Breaks for tourism development clear Senate
Senators have approved a Bill allowing for an extended period of concessions for hotel developers and investors.
The Tourism Investment Act 2017 will be amended to permit the tourism minister to grant relief to developers of, or investors in, new or refurbished hotels, new or existing restaurants, and attractions.
Owen Darrell, the Government Senate Leader, said the legislation would spur investment in the island’s tourism product, bringing more visitors, greater airlift and “jobs, jobs and jobs”.
Opposition senators signalled they did not support the legislation, but did not object.
Douglas De Couto, the Shadow Minister of Economic Development, told the Upper House: “We know how the vote will go.
“But we are against this Bill for all the same reasons we didn’t support the Fairmont Southampton Bill. The concessions are too long, too general and give too much away.”
He said the trade-off for the Fairmont Southampton had set a bar for other would-be developers to ask for breaks.
John Wight, an independent senator, backed the concessions, telling the Senate: “Investors compare the financial returns they can achieve in Bermuda against returns elsewhere therefore it is important that we entice continued investment in Bermuda’s inventory of hotel and restaurant facilities through fair and appropriate concessions such as those specified in this Bill.
“What current and future investors want is a level playing field. They want to know that there are not concessions made to one facility that unfairly advantage that hotel or restaurant versus theirs. The current model is not fair and equitable because some hotels have already been granted concessions that others have not been.
“What businesses want and need is to be able to compete on a level playing field based on services and price, like every other business. This Bill will facilitate every hotelier current and future to be able to do this. This is good for them and good for Bermuda.”
Concessions for new hotels will be extended from ten years to 15 years, a refurbished hotel from five years up to 15 years, a new restaurant from three years up to five years, an existing restaurant from one year up to three years and an attraction from three years up to five years.
The Act also repeals provisions for developers to maintain full and proper records of the goods to which customs duty has been applied.
It will permit the minister, upon the receipt of an application for a new or refurbished hotel, to consider the planned estimate costs of the proposed development plus the combined value of investment not exceeding seven years before such an application is made.
Dr De Couto said the One Bermuda Alliance had realised developments such as the St Regis, the Azura and The Loren during its time in power without requiring “the size and length of concessions in this Bill”.
He said the success of the resorts was less about concessions than “the quality and financial strength of their financial partners”.
Tax concessions could have been switched for rebates, he said, and concessions could come with the option to get extensions based on performance.
Lindsay Simmons, the Junior Minister for Social Development and Seniors and Home Affairs, said the sweeteners were needed because the island was “known to be an expensive place for all businesses”.
Rather than pertaining to any existing hotel applications, the Bill was “a framework for future applications”, she said.
“It’s not a money giveaway,” Ms Simmons added.
“The Government is not currently earning any funds from, say, Elbow Beach, Lantana or Ariel Sands” — all empty resorts.
Ben Smith, the Opposition Leader in the Senate, told the Senate: “We started off a year ago with concessions specific to one particular project.
“Once you open that door, it created an environment which meant you had to level the playing field for all other developers at the starting line.”
Mr Smith said the OBA had shown that developments could be achieved with less.
Leslie Robinson, the Junior Minister of Economy and Labour and Public Works, hit back at “the OBA and their constant reminder that during their time, they were able to have several hotels come online”.
She said a host of issues had since changed the investment climate, from the Covid-19 pandemic to the war in Ukraine, higher interest rates and inflation.
“It becomes very difficult to compare what happened in 2015 or 2013 versus what is happening now.”
Mr Darrell said he found the Opposition’s criticism of the Bill “disappointing”, and told the Senate the legislation was strictly about “supporting the tourism recovery”.
“That is the ethos of the Progressive Labour Party.”
The Bill was passed without objections.