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An internet image of a hotel room.
An internet image of a hotel room.
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By Bengt Mortstedt

I am the owner of Bequia Beach Hotel, probably one of the biggest — if not the biggest, with regards to number of rooms — hotels in St Vincent and Grenadines, after the Buccament Bay Resort went into receivership about one and a half year’s ago and after Raffles left the Canouan resort and most of the approximately 150 rooms there was converted to staff- and workers-accommodation or were demolished.

The hotels in St Vincent consist of, by international standard, small, family-owned-and-operated hotels.

With regards to yearly occupancy rate, I would think, based on my own experience, it is well below 50 per cent or even 40 per cent or 30 per cent. Average yearly occupancy rate in hotels in nearby Caribbean countries, I believe, rage between 60-70 per cent. Why is our occupancy level so low? It has to do with access and that we are in an expensive location to operate in. Flights coming to Argyle International Airport will ease access and cost for tourists visiting St. Vincent but lesser for the Grenadines. Budget travellers going to Bequia (other islands out of reach) would not mind the extra taxi travels and ferry and possibly extra waiting time. High-end travellers coming here do not care if they change aircraft in Barbados, St. Lucia or St. Vincent, as they anyway have to change aircraft somewhere to be able to get to the Grenadines. They will do it where it is most convenient.

We are expensive. A lot of the food and even fruit the hotel restaurants serve has to be imported, as the local produce do not always meet high-end tourists’ request with regards to quality or quantity. Total duty, VAT and various fees and transport cost add to the total cost of operation. Our hotel’s purchase price of, for example, wine, add to over 100 per cent when import duties and other costs are added which makes it substantially costlier to purchase than in most countries in Europe. We will therefore not be able to take out the European hotel’s margins, same with most food and cost of electricity to be in competition.

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The politicians have staked out SVG’s future is tourism. An overnight stay person in a country spends up to 40 times more in the local economy than a visiting cruise ship passenger! The Government should, therefore, promote the existing hotels as well as promoting new hotels to be built.

Overseas guests can choose among a number of destinations around the world, which at first glance presents better value for money than St. Vincent and the Grenadines.

My strong view is the Government of St Vincent and the Grenadines should do everything in promoting and simplifying for their chosen way forward for the country: sustainable tourism. They should make sure existing hotels survive and flourish. To bring in new taxes, announce duties and force new administration on to these mostly small enterprises is, in this context, the wrong way to go.

Since I started my various investments in SVG some 12 years ago, directly employing some 240 Vincentians, I have seen introduction of VAT — raised once, increasing and then doubling of the departure tax, and now introduction of a legislated new room tax of EC$8 per room per night, whilst our tourism industry standards have not vastly improved. I can not see justification for further charges to be implemented. All this also creates much extra administration for the operators, which also cost money and takes time that could be used to promote and to enhance their businesses. From a hotel’s point, to announce increased Government costs/taxes to tour operators and loyal guests, whatever the reason, sends a very negative signal to them, also to the ones already booked for the coming season. This tax also directly hit the most important type of visitors — the stay overnight visitors. Even if other countries have various taxes and duties they do not have the business challenges we have here with short seasonal business, complicated and expensive access and high costs.

I wish the Government would revise their strategy and find some other way to take out this increased tax or look how to reduce spending.

Editor’s note: This article was initially submitted as a comment under our article, “Hoteliers urged to speak publicly about new room tax”.

The views expressed herein are those of the writer and do not necessarily represent the opinions or editorial position of iWitness News. Opinion pieces can be submitted to [email protected].

The opinions presented in this content belong to the author and may not necessarily reflect the perspectives or editorial stance of iWitness News. Opinion pieces can be submitted to [email protected].

9 replies on “New gov’t taxes bad for SVG’s hotels”

  1. Brown Boy USA says:

    Well said my friend, and I do hope your business continues to strive not only yoursake but your employees as well. It is so unfortunate that this government listens to no one. They alone have the answer to solve the problem, while they on the other hand are the ones creating the problems with these high duties and now imposing charge on overnight hotel stays. The government needs to be more innovative and be willing to work with all stakeholders to ensure not only the government survives but the businesses, which helps the economy to survives. However, they appear not to care much about the businesses and how they are impacted by VAT and other duties imposed. I wish others like you could come forward to highlight the struggles and impact of these regulations on your business. The government might not listen but we the people will hear your cry.

  2. C. Ben-David says:

    You ask, “Why is our occupancy level so low?” and answer that it, “… has to do with access and that we are in an expensive location to operate in.”

    I beg to differ with both reasons because there are hundreds of holiday destinations around the world that are even harder to reach than Bequia and much more expensive to operate but have much high occupancy rates.

    The reason for the low Bequia occupancy rate and the even lower one on the mainland is the attractiveness of the destinations. Bequia has some nice white sand beaches but none come close to their counterparts elsewhere in the Caribbean. Nor are there many compensatory attractions on Bequia to make up for this. The situation is far worse on the mainland.

    The construction of Argyle International Airport certainly increases the convenience factor, at least from a theoretical perspective, but is insufficient in and of itself to attract thousands of new tourists to our country.

    To repeat, although high taxes and other costs, including high labour costs, are negative features that will affect profitability, they have not deterred tens of millions of people from visiting far more expensive and remote destinations around the world.

    1. All true C Ben however… If we did not have such high taxes and instead had good value for the money, I bet we would have higher occupancy rates. If I could get similar value for the money i would come here. Unfortunately our government is trying to convince Vincentians that everyone on earth would rather come here to spend more money for less value than anywhere else. The excessive greed of the SVG government is not going to help anyone.
      With the so very wrong thinking of our government (greed, poor management and arrogance) we are all doomed!

  3. Bengt Mortstedt

    Well written and I do hope that this tax and spend government will see what unnecessary burden it will place on people who come here to visit.

    What this government fail to realize, is the way to raise revenue, is not by taxing, but by increasing the amount of visitors who comes here.

    Taxes always has an effect on how WE spend our money.

  4. Increasing taxes is not the way to go on us Vincentians living overseas, and the locals who wants to get away for a weekend.The Government needs to consider on revoking the Visa from our little Island.

  5. I have the pleasure of working with mr.Bengt and he is a very good of the best caussian I met…so we need to keep him here

  6. Creative Problem solving says:

    When was the last time has st Vincent Tourist Board / Marketing manager attended a trade show to promote the destination. We have to wake up to the fact that St. Vincent has a rich diverse tourist product that isn’t fully promoted nor utensiled. I have attended a number of trade shows over the years and I founded it incredible that St Vincent has not been represented at any of these major shows. These are shows where hoteliers and tourism marketing teams showcase the destination and develop partnerships with travel companies. More money is needed to promote the destination if you want to see an increase in occupancy.

    Instead of introducing a tax why not provide an incentive for hoteliers to improve their product? One have to create an environment to encourage investment, taxes does not solve your financial challenges if you don’t have strategic approach to marketing and promoting the destination. St Vincent natural beauty and topography can rival any of the big tourist destination in the Caribbean but it takes innovative thinkers and leadership. There are many successful hoteliers who are welling sit down with those decision makers and formulate a strategic plan to market the destination. Put politics aside and ask yourself what can you do move this country forward . .

    1. They bad-spend thousands of dollars attending such shows all the time but, apparently, not the ones you have attended.

      The money is bad-spent because of “the fact that St. Vincent [Island] has a rich diverse tourist product” is false. Yes, we have some nice attractions, as I have shown, but we fall well short of our regional and international competitors in most areas, especially the absence of miles of white sand beaches.

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