‘Death knell for small hotels’

WESTERN BUREAU:

As Jamaica’s tourism sector continues its post-Hurricane Melissa recovery, small hotel operators are warning that new tax measures slated for implementation in April 2027 could destabilise locally owned properties and weaken the island’s competitiveness.

Hoteliers say the timing of the proposed General Consumption Tax (GCT) increase, coupled with rising utility costs and lingering hurricane-related disruptions, creates what one stakeholder described as a “perfect storm”.

Sophie Grizzle-Roumel, hotelier at Charela Inn in Negril, Westmoreland, did not mince words.

“Talking as a small hotelier, it is a death knell for small Jamaican hotels,” Grizzle-Roumel said. “We have already had massive increases in electricity. We have gone through two [recent] hurricanes. We consistently stay open, pay our taxes, and keep our staff employed even when business is down. This will put tremendous pressure on the smaller hotels.”

Grizzle-Roumel argued that small properties lack the economies of scale available to larger resort chains and do not benefit from substantial tax credits generated through major capital investments.

“We don’t get concessions. We buy local, which is often more expensive. We represent the authentic side of Jamaica, but we cannot compete with the large hotels on price,” she said.

She is advocating for a tiered or phased implementation similar to the structure used when the room tax was introduced.

“When the room tax came in, it was tiered because Government recognised that smaller properties were struggling. Maybe hotels under 80 or 100 rooms should remain where they are, or the increase could be phased … two and a half per cent first then adjust later. A five per cent jump at once is significant.”

Her concerns extend beyond taxation.

“We cannot compete with the price of electricity,” she said, pointing to recent increases in Jamaica Public Service rates, noting that past water disruptions in Negril drove her property’s water bill up by 50 per cent. “During the hurricane, we had to rely on generators. Fuel is far more costly.”

Compounding the issue is the rigidity of international tour contracts.

“We have already signed contracts with tour operators, some two years out. They are selling packages based on those prices. You cannot just go back and renegotiate easily,” she said. “Jamaica is already one of the more expensive destinations in the Caribbean. This will make us even more expensive.”

CONCERNS

Christopher Jarrett, president of the Jamaica Hotel and Tourist Association (JHTA), also echoed concerns about timing and structure.

“Most of the members to whom I’ve spoken say even though implementation is a year away, it does not give sufficient recovery time coming off the hurricane.”

Jarrett acknowledged that smaller properties and those with fixed tour contracts would feel the greatest strain.

“They are locked into rates that are almost impossible to come out of. You cannot suddenly tell tour operators that you need to renegotiate because government policy has changed,” he said.

The JHTA is advocating dialogue and exploring alternatives.

“We are not in a fight with Government,” Jarrett stressed. “We understand the need to generate revenue, but we believe there are solutions. Perhaps a tiered approach, maybe a two per cent increase first then an adjustment later.”

He described a five per cent jump as “significant, and, for many, unbearable,” particularly when combined with recent increases in electricity rates.

“We are already in a competitive space,” said Jarrett, referencing regional competitors such as the Dominican Republic. “We cannot continue to pass every cost on to the customer.”

Despite the concerns, Jarrett noted that occupancy levels remained relatively strong for properties that have reopened largely because several hotels remain closed following hurricane damage.

“That shortage has helped occupancy for those operating,” he said. “But once the closed properties reopen, competition will increase again.”

For Grizzle-Roumel and other small operators, the larger fear is long-term viability.

“Sometimes it’s not just money that has value,” she said. “We kept our full staff complement even when business was slow. Those employees spend their wages in the economy and Government still collects GCT that way. But it’s going to be a very big struggle for small, locally owned properties.”

Industry stakeholders are expected to meet with the tourism minister and the finance minister to explore possible adjustments before the measures take effect.

janet.silvera@gleanerjm.com