CHARLOTTE AMALIE, US Virgin Islands, Thursday October 24, 2019 – Legislation has been signed into law in the US Virgin Islands (USVI) to allow hotel developers to channel a percentage of room revenue to finance the renovation of existing properties and building new hotels.
The government said the expanded Hotel Development Bill was created to encourage and promote economic growth in the US territory and incentivize construction of new hotels and resorts including commercial and other related facilities.
“The signing of this bill is a game-changer for the Territory’s hospitality industry. It will significantly benefit hotels, resorts, and small businesses impacted by increased tourism and accelerate opportunity for employment in the Territory,” said Kamal Latham, CEO of the US Virgin Islands Economic Development Authority.
Under the new law, up to 100 per cent of revenues generated from the existing 12.5 per cent occupancy tax, plus 100 per cent of the gross revenue generated from the newly created Economic Recovery Fee, which is up to 7.5 per cent of the hotel guest bill, may be allocated to finance new hotel construction or a renovation project. Hotel developers would be able to utilize these funds to assist with debt service by leveraging financing for new development or property repairs and improvements.
“This is a very powerful hotel development and infrastructure financing mechanism that creates an environment for new development,” said Stephen Evans-Freke, President of Water Island Development Company. “It opens the door for transformative projects like ours to strengthen the island’s position as a top tourism destination.”
It is anticipated that the bill will motivate developers to obtain financing by making the bonds issues more attractive to investors in the capital markets, and drive hotel and resort development projects forward in the Territory.
Bill Tennis, Executive Vice President, DiamondRock Hospitality Company, owners of Frenchman’s Reef Marriott Resort and Noni Beach Resort believes the bill to be a positive and proactive approach to stimulating investment for the USVI.
“The bill demonstrates government commitment to hotel companies through upfront investment in new hotel supply and upgrades to existing tourism products as well as creating career opportunities for residents,” he said.