The Adrian Loveridge Column – Level Playing Field Required to Encourage Greater Sector Investment

Adrian Loveridge

Adrian Loveridge

Sometimes it is fascinating how numbers can be used to create what at best is a false impression and at worse what can simply be described as ‘fake news’.

In one media report a Government spokesperson is boasting of the increase one property on the South coast has made to recent arrival numbers. The fact that seems to be lost is that this hotel currently has just 280 rooms, the exact same number that both of the previous operators managed. Even achieving at year round average occupancy level of 85 per cent that remains a maximum of 25,636 guests based on two persons per room and an overall 7 night stay, whoever is operating the hotel.

To achieve this re-branding, Government extended extraordinary unilateral tax concessions previously unknown on Barbados and despite all the rhetoric these are still not available in the identical format to any other organisation, anywhere!

Yes when additional rooms under construction are completed and online ready for occupation, this could and probably will make a positive difference to arrival numbers and attracting additional airlift.

Then go to another section of the media and, if the reporting is accurate, where on a recent visit by the Public Policy Head in Latin America and the Caribbean for Airbnb, Shawn Sullivan, stated that that company accommodated some ‘16,000 visitors’ on Barbados last year which represented around 2 per cent of all long stay arrivals. He also said that there were around ‘1,100 Barbadian homeowners’ Airnb host properties on Barbados, so it is logical to conclude that this amounts to far more actual rooms than the single property previously mentioned.

So what is the difference? Well first of all the taxpayer and I suspect our current administration is not privy to the audited accounts of the branded south coast hotel and has no idea what proportion of its revenue actually comes to Barbados at all. As the vast majority of its consumables are imported free of taxes and duties, this again is an unknown local benefit.

To be fair Government also has little or no evidence of the net financial contribution that the eleven hundred plus Airbnb lodging options make to the economy, but there is a massive disparity.

Almost without exception the Airbnb properties would not have benefitted from any tax concessions due to the scale of their average size and number of rooms. This makes most, if not all of them in-eligible for duty free local or imported items necessary for their operation.

Therefore it is perfectly reasonable to conclude that more of the Airbnb earnings are spent locally and that Government obtains and retains a higher level of fiscal benefit in proportion to their turnover.

As a three decade operator of a small hotel, I am not advocating for a millisecond that Airbnb and similar accommodation offerings are given the same unique preferential concessions as granted to the single hotel in Christ Church.

But if there is ever going to be anything close to a level playing field to encourage greater sector investment, so that we as a country can maximise our tourism earning potential, this situation has to be addressed.

48 thoughts on “The Adrian Loveridge Column – Level Playing Field Required to Encourage Greater Sector Investment

  1. The government mismanaged their dealings with the hotel property you mentioned, in effect giving it an unfair advantage . However I doubt if they are willing to do the same for the other properties, as they can not afford the loss of revenue, in spite of the lip service saying they will. This is a case of government interference in the hotel business, and I think their track record is not very good . My opinion the government should approach a hands off attitude to hotel development except for environmental and building regulations. If a hotel fails because of lack of business or mismanagement so be it.

  2. The tax collector promised years ago that all hotels on this island would get the same sweetheart deal as Sandals! I guess he’s waiting till next year to do it! That’s where a lot of forex is leaving the island from. No wonder they can offer staycations at half of the room prices! That is a national disgrace. I wonder what sweetheart deal Hyatt has received! Have the British authorities caught up with the owner of the beautiful hotels which were to be built in Merricks, and on the South yet? Who vetted that person?

    • We should not blame the government. The stakeholders like the BHTA, BCCI, BPSA and others have to be able to advocate to force the issue.

    • The NIS has an obligation to invest to achieve a certain % rate of return to satisfy future obligations. Walter the actuary is a better person to explain. Investment opportunity in Barbados is non existent.

  3. @ David February 20, 2017 at 10:09 AM
    “The NIS has an obligation to invest to achieve a certain % rate of return to satisfy future obligations.”

    Ah, so why did it sell its shares in Emera (formerly BL&P) and the government did not create the environment in the sale of the BNTCL for the NIS to take up at least 30% of the share holdings?

    If it is profitably attractive for SOL why not the workers via their national pension provider and manager?

    OK David, state the obvious. Hunger and thirst for forex. So why not sell the GAIA and get a big belly full?

  4. @David

    Invest for returns, I agree, operating as a bank to private enterprise is extremely RISKY without risk assessments. How come other large lenders, BNS, CIBC, RBC etc. did not jump on a lucrative lending opportunity, only the challenged Republic bank. Smells of government swasion.

    This investment is going to come back and bite NIS in the assignment.

  5. The Minister of Tourism Richard Sealy is aggressively promoting his forecast of the tourism numbers for 2017. He has been lavished in his praise of the performance of the sector he has responsibility. What he must take on board however is that singing the praises of the performance of the Tourism while the overall economy is tanking will not be well received.

  6. You’re just a rich white man…people like you are SO dotish, the type that go to Barbados and install septic tanks when the island has a suck…didn’t you go for the nice beaches and snorkling and water….

    Just kidding, this isn’t the way the average Bajan thinks at all…strange expectations…whiteness is still a state of mind…ethnicity is the state of body

  7. An excellent article and it highlights the benifits of the Airbnb operation to the country and the small man.

    In the 70’s,we always said that …Friends&Family… word of mouth was the best marketing tool.

    I wonder what the country has reaped from entities such as BHTA, BCCI, BPSA,etc… we realy need all of them?

  8. I was at the Minister of Tourism media conference this morning and the Minister announced the sale of Time Out to Bernie Weatherhead (Sun Hotels) for $7.5 million. Under $100,000 a room. Cannot remember what Hotel and Resorts Ltd paid for it. Bernie has also bought the former Saga Holidays hotel in St. Lucia (Belle Jou).

    • Thanks for the update Adrian. Whichever way you view it 7.5 million is a steal for Bernie. What has happened to the debt associated with the HRL properties?

    • From the Archives:

      How is this figure arrived at?
      Reading from their own website, Savannah has 98 rooms, Time Out at the Gap, 76 and Blue Horizon 70. So a total of 244 rooms or a stated ‘book value’ of $303,278 per room with ‘accumulated debt of $229 million’. Put that in context to our little hotel of 22 rooms and it would value us at around $6.672 million.

      One big difference of course, we have no outstanding debt and have been profitable for a consistent number of years. Both Time Out at the Gap and Blue Horizon need extensive refurbishment, if they are going to live-up to their stated ‘3star’ rating.

  9. @WC
    Since we haven’t seen an Annual Report from the NIS in eons, we haven’t a clue what they have been doing?

    With the GoCB all but dismissed, can we expect the new ‘acting’ Gov to be former BU blogger Dr. JR? He is on the Board of both the NIS and CBB, and therefore more likely than most to know of the inner workings of ‘public finance Barbados’.

  10. @WS
    The thread author would know more than I.
    However, Barbadian hoteliers were not know to venture beyond the shores of the south Caribbean. Hence they never had the “mass” needed to create a larger concept. There is not even a BRAND known to be Barbadian, though Sun Hotels is obviously one of the leaders on that horizon, even that name is not front and center.
    Even Sandy Lane does not have a Sandy Lane Jca, SL Turks, SL Antigua etc

  11. @Northern Observer
    Thanks for your response. Imagine
    they complain about Sandals but they
    have no product that can match Sandals.
    They are like the old plantocracy, once
    sugar declined, they were done with agriculture
    Then it was left for governments to
    subsidise them. No ideas no vision but
    everyday they begging for concessions.

  12. Vob 4.30 news just had an excited MoT stating that Sandals is adding 200 rooms by november and presently employing 700 construction staff that will give way to 600 permanent hotel staff.

    I contend that a one trick pony in tourism is bad for the economy and that the govt must wean itself from it and allow it to find its own level which will see more locals becoming involved in Airbnb type operations providing govt does not kill it with taxes and restrictions.

    Tourism as we knew it is no longer viable unless govt continues its subsidies that includes paying airlines,passengers and concessions to hotels in order to come here.

  13. David,

    Is Walter a fund manager? The NIS’ long-term liabilities are pensions for future pensioners, so the best and most prudent investment strategy is in gilts – not just Barbadian or Eastern Caribbean, but also in developed markets.
    They also have to grow the fund, so investment in equities will be necessary; and in cash and property.
    A good asset allocation strategy would be: 50 per cent gilts; 30 per cent equities; 10 per cent property; 5 per cent cash; 5 per cent small businesses.
    I will leave the stock picking to the experts – and stop allowing the government to turn the NIS in to a piggy bank.

  14. David,

    That is the problem. There is no credible investment strategy. They all seem depend on Justin Robinson as he expert.
    Some time ago at a meeting in London, I tried to get some answers out of Robinson, either he did not want to reply, or could not, until Kellman intervened with some nonsense. Much against my normal behaviour, I had to shout at him to shut up.

  15. David,

    One of my most embarrassing moments. I do sincerely apologise. He is just not informed about the NIS or pensions, in my view.

  16. “Isn’t the NIS Fund invested 70% local?”…do the math…3.04+49.87+5.07+17.37= 75% in government issued paper…so it could be 95% local
    No audit so…is the RE at book value, are the loans collectible, book or market value of the equities

  17. De ole man saw the topic about levelling the playing field and thought that Loverige was upping his game regarding involvement in “other than hotel issues” as the Honourable Blogmaster has advised me that he does

    Sadly it turns out to be the same old begging mode but there is a point that the ole man noted in Loverige’s misinformation?

    First let de ole man insert this item copied straight from a Ding advertisement dat dem does send to people by email.

    “Triple credit + 200 MB starts today”

    “Top-up any FLOW number to take advantage of this fantastic promotion.”

    “Simply send a $10.90USD + fee top-up and get a x3 bonus +200 MB’s.”

    “Send minutes in seconds with Ding. Top-up now.”

    Now I wants wunna to read the third line of that DING ad and then review Loveriges comment about “…therefore it is perfectly reasonable to conclude that more of the Airbnb earnings are spent locally and that Government obtains and retains a higher level of fiscal benefit in proportion to their turnover…”

    Wunna unnerstand de ole man point?? surely wunna see how statistics lie and how this statement dat Loverige making is so incredibly THE SAME FAKE NEWS THAT HE IS ACCUSING GOVERNMENT OF

    Cause if DING work out a way to (a) subvert the FOREX restrictions by billing people topups in US $$ and (b) do so in clear light of day how Loverige arrive at this conclusion dat “ is perfectly reasonable to conclude that more of the Airbnb earnings are spent locally…” when any simpleton would say looka pay me in US$ and credit my account at Bank of America in Miami.

    Wunna hoteliers really like a good begging doah…

  18. @ Adrian L
    William Skinner is right that “nobody in our industry even came close to developing a product / brand such as Sandals.”

    The reason is that people like you and other local hoteliers were not prepared to offer million dollar bribes to politicians for contracts that made them hundreds of millions off taxpayers backs. Butch Steward had no such limitations ….as we know from out of court settlements that he has made in other jurisdictions.

    Instead, you went public – seeking to bring the politicians to account and calling for honesty and openness and professionalism.

    Surely you did not expect to create a global brand using THAT tactic ….not in a world where Satan runs things. Now if you had buried a Trident at Peach and Quiet…..

    Almond Beach had the potential to become an even bigger brand than Sandals has, but we needed a bigger crook running thing down there …one who understood how to use bribery and underhand dealings to achieve ‘success’. …or even to fund BOTH sets of thieving politicians – like Bizzy said that he does….

  19. @ Bush Tea

    I now know we don’t have a brand such as Sandals because our hoteliers and government ministers etc are not corrupt. Thanks .

  20. @ William Skinner
    Your lack of attention to detail may well explain your life issues…
    Where did Bushie say anything about government ministers not being corrupt?

  21. @ Bush Tea

    You are absolutely correct you did not mention government ministers. Kindly accept my profound apologies.

  22. David

    Can you verify this?

    Hotels get $12 million in concessions | Barbados Today
    Hotels get $12 million in concessions
    Government has granted nearly $12 million in concessions to 40 hoteliers since 2015, Minster of Tourism Richard Sealy Monday announced. In a one-hour-and-45-minute presentation at the Lloyd Erskine Sandiford Centre Monday morning,…|By Marlon Madden

  23. @ Vincent Haynes February 21, 2017 at 1:17 PM

    After the recent exposé involving the country’s two most important financial managers you would be foolishly gullible to accept on face value any financial or economic data emanating from this totally discredited and beleaguered administration.

    If this administration- in the face of all warnings to the contrary- is so bent on printing monopoly money to prop up a fast-becoming Mickey mouse economy what would it take of them to fudge a few imaginary numbers to appease the interest of suckers?

    This administration has been operating a political Ponzi scheme and like all others is about to come tumbling down like a jokey house made from a pack of ‘marked’ cards.

  24. millertheanunnaki February 21, 2017 at 2:22 PM #

    Chuckle….no such gullibility exists hence the question as I suspect it is alt-facts.

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