Bahamas Hotels Face Five-Fold Budget Hit

THE BAHAMIAN hotel industry is facing a potential five-fold whammy, with the Government adding to increases in National Insurance Board (NIB) contribution rates, electricity costs and Out Island Promotion Board fees by increasing hotel room/guest taxes from 6 per cent to 10 per cent, along with an $5 increase in departure taxes.

The Bahamas Hotel Association's (BHA) vice-president, Frank Comito, said the increases were a cause for concern, as they countered efforts by tourism officials to make the Bahamas a more competitive and cost-effective destination.

Mr Comito said despite the increases, the BHA understood the Government's fiscal difficulties and the reason and need for the increases.

However, Mr Comito added that the sector has attempted for years to create value in the minds of the travelling public in order to boost travel to not only Nassau, but also the Family Islands.

One Family Island resort owner said immediately following the Prime Minister's budget communiqué: "Obviously another nail in the coffin of the hotel industry and reflected in his comments."

Government recently sought to increase the amount of stopover visitors to the Bahamas by offering a ree companion airfare, which spawned a similar promotion for the Family Islands.

And as the Family Island resorts and hotels signed up to be a part of that promotion, their fees to the Bahamas Out Island Promotion Board were increase by 2 percentage points - from 4 per cent to 6 per cent.

Partner at the Emerald Palms resort in South Andros, Rashna Cussen, said with high utility rates and low visitor arrivals, her resort could be teetering on the edge of closure.

Mr Comito said the BHA had been briefed on the upcoming increases by the Government, but was not involved in the decision to make the rises.

"They advanced to us what the Prime Minster wished to put forth," he said .

He added that it still remains to be seen how the increase will affect the promotions being rolled out by the Ministry of Tourism and the Bahamas Out Island Promotion Board.

Mrs Cussen said these increases have now become a disincentive to investors who have put in time, heart and soul into their businesses.

"It is so disappointing," she said. "They should be providing incentives, not making it impossible for us to keep our doors open. We certainly need to take a hard look as to why we are still here!"

With visitor numbers down last year and the first quarter of this year seeing gains over last year's numbers, it is uncertain what the increases will do to visitor numbers.

However, small resorts like Emerald Palms are not certain they can survive the increases, coupled with low visitor numbers and few airlift options.

"Everything we have done for Emerald Palms and South Andros we have done ourselves," said Mrs Cussen. "The Government has totally ignored us and/or taken us for granted. I can't help but wonder how many other decent investors will leave as well."

Source: The Tribune