Tourism investments under the microscope
Minister of Tourism Edmund Bartlett has put a cork on new approvals of tour businesses, while his Tourism Working Group (TWG) examines the degree to which large hotel groups may be crowding out local destination management companies and tour operators from the market.
Wilfred Baghaloo of PricewaterhouseCoopers Jamaica, who was appointed to offer technical guidance to the TWG, said there is a perception that investments by big hotel groups are seeping into the transport, attractions, and entertainment sectors, and taking business away from small Jamaican companies.
Baghaloo says the committee decided that a probe was required based on feedback coming out of multiple meetings with industry groups. He framed the issue around foreign versus local investments.
The terms of reference of the committee include a review of work permit schemes, transport and destination management companies and the craft and housing sector.
Bartlett appointed Baghaloo to the expanded TWG in late June in a technical capacity. The group is chaired by hotelier and CEO of Sandals Resorts International Adam Stewart, who also heads the Tourism Linkages Network. Two months later, the minister moved to suspend the issuance of new tour operator licenses until the committee finished its work, which is expected to be early next year.
The suspension was a direct request of the working group.
So far, the committee has had more than 20 meetings with local stakeholders, in which the primary challenge expressed was "whether the local investors are getting a fair share of the industry which is being challenged by the large hotel investors who are now investing in attractions, transportation, entertainment, among other activities," Baghaloo said.
Baghaloo said ground transport and tour operators - including JUTA, J-CAL and Maxi - are asking for a policy response to safeguard their investments from competition - a position with which he appears to agree.
"These investments made by thousands of Jamaican nationals and several large hotels operators have created a serious conflict that needs an urgent policy framework at the national level," he said.
He quantified the investment by locals at around $35 billion to $45 billion, but did not put a timeframe around the figures.
As part of its probe, the working group is to meet with foreign investors to hear their perspective.
The group acknowledged the "level of substantial risk the investors are taking," said Baghaloo, "but equally the foreign investors need to be cognisant that growth must be felt by the people that participate in the industry on a daily basis".
If local investors are pushed out of the market, he added, it can have negative spin-offs for local productivity and lead to "dysfunctional behaviour", such as tourist harassment.
"We are bordering on a crisis and we need to act fast," he asserted.
Baghaloo declined to name the destination management companies and tours that are financed by large hotel companies.