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Caribbean leaders stress public-private unity
April 26 2012

Lack of trust between the public and private sectors in the Caribbean needs to change for the region to remain competitive, according to speakers at the Caribbean Hotel and Tourism Investment Conference.

Highlights
  • There are many public institutions in China willing and interested in investing in Caribbean projects, according to Martyn Bould of Rider Levett Bucknall.
  • The government of Martinique is learning from past mistakes and is building relationships with the private sector to incentivize its players for their contributions to tourism.
  • A concern for many hoteliers in the region is the excessive taxation being imposed on tourists, while Caribbean cruise companies do not pay any taxes.

SAN JUAN, Puerto Rico—Trust is not something that commonly exists between the public and private sectors in the Caribbean tourism industry, according to Hon. Ricky Skerritt, minister of tourism and international transport for the government of St. Kitts and Nevis, a two-island state in the West Indies .

That needs to change for the Caribbean to survive as one of the world’s top warm-weather destinations, Skerritt said Wednesday during a general session at the Caribbean Hotel and Tourism Investment Conference. “The competitiveness of the region depends on it.”

Government officials in the Caribbean are under tremendous pressure to grow the economy, said Hon. Haydn Hughes, parliamentary secretary for tourism for Anguilla. And it cannot be done alone, he added.

The importance of public-private partnerships is greater now than ever before because Caribbean governments do not have money, Hughes said. “Private groups do have that money, but they are holding on to their dollars.”

Chinese investment
There are several public institutions in China willing and interested in investing in Caribbean projects, according to Martyn Bould, chairman of global property and construction firm Rider Levett Bucknall in the Caribbean, who recently met with lenders in Beijing.
The Export-Import Bank of China and the China Development Bank, both government banks, have sources of funds for infrastructure projects; there also are private lenders in the region that have similar amounts of funds available, he said.

The funds that are available in the region are significant, Bould said, but not many investors are being approached for capital.

One of the key issues involved with deciding to work with Chinese investors in the Caribbean, however, is the employment of Chinese contractors.

“Chinese investment means Chinese workers,” Hughes said. There is a very high unemployment rate in the region, so developers need to balance between what they need from China and the needs of the Caribbean workers.

Caribbean workers would remain unemployed, watching from the sidelines as 8,000 Chinese workers complete a project, Hughes said. “This is one of the challenges we have with the public-private partnership with China.”

Government incentives
The government of Martinique is learning from past mistakes and is now building relationships with the private sector to incentivize its players for their contributions to tourism.

Approximately 20 years ago in Martinique, a number of investors built dozens of hotels on the island. After five years, most of the investors sold the hotels as condominiums, leaving all the hotel employees out of work, said Hon. Karine Roy-Camille, president of the Martinique Council of Tourism.

Martinique government officials now are making full agreements with investors to make the hotel industry work for them. “We ask them to stay in the building as a hotel for a minimum of 10 years,” she said.

For the hotels built 20 years ago and remain as such today, the government is helping with renovations.

“Things are really working, and we do work all together now. We have no other alternative than working together,” Roy-Camille said.

In Anguilla, the government also is stepping in to provide incentives for hoteliers to keep buildings revitalized, according to Hughes.

Before 2008, hoteliers could get away with commanding higher rates in hotels that were physically declining, Hughes said. Once the downturn hit, consumers started demanding better value for their dollars.

As the economy of Anguilla is completely dependent on tourism, the government now provides tax incentives to every hotel undergoing renovations, Hughes said.

Challenges remain
Inter-regional travel has become more time-consuming and expensive within the Caribbean, Hughes said. “This is something we need to put into action.”

Roy-Camille said she currently is in discussions with a regional airline to develop options for less expensive and more efficient air travel within the Caribbean, inviting her fellow panelists to join in on the talks.

An additional concern for many hoteliers in the region is the excessive taxation being imposed on tourists, while Caribbean cruise companies do not pay any taxes, said Josef Forstmayr, president of the Caribbean Hotel & Tourism Association and managing director of Round Hill Resort Management.

“I feel it is wrong for the visitors of a destination to be exposed to general consumption taxes,” Forstmayr said. Meanwhile, cruise ships move around as they wish and get away with everything, he said.

“There’s a fallacy that adding taxes to a ticket isn’t going to hurt anyone,” Forstmayr said. The public and private sectors need to unite to lower those taxes, he said, allowing tourists to arrive to their destinations as cheaply as possible and spend as much as possible in the Caribbean.

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