— as more than US$640M rolls out in hotel investments next year
By Navendra Seoraj
A SINGLE investment is enough to reinvigorate a community or an entire sector through employment and other spill-off benefits; so, in about a year’s time, when hoteliers pump close to US$640 (G$137B) million into the local economy, the benefits which would accrue to the country would undoubtedly be immense.
Job and wealth creation are anticipated from the construction phase to the level of full operationalisation. And, based on available statistics, over 3,000 persons are expected to gain employment next year when mega hoteliers ‘land’ their multimillion-dollar investments in Guyana.
Several investors have already acquired private land to kick start their investments. The Guyana Chronicle understands that 10 developers have acquired such land and will start construction in the coming year.
While the names of those investors were not released, the Guyana Chronicle had reported that a business-friendly climate supplemented by the anticipated economic ascension is being credited for the attraction of major players in the hotel industry such as, Sheraton, The Element, Delta Marriott, Best Western Hotels and Resorts, the H-Tower Luxury Hotel, the Hyatt Hotels Corporation, the Radisson Hotels, and the Hilton Hotels and Resorts, among others.
These potential investments are seen as timely, because Guyana, which sits on the edge of South America and has a population of about 750,000 people, is expected to ‘boom’ with its new-found oil wealth, which is expected to drive infrastructural development and other sectoral advancements.
According to a study by Oxford Economics, hotels are extraordinary job creators in communities all across the nation. In addition to offering numerous entry-level positions, hotels also provide stepping stones for employees to quickly move up within the organisation.
The same study found that a typical hotel with 100 occupied rooms per night supports 230 local jobs every year.
And the nation’s hotel and lodging industry brings other important benefits to local communities. These businesses are a cornerstone for local economic activity, providing increased tax revenue, capital investment, tourism-related development and promotion, civic leadership, charitable contributions and sponsorship.
Information shared with this publication shows that the developers, who acquired private land, will create close to 3,000 direct jobs through their collective US$640 million investment.
There will also be indirect jobs and opportunities which would accrue to not only individuals, but also companies and small businesses.
Chairman of the Private Sector Commission, Nicholas Boyer, has said that, come next year, once those investments materialise, there will first be benefits in the construction phase, then there will be other spill-off activities.
“As long as they hire local labour, you get a lot of spill-off benefits…you have more employment and those people, who are employed, spend more, so there is community development,” said Boyer in an invited comment on Sunday.
Community development is inevitable once there are investments. And, from Boyer’s view, this will also be the case in the surrounding areas where the hotels will be constructed.
Those benefits are, however, supplementary to the direct employment opportunities, such as service staff, janitorial services, and front desk operators, supervisors and managers, and, outside of the hotel, on a macro level, taxes.
Critical in the advancement of those investments will be local content, because, while the opportunities will be there, it is left to the investors to hire Guyanese to “do the job”.
Most of the investments are from indigenous companies, but excuses in the past — while not from these investors — have been about Guyanese lacking the expertise to function effectively. This notion has since been cast out by officials, who have time and again said that more Guyanese are qualifying themselves.
Head of the Department of Economics at the University of Guyana, Sydney Armstrong, has been one advocate for local content to be on the front burner of every investment made in Guyana.
This increased attention that Guyana’s economy is witnessing is not unique, as it was observed in countries like Trinidad and Tobago, Nigeria, Ghana and even Suriname, where there have been discoveries of major oil resources.
“What you find is, generally, in countries which have discovered oil and gas, you would see a lot of businesses coming to their doorsteps… oil and gas is a lot of money and businesses are going to try to get in on that money,” said Armstrong during a recent interview with the Guyana Chronicle.
But Guyana, unlike other countries, has other lucrative resources like land, minerals, fresh water and other things which are very attractive to investors.
So, as Guyana prepares to absorb those opportunities and attention, Armstrong advises that the country must develop a local content policy, to serve as not just a safeguard, but as a conduit for persons to capitalise on the potential opportunities.
“The local content policy needs to specify in terms of components of labour, especially when we talk about massive hotels… Guyanese must be able to benefit from the construction process and also be a part of not just lower levels of the general operations, but also be managers, supervisors and so on,” said the economist.
DRAFT LOCAL CONTENT POLICY
There is, however, a high level of confidence that this will no longer be the case, as the Minister of Natural Resources, Vickram Bharrat, has said that President Ali will receive a draft Local Content Policy soon.
The Government, in September, had established an advisory panel on local content. The panel was tasked with undertaking a review of all existing initiatives and policies relating to local content in the petroleum sector and to provide guidance for the development of Guyana’s Local Content Policy and Legislation.
The panel comprises Shyam Nokta (chair), Carl Greenidge, Anthony Paul, Kevin Ramnarine, Carvil Duncan and Floyd Haynes.
The team handed over its report to the Minister of Natural Resources, Vickram Bharrat, on Tuesday. The policy, once ratified, will pave the way for an inclusive environment, amidst increasing foreign investment and interest in Guyana.
A local content policy, in addition to outlining the measures for direct benefits, must also establish grounds for Guyanese to capitalise on the spill-off benefits. In Armstrong’s view, they must be able to supply food, water, and other locally produced items which will be on demand based on the operations of the hotels. This is needed especially because of Guyana’s high rate of unemployment.
From 2017 to 2019, the unemployment rate in Guyana increased from 12.2 per cent to 13.4 per cent, but the new Government aims to reverse this over the next five years through the creation of 50,000 jobs.
FASTER RECOVERY EXPECTED
The impending investment for 2021 will not only serve as a means of reducing the unemployment, but it will help Guyana to recover from the effects of the dreaded novel coronavirus (COVID-19) pandemic.
The International Labour Organisation (ILO) has warned of the need to adopt immediate strategies to face the labour crisis caused by COVID-19, which has led to the loss of at least 34 million jobs in Latin America and the Caribbean.
“We face an unprecedented challenge, that of rebuilding the region’s labour markets, which implies facing structural failures that have worsened with the pandemic, such as low productivity, high informality, and inequality of income and opportunities of decent work,” said Vinícius Pinheiro, Director of the ILO Regional Office for Latin America and the Caribbean.
The Labour Overview said that during this crisis “34 million workers lost their jobs (some temporarily)”, according to available information from nine countries that represent more than 80 per cent of the economically-active population of the region.
It also noted that employment rate reached 51.1 per cent in the first quarter, representing a strong reduction of 5.4 percentage points compared to the data for the same period of the previous year, which represents “a historical minimum value”.
Guyana could possibly recover faster than other nations, as President, Dr. Irfaan Ali, has said already that progress is expected on all fronts in 2021, which has since been designated as the Year of Investments and Development.
“What you will see next year is a flurry of development; there will be active work on the new Demerara Harbour Bridge, the new four-lane road, new hotels, and the creation of 50,000 homes,” said the President.
He said work will commence the construction and rehabilitation of roads in hundreds of communities; new infrastructure will be created, and there will be major developments in every sector.