Two in three Caribbean hotels are reporting being owed large sums of money by international tour operators – a plight industry chiefs say could put some hotels out of business.
The average amount owed to hotels for holidays taken earlier this year is US$219,000, according to the Caribbean Hotel and Tourism Association (CHTA).
A number of hotels are reporting “outstanding amounts in excess of $1 million and one hotel being out-of-pocket $15 million,” CHTA’s CEO Frank Comito said.
Comito is calling on tour operators which have delayed paying hotels for services delivered to the operators’ clients as early as January to speed up reimbursements.
He has penned a letter to major trade organisations representing the bulk of tour operators that do business with the region. He claims 69 percent of hotels say they have not been receiving timely reimbursements from tour operators for services provided during the first quarter of 2020.
Comito said the global coronavirus crisis is putting unprecedented pressure on the region’s hotels and resorts. And it is threatening the survival of many – particularly the small- and mid-sized independent properties – which are a staple element of tour operators’ business, Comito wrote.
“We have become alarmed in recent weeks to learn of the extent to which some of your member tour operators are withholding reimbursements to hotels for services which were rendered as early as January and into February and March,” he stated in the letter.
Acknowledging hotels had been advised to expect reimbursement to take an average of 60 additional days, and as long as 120 days from certain tour operators who cited staff shortages, high demand and reduced cash flow as primary reasons for delays, Comito pointed out that “these payments were made to the tour operator by consumers, often many months in advance and were to be held in trust for payment to hotels shortly after the delivery of the services.”
Comito requested the associations help CHTA by “reaching out to your member operators who work with the Caribbean urging them to make every effort to expedite their obligation to reimburse Caribbean hotels for services which have been rendered.”
The CHTA chief said he understood the dilemma facing all in the travel industry, but he stressed “the reimbursement of funds which were collected from the consumer far in advance and are obligated should take priority.”
Comito warned that the consequences of contributing to the demise of some Caribbean hotels “will also be long-term for your members and the reputation of the sector, having already impacted the ability of many Caribbean hotels to meet their own financial obligations to employees, vendors and government for taxes owed related to past activity.”
The CHTA boss reminded the letter’s recipients that the association had been a longstanding resource for many tour operators working to develop their Caribbean portfolio.
“Through our B2B marketing efforts, advocacy work, and reach to our 33 member destinations and hundreds of properties, we’ve helped to create an environment which has supported the growth of your members’ business into the region,” he said.
Comito asked the associations to rein in some tour operators which are considering “one-sided attempts to revise future contracts as they seek new rate and payment terms, already asking for deep discounts which are difficult to provide in an extremely high-cost/low-revenue operating environment.”
The business relationships developed by tour operators with Caribbean hoteliers over many years had been key to their mutual success, and Comito voiced the hope to maintain and build upon those relationships as the world emerges from this crisis.
“This will require give and take by all parties,” he added.
CHTA confirmed that correspondence had been sent to bodies representing tour operators in Canada, Europe, the UK and the US.