As T&T weighs up approving the construction of a Sandals Resort in Tobago, Antigua and Barbuda’s Prime Minister Gaston Browne has been engaged in a testy public exchange with Sandals Chairman Butch Stewart over Sandals’ retention of sales tax income, by what the Antiguan government has called “an unlawful agreement.”
Sandals collects an Antigua and Barbuda Sales Tax (ABST) from its customers and, according to Browne, keeps 65 per cent of the yields. The Antigua and Barbuda government is trying to change this, but Stewart is claiming it means the rescinding of a concession agreement with Sandals.
The disagreement with the Antigua and Barbuda government highlights the extent to which Sandals polarises opinion about its business model in the Caribbean. The Sandals chain, founded by Jamaican billionaire Gordon Butch Stewart, has asked for significant tax concessions in other islands in which the all-inclusive hotel chain operates.
In Antigua and Barbuda, the Sandals Resort pays no direct taxes to the government treasury, an agreement that extends for another 25 years. It also pays no taxes on imported capital items, none on food or beverage, and none on items needed for resort improvements.
Meanwhile, in Barbados, Sandals also negotiated a 25-year tax holiday on all import duties, imports and levies, including VAT on the importation or local purchase of all capital goods from Barbados—including hotel equipment, furniture, fixtures, vehicles, and computer equipment. Barbados also had to give a 25-year tax holiday on all food, alcohol and beverages imported or bought locally by the resort.
The question the Rowley administration has to consider is whether the economic impact of permanent tourism jobs created would outweigh the tax concessions Sandals is likely to demand.
A Sandals/Beaches Resort in Tobago would boost tourist numbers, and significantly help market Tobago as a tourist destination, says one hotel industry expert.
However, the actual nature and scope of benefits to citizens is still to be worked out. And, as Antigua demonstrates, there are cautionary concerns about the tax concessions involved.
Potential benefits
The Sandals hotel would add 750 rooms to T&T’s stock, creating jobs and boosting incomes in the food and recreation industries.
Data from T&T’s Tourism Development Company Ltd, cited in a National Training Agency report on the T&T tourism sector, stated that in 2012 there were 2,697 hotel/guesthouse rooms in T&T; and a further 94 bed-and-breakfast, self-catering facilities, for a total of 2,791 rooms.
So an additional 750 rooms from Sandals would by itself represent roughly a 25 per cent increase in total rooms, and an up to 50 per cent increase in high-quality (4-star and above) rooms.
According to a publication by the World Travel and Tourism Council (WTTC), the direct contribution of travel and tourism to GDP in 2014 was TT$4,882.0 million (3.2% of GDP). This reflected the economic activity generated by hotels, travel agents, airlines and other passenger transportation services (excluding commuter services), as well as restaurants and leisure industries.
The WTTC document said travel/tourism generated 27,500 jobs in 2014 (4.4% of total employment), including jobs from hotels, travel agents, airlines and other passenger transport services, restaurant jobs, and leisure industry jobs. This was predicted to decline by 0.1% to 27,000 direct jobs in 2025.
Support for Sandals
Tourism sector expert John Bell has told the Guardian there would be several positive impacts of a Sandals hotel in Tobago. Bell is an honorary director and former director general and CEO for 28 years of the Caribbean Hotel and Tourism Association (CHTA). Bell is also a current honorary member of the Trinidad Hotel Restaurants and Tourism Association (THRTA), a private sector body which lobbies for tourism development here.
Bell said Tobago’s tourism has been a “basket case” for years now due to its small airport which needs much upgrading, too few competitive, quality accommodation options, too few flights, not enough tourism incentives, restrictive foreign ownership licensing requirements, and what he calls a “complete absence” of destination brand promotion.
Calling Sandals “the most powerful resort brand in the Caribbean,” Bell welcomed Stewart’s ability to build “international consumer demand.”
He believes a Sandals resort in Tobago would attract overnight a lot more North American visitors.
It would propel upgrading of the ANR Robinson International Airport, and drive competing resorts to be more competitive, he says. He feels the tourism industry benefits would outweigh the tax concessions.
“Those who fear that the all-inclusive model precludes benefit beyond the parameters of the resort should check out the commercial life in such resort communities as Rodney Bay in St Lucia, or Ocho Rios and Montego Bay in Jamaica where the all-inclusive model predominates,” Bell said.