US Virgin Islands Senate considers loan to finance hotel construction
For islands situated in the pristine Caribbean Sea, tourism constitutes a large, if not the largest, portion of their economy. This is especially true for the United States Virgin Islands.
According to one report published in 2014 by the World Travel and Tourism Council, in totality roughly 30% of the territory’s GDP is tourism-generated. And almost a quarter of the territory’s employment, both directly and indirectly, requires a thriving tourism industry. These estimates are actually on the low end, because according to another report published in 2014 by Euromonitor International at least half of the islands’ inhabitants are dependant on tourism for employment.
All of this is to say, to the US Virgin Islands’ economy and its citizens, tourism is important.
This is why the planned construction of a brand new hotel on St. Thomas island, which would be the territory’s first in over 30 years, has embroiled the island’s inhabitants and legislators in a large debate.
Yacht Haven Grande (YHG) is the area under consideration for the new hotel. It is located in the Charlotte Amalie downtown corridor near the harbor used by the large fleet of cruise ships that visit the island year-round. YHG LLC is teaming up with Polcom Group — a European construction company — to contribute $28 million of the proposed $38 million estimated budget needed to build the hotel. The other 10 million? That, YHG and Polcom are asking the territory’s government to foot, making the new hotel a private-public venture.
For the territory’s senators Marvin Blyden and Myron Jackson, who proposed Bill 32-0263 in the Senate in late August, and their other colleagues who support its passage, the hotel is an investment in the tourism industry. After last year’s devastating Hurricane Maria, much of the territory’s hotels were damaged or destroyed all together. To date, There are still many hotels not open and some are not even scheduled to reopen until late 2019 or later.
The bigger argument being advanced by those supporting the bill and the project is that the Caribbean Sea tourism industry is becoming more competitive as more Caribbean states invest in tourism and also as Cuba allows more Americans to visit.
Thomas Mukamal, the owner of the Yacht Haven Grande development on St. Thomas, argued in his testimony to the US Virgin Islands Senate, “It [the hotel] will also cement St. Thomas and Yacht Haven Grande as the market leader in nautical tourism in the Eastern Caribbean for years to come.”
Those advocating for the new hotel also argue that the public money is necessary because private lending institutions don’t want to shoulder that much liability because of the island’s volatile and destructive weather disturbances. They are also arguing that the $10 million pubic loan is guaranteed to be recuperated if the hotel succeeds or not, plus interests.
“This is not a hand out. The Government will invest ten million in exchange for a promissory note, on terms under which the Government’s capital will be repaid first,” said Commissioner Valddamier O. Collens during Senate testimony.
Those assurances, however, have not silenced those who oppose the bill.
With the islands already in major debt, corruption rampant, and other key services and institutions needing assistance, many citizens are questioning the wisdom of loaning $10 million to help build another hotel, that will mostly be used by tourists, not the island’s citizens.
Those concerns were addressed on October 8 when the Senate voted to hold the bill, authorizing the loan, in committee. The senators who voted to hold were Brian Smith, O’Reilly, Neville James, Tregenza Roach, and Kurt Vialet. They want the “loosely worded” bill to be amended by Senators Blyden and Jackson to make sure the loan’s repayment plan is airtight.
A new date for a vote on the amended bill has yet to be scheduled.