FOUNDER and Chairman of Sandals Resorts International, Gordon “Butch” Stewart says Caribbean governments can derive even more revenue if they would take a more strategic approach to their tourism products rather than front-load tax demands.

Addressing Republic Bank’s investor briefing conference in Grenada at the end of last month entitled, “Fast Forward Together — Reigning Growth,” Stewart said: “It is very important that we all pay our taxes and it is incumbent upon corporate entities to make an equitable contribution to the country’s exchequer. Tourism is the single largest source of income for many of the islands and has enormous potential for our Caribbean economies. That being the case, governments must be strategic in their approach in deriving revenue from it — ever mindful to ensure its continued viability.”

The hotel magnate suggested that governments must adopt a reasoned manner and cannot over-react when looking to solve budgetary problems by rushing to burden export businesses, which in essence, tourism is. He is of the view that overtaxing tourism reduces its export capabilities which in turn nullifies competitiveness.

“A government is only as good as the health of its business community because there is nowhere else to garner tax revenues. Therefore, it behooves Caribbean governments to make sure tourism remains competitive and continues to generate revenues. The more people tourism employs, the more taxes governments can collect. Tourism can really provide a windfall that addresses deficits if governments look to collect on the back-end,” said Stewart.

He observed that Miami in the United States had prospered over the last 30 years as people from South and Central America and the Caribbean had gone there to shop and make the most of the great retail experience there. He noted the vibrant restaurant and café society that exists there, as well as every fashionable brand name doing business which leads to a trickle down effect.

In other words, shoppers need hotels to stay in, taxi drivers to ferry them around the city, restaurants and bars to go to. A whole economy has prospered on this model.

“Look at the tiny island of St Barts. It has the most fantastic retail experience you can find. Women love to shop there and it has all the best brand names you can find. All that spells revenue and earnings in United States dollars. Caribbean countries should now look to develop shopping as an attraction that further bolsters tourism.

Take a look at Jamaica. Where can tourists, particularly women, get a first-class shopping experience? I would argue nowhere of note. Yes, we have beaches but we need more than that to generate even more income. There needs to be more value-added to our tourism product which allows governments to collect even more taxes while at the same time seeing to it that everyone benefits – hotel workers, hoteliers, shop owners, realtors, restaurant owners and the list goes on and on. Hence this shopping experience effort will further drive the tourism business.

“Just as Lee Kuan Yew studied Jamaica as an economic model when it was prospering, we should study the likes of St Barts and Miami, to help our tourism product earn even more revenue.”

Stewart, who is also chairman of this newspaper, is of the view that you have to look after the goose that lays the golden egg and see to it that it continues to lay those eggs. Efforts should be made not to hamper or restrict that process.

“As Michael Manley use to say, ‘If you tax a banana, you will not be able to sell a hand.’ “

“If you have a competing racehorse, why would you saddle it with too much weight then expect it to win? We must be mindful that we have to compete with Mexico, Disney, Europe and the United States, and we cannot do so effectively if we are overtaxed.”

With so many governments having to abide by the strictures of the IMF as a result of indebtedness, the Sandals boss said that every effort should be made to encourage greater investment in the Caribbean and bring the marketplace here.

To that end, he would like to see both local and foreign investors encouraged and facilitated, which then leads to greater employment and increased earnings, resulting in governments being able to collect even more taxes from vibrant businesses.

He made it clear that businesses that invest in Caribbean countries and play a role as good corporate citizens should be encouraged and rewarded and that those that do not invest here, cannot profit at the expense of those companies that have invested in the region’s economies.

“Governments continue to tax local hotels while the floating hotels that are the cruise ships enjoy all sorts of concessions with very little return made to Caribbean economies.”

Land-based accommodations account for 90 per cent of Caribbean tourists.

“The cruise ships do not make as significant a contribution to Caribbean economies as do the land-based hotels. We contribute to the agricultural sector, furniture makers, taxi drivers, telecom providers, landscapers, liquor suppliers – yet cruise ships, while making far less of a contribution get all sorts of concessions which sees governments unable to claim meaningful taxes from them,” pointed out Stewart.

He thanked the Grenadian government for facilitating Sandals’ investment in the country. Sandals LaSource Grenada is due to open in the middle of December of this year, and the chairman of SRI added that already bookings are excellent.

Sandals has made an initial investment of US$80 million in this project and during the first phase will add a further 130 keys, mostly one-bedroom suites. The hotel originally had three restaurants but an additional five will be added, taking that number to eight restaurants.

On the site, there are between 350 and 500 construction workers completing the 225-room hotel, which will employ just over 450 people when operational.

This hotel brings the Sandals brand to Grenada, which hopefully will lead to additional airlift and help to create jobs in a country where the unemployment rate is 40 per cent. Stewart declared that the hotel will be looking to engage as many Grenadian suppliers as possible. He also praised the diligence and professionalism of the local construction team who are set to deliver the hotel on deadline.

He took the opportunity to declare that Sandals has been looking to invest in Grenada for the last 14 years. He thanked the Chairman and Managing Director of Spice Island Beach Resort, who hosted the conference, Sir Royston Hopkin, for encouraging Sandals to invest in Grenada and he also thanked local businessman, Michael McIntyre for playing an invaluable role in helping Sandals LaSource Grenada become a reality.

Turning his attention again to the state of Caribbean economies, Stewart concluded, “Complaining has no place in our future. The future has to be determined by solutions.”