It’s been an issue in the Caribbean for years: air taxes. 

But now, the tide seems to be turning, with the recent news that the Caribbean Community would be launching a review of taxes and fees on airline tickets in the region. 

To learn more about the issue, and ways to solve it, Caribbean Journal caught up with Vincent Vanderpool-Wallace, former Tourism Minister of The Bahamas, long one of the region’s leading tourism experts and principal partner of Bedford Baker Group.  

First of all, you believe that some congratulations are in order for CARICOM undertaking to review taxes and fees on airline tickets.

Yes, congratulations are owed to the Heads of Government of CARICOM and, in particular, to the current Chairman for advancing the proposal to review the taxes and fees applied to airline ticket for intra-Caribbean travel and for the endorsement of CARICOM members to proceed. We also recognize the support from the Prime Minister of The Bahamas who heads the CARICOM Sub-Committee on Tourism and his support from the Caribbean Tourism Organization and the Caribbean Hotel & Tourism Association in moving this particular matter forward.

The case for reviewing taxes and fees on airline tickets has been made for more than two decades and it may well have taken the pandemic for governments of the world’s most tourism-dependent region to fully grasp how airlines taxes and fees act, counterintuitively, as deterrents to maximizing tax income and employment from tourism.  

What do you mean by taxes and fees on airline tickets acting “counterintuitively” as deterrents to maximizing tax income and employment from tourism?

It is counterintuitive because some people find it difficult to understand how we can maximize tourism tax income by reducing some of the very taxes and fees that we are seeking to maximize. To quote Satchel Paige and others, “Often, it ain’t so much the things you don’t know that hurt you, it’s the things you know that just ain’t so”.  

Many have always “known” that direct tourism taxes such as guest night taxes and taxes and fees on airline tickets and departure taxes are the sum total of taxes and fees derived from tourism. That misperception is derived from the fact that most government revenue accounting systems have line items that track only those direct tourism taxes. So, whenever governments seek to increase income from tourism, they “know” that they have to raise some or all of those direct taxes, not lower them. That has been our history.

But EVERY study of tourism taxes that I have seen shows that the sum of indirect and induced taxes collected from tourism related transactions exceed the sum of direct taxes. There are no government line items tracking such indirect and induced taxes as VAT payments from tourism workers at the supermarket, fuel taxes paid by taxi drivers for transfers and tours, import taxes paid by hotels for items consumed by their guests, taxes paid to trucking companies and their employees that are derived from deliveries to tourism establishments etc, etc etc.  The quantum of all of those substantial indirect and induced taxes from tourism are invisible to government accountants because they are lumped into many catch-all accounting buckets in government systems.

So, up to now, whenever anyone recommended the removal/reduction of direct taxes and fees on airline tickets, government accountants, unable to identify and take into account the induced and indirect tourism taxes, “knew” such a move could only result in a loss of tourism tax income. Economists, however, through tourism satellite accounting systems, knew that it “just ain’t so” especially if the reduction in taxes and fees on airline tickets stimulates travel to the destination and leads to increases in total visitor arrivals and occupancies.

Note that few people are advocating for a reduction in the guest night taxes, a direct tax. The real focus has been on adjusting airline ticket taxes and fees.

Why have taxes and fees on airline tickets, a relatively small portion of the total trip cost, been such an impediment? Surely for the kind of visitor traveling to the Caribbean, that should not be a significant impediment.

Very good question. Yes, the kind of visitors that comes to the Caribbean today might not be so affected by high ticket prices. But Southwest Airlines, JetBlue and Ryan Air found out long ago and every study maintains that the “Southwest Effect”, “Jet Blue Effect” and the “Ryan Air Effect” are still alive and well. These studies show that other factors being equal, nothing stimulates travel like lower airfares. Nothing. Studies by IATA and the Caribbean Development Bank have shown similar prospects for the Caribbean. And if you run an average of 40% of your rooms vacant every year as we do in this region, there is much space available for those who might be stimulated to travel by better airfares.

Further, we congratulate CARICOM Heads for some insight that is often missed by many. We do not oppose all taxes and fees on airline tickets, we have always been against high fixed taxes and fees especially on low airfares. The reason is not difficult to understand.

If the base airfare on a ticket is $100 and the fixed taxes and fees on a round trip ticket is $100, we have just raised the price of that ticket by 100 percent. But if the base airfare for some far away source market is $1000, the fixed taxes and fees of $100 raise that total ticker price by only 10%. So you see that high fixed taxes and fees punish our nearby markets the most. Never mind how we love to brag about visitors from faraway places, nearby markets deliver far more business because of the opportunity for impulse travel and for multiple trips by the same individuals during the course of a year. Take a look at Orlando (50% of its business from the state of Florida),  Las Vegas (25% of it business from southern California) and Macao (40% of its business from the nearest province in China). And, yes, the nearer market still outperform more distant source markets when lengths of stay are taken into consideration.

Where are those nearby markets for the Caribbean as recognized by Heads? The Caribbean itself. Remember that the fixed taxes and fees for Caribbean tickets are being applied by both countries for a round trip flight. It explains the fall-off of in intra-Caribbean business and leisure travel. We have all seen cases where airline tickets prices are lower for travel from Caribbean countries to Florida compared to ticket prices to nearer by Caribbean countries. When we examine the components of an airfare, we often find in the Caribbean that the total of fixed taxes and fees exceed the portion that the airline receives. I am fairly confident that had this fix been in place years ago, LIAT would still be flying.

So downward adjustments in fixed taxes and fees can have some wide ranging positive effects in attracting private carriers to the region and stimulating travel within our region.

But doesn’t some of the fixed taxes and fees on tickets go to repayment of financing for the development of the airports?

Yes they often do. I have long been persuaded that airports at highly tourism dependent destinations, especially on islands, should be regarded as a public good. We build roads and bridges to facilitate social and economic interactions and often do not assign a user fee to their use. We often build cruise ports and ask not a cent in user fees. So why do we apply them to airports?

The real problem has always been the tendency of governments to starve important capital projects whenever they have the option to apportion funding. User fees that guarantee the financing, maintenance and management of the airport is the real reason for the process. In cases where passenger facility charges have been pledged for airport financing, the review might examine elimination of all of the other taxes and fees on airline tickets as a first step in lowering total ticket prices and stimulating increased travel.  

What is the desired outcome of this review of taxes and fees on airline tickets?

Governments are beginning to recognize the substantial increase in tax collection and employment that can be derived from tourism by increasing visitor arrivals and occupancies of accommodations. The very simple analysis is that for countries running 60% annual occupancies, their contribution from tourism can be increase by 50% by growing occupancies to 90%.

If decreasing the price of airfare leads to increases in visitor arrivals and occupancies as every study has shown, the income and employment derived from guest night taxes AND the induced and indirect taxes will most assuredly deliver significant tax increases Treasuries and more employment for citizens.

Finally, there is the aforementioned benefit of attracting private carriers. The Caribbean has some of the highest airfares in the world measured on a per mile flown basis. If we can adjust the taxes and fees applied to airline tickets downward, it just might be the tonic needed to stimulate increased intra-Caribbean business and leisure traffic AND allow the carriers to earn a little more per seat toward sustainable profitability.

In the end, it all leads to increased economic activity and more tax collection and employment for Caribbean citizens.

The post Solving the Caribbean Air Tax Problem appeared first on Caribbean Journal.

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Margaritaville is set to open its newest all-inclusive resort in the Caribbean in November, Caribbean Journal has learned. 

The new Margaritaville Island Reserve by Karisma is slated to open in November and is already taking reservations, according to the company. 

The hotel will feature a total of 228 guest rooms and 40 luxury villas; the latter will include private balcony pools. 

Amenities will include the signature St Somewhere Spa, a number of eateries, specialty bars and daily live music. 

“From the moment guests enter, they’ll be greeted with flip flops, and immediately transported to a seaside paradise,” the resort says. 

It’s the latest addition to Cap Cana, the most luxurious corner of Punta Cana, which has seen a wave of new brands open all-inclusive resorts, from Hyatt to Palladium. 

It will be the second Margaritaville Island Reserve by Karisma in the Caribbean, following last year’s debut of the Margaritaville Island Reserve Riviera Cancun. 

The Margaritaville Island Reserve brand is the product of an alliance with Karisma Hotels and Resorts. 

For more, visit Margaritaville Island Reserve by Karisma Cap Cana. 

— CJ

The post Margaritaville Set to Debut New Dominican Republic Resort in November appeared first on Caribbean Journal.

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Aruba has updated its entry protocols, with new rules that waive pre-testing requirements for certain fully vaccinated American travelers. 

But it’s not quite that simple.

Crucially, the island is only waiving testing for U.S. residents who have been fully vaccinated and have a SMART Health Card vaccine record. 

For now, that means a relatively small number of U.S. travelers — SMART Health Cards are available for those who were vaccinated at Walmart and Sam’s Club Pharmacies, or at healthcare providers in California and Louisiana. (You can find more about the SMART program here). 

So even if you’re fully vaccinated, without that card, you’ll still have to go through Aruba’s existing pre-testing requirements. 

That means, you’ll have to show proof of a negative PCR test taken and received within three to four days before traveling to Aruba. 

That’s along with the island’s travel protocols that still apply to all travelers — verifiably vaccinated or otherwise.

Travelers have to buy Aruba Visitors Insurance, and all travelers have to fill out Aruba’s online ED card (you can find it here), among other protocols.

The move stands in stark contrast to countries like The Bahamas, which have very successfully waived testing requirements for fully vaccinated travelers, without the requirement of the added vaccination verification. 

For more on Aruba’s new protocols, visit Aruba. 

— CJ

The post Aruba Waives Testing for Certain Vaccinated U.S. Travelers appeared first on Caribbean Journal.

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Hilton is making a major move in one of the hottest destinations in the Caribbean: Tulum. 

The hospitality company has announced plans to expand with two new resorts in the Mexican Caribbean hotspot: the Hilton Tulum All-Inclusive Resort and the Conrad Tulum. 

“Mexico has always been an incredibly important destination for Hilton,” said Danny Hughes, executive vice president and president, Americas, Hilton. “We are extremely proud of our new products, ongoing partnership with Parks Holdings and the resilient Team Members who are working to bring the warmth of hospitality to the new resorts entering our portfolio.”

Both Tulum resorts are owned and developed by Parks Hospitality. 

The Hilton Tulum All-Inclusive and the Conrad Tulum will debut as Hiltons in the fourth quarter of this year and the first quarter of 2022, respectively. 

“We are honored and excited to be extending our successful partnership with Hilton with these iconic resorts and bringing new unprecedented luxury options to Tulum,” said Charles Elmann Fasja, CEO of Parks Holdings. “We believe Mexico’s unique combination of people, culture, gastronomy, and natural beauties, make it the best global destination for tourism and we look forward to our continued future growth with Hilton. I would like to thank all of Parks, FUNO and Hilton’s team for all their hard work in bringing these amazing projects to reality.”

The Conrad Tulum will be Conrad’s first-ever resort in the Mexican Caribbean; it will provide a “secluded haven for travelers featuring a bold design aesthetic inspired by Tulum’s lush landscape, picturesque beaches, and surrounding nature reserves,” according to the company. 

The Hilton Tulum All-Inclusive Resort will have a total of 735 rooms in an oceanfront setting, with seven dining concepts and an expansive pool complex, including a waterpark. 

The latter is part of a broad expansion for Hilton in the Mexican Caribbean; the company is also planning to open the new Hilton Cancun, another all-inclusive, in the near future. 

And it’s yet another sign of the growing tourism energy in Tulum, which continues to draw in major brands like Kimpton, which opened its new hotel in Tulum late last year, Marriott, which debuted its first-ever Tulum hotel in February, and boutique operators like Namron.

For more, visit Hilton. 

The post Hilton Is Opening Two New Resorts in Tulum, Mexico appeared first on Caribbean Journal.

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The Turks and Caicos islands blend the sophistication of Providenciales with the quiet solitude of islands like Middle Caicos and South Caicos. Whether you’re searching for the ultimate socially-distanced vacation or a classic beach getaway, there are many great reasons to explore this archipelago Caribbean destination further. Here are some of our favorites.

And for more on how to visit, check out the Turks and Caicos Islands’ entry protocols for travelers.

Grace Bay Beach: There are plenty of beaches in the Caribbean that claim to be among the world’s best (and some of them are), but it’s hard to top the broad, talcum-soft sands of Grace Bay Beach. Stretching for miles along the shore of Providenciales, Grace Bay Beach also has calm and brilliant waters and a wide range of hotel, resort, and activity options to enhance your days at the beach.

Fabulous Resorts: From boutique luxury beach hotels to private island resorts, Turks and Caicos has an exceptional array of places to lay your head for a Caribbean vacation. For pure beachfront luxury, it’s hard to beat the Shore Club on Long Bay or the Palms, Turks and Caicos. For an all-inclusive stay, there’s Beaches Turks & Caicos and Club Med Turkoise, both located on Grace Bay Beach. Ambergris Cay joins the Meridian Club on Pine Cay as exclusive private island resorts off the coast of Providenciales. The dune-protected Beach House is a small boutique hotel with a beach club vibe, while Aman Resorts’ Amanyara and Seven Stars resorts also offer luxurious accommodations and top service. The new Beach Club at the Rock House resort features luxury accommodations, oceanfront dining, and a 130-foot jetty with umbrellas and daybeds for guests. That’s along with the brand-new Ritz-Carlton, Turks and Caicos, which just opened in June.

Splendid Isolation: As bustling as Providenciales can seem at times, quiet Caribbean calm is never too far away. Less than half an hour from the Provo beaches you’ll find Chalk Sound, an undeveloped lagoon dotted with limestone islands that can be explored by kayak or paddle board. Big resorts and crowds are likewise absent from Sapodilla Bay. And if you really want a taste of the “old Caribbean,” venture off Provo to historic Salt Cay, where donkeys outnumber people, and Middle Caicos, which is blessedly devoid of mass tourism despite beautiful beaches like Mudjin Harbor.

Beach Bars and Fine Dining: Sophisticated dining can be found at both resorts and standalone restaurants, but Turks & Caicos also has its share of laid-back and local eateries. Da Conch Shack on Provo is a legendary but pretense-free beach bar famed for its conch dishes. Hemingways has fish tacos and other beach food served under shady umbrellas at the Sands Hotel on Grace Bay. With outdoor dining is a palm shaded courtyard, Coco Bistro proves that it’s worth venturing away from the shore if you want to sample some of Provo’s best food (along with its splendid food-truck-style eatery, Cocovan. And for real local flavor, be sure to make it to Bight Park on Friday night for the weekly fish fry, which also is accompanied by live music and the occasional Junkanoo parade, too.

Fishing: The waters surrounding Turks and Caicos are rich in big-game fish, including wahoo, mahi-mahi, yellowfin tuna, skipjack tuna, sailfish, and sharks, with excellent fishing grounds located as close as 10 minutes offshore. Fishing charter boats operate out of a pair of marinas on Providenciales, and local restaurants are usually happy to prepare your “keeper” fish for dinner when you get back into port.

Diving and Snorkeling: The Turks and Caicos Islands sit on the edge of a mostly submerged plateau, surrounded by the barrier reefs of the Caicos Banks and with precipitous drop-offs to the 6,000-foot-deep Turks Island Passage. Add the fact that the islands are largely composed of porous limestone and it sets the stage for some of the Caribbean’s most spectacular diving, from plunges over colorful reefs and walls teeming with marine life rising from the dark deep to the beauty of blue holes like the 250-foot-deep Middle Caicos Ocean Hole.

Iguanas and Stingrays and Bats, Oh My: Take a wild guest what inhabits Iguana Island. We’ll wait. Yup, it’s a colony of rare rock iguanas, which once were found across the islands but now live only in a few isolated communities like the one on Little Water Cay off Providenciales (Iguana Island is a nickname). The waters off Gibbs Cay, another small island off the coast of Grand Turk, is home to a docile population of stingrays who will eat out of the palm of your hand. And if you visit the Conch Bar Caves on Middle Caicos be sure to look for the resident bats hanging out on the ceilings in this vast cave system.

The post 7 Great Reasons to Visit Turks and Caicos Right Now appeared first on Caribbean Journal.

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