Marriott Hotel with taxpayers money is an indecent assault on local private sector

Dear Editor,

It is difficult to understand why President Jagdeo has committed US$20M of poor taxpayers’ money to a Hotel for the benefit of Marriott International, a wealthy American Hotel Group. So far no rational explanation has been forthcoming despite widespread criticisms.

The Marriott Hotels would usually under normal commercial management contracts have to pay a management fee to compensate a developer and owner of a hotel of a minimum of 10% of the project cost, in this case a minimum of US$2M per year.  No hotel in Guyana earns a profit of US$2M per year, so it is easy to deduce that if Marriott has agreed to manage the hotel, then the usual rules must have been relaxed by the Government of Guyana.  Nor is it unlikely that the Hotel would receive no less favourable tax concessions than Buddy’s Hotel at Providence, which received a 10-year tax holiday.  So we can conceptualise a foreign Hotel Group for which the Government of Guyana has relaxed the usual rules of operation, and given a 10-year tax holiday!  Guyana must need such an investment very badly.

The only excuse given was his Excellency’s statement to the Jamaican media, while attending the last Caricom Heads of Government meeting, that the Pegasus and Princess Hotels do not meet the required standard.  But if that were genuinely the reason, and Guyana so desperately needed to improve its standards, why not make these locally generated resources available to the Guyanese operators with strict conditionalities?

The management and staff of the Pegasus Hotel are deeply disturbed by the irresponsible, erratic, and unpatriotic behaviour of President Jagdeo in criticising this icon and hallmark of Guyanese hospitality. Such claims come at a time when the local tourism industry is actively trying to attract tourists to Guyana as an alternative destination. Such behaviour is unbecoming of any Guyanese public official and uncomplimentary to the investments we are currently making in Guyana’s tourism and hospitality industry.   The Pegasus Hotel has for the past 40 years been an icon of hospitality to Guyanese and those who visit Guyana on business and otherwise. We have been hosts to many dignitaries, Heads of State, Senior Diplomats and Statesmen, and many other important persons. All of these people keep coming back attracted by the unforgettable memories of modern comfort, good food and entertainment that we consistently provide.  Only last Monday, we catered the formal dinner for the visiting Kuwaitis hosted by His Excellency at State House.

The local hospitality industry has three times the number of rooms needed when one looks at the average annual occupancy in Guyana. Many of these additional rooms were built in response to the Government’s request of local entrepreneurs to invest in the sector to meet the needs of the 2007 ICC World Cup Cricket, something those that invested regretted bitterly, as most of those properties are up for sale because of the lack of sustained demand.  Another hotel would only exacerbate the problem by increasing the supply of rooms without a compensating increase in the demand for them. This will reduce average occupancy below break-even point thereby threatening the collapse of the local hospitality industry.  This move by President Jagdeo must be seen as an indecent assault on the local hospitality industry, but more so on the local private sector. Why would a Government of a poor country seek to use taxpayers’ money in a manner completely contrary to the growth and development of its very own private sector, the supposed engine of growth, source of employment and taxes?

This attempt goes to the core of Guyanese politics: the lack of accountability and proliferation of poor governance. The consequence of this is clearly illustrated by the State’s investment in the Skeldon Estate which has bankrupted Guysuco and has thousands of Guyanese families facing the looming prospect of ruin.  Similarly, such massive Government investment could be better deployed  in lowering the cost of electricity, clean water, better roads and other infrastructure, even in garbage disposal, security at our airports,  crime fighting, etc. Why should the use of our money to enrich a foreign multinational enjoy priority over the above?

All in the private sector must raise their voices to condemn this wanton misuse of public resources. Similarly, opposition forces should demand answers to their repeated questions on this project, even having this ill-starred project debated in Parliament. Let’s ensure that the Government we elect is finally made accountable to us and acts in our interest not some foreign interest.

It would be difficult to see the President of the United States placing a foreign investment in a better position than his own Marriott, but then, Barack Obama he is not!

Yours faithfully,
Robert Badal

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