‘Imminent collapse of the hotel sector’

Hotels in Grenada are asking for a reduced price in High Cost of Energy.

GHTA President, Ian DaBreo says the sector could collapse in the next six months is help is not on its way

This is a plea made by President of the Grenada Hotel and Tourism Association (GHTA), Ian DaBreo in the wake of the forced closure of some hotels on the island.

There are unconfirmed reports that some hotels have to find in excess of EC$100, 000.00 a month to pay GRENLEC in electricity costs.

In a press statement issued, Da Breo called for a moratorium on disconnections by utilities (since losing power or water with guests on the property hurts all of Grenada, not just the hotel).

He also called for the establishment of a soft loan facility, since many properties pay debts at interests rates as high as 13% and for government to assist GHTA with its attempts to obtain grant funding to implement energy efficiency measures that would reduce energy consumption by half.

Following is the full text of Da Breo’s statement read at a press conference held on November 15, 2012:

 

For the last decade, Grenada’s largest earner of foreign exchange, the Tourism Sector, has been under pressure from world events that have affected the growth and prosperity of our businesses and our nation.

This has caused hotel properties to borrow heavily to keep their businesses in operation, while also enduring high energy prices, fewer visitors, insufficient airlift, and virtually no destination marketing beyond the estimated 10 Million US Dollars spent by private sector tourism companies marketing their individual businesses.

This is an unsustainable situation that is placing an estimated 2000 direct jobs at immediate risk.

In June of this year, the following figures were reported to the Minister of Finance and the Minister of Tourism in a meeting where the GHTA requested that Cabinet set up an Emergency Task Force to address the crisis.

The figures reported to the Ministers remain as follows: 11 properties are closed or changed over to student accommodation and an additional 9 properties have been foreclosed by banks bringing the total number of businesses no longer in operation to 20, or an estimated 1/3 of the hotel properties in Grenada.

In addition, of the remaining properties in operation, 6 are stressed and 8 are severely stressed, which means that by this time next year these properties could be closed without significant interventions to stimulate the tourism economy.

The potential impact of this situation on Grenada’s economy is tantamount to a national crisis.

Figures reported from 17 properties confirm that XCD $8.5 million is spent in the local economy on food alone, over XCD $ 2 million is owed to GRENLEC, XCD $9 million is in arrears to local banks, and an additional XCD $6.1 million is in arrears to local suppliers and the government.

Local suppliers have little room to wait for late bills – these are Grenadian fishermen, farmers, bakeries and retail establishments that have bills to pay and employees to depend on them for work.

Already, the hotel sector is in the second round of employee rotations, trying to reduce hours rather than let people lose their jobs altogether.

Recognising that action was urgently needed, the GHTA identified a list or priority actions to help prevent the closure of more hotels.

They include:

 

(1). Reduce the High Cost of Energy

(2). Obtain a moratorium on disconnections by utilities (since losing power or water with guests on the property hurts all of Grenada, not just the hotel)

(3). Establish a soft loan facility, since many properties pay debts at interests rates as high as 13%

(4). Assist the GHTA with its attempt to grant funding to implement energy efficiency measures that would reduce energy consumption by half.

(5). Promote Grenada as a destination

 




What is most critical to observe among these actions is that they represent self-help initiatives that require little more than effective communication and follow through by government.

That is why the Hotel Sector Emergency Working Group, established by Cabinet on July 19th was so important. The purpose of this task force was to provide a forum to fast-track solutions given the urgency of the crisis facing the sector.

However, four months into the six month mandate we are gravely concerned (that) the Emergency Working Group has not served as an effective repository for communication and coordination either between the GHTA and the Government or internally between Government stakeholders.

We do not see any indications of progress in any of the key priority areas identified that will in any way prevent the imminent collapse of the hotel sector in Grenada.

Since the tourism sector is a vital element of the stability and security of the entire nation, we are compelled to report the following:

 

(1). The GHTA urgently needs to source grant funding to implement energy conservation measures immediately. When hotels pay on average $70,000 a month in energy costs, reducing this bill by half represents the difference between open and closed for many properties.

The government has failed to support us effectively in this regard and we are nearing the point of no return for being able to use this creative option as a means to extend the life of the sector.

 

(2). GHTA urgently needs to establish a soft loan facility for hotels to refinance existing debt through traditional commercial agreements. This means that we are not seeking any money from the government directly but we do need their support in sourcing the funding to set up the facility.

We had been invited to participate in the government mission to the United Arab Emirates, but with less than a week’s notice, the person Cabinet had appointed to travel with them on our behalf was not able to make alternate arrangements to manage his business on such notice.

 

(3). Grenada needs a robust investment in destination marketing. The Grenada Board of Tourism has virtually no operational budget, and Government Ministers have been reported to have made statements regarding their expectations for what the new Sandals investment will bring that suggest the Government is placing far too high an expectation on this one investment to be the catalyst for the recovery of tourism in Grenada.

Even though the Sandals Resort will result in increased marketing and airlift services for the resort, it will not substitute promoting Grenada’s tourism product.

 

(4). The private sector needs to be included in the articulation and planning of the Nation’s economic recovery, rather than informed about initiatives after the fact.

We have played a role in fostering relationships that could generate opportunities for Grenada, such as the Clinton Foundation and it is disappointing to hear that a Memorandum of Understanding has been signed without any communication back to the Task Force that this important item from the emergency task force was being acted on.

 

(5). There is a need to improve communication, so the GHTA is aware when action items stemming from the Emergency Task Force are acted upon, and to ensure that stakeholders possessing the highest offices in Government are appropriately informed. Only yesterday, we have been advised that one proposal we developed may be put through another funding channel, and without any details being offered up.

 

(6). Most of all there is a profound need for the Government of Grenada to demonstrate that they recognise the magnitude and urgency of the crisis facing the Tourism sector and Grenada as a whole.

 

As a result, we are compelled to ask what plans the Government has which would assist hoteliers and prevent the total collapse of the sector in the next six months.

The GHTA would like to thank you for your time and sincerely look forward to changes ahead that will prevent further closures in the tourism sector in the next 12 months.

 

 

 

 

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