The Adrian Loveridge Column – Tourism Investment Strategy Needs an Overhaul
A leading local hotelier reminded me recently of a column I wrote several years ago naming an incredible 37 hotels that had closed their doors and it raised a commonly held but frequently ill-informed public view, that the tourism sector attracts limitless concessions.
The reality – apart from a chosen few – is something quite different.
The simple response is to pose the question- if our hotels are in fact receiving disproportional fiscal assistance, why is it that so many properties have closed and in practicality failed?
Various administrations have not fared any better and while the taxpayer is still one, if not the largest owner of hotel rooms on Barbados, the disaster called Hotels and Resorts Ltd or GEMS, where hundreds of millions were written off or lost, reminds us that Governments should have very limited participation in the industry.
I believe there is an urgent need to look carefully again at our investment framework. Local investors need to be able to access loans at affordable and sustainable interest rates over realistic re-payment periods.
Overseas investors need irrefutable assurance that properly registered foreign funds and a transparent scale of return-on-investment can be repatriated without Government hindrance and delays.
The whole investment mechanism should be brought under one department, where all involved are fully aware of existing and any new bilateral treaties which have been drafted and legally implemented.
Having spent a lifetime as an entrepreneur, I gave up many years ago trying to understand the ‘rationale’ of banks and their decision making process. My conclusion was that business people, especially smaller ones, and banks speak different languages and occupy contrasting planetary space. Each largely functions in a totally different environment. One with a 9 to 5 or 8 to 4 pm working days with most weekends off and little or no associated work related risk.
The other requiring long often unsocial hours and needing a great deal of personal dedicated commitment to ensure there is a reasonable possibility of success.
Recently one of our largest banks declined a loan facility to a potential purchaser on the grounds that they could not justify their minuscule participation because the hotel had been closed for some time and was not currently trading. It seemed futile at the time to remind that same bank that when we purchased the property in 1989 that it had been derelict for several years.
Within two years we transformed the hotel into one of the highest occupancy boutique lodging options on the island and our guests propelled us into the much coveted #1 rated TripAdvisor position above 106 other graded hotels. This, despite being severely impacted by the fall in the value of Sterling, prior to completion, which dramatically restricted our ability to carry out planned renovations and improvements.
Ultimately, at the end of the day, even the banks must comprehend that it is only the private sector which will ensure there is any meaningful national financial recovery. By creating illogical barriers to growth and business development, how on earth will they ensure they themselves survive and flourish?