How Sandals Under Develops the Caribbean

How Sandals Under Develops the
Caribbean

Perry Douglas,
Jan 1, 2020


“To lay, with one hand, the power of the government on the property of the citizen
and with the other to bestow it upon favored individuals to aid private enterprises and
build up private fortunes is none the less a robbery…” ~ Samuel Miller

Sandals, is known as a “great business” the king of the all-inclusive; however, as the real facts are laid out  – Sandals “success” has been driven through state-sponsored capitalism. Sandals ability to manipulate political leaders to achieve ridiculous tax deals is fundamentally responsible for a lot of their success.

In the case of Grenada, Sandals for example, in 2012 was looking to put another all-inclusive
resort in Grenada, my country of birth, the Government of Grenada saw it fit to award Sandals with multiple multi-million dollar tax breaks (waives corporate taxes for 29 years, property taxes for 25 years, customs duties on all capital inputs for 25  years and an extension of the duty waiver on
alcohol 25 years.) Those astronomical tax breaks were embodied as an inducement to development and job creation. However, to date, there has been no economic development beyond the gates of Sandals, no meaningful fair wage growth for the service employees, no senior management advancement for local individuals. In short, the only economic development that has taken place was in the pockets of Sandals owner.

You don’t need to be an economist to get this, common sense alone tells you this does not pass the smell test. Nevertheless, the international trade studies by the World Bank, the United Nations, and academic institutions -- find that tax incentives do not increase the aggregate amount of foreign
investment available to developing countries. In addition, they have found these incentives do not create a net transfer of taxation from taxpayers to investors. In other words, our Grenadian vendors, teachers, policemen, and nurses and ordinary working citizens are subsidizing and financing Butch Stewart.

Caribbean nations welcome and encourage foreign investment and it is essential for sustainable growth, more than ever today, because of the rise of the digital economy. However, the investment must not only benefit the investor, but it must also be responsible and benefit local communities as well. The government must generate taxes to pay for social programs, roads, and basic infrastructure.

“However, we must note Sandals’ very ethos is reliant on the “all-inclusive” sale, where the local environs inevitably suffer because all accommodation, meals, soft drinks, tips, recreational activities, entertainment, and drinks are included in a flat rate cost, disincentivising local expenditure. Sandals’
guests will not be encouraged to get out of their infinity pools sipping their tax-free Mai Tais to patronize and support our local economy. Most of our tourist and spice market vendors in the market will not benefit. Most of our local restaurants will not benefit. Only a few selected tour operators will benefit, if at all. Instead, land prices will increase, there will be a drain on our water resources (these infinity pools do not come cheap) and our local suppliers will be priced out of the market. Not to mention the thousands of well-educated underemployed or unemployed young adults who will remain so under this acclaimed deal.” (Deal or No Deal: Grenada- Sandals Partnership Debunked, November 20, 2012)

The all-inclusive is not the only one to blame here; Governments are negotiating these deals like amateur hour. Their inability to recognize that Sandals needs the island's natural environment to expand and grow their business in a competitive business environment has led them to behave
desperately. Resulting in runaway bad deals. Therefore, the approach and mindset should be more of a partnership with potential large investors in that sector. Each party has something meaningful to offer, which will benefit the whole. It cannot be that one side gets it all.


Perry Douglas,
Entrepreneur, Innovator and
Believer in Social Responsibility, and the
Good in Progressive Capitalism