating whether our Government was aware and factored in the almost nine months closure with hundreds of hospitality employees being thrown on the unemployment pile, before granting unilateral extraordinary concessions to the Sandals group.

Perhaps they calculated the NIS and income tax contributions collected from local construction workers hired for refurbishment would more than make up for this. Because clearly, the state is not going to collect other taxes like VAT and import duties from Sandals as they have all been waived.  Most materials used will also be imported, so a substantial percentage of the estimated US$65 million project will simply re-export foreign exchange (FX).

Several other issues also have to be considered: The lost revenue to our Direct Tourism Services with included package components like golf green fees, catamaran, diving etc., let alone secondary spending that 16,000 plus extra visitors would have generated on submarine excursions, taxis, car rental attractions, activities and shopping. The list goes on and on.

Over $1 million will not be collected in airport departure taxes alone.

And of course it does not end there. Sandals are now switch-selling clients who booked for Barbados to other resort locations, including our neighbours St. Lucia and Grenada – helping to reinforce and increase their airlift, to the detriment of ours.

The Chairman’s comments and various travel trade press or general media releases that I have read did not offer the option of transferring to another hotel on Barbados. But if a full refund is in fact being offered, then this may partially mitigate some of the damage. From studying the TripAdvisor Barbados Forum comments it is also clear there is a risk that once switched we stand the chance that at least some may not consider us as a destination in the future.

In the real world there are always consequences equated with decisions and policies, but in this case it is difficult to comprehend that any Government would, at a stroke, create chaos in their single largest FX earning sector, without invoking a “Plan B”.

I am sure ultimately Barbados will end up with a substantially improved hotel at the former Casuarina/Couples.

But at what cost to the entire tourism industry along the way?

19 Comments

Filed under Barbados, Barbados Tourism, Disaster, Economy

19 responses to “Sandals 9 month closure another blow to Barbados economy and employment

  1. gentle jim

    Is it any wonder that Butch Stewart shut you up ?

  2. gentle jim

    Maybe he is family to our PM by another mother????

  3. Adrian Loveridge

    gentle jim,
    thank you yet again for your invaluable and constructive contributions.

  4. gentle jim

    Adrian ,not sure if you are being sarcastic or not. Either way no problem..:)

  5. job advancement

    Looks like gentle Jim just moved over from Harlequin

    Put your hip waders on

  6. St George's Dragon

    Sandals has several options:
    1. Don’t refurbish – leaves the hotel tired.
    2. Refurbish while the hotel is in occupation – upsets the guests.
    3. Refurbish in the high season – loses high room rates.
    4. Refurbish in the upcoming low season – sounds sensible.
    One of the problems with Barbados hotel plant is that owners do not invest and modernise. Sandals is doing it and should be congratulated.
    Any temporary loss of tourist numbers is unfortunate but necessary. A bit like going to the dentist – you don’t want to take time off work and lose money, but you know its for the best.

  7. MANJAK of MY LORDS HILL

    Re Gentle Jim
    Please go away. Surely there is something that you can do which may be of more use like sweeping the yard or feeding the pigs in the hog pen. You may also like to try picking wilks on the Wharf or even diving for pennies.
    But may I plead with you if there is nothing of value that you have to contribute to what is an increasingly serious matter with regard to the thousands of working class Bajans regarding their livelihoods, for Lucifer’s sake be off with you.

  8. louche

    You are selling your hotel because it makes financial sense to do so. No one is complaining about your decision and trying to match the impact of less visitors to the island. Sandals has just opened; Is there a slight possibility for the refurbishing of the property? If so, is it your duty to tell them when they should start and how they should run their business? Can you back off and leave the owners alone. I am sure the owners are as far away from your property as possible but hoping that you continue to do well. Please leave Sandals alone you might some day benefit from all the promotions they will do for the island.

  9. Adrian Loveridge

    louche,
    apart from the reduced rate of land tax we have never in 25 years received ANY concessions from Government. Yet within weeks Sandals have been granted untilateral extraordinary concessions that it is curently impossible to compete fairly with. There are also other issues concerning WHERE the revenue goes and what VAT is collected by guests accommodated on Barbados. Go onto the Government (taxpayer) owned Hilton Barbados website and you will clearly see that it states ‘ALL PAYMENTS ARE PROCESSED IN BARBADOS CURRENCY AS REQUIRED BY LAW’.

    Yet Sandals Barbados are allowed to flout this law without re-course.

    Meanwhile Government continues to owe us tens of thousands of Dollars in due but unpaid VAT and NIS refunds, despite the continuous calls for hoteliers to upgrade their properties.

    Do you think that is fair?

  10. louche

    A Government has the right to levy taxes on individuals or corporations based on whatever they think is correct. For example if I open a hotel in Barbados and all my clients for whatever reason paid in the USA or St. Vincent and not in Barbados it does nor preclude the government from leying a tax based on what they think was my occupancy and average rates. The levy doesn’t even have to be correct. Usually, you the business owner, have to prove that it is incorrect. The goverment doesn’t have to care how Sandals transact their business as Sandals will still be responsible for taxes.
    The upgrade of properties has nothing to do with VAT and NIS refunds. It has been a myopic view by hotel owners to milk every penny out of their property and hope/expect that the government/people of Barbados would bail them out.
    When you argue that you get no concessions from goverment I wonder how guests get to your hotel. As far as I can remember Barbados has roads. This might be a tiny concession but just ponder all the other concessions that you never care to think about.

  11. MANJAK of MYLORDS HILL

    louche
    It appears that you juxtapose the notion that Barbados having roads are concessions/advantages to small businesses on the island as opposed to the absolute and cringing concessions that the DLP regime recently granted to Butch Stewart and Sandals.
    The infrastructure/education/health services etc of any society is paid for by its citizens through taxes collected from its people for the betterment and development of self same society.
    Take for instance the allowing of Sandals to utilise offshore establishments to administer guests bookings and the like thereby avoiding substantial monies that should accrue to Barbados. This surely is a financial scam of major proportions. Your nonsense view that the Barbados government does not have to care how Sandals conduct business is benign in the extreme. It suggest that you have a naive view as to how rampant global capitalism conducts itself.
    The legacy of allowing big business to operate with little constraint
    leaves an open door policy that allows all stripes of mafia type activity such as drug/gun runners, scammers, tax dodgers, bogus banks and other such criminal ilk to set up their nefarious shops in the Caribbean. Barbados as we have witnessed is not immune from such activity.
    Ever checked the name plate businesses in Bridgetown that our third rate lawyer class are fronting for.
    One wonders if you were the proprietor of a small business in Carrington Village making Bajan bakes, fish cakes and lead pipes. Then lo and behold the Bajan government gives a major concessions to a Chinese owned and managed shop two hundred metres from your establishment producing the self same Bajan bakes and fishcakes. What would be your response. A mere heartfelt thanks that there is a road for the potential customer to traverse from their home to your little shop. Very much doubt it.

  12. louche

    It has happened all over the world larger companies gaining many concessions from goverments at the expense of smaller stores. “Best Buy” a large warehouse store sets up shop and puts the smaller stores out of business. Now Amazon with all the tax breaks is putting “Best Buy” out of business. Probably the fish cake seller can stop selling out of the back of his car and pay more attention to his presentation of product. The owner can make sure he is giving value for his prices and improve through competition. I am afraid that the Barbados hotel owners would prefer to complain about Sandals rather than work on their product and service.
    There is only so many visitors that Sandals can accommodate and they are going after a specific market which is not the rich and famous. Barbados hotel owners still have the rich and famous to go after which in the end will mean more people coming to Barbados.
    I am curious to find out why the insults? Is it because my views are different from yours. Manjak, I don’t know who you are and it would be very immature and disrespectful on my part to try and insult your intelligence.

  13. Anonymous

    There is nothing wrong with the concessions that Sandals has been given. What is wrong is that no other hotel has been given the same deal.

  14. Level playing field

    Anonymous

    Bang on!

    If Barbados wants to dig itself out of its hole, all hotels and businesses that drive tourism revenue must be treated equally and special, generating VAT and other taxes not just to pay back some horrific losses and thieving through purchasing Gems and abusing pension monies but to drive the economy.

    Uneven and ad hoc policies only deters capital investment in the long term as a form of economic discrimination.and elitism.

  15. Adrian Loveridge

    Anonymous and Level playing field,

    Hear! Hear!

    That’s really all we want.

  16. Blue Mountain Curry

    Off topic..Just a shoutout for Blue Mountain Curry..it sweet for days..wunna should try some..

  17. Adrian Loveridge

    The Minister of Tourism is quoted in Barbados Today and the Barbados Advocate that ‘The UK market has completely recovered’.

    Now the FACTS:

    UK long stay visitor arrivals declined by 15,631 in 2012 with a fall in every month, but December.
    UK long stay visitors arrivals declined by another 4,786 persons in 2013 on top of 2012.

    An overall decline of 20,417 persons over the last two years.

    I think that ‘completely recovered’ might be a slightly premature statement at this time.

  18. Topcat

    @ Adrian Loveridge
    When was the quote ‘The UK market has completely recovered’ made? Was it a recent quote, made within the last few weeks? If so, why the need to once again display arrival figures from 2012 and 2013?
    I’m sure we all know that most visitors plan and book their vacations between 9-12 months in advance. Do the maths or at least wait until 9-12 months from the date of the Minister’s published ‘recovery quote’ to make your comment a valid one.
    Btw, I’m generally in total agreement with most, if not all of your comments and laud you for your hard and meaningful work…however please don’t start grasping at straws!

  19. Adrian Loveridge

    Topcat,
    I can assure that is not the intention, but there is a frightening malaise among our policymakers. If you ask just about any tourism provider you will find the booking window has been dramatically reduced. The ‘complete recovery’ comment was made within this last week.

    A few facts remain. February 2014 recorded the lowest number of long stay visitor arrivals for that month during the last 11 consecutive years. During 2012 and 2013 we ‘lost’ nearly 60,000 long stay visitor arrivals. If this indicates a ‘complete recovery’, then I clearly live on a different planet.

    What many people contrubuting to this blog, simply do not understand, is that my only source of income is from tourism and I have no vested interest in seeing it suffer any more that it needs too.