Yesterday's front page news that government wants to develop two branded hotels with at least 500 rooms was no doubt a surprise to many. It also raises concerns.
For starters, the hotels already present on the Dutch side recorded a combined average occupancy rate of 52.3 per cent during the first half of 2011, down 5.8 per cent compared to the same period last year. The local timeshare sector did not fare much better with 69.7 per cent, down 6.1 per cent from 2010.
The question therefore rightfully can be asked whether an increased effort should not be made to fill the existing units rather than build more at this point. There is no denying that one or two new, modern and state-of-the-art luxurious properties might create some renewed excitement for the product within the travel market and attract additional visitors, but the current resorts probably would prefer some help with the inventory they now have available.
In addition, the thought of government going into the hotel business is hardly comforting. Experience with such in the region generally has not been exactly good, to which the people of Curaçao, among others, can attest.
Moreover, the intention apparently is to fund the "new development bank" that is to finance the two "flagship" tourist accommodations by pooling money from the estate of the dismantled Netherlands Antilles and the share of the Central Bank that belong to St. Maarten. This needs to be looked at carefully, to ensure that certain reserves the island may need in the future are not committed elsewhere with all possible consequences.
Tourism and Economic Affairs Minister Franklin Meyers, in presenting his plans to Parliament, mentioned that a similar approach to hotel development had been employed by Aruba with success in the past. If he meant that several properties indeed were built, he is right. However, anyone familiar with the so-called hotel guarantee problem there knows of another side to the story.
Ultimately the island was stuck with hundreds of millions of dollars in debts because of guarantees provided for projects that were either botched or abandoned. Because the Dutch state's investment company "Nederlandse Participatie Maatschappij" was involved in a few cases the financial damage could be somewhat limited, but up to recently the government in Oranjestad was still struggling with related negotiations and court battles on huge amounts.
If the intention is to offer incentives to private developers who want to invest their own means without putting public funds at risk, few will have any objections. However, the idea of government constructing hotels with taxpayers' money is a whole different ballgame.
