admin's picture

Low occupancy, increased operating costs

By Ashwini Prasad

SUVA, Fiji (Fiji Times, April 30, 2008) - An island resort will be laying off about 50 workers as a result of the increased cost of business, low occupancy rates and reduced rates.

Located on Malololailai Island in the Mamanuca Islands, Musket Cove has been in operation for 45 years and this will be the first time the resort has taken this step. The workers will be sent home in the coming weeks.

Resort chairman Dick Smith said the increased cost of doing business and the low occupancy and reduced rates had forced their hand.

Mr. Smith said the occupancy rate at the resort was very low.

He said added to this was the increase in price of fuel, which had taken the cost of electricity to FJ$0.65 per Kwh, inflation rate and fringe benefits like employees accommodation being taxed.

Smith said the Hotel Turnover Tax had affected the resort, as island resorts were expensive properties to run.

"We are not able to discount to the same extent as mainland properties or absorb the HTT," Smith said.

The industry has to pay HTT, which increased from three to five per cent in the 2007 budget from April 1. "Our cost of operation is much higher," he said.

The 50 workers are mainly from the construction and maintenance sector as this development has slowed down due to changes in the Foreign Investment Act, the slowness to obtain development and building permits as well as the slowness or reluctance by Fiji Islands Revenue and Customs Authority to respond to VAT refunds.

"We just do not have any choice if we wish to continue the business," he said.

Attempts to contact FIRCA chief executive Jitoko Tikolevu last night remained unsuccessful.

Many resorts that did not wish to be named said because of the downturn in the industry, many employees were on reduced working hours.

Fiji Islands Hotel and Tourism Association president Dixon Seeto said many resorts were facing similar problems of low occupancy and to adjust they were reducing manpower and operating expenses.

Mr. Seeto said the industry was still on recovery and hoteliers were suffering because of the prolonged period of poor financial results and many are using their reserves.

Rate this article: 
No votes yet

Add new comment