Duty-free concession or certain death, says small hoteliers

Janet Silvera, Hospitality Jamaica Coordinator

Contributed - Many small hotels are struggling to remain viable.

Several of the island's small hoteliers, particularly those in the 'Capital of Casual' - Negril, fear being wiped off the Jamaican tourism landscape if they cannot continue to enjoy duty free concessions on import items to upgrade their properties.

The hoteliers, who said they are no longer asking for bank loans as they are never able to qualify, told Hospitality Jamaica that they need an avenue which will assist them in upgrading themselves and not have to worry about duties.

As part of the Hotel Incentive Programme, each new hotel (small and large) enjoys a 10-year duty-free concession. However, most of the island's small resorts were built over a decade ago.

After the 10-year period, hoteliers are not entitled to any further concession unless they put in 30 per cent more rooms or carry out substantial structural restructuring, says Carolyn Riley of the Strategic Unit in the Ministry of Tourism, Entertainment and Culture.

on the brink of extinction

Faced with the harsh reality, stiff competition from larger and more luxurious neighbours, and lack of proper marketing, the small entities which have become an integral part of the survival of the Jamaican tourist industry are predicting 'extinction'.

Daniel Grizzle, owner of the 49-room Charela Inn Hotel in Negril, says after 10 years in business that is time the concession becomes extremely necessary, because no amount of marketing is going to put guests in a bad or substandard property.

"That is the time your rooms are in need of refurbishing and proper maintenance," he said.

According to Mr. Grizzle, 25 per cent of the rooms in Negril are new hotels, and among the small hoteliers, villas and cottages which makes up the remaining 75 per cent, the majority of them need to be refurbished.

"But in order to upgrade the duty is 40 per cent. The Government should do away with duty relating to equipment, tangible goods and raw material," he stated.

He noted that the Tourism Product Development Company had refused to recommend a number of hotels on the Negril west end because they were not up to standard.

"Our occupancy has been the worst in Negril, as we face 25 per cent increase in inventory," added the hotelier.

Mr. Grizzle said he was given an estimate recently to refurbish 12 bathrooms and each room is going to cost $36,000. While the last time he refurbished his bedrooms it cost him $1.5 million to redo 20 rooms.

"I had to go to Miami to buy the marbles, faucets and fittings and could have saved 50 per cent had it not been for the duty," he said.

Ray Arthur, owner of the Golden Sunset, who admitted receiving assistance from TPDCo three years ago, says he has never enjoyed the 10-year concession. "A lot of us are just sitting on the cusp of closing down; I am now down to one guest per night because I cannot compete with the prices that others are offering."

He said even his Spring Break business is gone. Having not made a profit in three years, Mr. Arthur believes he is being deliberately closed down. "Whether they recognise it or not that's exactly what they (government) are doing."