Caribbean hotels are struggling to pay their staff, vendors and taxes with tour operators withholding millions of dollars in payments, one of the region’s top tourism chiefs has warned.
Frank Comito, chief executive and director general of the Caribbean Hotel and Tourism Association (CHTA), has written to major trade associations in the UK, Europe and US stating 69% of hotels are still awaiting payment for services provided during the first quarter of the year.
According to Comito, the average amount owed to hotels by tour operators is $219,000 per hotel, with several reporting they are due in excess of $1 million.
Comito said the coronavirus crisis was threatening the survival of "many" Caribbean properties, particularly small and mid-sized independents, which he described as a "staple element" of tour operator’s business.
"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," said Comito in his letter.
Comito said hotels had been advised to expect payments an average of 60 days later that scheduled, with some payments likely to be delayed by up to four months.
He said operators were citing staff shortages, high demand and reduced cash flow for the delays, despite payment often having been taken from consumers "many months in advance".
The CHTA chief has urged operators to "expedite" payments or risk contributing to the demise of some Caribbean hotels, warning the consequences would be "long-term" for many operators and the reputation of the sector.
"[It has] 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," said Comito.
He further urged trade association to "rein in" some operators attempting to revise future contracts with new rates and payment terms, and seeking "deep discounts" that defy "an extremely high-cost/low-revenue operating environment".
Comito said the situation risked undoing the years of effort poured into mutually successful business relationships. "This [situation] will require give and take by all parties," he added.