Caribbean Hotel Association

CHA APPLAUDS PM INGRAHAM FOR SUPPORT OF TOURISM AT CARICOM HEADS OF GOVERNMENT MEETING

One Day Special Session on Tourism Planned for July Meeting

CORAL GABLES, FL (March 12, 2008) -- The Caribbean Hotel Association (CHA), through its President Peter Odle, has applauded and praised the remarks and strong support of tourism interests by the Rt. Hon. Hubert A. Ingraham, Prime Minister of the Bahamas and Chairman of the Conference of Heads of Government of the Caribbean Community (CARICOM) at the 19th Inter-Session Meeting of the Heads of Government last week in Nassau, Bahamas, and is very pleased about the resulting special session on tourism being planned for July.

Prime Minister Ingraham welcomed the delegates with a clear warning that “our tourism sector is stalling” and urged his fellow Heads of Government to take appropriate action, in particular to place emphasis “on our youth and on their education and skills training.” He also urged “collaboration and cooperation in areas such as product development, service standards, marketing, eco-tourism and sustainable tourism promotion and development.”

The result of this 19th Inter-Session Meeting of the Heads of Government is an agreement to devote one day to a special session on tourism during the 29th Meeting of the Heads of Government set to take place July 3 - 5, 2008 in Antigua. In addition, the Heads agreed that tourism would be included as a permanent item on the Agenda of the Conference and on all CARICOM agendas in view of the importance of tourism to the economies of the region.

Peter Odle, president of CHA and owner and managing director of Mango Bay Hotel in Barbados, said: “We are invigorated throughout the private sector in the Caribbean to hear the words of support and encouragement for the importance of our tourism industry in the Caribbean from one of the most recognized and respected prime ministers in the region, the Rt. Hon. Hubert A. Ingraham.

“We both applaud his remarks and urge all our government leaders to take to heart the warnings and suggestions that will help fortify our tourism industry at both the public and private sector level.

“We at CHA also recognize the crucial importance of human resource development and over the years through our own Caribbean Hotel Association Education Foundation (CHAEF) have awarded more than US$1 million in scholarships and grants to Caribbean nationals to enable them to advance their skills and become more productive members of the Caribbean community in their respective destinations.”

At a press conference at the conclusion of the meeting, CARICOM Secretary General Dr. Edwin Carrington, St Kitts and Nevis Prime Minister Dr. Denzil Douglas, Jamaica Prime Minister Bruce Golding and Trinidad and Tobago Prime Minister Patrick Manning supported Bahamas Prime Minister Ingraham’s position.

Ingraham told the media at that press conference: “We agreed that we are going to have a special one-day session on tourism at the conference in Antigua in July. Tourism is very important to the Caribbean region and to The Bahamas and our economy, and we are going to seek to bring focus to that issue.

“We are going to focus on the aviation and transportation of tourism, the marketing, branding of the tourism structure and we are going to seek to create a sustainable economic commission on tourism. We are [also] going to appoint a task force to produce a report for us prior to the meeting in July.”

Ingraham opened his keynote address to the Heads of Governments with a singular focus on tourism, an issue that has not had front and center stage attention before.

Ingraham said, “The economic down-turn in the U.S., the result of any number of issues including the high and increasing cost of fuel (trading at $105 per barrel yesterday) is negatively impacting all of our tourism economies and increasing the cost of living for our people. And the sub-prime meltdown and the related collapse of the U.S. housing market will further impact travel to our region.

“Hence, our tourism sector is stalling. While world travel and tourism continued to grow by as much as 7% last year, we in the Caribbean have enjoyed a far smaller rate of growth - hovering at as little as 2?%. Even more chilling, more than 1% of that growth in tourism is reportedly accounted for by expansion in regional, but not CARICOM, tourism destinations.

“Yet all of us are aware that creating a viable and sustainable tourist industry is critical to the economic well being of most of the member states of the Caribbean Community.

“While this has been recognized and there exists Caribbean cooperation in tourism at some levels, I believe that our efforts could be more focussed and intensified. We might improve collaboration and cooperation in areas such as product development, service standards, marketing, eco-tourism and sustainable tourism promotion and development.

“And so it is my hope that during our deliberations over the next two days we might agree to convene a special session on Tourism, hopefully in conjunction with our Annual Meeting in July.”

Ingraham also alluded to the recently concluded Economic Partnership Agreement (EPA) with the European Community in which CHA provided its strong support. “It is critical, therefore, that we take lessons from the Economic Partnership Agreement recently concluded with the European Community so as to inform our economic and commercial relations with our other trading partners, near and far.”

The Board of Directors of CHA, at their meeting during Marketplace 2008, has praised the recently concluded Economic Partnership Agreement with the European Union, a first-ever, alliance that will ensure continued support of tourism interests in the Caribbean.

This is the first-ever international treaty to include language on Caribbean tourism and thus gives recognition to the importance of the development of the tourism industry that has become central to the future success of the regional economy.

As a result of this just concluded agreement, CHA looks forward to the establishment of an appropriate CARIFORUM mechanism that will lead to the rapid implementation of what has been agreed in order that the industry may improve its competitiveness in preparation for the agreed upon level of services liberalization.

Ingraham concluded his remarks by stating “Clearly, to remain relevant to all, CARICOM must become a part of the national and regional response of its member states to changing global realities including:
“The continued move toward trade and investment liberalization;
“The critical importance of education and skills training to ensure an efficient and effective labour force;
“The need to improve and expand access to information and communications technologies to improve efficiencies in our economies.

“I believe our determination to make human and social development, a pillar of the Community’s work will place our greatest emphasis where it needs to be; on our youth and on their education and skills training. This will help us to ensure that future generations of Caribbean people are better prepared to assume productive roles in our societies.

“This is essential if we are to ensure that economic growth and development in our countries translate into job creation and entrepreneurial and social opportunity for our citizens.”
Peter Odle and CHA join with Prime Minister Ingraham in urging the Heads of Government to quickly take action on these issues as “Our mission at the Caribbean Hotel Association is to build a strong tourism industry for the ultimate benefit of the people of the Caribbean.”

1st Annual Caribbean Tourism Summit (ACTS)

ACTS has been created by leaders of Caribbean Governments and the Caribbean Hotel and tourism industry and will consist of several functions including a groundbreaking high level Conference focusing on Investment and Marketing, an Awards Gala Dinner & Ball and an Exhibition. This historic event is scheduled to coincide with Caribbean American Heritage Month and will include events for the Caribbean Diaspora.

Caribbean tourism industry leaders will be moving their activities to Washington DC with the objective of transforming them into a program that is larger and more meaningful to the entire Caribbean. All events will create tremendous promotional opportunities for companies currently investing in the Caribbean as well as those organizations interested in marketing their services in the Caribbean and helping to promote the Caribbean to the U.S. market.

Over 1,000 leaders from more than 32 Caribbean countries as well as U.S. Government officials and the Tourism and Investment communities are expected. Based on the level of interest in this event so far, it is anticipated that all events will be sold out. Sponsorship opportunities, at different levels, are available as is limited exhibit space for select organizations.

The Caribbean Tourism Development Company, formed by the Caribbean Tourism Organization and the Caribbean Hotel Association, has created several organizing Committees to collaborate on this special event. Additional details on all events including the Conference program will be available shortly.

Caribbean hotel sector overtaxed in detriment of revenues for the wider economy
Activities in the Caribbean tourism industry are unduly subjected to additional taxes not found in other sectors, such as room tax, import tax, and departure tax. This is according to the study entitled “Taxation and Tourism Costs for the Caribbean Hotel Sector,” undertaken under the Caribbean Regional Sustainable Tourism Development Programme (CRSTDP) by PA Consulting Group, as part of technical assistance provided to the Caribbean Hotel Association with funding from the 8th European Development Fund (EDF). The study looked at the competitiveness of hotels in the Caribbean, in relation to their operating costs, taxation levels, and other non-cost barriers that negatively impact the tourism sector - focusing on four sample destinations: Barbados, Dominican Republic, Jamaica, and St. Lucia. The findings were released on Friday at the Caribbean Small Hotels Retreat held last week in Barbados.

The resulting report shows that most CARIFORUM countries have fiscal incentives for the establishment of hotels, which include exemption of corporate taxes, reduction or exemption from import duties on equipment, and reduction or exemption of duties on construction materials. However, the reduction in duties applies specifically to the construction phase and incentives often run between 5 to 15 years depending on the number of rooms the hotel is constructing. “On one hand, governments traditionally address the burden of high expenditures by applying taxation to leading sectors in the economy-more often than not, the tourism sector,” said CHA President Mr. Peter Odle. “By the same token, such an unfriendly fiscal climate makes our destinations less attractive as an investment opportunity and less attractive to visitors, which produces the exact opposite of the intended result of taxation in the first place. It begs the question: ‘Do these incentives, as they are, achieve their goals?’

For purposes of comparison with similar island destinations, the report examined the incentive and investment regimes in Hawaii and the Canary Islands; both destinations enjoy incentives that not only create an enabling environment for investments in hotels, but also have a long-term commitment through various concessions that ensure that the inputs into the hotel sector are not over-taxed. The net result is a vibrant hotel sector that has blossomed in a competitive destination. “That is the challenge facing the hotel sector within CARIFORUM countries,” Odle pointed out.

To address these concerns, the report calls for a new look at taxation practices, especially in the context of how profitability is becoming increasingly challenging amidst high construction costs, rising utility costs and high labor costs. In the long run, the report says, the hotel sector is not expected to be able to sustain the increasing burden of heavy direct and indirect taxation that makes the sector less attractive to investors and visitors.

The report goes on to stress the urgent need for CARIFORUM governments to commit to look at applying concessions to hotels that are upgrading their product, improving technology, and investing on inputs that can improve efficiency, such as environmental management and training materials. In addition, the document recommends the concept of a one-stop-shop, a clearinghouse to coordinate and facilitate hotel investment projects in a more business-like and timely manner.

The “Taxation and Tourism Costs for the Caribbean Hotel Sector” study is available online. It completes a series of three economic research projects undertaken by CHA. It is preceded by “The Caribbean - The Impact of Travel & Tourism on Jobs and the Economy,” conducted by the World Travel and Tourism Council with sponsorship from American Express and published in May 2004, and “The Accommodations Sector as a Consumer of Locally-Produced Goods and Services and as a Contributor to Government Revenues,” released in February 2007, conducted by Tourism Global Inc. with funding provided by Pro€Invest.

Spanish hotel investors come to the table with the Caribbean hotel and tourism industry

The Caribbean has shown to have tremendous investment potential for Spanish hotel interests, which have steadily expanded their presence beyond their successful ventures in Mexico, the Dominican Republic, and Cuba, and are growing throughout the region from the Bahamas in the north to Aruba in the south. In recognizing the role of Spanish investors in the sustainable development of Caribbean tourism, Peter J. Odle, President of CHA, and Senator the Hon. Allen Chastanet, chairman of CTO, are heading a delegation from the Caribbean hotel and tourism sectors to meet September 14th with senior executives of the main Spanish hotel chains operating in the Caribbean. The meeting, to be held at Palma de Mallorca, in Spain’s Balearic Islands, was brought to fruition through the good offices of Dominican lawyer and hotelier Enrique De Marchena, President-Elect of CHA.

The meeting’s agenda reveals an ambitious range of issues for discussion, such as global competitiveness, Spanish investment, the United Status passport requirement, and global warming, among others. “We expect this to be the first step in a long-term collaborative effort that can be equally beneficial for the indigenous Caribbean tourism industry, foreign hotel interests, and ultimately, the Caribbean people,” said the CHA President.

Some 30 of Spain’s most powerful hotel investors have confirmed their attendance, including Gabriel Escarrer, president of Sol Meliá; Miguel Fluxá, president of Grupo Iberostar; Abel Matutes, president of the Fiesta Hotel Group; Simón Pedro Barceló, co-chairman of Barceló Enterprises; and Pablo Piñero, president of Grupo Piñero.

Meanwhile, the Caribbean’s delegation will also include former CHA President Simón Suárez, chief development representative for Latin America and the Caribbean of Hilton Hotels Corporation; Grenadian hotelier Sir Royston Hopkin KCMG, chairman of the Caribbean Alliance for Sustainable Tourism; David Jessop, executive director of the London-based Caribbean Council; and Alec Sanguinetti and Tanya Lazarus, director general & chief executive officer and director of membership development, respectively, of CHA; among others.

The logistics of the high-level meeting were spearheaded by CHA and Spain’s Grupo Preferente, with the support of Sol Meliá and Bancaja, parent company of the sixth largest financial group in Spain and renowned for its commitment to corporate social responsibility.

Caribbean tourism aims to become carbon-neutral

CAST Director Deirdre Shurland set the stage by tabling two fundamental principles behind the Caribbean tourism industry’s position as it relates to climate change.

Caribbean tourism depends heavily on the sustainability of its natural and environmental assets.
Caribbean countries must not be disadvantaged, or their development efforts curtailed, as a result of mitigation efforts by industrialized, developed countries acting to curtail their own negative impacts on the environment.

At the meeting, she made clear that the Caribbean hotel and tourism industry supports a strategy that is proportionate for developed and developing countries within carbon trading schemes.

According to the joint CHA/CTO position paper on climate change: The Caribbean “should not be penalized as the world’s major economic powers move towards curtailing their past, present, and future impacts on the global climate,” states the official position document, adding that every effort must be made to ensure that future consumer movements and government action do not deter potential European travelers from taking vacations in the Caribbean. Instead, “[they should] ensure that programs are established to demonstrate to consumers that they can balance the impacts of their travel to the Caribbean.”

The CHA and CTO joint position further concedes that while effective taxation plays a part in the widespread approach to reduce carbon monoxide emissions, there is a need to apply such schemes to all transport sectors, not just aviation. In their joint statement, CHA and CTO also pointed to the potential consequences of transport services passing on the cost of carbon credits to the passengers, which could discourage long-haul travel to the region.

The schemes being explored in London aimed at managing the carbon - emitting impact of the industry, while fostering the growth and development of Caribbean nations, include:

Creation of carbon trading programs – whereby polluting businesses in the travel trade (such as airlines flying to the Caribbean, for example) can buy permits to emit carbon dioxide from lower emitters (such as eco-resorts or hotels with energy saving practices).
The establishment of a carbon emission verification system in the Caribbean – a structure to oversee the issue and trading of certificates and permits.
Development of a carbon trading hub – Both private and public sectors have stressed their commitment to work towards the long-term vision of the Caribbean region functioning as a carbon trading hub, where funds for regional development are generated through the trading of carbon permits. Some portions of these funds can be ploughed back into sustainable tourism and regional climate change mitigation programs.
Carbon offsetting programs – A way for individuals and business to become “carbon-neutral. Individuals would be able to pay to offset their proportion of the carbon emitted on a journey to the Caribbean and that money would go towards a carbon reduction scheme in the region.

Further, CHA and CTO support a holistic approach where household, road transport, agriculture, and other industries’ practices are incorporated into efforts to minimize carbon dioxide emissions.

“It is our hope that the CHA and CTO Position Paper will serve as a template for replication in other Caribbean tourism markets, following the vision that the Caribbean comes to be seen as the travel industry leader in combating climate change,” concluded Deirdre Shurland.

The meeting was co-chaired by Senator the Honourable Allen Chastanet, Minister of Tourism and Civil Aviation for St Lucia and Chairman of CTO, and Peter Odle, President of CHA. It also included presentations from Dimitri Zenghelis, Senior Economist, HM Treasury; and Andy Cooper, Director General, Federation of Tour Operators (FTO).

Caribbean tourism investment fund gathers force

In May 2007, Peter J. Odle, President of CHA announced the engagement of KPMG and Caribbean Financial Services Corporation (CFSC) as advisors to a Tourism Investment Fund (the Fund) that CHA is seeking to introduce to the market, to help fill a "financing gap" in the regional tourism industry. The financing gap is primarily defined as being limited access to third-party equity and financing for owner-operators of resorts up to 150 rooms looking to expand, renovate, and/or takeover underperforming assets.

The Fund would support applications evidencing strong management teams with a proven track record and a robust business plan. The next stage in the development of the Fund were to appoint an investment advisory board and to agree on a framework for the Fund. Both steps have now been completed.

At a panel discussion during the Caribbean Hotel and Tourism Investment Conference, held in Curaçao, chaired by Peter Odle and featuring Gary Brough, head of KPMG's regional hospitality group, and Milton Lawrence, Deputy Chairman of CFSC, Odle stressed the importance to the regional hospitality industry of indigenous entrepreneurs participating in its development.

Stressing that no region in the world is more dependent on tourism than the Caribbean, Brough pointed out that such dependency is not likely to change at any time in the foreseeable future. “If anything, the region will become more dependent on tourism as traditional industries, such as sugar and bananas, decline,” he added. Accordingly, Brough suggested that if an opportunity arises to improve the region's tourism industry, it should be taken.

CHA has identified one such opportunity with the introduction of the Fund. Brough added that should the Fund be successful, it would mean more successful indigenous Caribbean entrepreneurs - a very attractive feature of the engagement for KPMG. However, he warned that a failed fund would benefit no-one and that its success or failure would be judged in the marketplace as being dependent on whether or not the Fund achieved commercial rates of return for its investors.

Emphasizing this point, Lawrence made it clear that the Fund would not make decisions based on philanthropy, but would judge every application on its relative merits and taking an entirely objective, commercial approach when reviewing applications. However, he pointed out that through its involvement in the Fund, CFSC will extend to the industry the benefit of its close working relationship with a network of technical support organizations, which may independently help investees to mitigate some of the existing challenges in the sector.

The Caribbean Tourism Investment Fund generated a climate of confidence and enthusiasm, with expressions of interest from participants in potentially investing in the Fund, while others enquired about applying to the Fund for financing. “While the Fund is still in its
development stage, the response is very promising,” said CHA President Peter Odle, adding that the ten years since the first CHTIC was held a decade earlier had been leading up to this initiative. The event registered the largest number of delegates since its inception: Investors, hotel owners, banks and lender, CEO’s and hotel chain executives, financial advisers, mortgage brokers, real estate agents, lawyers, designers and architects, consultants, tourism officials,
timeshare developers, and government officials. More than 400 delegates from 27 countries gathered over the course of two days at the Curaçao World Trade Center on May 7 and 8th, to address the issues, challenges and opportunities for improving the tourism investment climate across the region and opening up a more generous flow of both equity and loan capital into the Caribbean. A look at the companies present are evidence that the leading companies in the industry recognize the importance of the
event in shaping the Caribbean tourism industry. The event was hosted by the Curaçao Tourist Board and the Curaçao Hospitality and
Tourism Association.

The View from Europe

The View from Europe is a weekly column written by David Jessop, Executive Director of the Caribbean Council. Each week the column focuses on an issue affecting the Caribbean, offering a European perspective. The column appears in the Caribbean press. To access The View from Europe archive, click here.

In other ongoing news

CHA board commends IATA report on the need for regional aviation policies (downloadable press release in pdf format)

Click here to download the IATA powerpoint presentation (25mb)

Spanish hotel investors come to the table with the Caribbean hotel and tourism industry.

Caribbean tourism investment fund gathers force.

Caribbean tourism aims to become carbon-neutral.

Caribbean hotel sector overtaxed in detriment of revenues for the wider economy.

CHA Weekly News archive

April 23, 2008

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