Neko C. Grant 1, J.P., M.P.,
Minister of Tourism & Aviation
Hotel Encouragement Act
Wednesday May 7, 2008
10:00 a.m.

Mr. Speaker,

I rise to second The Hotels Encouragement Act which has enormously important implications for the future development of the tourism industry in The Islands Of The Bahamas.

Before speaking to the Act, Mr. Speaker, permit me a moment to acknowledge the wonderful people of Lucaya who, one year and five days ago, spoke loudly for the fourth consecutive time on May 2, 2007. Lucaya has good reason to celebrate this forward thinking and progressive legislation today. Like everyone who meet the terms for concessions under the Act, eligible constituents in Lucaya also stand to benefit a great deal.

Mr. Speaker,

It is indeed sad that some would rush to judgment without first obtaining the facts and the challenges with regards to the Ministry of Tourism and Aviation.

Never mind that on May 8, 2007 I walked into a Ministry that had overspent by some $8 million.

Never mind that I met a building that the tax payers spent $4.2 million to acquire that was almost unfit for human habitation.

Never mind that Royal Caribbean Cruise Line (RCCL) reduced its services because their request for improvement to the Nassau Harbour fell on deaf ears.

Never mind that the Civil Aviation Department (CAD) was in a mess.

Never mind that trailers for the Exuma International Airport, delivered in 2004, were only recently paid for, four years later, but less than one year after we took office.

Never mind Mr. Speaker, that as I speak CAD has on its books, receivables in excess of $6 million because tenants have not paid rent and land lease payments throughout the Family Islands airports in years.

Mr. Speaker,

For the sake of posterity and in tribute to the dedicated, hard working staff at the Ministry of Tourism and Aviation and for the benefit of the Bahamian public, I wish to present the facts.

· Despite the decline in visitor arrivals in 2007 to 4.595 million, not 5 million that was paraded during the 2007 election campaign, from 4.730 million visitors, expenditure estimates increased from $2.057 billion to $2.186 billion.

· Despite the lost of thousands of cruise passengers as a result of RCCL repositioning ships because of the inaction of the previous administration, cruise arrivals for the entire Bahamas for the month of February 2008 was 295,713 up from 251,315 for February 2007 an increase of 17.7 per cent.
· Despite the challenges presented by the economic down-turn in the US, the result of any number of issues including the skyrocketing cost of fuel (trading at $122 per barrel today); the sub-prime meltdown and the related collapse of the US housing market, consider the following:

1. If we had not suffered the lost of RCCL passengers, we would have had an increase rather than a less than one (1) per cent decline.
2. Yes Mr. Speaker, Grand Bahama Island is down 10 per cent despite our efforts. I hasten to add, that had it not been for the sustained efforts of my Ministry, it would have been worse.

                  Our efforts resulted in the MV Discovery continuing to call on Grand Bahama Island when it was scheduled to discontinue services in October 2007. Every Member of Parliament for Grand Bahama Island in this place knows of Discovery’s worth to not only the tourism sector, but the economy of GBI in general.

                  Our efforts resulted in Spirit Airlines commencing daily jet service between Fort Lauderdale (one of its major hubs) and GBI in November 2007.

                  Our efforts also resulted in Norwegian Cruise Lines (NCL) commitment to 28 new calls.

                  Mr. Speaker, our efforts as an outcome of a “no holds barred” town meeting with all stake holders resulted in a change of attitude. The word got out! GBI transport providers have changed. Let’s give them a try! Cruise ships delivered inclusive of an unscheduled stop which landed almost 10,000 passengers in one day descending on GBI. Taxi drivers, straw vendors, shop owners, the casino, everyone benefited.

Yes Mr. Speaker, our efforts produced results.

Had it not been for our efforts, things would be worse.

Mr. Speaker,

We are satisfied that we will continue to be challenged on GBI for a number of reasons.

I want to assure the good people of GBI, that your Government will not betray the “trust” you have placed in us.

We will deliver.

Continue to “trust” us!

Mr. Speaker,

Stopover visitors from Europe, up to February, was up 8 per cent.

On Friday past, May 2, 2008, we secured a new advertising agency for Europe. This agency, Fox Kalomaski replaces an agency that has represented us for some 10 years and we felt that in view of the changed environment both in The Bahamas and in Europe that we needed a fresh approach to our marketing efforts.

We are confident that this new agency will deliver break through creative, targeted media and good integration with our PR efforts.

Mr. Speaker,

Stop over arrivals from Canada was up some 28 per cent. New airlift from Calgary, introduced in November 2007 has contributed to this.

Latin America was up some 17 per cent.

Mr. Speaker,

We intend to continue to exploit these markets to increase visitor arrivals from these markets.

Mr. Speaker,

The Bahamas’ tourism sector’s growth and development can, in very large part, be accredited to the government’ s vision at the time to provide an incentive to resort developers through the existing Hotel Encouragement Act that provided relief from customs duties applied to material for building and furnishing of hotels.

Today, while we can boast of our success in encouraging resort development throughout The Islands of The Bahamas, we have not however nurtured the growth and development of other key sectors of the tourism industry. The growth in the retail shops and independent (out of resorts) restaurants sectors have not kept pace with resort development.

Mr. Speaker,

My government, in the spirit of our policy commitment to broaden the distribution of the income derived from tourism, has determined that we must therefore do more to encourage investment by Bahamians in the retail shops and restaurant sectors that cater to visitors and in this regard, we are proposing to extend the benefits of the Hotel Encouragement Act to these business.

We trust that these incentives that lower the bar to Bahamians to become owners and operators of such businesses will be fully exploited and result in our achieving the intended goal of spreading the benefits derived from our Tourism industry to a much broader cross section of our population.

In addition, Mr. Speaker, we anticipate it will result in visitors having a wider menu of dining and shopping options that will contribute to The Islands of The Bahamas remaining a destination of choice.

Mr. Speaker,

It is important, we believe, to allow Bahamians, who wish to invest in these kinds of businesses, catering to tourists, concessions similar to those previously given exclusively to foreigners or persons operating within the confines of a resort.

These amendments to the Hotels Encouragement Act widen the scope of those who will now be eligible to apply for and receive concessions.

Mr. Speaker,

Exuma and Long Island have not yet recovered fully from the effects of “Noel”.

We seek to change that.

I had the privilege recently of officially opening the Long Island Tourism Office in Deals, Long Island to further assist with the development of the tourism sector on the island.

During that occasion, I also participated in the formal opening of the Long Island Breeze, a boutique resort in the Salt Pond area and visited and toured the Winter Haven Resort/Rowdy Boys Bar and Grill in Clarence Town, owned by a Bahamian, Burtis Knowles.

Mr. Speaker,

Both resorts are having a positive and sustainable economic impact on the economy of Long Island and are truly complementary to the natural treasures to be found on the island.

However, it took Mr. Knowles six years to realize his dream of constructing phase one of his resort vision. I imagine that with the concessions envisioned by these amendments in place, Mr. Knowles will be able in a more timely fashion to get subsequent phases of his resort complex off the ground and completed.

Mr. Speaker,

The Amendments also permit restaurants which are not limited to a hotel site and shops, which offer goods for sale to tourists, to be afforded concessions similar to whose granted to hotels.

The only condition of note is that these establishments must be open to the public for a minimum consecutive period of nine months.

The amendment further makes it clear Mr. Speaker, that the restaurant or shop must be in a designated area, which is described and defined as “an area defined by the minister.”

Mr. Speaker,

This is an important break through for tourism. The Ministry of Tourism and Aviation has long wanted to see the expansion of the industry and its diversification to reflect more than hotels so that it includes other related industries.

The fact is that with the passage of this legislation, Bahamian restaurants and shops catering to our visitors will now benefit directly in meaningful and tangible ways they were previously excluded from enjoying.

Bahamian businesses eligible for hotel concessions will now be able to enjoy exemptions from customs duty and certain taxes with respect to the construction and equipping of a new restaurant or shop or the alteration or renovation of an existing restaurant or shop.

Mr. Speaker,

I have no doubt that more shop owners on Bay Street would have moved before now to upgrade their premises if they had access to duty free concessions.

There are many restaurants and shops Over the Hill catering to visitors who will benefit by accessing the concessions to improve their property.

I also am of the view, Mr. Speaker, that major foreign investors who were able to access concessions under the Act, had what amounted to an advantage over smaller Bahamian investors and business persons. As an example, while Atlantis was eligible for concessions under the Act and was able to bring in their fittings duty free, smaller businesses such as John Bull which operates an outlet right next door were not eligible for similar concessions.

While we all appreciate the tremendous impact attracting a billion dollar resort facility has on the national economy, we must also understand that small Bahamian business also have a significant role to play to ensure our long term sustainability and viability in the tourism sector.

I believe, Mr. Speaker, that over the years, the exclusion of Bahamian businesses catering to tourists from eligibility to the hotel concessions, has had a negative effect on struggling Bahamian businesses.

Today your caring Free National Movement Government is moving to put this wrong right.

Mr. Speaker,

The Ministry of Tourism also considers this amendment as a singular opportunity to encourage investment by Bahamians in specialty shops and themed restaurants which will allow us to significantly diversify our tourism product.

One of our major challenges in the industry is overcoming the perception by some that there is little to see and do on a visit to The Bahamas.

Mr. Speaker,

The thrust of this amendment will be to help to encourage the proliferation of additional tourist attractions such as amusement parks, water parks all with themed shops and restaurants catering to visitors.

My Ministry views this legislation as enabling us to attract a greater variety of desirable tourist attractions thereby creating more for our visitors to see and do on their vacations.
Mr. Speaker,

This legislation also has tremendous implications for the upgrading and improvement of Bay Street and the downtown environs.

I believe that Members Opposite and my colleagues on this side of the isle have long lamented the deteriorating condition of shops and buildings on Bay Street, once a premier attraction for tourists visiting the city.

What we are debating here today, Mr. Speaker is an opportunity for Bahamians catering to tourists, those down town and those in defined areas over-the-hill to redefine themselves and their businesses under this amendment.

These businesses have the opportunity to create a whole new face lift that encompasses renovations to both the physical exterior of restaurants and shops as well as the interior utilizing the concessions under the Act.

Mr. Speaker,

The same thing applies for other depressed tourism environs on Grand Bahama Island and other major shopping and dining areas in the Family Islands.

These businesses, by virtue of these amendments, have an incentive to present themselves in a new improved form.

Mr. Speaker,

This is critically important to our destination, particularly at this time of economic uncertainty precipitated by global credit crisis and the less than favorable outlook for the US economy.

The Central Bank Of The Bahamas in its recent economic report stated that despite a softening economy tourism provided a positive contribution to economic output in January. However, on balance, the country’s economic performance in the first half of 2008 is likely to be relatively mild, the report stated.

Visitor spending indicators remained positive in January driven in part by a 6.5 per cent improvement in the higher value added air segment, notwithstanding a 6.4 per cent overall reduction in visitor arrivals and a 10.9 per cent decline in sea arrivals.

Given this scenario Mr. Speaker, the need to provide new and improved tourism facilities, required and demanded by today’s discerning travelers, becomes even more paramount.

It is important that we diversity and upgrade the tourism product in a wholesome way throughout the Islands Of The Bahamas. We must therefore be able to consider new initiatives such as the one before us to accomplish our objectives.

Mr. Speaker,

I am therefore happy to say that for the first time a real opportunity exists for our destination to improve and diversity its tourism product in a major way.

This is a long awaited and welcomed opportunity.

I’m therefore delighted to second the amendments to the Hotels Encouragement Act.