The Adrian Loveridge Column – Tourism Expenditure Under he Microscope

The January-December Stayover Expenditure 2018 Report makes very interesting reading, but it does raise a number of unexplained questions.

It is now well over six months since Government introduced a bevy of new tourism taxes on 1st October 2018, including the Airline Travel and Tourism Development Fee (ATTDF) or second departure tax, Room Rate Levy, DTS Product Levy and Shared Accommodation Levy.

In the interest of absolute transparency and securing the undoubting unilateral support of the tourism sector, it was hoped that the administration would have published the figures, to illustrate without question, what additional revenue, the latest taxes have generated.

Without these statistics, it is almost impossible to intelligently compare like-for-like over the last two years.

What also needs clarity is whether the Airline Travel and Tourism Development Fee element is included in the average visitor spend figure?  Especially as it forms a legitimate integral component part of the overall holiday cost even though it is ‘hidden’ in the airline ticket cost.

According to published data, Barbados welcomed around 680,000 visitors by air in 2018. Average that out through the three months from1st October until 31st December and that could be 170,000 passengers (bearing in mind December is one our busiest months).

Assuming 80 per cent are paying the higher level of ATTDF at US$70 per person and 20 per cent US$35 at the intra-Caribbean level, that’s a staggering BDS$21 million alone, before you even consider the other imposed taxes.

It is also difficult to understand why Government has chosen to ignore the cruise passenger sector yet again, despite the stated economic crisis situation?

While VAT at 17.5 per cent is levied on all outbound airfares it is not on cruise ship passengers who depart from Bridgetown Port.

Why?

Particular mention has been made of a quoted $50 million (BDS$ or US$ was not specified) that could be collected on online purchases, like hotels, villas and car rentals annually, where VAT is due for goods and services that are provided on Barbados.

The $50 million figure is especially puzzling, as 25% of this figure could be payable by a single two property hotel operator alone, annually in VAT contributions on the due accommodation/food and beverage element.

If they are exempted through previously arranged tax concessions, where is the equity and fairness in that?

Of course, if VAT is payable, it should be accounted for and paid, but perhaps part of the reluctance to comply has been created by the inability or unwillingness by Government to repay long due VAT refunds to those entities, who have already fully complied previously.

While 2018 generally shows an encouraging increase in average spend on many areas over 2017, there are some disturbing contradictions.

Visitors spend is down on souvenirs (-5.3%), transportation (-3.3%) and perhaps most concerning, entertainment/recreation (-1.2%).

While in the last case the percentage decline is small, when you factor- in the new DTS 2.5 per cent Product Levy payable for three or the twelve month period, then the gap is substantially increased.

Perhaps this sub-sector needs some additional attention?

17 comments

  • Land’s end

    Article by
    Barbados Today Published on
    May 14, 2019
    The compulsory acquisition of land on Bay Street for the construction of a new and improved Hyatt Centric Hotel has hit another snag.

    Barbados TODAY understands there is disagreement between government and at least one landowner over the value of the real estate and the necessary price for acquisition to occur.

    Attorney General, Dale Marshall disclosed that at the center of the disagreement is the land owned by businesswoman, Asha Ms Ram Mirchandani on the spot which currently houses the Liquidation Center.

    Attorney General Dale Marshall and Asha ‘Ms Ram’ Mirchandani
    Attorney General Dale Marshall and Asha ‘Ms Ram’ Mirchandani
    “The owners have told the Government of Barbados that they have no difficulty acquiring the property, but they want a certain amount of money and the valuations we have don’t support that. So it is a process that we’re going through, but at this point I don’t know if there’s any sense elevating it beyond what it is,” said Marshall.

    “Every time the government seeks to acquire property, it exercises its right of eminent domain and an owner would have his right to a view as to whether it is worth X or Y and as far as I am concerned that is the only issue between the Government of Barbados and the owners of the property.”

    While Ms Ram refused to comment on the disagreement, she directed Barbados TODAY to her son, Rabi Mirchandani, a director of the family business. He indicated that after contracting a “reputable” real estate company to provide a valuation of the property and providing a copy to the government, the company was yet to receive a response.

    During a March 13 sitting of Parliament, Prime Minister Mia Mottley revealed that Government was against the previous plan of having the Hyatt built on two spots in Bridgetown. She said it would now be constructed on three lots after Government’s compulsory acquisition of land, which includes the nearby Mirchandani-owned property.

    At the time, she expressed hope that “we can reach an amicable agreement on the quantum of price”.

    In his response however, Mirchandani said: “The Government of Barbados expressed an interest to purchase our land on Bay Street on which the Liquidation Center operates. We were informed the purpose of purchase is to facilitate the Hyatt project, which we recently became aware, is to increase from 189 rooms and 19 residences to 350 rooms.”

    “Conversations led to negotiations where each party was to provide a current market valuation of the land using the land acquisition rules,” said Mirchandani in a statement.

    The acquisition process still requires parliamentary approval, after which “it shall be lawful for the Governor General…to declare the land to have been acquired…” according to section 5 of the Land Acquisition Act, Cap. 228.

    By that time however, the Mirchandani family is hoping to have the matter settled on good terms.

    “We have been operating the business, the Liquidation Center since 1993 and quite a number of employees and customers who have supported us over 25 years all depend on us as we do on them. The cost for relocation of our business was calculated by a reputable real estate company and while we recognize the keen interest of the government to see the Hyatt hotel become a reality, we too would like the opportunity to continue our family business even if it is at an alternate location,” said Rabi.

    The project, which was first announced in October 2014 by then Minister of Tourism, Richard Sealy under a Democratic Labour Party (DLP) administration has been fraught with controversy. Ms Ram at the time placed her full support behind the project, indicating in February 2017 that she intended to take full advantage of the development.

    The following month, social activist David Comissiong filed an injunction for a judicial review of the permissions granted by then Prime Minister Freundel Stuart to Hyatt developer Mark Maloney for construction of the hotel. This was based on a perceived failure by Maloney to carry out an Environmental Impact Assessment (EIA) at the construction site. At the time, he also questioned the impact the proposed 15-storey hotel would have on the area, which has been designated a UNESCO World Heritage site.

    Following a change of government, Comissiong, now Barbados’ Ambassador to CARICOM expressed his willingness to withdraw the legal challenge if Government agreed to his key demands.
    kareemsmith@barbadostoday.bb

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  • @blogmaster

    under-The-microscope

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  • Like

  • Never thought I would agree with Mrs Ram on anything, but this time she is right. Why is the government compulsorily obtaining land to hand over to a private company? This is highly unusual. It is not only crony capitalism, it looks to me like theft. This is the real principle that should be discussed.

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  • Does anyone know the square footage of this piece of land?

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  • Hal is correct but wait a minute….. she ‘valued it’ at $2M for tax purposes with BRA…… now asking $30M instead of the $12M offer…. should BRA retroactively assess her for taxes on $30M???? LOL!!

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  • Why doesn’t private developer buy real estate directly from Mrs Ram?
    Why use Govt to acquire the property?
    Is Govt now a real estate agency?

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  • Hi Adrian:

    How come tiny Bermuda can boast of such World Sports-Tourism events while ‘big’ Barbados can’t??

    Bermuda = Area: 20.54 mi² Population: 65,441
    Barbados = Area: 166 mi² Population: 280,000

    (1) Bermuda will be the exclusive tourism partner of the U.S. Open Tennis Championships, beginning with the 2019 U.S. Open in New York City, under a multi-year agreement between the Bermuda Tourism Authority (BTA) and the United States Tennis Association (USTA) announced Wednesday.
    Bermuda will benefit from a “significant” presence at the famed tennis event under the agreement, which provides Bermuda with on-court signage in Arthur Ashe Stadium, representation on U.S. Open digital properties and social media channels, plus “on-site activation space” for consumer engagement.
    The court signage will provide Bermuda with “significant” exposure during 100-plus hours of live coverage in top Bermuda markets including the U.S., Canada and U.K. along with 100 other countries.
    Meanwhile, during the two-week tournament the on-site activation space will offer engagement with “more than 800,000 fans, 56 percent of whom are from the New York metro market,” said officials. New York is Bermuda’s top visitor source market, located within a 90-minute flight of the territory.

    (2) MS Amlin AG Bermuda Branch, a global (re)insurer with offices in Bermuda, is pleased to announce its title sponsorship of the ITU World Triathlon Series in Bermuda on 28th April, 2018. The event will be branded as the ‘MS Amlin World Triathlon Bermuda’. The prestigious ITU event in Bermuda is the second of eight stops on the World Triathlon Series circuit.

    (3) The 2017 America’ Cup in sailing. The America’s Cup is the oldest international sporting trophy.

    ….just to mention a few!

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  • ks,

    I am not sure that I can give you a sensible answer. Billy Griffith (a Barbadian) used to head Bermuda Tourism and has for the last three years been CEO of the Barbados Tourism Authority, now the Barbados Tourism Marketing Inc.

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  • @Redman,

    Sometimes we call the middle man a pounce. Did Hyatt make an offer for the adjoining property? Or, was it a decision made by the tourism/government authorities? If it was a government decision, would the cost be another gift from taxpayers to the business class?
    Let us assume that Mrs Ram wants Bds$30m for her property and the government is offering $12m, eventually the two settle on $21m.
    Who pays? Hyatt, the government or some godfather?

    Liked by 1 person

  • ks makes a very legitimate point, but does the tax dept allow the owner to value there own property down there, In ontario mpac sets the assessment and to get it lowered you have to fight tooth and nail.

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  • Miss Ram is from that class if she sniffs the opportunity to make a dime she will press for it.

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  • David have you learned nothing from trump, sometimes you just have to walk away from the deal and build somewhere else. lol

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  • The government is under pressure to close the deal. The developer in this case has already purchased the property adjoining? The government sees the opportunity to remove an eyesore read the liquidation center? Some will say it is a win win. That said it looks like litigation will stop or slow this project like many others before. It is how we roll in Barbados.

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  • David
    May 16, 2019 6:49 AM

    The government is under pressure to close the deal. The developer in this case has already purchased the property adjoining? The government sees the opportunity to remove an eyesore read the liquidation center? Some will say it is a win win. (Quote)

    Is this for real? How can a thinking person come up with this crass nonsense.

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  • Mrs. Ram is not a fool over the years she has lay in bed with all of them and she knows all their secrets and the games they play
    Mrs. Ram going move heaven and hell before she allow govt to steal her land for any purpose.
    Recently land grabbing and land swapping by theft has been associated to known members in this govt with suspicious dealings attached

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  • Here we are talking about the speed and authoritarian nature of this government and its weaponising of town and country planning, yet for weeks we have had a number 1686of blogs about a poor black man whose home has been greatly affected by some council estate English woman (see Open Letter to Duguid from Mr Blackman) and no-one is making the connection. This is Barbados. ‘Justice’ for Hyatt, none for the poor black man.
    I have just been reading about slave revolts in Barbados in 1675, 1692 and threats of rebellion in 1683 and 1686. I hope it does not happen, but the re-enslavement of people in 2019 will also lead to rebellion.
    I say again, Barbados is a failed state. It will end in tears.

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