The Caribbean Hotel and Tourism Association (CHTA) is urging international tour operators that have delayed paying its members during the coronavirus pandemic to do so before some of them go bankrupt.
Nearly 70 percent of hotels have not been receiving “timely reimbursements” from tour operator partners with the average amount owed US$219,000 per hotel, says CHTA CEO and director general Frank Comito, who adds that a number of properties are reporting outstanding amounts in excess of $1 million and one hotel, in particular, being out-of-pocket $15 million.
“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,” Comito said in a letter to major trade associations representing tour operators in Canada, Europe, the US and UK.
He noted that many Caribbean hotels and resorts – especially small and mid-sized independent properties that comprise a staple element of tours operators’ business – are facing “unprecedented pressures” due to the nearly complete halt of travel during the coronavirus pandemic.
Acknowledging that 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 countered 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.”
As such, Comito requested the international tour operator associations help CHTA by reaching out to member operators to urge them to “make every effort to expedite their obligation to reimburse Caribbean hotels for services which have been rendered.”
He also urged that members asking for deep discounts and making “one-sided attempts to revise future contracts” be “reined in.”
Comito said the CHTA understands the dilemma facing all in the travel industry, but stressed “the reimbursement of funds which were collected from the consumer far in advance and are obligated should take priority.”
If not, he warned that the consequences of contributing to the demise of Caribbean hotels will have a long-term effects not only on employees, vendors and governments in the region, but the “reputation of the sector.”
It would also damage the interdependent relationship between tour companies and Caribbean hotels, with the CHTA having supported the growth of operators’ businesses in the region through “B2B marketing efforts, advocacy work, and reach to our 33 member destinations and hundreds of properties.”
Comito says that business relationships developed by tour operators with Caribbean hoteliers over many years have been a key to mutual success and added that he hopes to maintain and build upon those relationships as the world emerges from the COVID-19 crisis.
But, he says, “This will require give and take by all parties.”
The Canadian Association of Tour Operators acknowledged the CHTA’s concerns to Travel Industry Today, but added, “One of the founding principles of CATO is, and has always been, that it does not get involved in or comment on the commercial affairs of any of its members.”