MONTEGO BAY — Jamaica Hotel and Tourist Association (JHTA) president, Josef Forstmayr, has expressed concern about the impact the bargain basement rates being charged by the Spanish-run Riu hotel will have on smaller properties in Negril. And he has called on the government to examine whether the foreign investors, who he charged had received tax and land concessions while constructing the property, have lived up to their original commitments.

“It was a clear understanding from the very outset (that the hotel should be a high end resort). And it would not have been approved as a development if it would have gone ahead as a three or four star hotel because it was felt that Negril does not have adequate representation in the higher end,” Forstmayr said. “Obviously the existing property is not a five star hotel. And it certainly sells at a much reduced rate than a five star hotel and therefore directly competes with some of the smaller properties and some of the larger properties, not in an unfair way, but it certainly puts pressure on them. My argument is: if approvals were given based on certain preconditions and these preconditions are not met, then I, as the government and as the minister of tourism, would have a problem with it.”

Forstmayr, who also sits on the Jamaica Tourist Board’s board of directors, said he wanted the government to look at the conditions under which the original approval (for the property) was granted. “Now, if I am wrong, I will apologise publicly if I have to. But from my understanding, it was always meant to be a five star resort with x amount of rooms and in a certain area. It has certainly not maintained a five star rating,” he said.

Riu has come under fire from Negril’s tourism community who accuse it of offering substantially discounted rooms at the 392-room property. Concerns have also been raised about the Spanish chain’s plans to build another 400-room hotel in the Bloody Bay section of the resort town and what this would mean for the future of smaller properties which are now forced to compete with the larger hotel chain.

Yesterday, Spanish ambassador to Jamaica, Rafael Jover Y de Mora Figueroa, maintained that in Jamaica’s “capitalist” economy, no one could dictate to Riu what rates to charge.

“If they feel that by lowering the prices at their hotel they are going to have better occupancy, I think they have all the right to do so,” he said before attending the Montego Bay Rotary Club’s monthly luncheon. “But I think that maybe, particularly after September 11, some of the hotels in Jamaica have done the same thing. Probably they need the level of occupancy to have been better. But it’s a free enterprise, they can do whatever they want.”

At a recent town meeting, Kenrick Davis, the president of Negril’s Chamber of Commerce charged that Riu was “crippling the small hotels” by offering rooms at US$65 a night, while the mid-range Sandals resort was charging US$300 a night.

Yesterday, Forstmayr agreed that some small hotels could be forced out of business if Riu’s practices continue, but he stressed that no one can dictate their rates.

Forstmayr also noted that Riu was a very efficiently-run property and he was on good terms with the local management and had made a conscious effort to get them to become a part of the JHTA.

But, he said, he had grave concerns about the hotel chain’s failure to keep its end of the bargain struck before the property was constructed.

“The problem is not that we’re living in a free world where people set rates with which they wish to get a return on their investment. The problem is that you are misrepresenting your intentions, that’s the fundamental problem. We encourage, and we welcome all investors but everybody has to play by similar rules,” he said. “If you get approval to build a five star resort and then you sell it cheaper than a two or three star hotel in Negril, it causes problems.”

The JHTA head also said that another area of concern he had was that expectations that Riu’s entry into the market would translate into greater airlift to the island out of Europe had failed to materialise.

“At the time it was also felt, and this was very, very important, that the new (hotel) development has international affiliations, which would provide it with additional airlift,” Forstmayr explained. “Riu is partially owned by Tui, which in turn, owns Lufthansa and Condor, which is their affiliate charter lift. So we expected additional flights out of Condor, the only remaining German charter we have, and that has not happened.”