CHTA says delayed payment from tour ops could mean resort closures

MIAMI — Travel is still all but grounded and financial losses from COVID-19 are piling up. That means pressure on the supply chain is increasing and now Caribbean resorts are warning they could soon be out of business if they don’t receive monies owed from tour operators in markets including Canada, the UK, Europe and the U.S.

Frank Comito, CEO and Director General of the Caribbean Hotel and Tourism Association (CHTA), in a letter to major trade organizations representing the bulk of tour operators that do business with the Caribbean, says 69% of hotels report that they have not been receiving timely reimbursements from tour operators for services provided during the first quarter of 2020.

The average amount owed to hotels by tour operators is US$219,000 per hotel, says Comito, ”with a number of hotels reporting outstanding amounts in excess of $1 million and one hotel being out-of-pocket $15 million.”

He says some tour operators have delayed paying hotels for services delivered to the operators’ clients as early as January, and he’s calling on the sector to expedite reimbursements.

“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,” says Comito.

While acknowledging that hotels had been advised to expect reimbursement to take an average of 60 additional days, and as long as 120 days, from some tour operators who cited staff shortages, high demand, and reduced cash flow, Comito said 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 international tour operator 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.”

Comito 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.”

He also sounded a warning bell for the survival of some resorts. The consequences “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.”

In his letter, Comito asked the associations to rein in some tour operators which, in his words, 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.”

“This will require give and take by all parties,” he added, noting that the business relationships developed by tour operators with Caribbean hoteliers over many years had been key to their mutual success. Comito said the CHTA hopes to maintain and build upon these relationships as the world emerges from the coronavirus crisis.

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