Tourism businesses squeezed

TOPTourismbusinessesLEAD

The Cayman tourism community is to
meet with Premier McKeeva Bush on Friday to discuss difficulty of doing
business in the light of increased costs and fees.

Harry Lalli, president of the
Cayman Islands Tourism Association, said he would discuss several issues of
immediate concern. The closure of Caribbean Emporium, Faraway Places and Senor
Frog’s in George Town have been noted and many businesses are facing difficult
times.

“A lot of businesses are feeling
the pinch; in Cayman we have stores that cater to not only tourists but also
the local market. We’ve seen a lot of stores close down, we’ve had a lot of
them try to combine locations if they had multiple locations. The big stores in
town that cater to the cruise ship passengers are telling me that the cruise
ship spending has changed.

“Ten years ago people would come
off those cruise ships and buy a $500, a $1,000, a $2,000 item without thinking
and now it seems to be the stores that are selling items under $20 are doing a
little better. The bigger stores are not having as much of the spend. That
could be the US economy, as 80 per cent of our customers come from there. Also
a lot of the cruise ships, when the recession hit, lowered their prices to such
a level that it attracted a clientele [with much less disposable income],” said
Mr. Lalli.

Restaurant industry

Another issue causing problems is
the hike in fuel costs, which the tourism association chief said is causing severe
problems for the restaurant industry.

“Although CUC will tell you that
they keep their rates consistent it’s the fuel factor that really gets the
restaurants. You could take an average restaurant and 60 per cent of the bill
is the fuel factor.

“If you take a bill of $6,000 and
60 per cent is the fuel factor and now we’ve increased the duty and fees that’s
going to go up by 5 per cent next month that’s going to be a huge detriment to
a lot of businesses. You’re talking 300 or 400 dollars up on the average
restaurant’s bill just on CUC [bills],” he noted.

A doubling of work permit fees for
food beverage servers and bartenders, he said, has had a very negative impact
on the industry and there has been an across-the-board deterioration of service
as a result.

“There’s a saying that people are
living paycheck-to-paycheck. Businesses are living deposit-to-deposit. You
know, you get a deposit and figure out which bills you can pay with it. And off
you go to wait for the next day to see what you can do.

“No restaurant is saying to me
they’re turning a huge profit but they’re paying their bills and hoping that
maybe next month, next month, next month things will get better,” said Mr.
Lalli.

Independent businesses

Independent businesses in the
tourism industry are also feeling the pinch. Matt Lee of Island Glassblowing
Studio told the Compass that fees are becoming a problem for their unique
tourism-oriented family business.

“Things are a real struggle; the
doubling of work permits and the impact of gas prices increasing has affected
us. We use propane here and in line with pump prices going up Home Gas has
increased the cost of propane. They’re putting electric up in October, we have
a big oven we have to put our glass into and we’re looking at a couple of
hundred dollars a month extra at least for electric. We have a lot of repeat
customers, but obviously they’re not aware of the costs of running the business
or government fees. They can only buy a certain amount of glass to help us out.

“A bit more assistance to local
business would help; not putting up the costs of permits would help. We do have
Caymanians working for us [but glass blowing is very specialised]. The business
could close, that’s the bottom line. We own properties on the island so we’d
either have to sell or lose those properties,” he said.

Watersports

The watersports industry is also
facing increased costs, with one particular issue coming to the fore. For
decades, according to Rod McDowall of Red Sail Sports, the company has offered
free transfers between hotels and the watersports sites. Now, however, the
vehicles used are being treated by the government as the equivalent of tour
operators and therefore need to be licensed, as do those who drive them.

“The transport authority is now
interpreting the law that any pickup by a courtesy van, even if there’s no
charge to the guest, is built into the cost of the services that people are
supplying and therefore it’s being classified as a reward.

“The cost is very significant as
you need a permit as a company then every individual staff member needs a
permit. By the time we’d finished the additional cost was going to be an
additional $300 per person, which is another thumping great expense on top of
everything else. We’ve been providing that service for 30 years, as everyone
else in the watersports industry and it’s another knock for customer service,”
said Mr. McDowall.

He said that this would simply lead
to higher ticket prices as this cost, plus fuel costs, could not be all absorbed
by companies.

“They’ve also said it’s not just
the watersports industry, it’s across the board. That opens up a whole number
of things, like the hire cars and the complimentary pickup when you go to get a
vehicle; anyone that has a courtesy van to pick up a resident whilst their
car’s being repaired is going to be the same way. Vans are common enough on
island but the biggest one that uses them in the fashion that they do is the watersports
industry,” he noted.

Often stringent or increasing
insurance requirements for vehicles performing passenger pickup from hotels and
cruise ships are also cited as increasing costs for tour operators or tourism
businesses. Recent reminders on this issue have been sent to local tour
operators.

Budgetary issues

Fundamentally, according to the Red
Sail boss, the issues are financial as the government seeks to address its
budgetary issues.

“I understand that the government
is desperate to raise revenue and the only method they’ve got is through some
sort of indirect taxation, but boy it is making it tough right now. Sooner or
later it’s going to have the reverse effect where it’s going to frighten people
away from coming here, period, and then you lose the whole trickle-down of a
visitor coming here – the accommodation taxes, the food, the duties and
everything required to service those goods on the customs side, too,” said the
watersports boss.

Harry Lalli said that some of the
points to be raised at Friday’s meeting would concern the costs of doing
business but other points would be more to do with the ‘atmosphere’ of doing
business.

“We would like to see more
positive, easier transactions. We’ve got problems with immigration, the time
it’s taking for work permits, we’ve got a problem with licensing authorities. A
lot of the things the civil service is running are slowing down the process.
Businesses are trying to make money and the people within certain government
departments need to understand that if business is booming then money is coming
into government and there will be no further layoffs, cutbacks or anything
else.

“We’re trying to say, make it easy
for the private sector to do business so that we can make money and the
government can have these funds coming in. But there seems to be a real
disarray between the two at this stage,” said the tourism association president.

TOPTourismbusinessesSTORY

Tourism-related businesses say they are being squeezed.
Photo: Joe Shooman
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