Tag Archives: Barbados Economic Crisis

Increased taxes and costs are killing tourism. Barbados government actions “simply defies rationale”

Barbados Solid Waste Tax

Adrian Loveridge - tourism expert, hotel owner

Adrian Loveridge – tourism expert, hotel owner

I had hoped to dedicate this week’s column to the new measures put in place announced in the 2015 budget to stimulate spending, especially in the tourism sector.

Unless I missed something while trawling through the 57 pages, not a single ‘incentive’ has been announced that would be likely to encourage increased domestic spending across the sector.

Conversely, many could fairly claim that the additional $200 million in taxation annually will further restrain people’s ability to take a ‘staycation’ or enjoy one of many excellent restaurants.

Government Broke: VAT refunds two years past due.

In fact private sector led initiatives like the re-DISCOVER dining promotion have been forced to scale down any paid promotion, due to the continued inability to reclaim due and payable VAT refunds, now overdue for more than two years. This in itself is ludicrous and short sighted as many of the participating restaurants do not qualify and are unable to apply the reduced rate of 7.5 per cent VAT, but obligated to pay the higher 17.5 per cent rate.

So Government could be easily losing up to $2 million a year in lost taxes. Add the duties and taxes lost in the included wine element and that figure could well be significantly more, let alone the employment this promotion generates.

Until we witness some real actual sustained recovery in tourism, it is very difficult to comprehend why any Government thinks that increasing taxation and operating costs will reduce the time it takes to attain that objective.  Continue reading

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Almost one year since Forbes called Barbados ‘Cyprus West’ – have we changed for the better?

Barbados Finance Minister Sinckler

Has Finance Minister Sinckler done the right thing… or is the situation so far out of hand that no government could be effective now?

Barbados, “the Jewel of the Caribbean,” the tiny easternmost island in the Lesser Antilles with 288,000 year-around inhabitants and lots of very rich foreign visitors and investors, is in the throes of a financial meltdown.

While its entire GDP is now only worth about $4.2 billion, and its population is smaller than that of Duluth Minnesota, this crisis is worth examining closely. For here we have a very precise example of the “finance curse,” where excessive dependence on high debt, an aggressive offshore haven industry, very low tax rates for high-net worth investors, foreign companies, and banks, and high tax rates for everyone else, have essentially brought this little country to its knees.

… from the December 2013 Forbes online article Postcard From Barbados — a.k.a. ‘Cyprus West’

See BFP’s January 2014 article Happy New Year 2014: Forbes announces that Barbados is on its knees, in a financial meltdown.

 

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Canadian banks unhappy with Caribbean investments and loans

Caribbean-bank-money_laundering

“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

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Filed under Barbados, Business & Banking, Disaster, Economy, Offshore Investments

Barbados Finance Minister says redundant public employees should work for Trinidad & Tobago government

“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

Leroy Parris and good friend Finance Minister Chris Sinckler share champagne

Leroy Parris and good friend Finance Minister Chris Sinckler share champagne – file photo

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

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Filed under Barbados, Disaster, Economy, History, Immigration, Island Life, Trinidad and Tobago

Barbados Top Gear Festival is over. What now?

“Hopefully the Top Gear Festival will have redressed the low tourist arrivals problem for this month, but with almost half a year of the softer summer months yet to come, what can we do to grow the most receptive markets?”

Recommendations: Smarter partnerships, and a focus upon Great Britain and Continental Europe

Adrian Loveridge - tourism expert, hotel owner

Adrian Loveridge – tourism expert, hotel owner

Back in the nineteen seventies while I was working in Canada as a travel agent we pioneered a number of what were then ‘unique smart partnerships’ with airlines and hotel groupings.

One of the most successful was an arrangement with Wardair on the Winnipeg-Gatwick (London) route, where our agency block booked groups on certain dates to obtain a lower price. The benefit to the traveller, our customer, was that if they flew on these particular specified dates, they would get their first or last night’s airport accommodation at no extra cost.

What prompted these memories was trying recently to find a more affordable way of getting my wife to the UK shortly for family reasons. We ended up booking a flight to Manchester, simply because it is currently far less expensive than flying to a London airport.

Despite then still having to travel over 220 miles to where she is staying, off-peak rail travel is very reasonably priced and virtually door-to-door with a minimum number of station changes.

The longest part of the land journey is between Manchester and Euston and is operated by Virgin Trains. This prompted me to look carefully at the incredible network they operate and a closer study of the ticket prices and overall journey times to other major northern British cities. Huge population centres that include Liverpool are only about an hour away and Edinburgh and Glasgow between three and four hours from Manchester Airport.  Continue reading

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More unemployment coming to Barbados hotel and tourism sector

“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

Adrian Loveridge - tourism expert, hotel owner

Adrian Loveridge – tourism expert, hotel owner

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

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What has gone wrong with the Barbados 7.5% VAT?

Current 17.5% VAT killing tourism

Adrian Loveridge - tourism expert, hotel owner

Adrian Loveridge – tourism expert, hotel owner

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

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Filed under Barbados, Barbados Tourism, Economy