The Bahamas Hotel Association (BHA) is calling for the elimination of the 25 per cent market value investment required under the Hotels Encouragement Act for the renewal of investment incentives.
Its President Stuart Bowe told Tribune Business many small hotels were unable to come up with that much capital to invest in tough economic times.
A forum was hosted yesterday by The Bahamas Investment Authority (BIA) and the Bahamas Chamber of Commerce and Employers' Confederation (BCCEC) which focused on the Hotel Encouragement Act and the City of Nassau Revitilisation Act.
Responding to questions posed by Tribune Business after the forum, Mr Bowe noted that many of the small hotels in the Bahamas have been forced to hold off on investing in refurbishments and improvements to their offering due to the impact of the recession.
Mr Bowe said: "The recession has underscored the vulnerability of many of our hotels, particularly our small hotels. It has also forced many of them to put a hold on investing in refurbishments and capital improvements as they found it necessary to first meet basic operating expenses in order to survive. As a consequence, there is a critical need for investment to upgrade many of our hotel products. Hotels must continually invest in their product and if they fail to do so; room rates cannot be increased which further increases cash flow challenges, and increases the negative perceptions of the destination and staff service. The Bahamas Hotel Association recommends that incentives be put in place to stimulate capital improvements and refurbishments."
Mr Bowe added: "The Hotels Encouragement Act presently requires that in order to renew investment incentives, a hotel must invest the equivalent amount of 25 percent of the market value of that hotel. That means that a Bahamian who owns a small 15-room fishing lodge on a Family Island which sits on a beautiful location valued at one million dollars must come up with $250,000 just to qualify for duty exemptions. In these difficult times, that kind of cash is rarely on hand in a small operation. The Bahamas Hotel Association recommends that the 25 per cent requirement be eliminated to stimulate improvements to our tourism product, which benefits over 70 per cent of our nation's hotels; already owned and operated by Bahamians. This strategic initiative would help all hotels in the Bahamas to increase competitiveness in the global tourism economy."
Published: June 22, 2012