Bermuda’s growth requires investment
The Government’s support for the development project on the Fairmont Southampton site is essential to jump-start our tourism industry and add desperately needed hotel beds to our product. It will mean hundreds of jobs and opportunities for Bermudians.
Over the years, successive governments (UBP, PLP and OBA) have had to face tough realities about Bermuda if we want to attract desperately needed foreign direct investment. We have had to accept that Bermuda is an extremely expensive place to do business.
As a result, getting investors to build hotels and invest here is often far more difficult than in other jurisdictions. We have even had to provide incentives to airlines to maintain our airlift to compensate for our competitive disadvantages. That is why, over the years, government incentives, tax relief and even guarantees have become necessary to get deals done and get opportunities for Bermudians on our shores.
If we go back to the 1970s, when Bermuda was operating in a far less competitive tourism market, government assistance was still needed to get the original Southampton Princess to open its doors. That investment led to the creation of more than 800 jobs and the opening of an iconic hotel that formed the bedrock of our tourism industry due to the sheer number of beds it added to our tourism product.
Under the first PLP government, then Tourism Minister David Allen saw the need to make Bermuda more competitive and attractive to investors. That is why the PLP introduced the Hotel Concessions Act 2000. This has been supported, and expanded under Mr Allen’s successors.
More recently, under the current PLP administration, the Tourism Investment Act 2017 was introduced to lay out a structure, a method of accountability and an array of benefits to investors while protecting Bermudian jobs and opportunities. This Act is available to both Bermudian and overseas investors. It is not just for investment in hotels and restaurants, it is for attractions as well.
Also, as a means to encourage and support Bermudian entrepreneurs, there is the BTA’s Experience Investment Programme. Further, we have launched a series of incentives, tax breaks and expanded access to capital for Bermudian entrepreneurs via the BEDC, including the General Micro Loan Programme and loan guarantees.
Attempts to bring investment to Bermuda under the OBA went terribly wrong. Hard lessons have been learnt from the $160 million catastrophic Morgan's Point OBA blunder and the ongoing financial challenges at the airport. Unlike the OBA, we have taken steps to ensure that the taxpayer's investment in Bermudian jobs and opportunities is not squandered.
The successful completion of this project presents a tremendous opportunity for Bermuda, including:
• The creation of jobs and opportunities during the construction process;
• The restoration of hundreds of jobs lost when the Fairmont Southampton closed its doors;
• Hundreds of beds added to our hotel stock, creating more and needed options for tourists to visit Bermuda;
• The addition of a conference centre with the ability to host larger group events and attract business to Bermuda that, up until now, we have not had the space to accommodate; and
• Increased demand for travel to Bermuda alongside substantial uptick in airlift and travel options to Bermuda
Some have stated their concerns about the loss in tax revenue from concessions provided to Fairmont Southampton. We would like to point out that there would not be any tax revenue generated without this deal. If the hotel does not reopen, there is no business to tax.
The PLP Government has recognised that investors have options and that without incentives, prudent governmental oversight and a willingness to be decisive, they will choose to invest somewhere else.
We must be proactive in the wake of the economic devastation caused by the Covid-19 pandemic. We cannot sit idly by and watch as the rest of the world opens up. We have decided to take action and anticipate that the benefits to Bermudians and Bermuda, in support of this development, will be positive for decades to come.
Crystal Caesar is the Progressive Labour Party MP for Southampton West Central