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MPs approve up to $1.2 million tax relief for hotel

Tax relief: Fairmont Southampton.

Legislators have approved up to $1.2 million worth of tax relief to Fairmont Southampton to assist in the property’s redevelopment, despite concerns about the hotel’s commitment to hire Bermudian entertainers.“We’ve seen improvements in theory to our tourism but the actual results aren’t there,” independent MP Terry Lister said.He told the House that an entertainer who had worked at the hotel for 12 seasons was never given a contract despite his repeated requests, was asked to audition for his job every year, and had now been laid off indefinitely since November last year.“I’m going to invite you to hold people’s feet to the fire, so we protect Bermudians in the way they deserve to be protected,” Mr Lister told Tourism Minister Shawn Crockwell.Under the Hotel Concessions Act, hotels are given tax breaks to help defray the costs of investing in their physical plants. The size of the concessions depends on how much the hotels spend on marketing, and training Bermudians and hiring Bermudian entertainers.“Fairmont Southampton is an icon to Bermuda’s tourism industry,” Mr Crockwell said in introducing the Hotels Concessions (Fairmont Southampton) Order 2013.“With 596 hotel rooms and approximately 580 Bermudian employees, Fairmont Southampton is Bermuda’s largest tourist accommodation.”Mr Crockwell continued: “In order to succeed in today’s competitive global marketplace, the hotel’s principals recognise that they must commit capital investment for physical plant upgrades in updating their overall product.”He reminded the House that concessions up to $40.1 million and $27.9 million had been approved for the hotel by the House in 2001 and 2009 respectively and that Fairmont Southampton had benefited by $5.3 million to date.“The current development aims to ensure long-term sustainability of the hotel and to improve on several areas including working conditions, safety for the staff and visitors to the property and efficiency in the operations,” the Minister said.Mr Crockwell added that the value of the development improvements planned by the hotel was estimated at $9.2 million.He stressed that the hotel’s application for the tax relief would have to include audited financial statements and “specific details on expenditure on marketing, training of Bermudians and Bermudian entertainment”.Under the order, the hotel will get partial exemptions from land tax, hotel occupancy tax, and payroll tax, depending on its spending on marketing, employment of Bermudian entertainers and training of Bermudians.The Progressive Labour Party supported the measures. Mr Lister also supported the concessions, but said he was disappointed that tax breaks for the hotel industry were still necessary 15 years after the Hotel Concessions Act — meant to be a temporary measure — had been enacted.“At some point we have to get this industry where it can pay its own way, where it can be profitable just like the neighbourhood plumbing outfit has to be profitable. No one’s giving concessions to six-man plumbing companies.”In response to questions from the Shadow Tourism Minister Wayne Furbert the Minister reported that the hotel had spent $198,211, $201,024, and $242,627 on local entertainment in 2009, 2010 and 2011.Mr Lister told The Royal Gazette yesterday that the figures provided by the Minister showed the hotel “has very minimal commitment to having Bermudian entertainers in their facility.”The concessions passed give the hotel a 50 percent tax break on money spent on local entertainment, capped at $242,500.Mr Lister said: “If you were paying those entertainers the rather small sum of $60,000 each you’re only talking about eight people,” to get the maximum tax relief, yet in 2009 the hotel had hired the equivalent of just three local entertainers.Government will also give tax exemptions which match the hotel’s spending on marketing and training of Bermudians, up to a maximum of $107,700 and $315,000 for each year.Fairmont Southampton was contacted for comment but no response was received by press time last night.