Will tax concessions for new businesses finance predatory pricing against existing hotels?
If you have not already, I implore you to read, especially if you are involved in tourism or financing, what in my humble opinion is an excellent article entitled ‘The La Source Saga’. The author, S. Brian Samuel, spent 20 years with the World Bank primarily working on the Caribbean Project Development Facility with the specific task of raising finance for regional businesses.
Brian honestly admits that La Source was one of his favourite projects and in fact on retirement he took up the post of Executive Director when it re-opened in February 2008 after the ravages of Hurricane Ivan.
Within three years of its original opening La Source financially broke-even and achieved a year round occupancy of between 72 and 78 per cent, prior to Ivan striking the island. Even with just 100 rooms, which then represented only 8 per cent of Grenada’s total room stock, it was providing a staggering 20 per cent of the entire hotel guests to the destination.
The article goes on to graphically detail the challenges that followed, leading up to a second closure, or as the writer describes it, ‘Death and Rebirth’.
Faced with mounting unemployment, declining revenue and a real risk of losing further airlift, the Government of Grenada had to do something and I understand that Sandals had already expressed an interest.
To seal the deal, the then Minister of Finance, Nazim Burke, gave them ‘something special’ and concessions granted included: Continue reading