Tourism environment sustainability levy: |11 August 2023
A one way ticket to gains or losses?
As of August 1, visitors staying at tourism establishments in Seychelles are paying a newly introduced levy, on a per person, per night basis. The levy, approved by cabinet last month, places the responsibility for collection on establishment owners, when invoicing clients for their stay.
Since its introduction, the levy has been met with some resistance from tourism actors who have expressed that while they are in support of such a levy, government should revise the payment or collection mechanism, as well as finding means to better communicate the levy to visitors so as to avoid confusion.
Eager to have their concerns heard, numerous hotel and small establishment owners have signed a petition by the Seychelles Hospitality and Tourism Association (SHTA), who have gone as far as seeking legal advice as to how to move forward.
Seychelles NATION sought the views of a tourism analyst and consultant, David Lowseck, on the matter. The following is Mr Lowseck’s expert opinion.
The pros and cons of the Tourism Environmental Levy
The newly introduced Tourism Environmental Sustainability Levy in Seychelles is long overdue and recommended taking into consideration that Seychelles tourism carrying capacity is limited due to its small land size. Environmental protection, infrastructure development and good management are primordial to ensure that Seychelles keeps its rich biodiversity and forests intact for both the Seychellois people and visitors. It should be noted that many popular tourism destinations in the world have already introduced different kinds of tourism levies for visitors. Example Dubai tourism tax is US $8 per night for 5-star establishments, US $2 per night for budget hotel, and 10 percent tax on room rate. In Singapore, there is a 17 percent tax on hotel bill, while in Mauritius it is 15 percent on hotel bill. As for the Maldives, there is an 8 percent on room rate, plus 16 percent tax in tourism goods and services.
Seychelles: US $7 per night for 5-star; US $5 per night for medium size and US $2 per night for guesthouses.
This long-term protection has a cost. However, the government must understand that the international tourism industry is very sensitive to prices, levies and indirect taxes especially at short notice. The need of substantial lead time for the implementation of any tourism levies or taxes to the tourism industry is crucial and critical to avoid frustrations, confusions and chaos in its initial stage of implementation. It should be noted that adequate notice and communication, say, eight to 12 months ahead, to international and long haul tourism operators is required as they operate on long term planning cycles. In fact, some have already finalised their holiday programmes for 2024!
Risk of devolution
It should be noted that any price increase to a visitor’s bill can be regarded as a negative point and such thinking could be potential for behavioural change on the part of the visitor. The environmental sustainability levy or tax requires a significant level of national consistency in terms of design and operation to reduce complexity and minimise costs of compliance.
Consistency is important for visitors themselves as different levy or tax arrangements could be viewed negatively by those moving between different classes of accommodation in Seychelles. The risk of devolution could create complexities and inefficiencies in the collection of the levy. Simplicity in design and operation is very important and easily understood by the visitors.
Logistics and implementation
The collection of the environmental levy by operators of accommodation establishments and yachts require the implementation, administration, collection, processing and enforcement of the levy. All operators need to change or adapt existing IT, accounting and booking systems and train staff to comply with the law.
There could be potentially ongoing costs associated with the administration and remitting of the levies to the Seychelles Revenue Commission. In its early stage of implementation, the Ministry of Finance, National Planning and Trade should facilitate the process and assist all accommodation operators. The strong arm ‘stick’ penalty for non-compliance in its early stage of implementation is not the right solution. Tourism is a sensitive and difficult industry and we must not try and penalise operators and visitors. Effective communication and dialogue is crucial.
Acceptance of the environmental levy
I must admit that international visitors normally do accept ‘green environment levies’ in any tourism destinations in the world provided there is transparency and effective communication to inform visitors where the levy or tax is being used for. In the case of Seychelles, sustainability of the environment is crucial to the survival of the tourism industry especially with limited land space available. We must find and determine the right balance of tourism development to match with the social, environmental and agricultural needs of the country. Therefore, finding the right carrying capacity is important to safeguard the fragile environment of Seychelles. The environmental levy will no doubt provide Seychelles the financial resources to safeguard and manage the pristine environment for both the local population and visitors.
Acceptance of the levy
In view that the Tourism Environmental Sustainability Levy is not new to visitors who travel to the many tourist destinations in the world, Seychelles’ new levy will also be accepted in the months ahead. However, the real issue that will affect both the operators and tourists in the short term is the timing and narrow implementation timeline. As the “horse has bolted”, the Ministry of Foreign Affairs and Tourism must develop a communication public relations strategy to educate, sensitise, motivate visitors in the merits of the new tourism environmental levy. It will be an excellent public relations exercise each year to inform the world what Seychelles has done with the levy and the many benefits visitors will enjoy in the years ahead.
It should be noted that the tourism industry is vulnerable to any drastic and sudden change to its existing structure, pricing, image and perception. As per the PLC Matrix model, Seychelles is still evolving with a positive growth pattern after the pandemic Covid-19 but in view that the country has not yet reached its maturity level, Seychelles will always be vulnerable to any negative internal or external factors. And the environmental levy is one of those internal factors.
A prediction of some cancellation of existing hotel bookings will no doubt occur in the next few months. It should be noted that approximately between 70 to 90 percent of visitors to Seychelles are price sensitive as a majority has saved money for their annual dream holidays. Request for additional taxes to the holiday package will not be regarded in good light. Furthermore, in the short term, many visitors will believe that accommodation establishments in Seychelles are increasing their room tariffs without prior notification. It is a catch 22 and hoteliers will have to explain the reasons for the increase well. The real issue is not about the levy, but the way and timing it was presented to the industry and visitors. Designing an effective communication network to sensitise all tourism partners will be necessary in the next three months. Only then will the levy be accepted by all tourism partners and visitors, and Seychelles could become a world leader in destination tourism environmental management.
Innovation to encourage compliance
A two-page ‘Seychelles Tourism Environmental Sustainability passport’, a small brochure-like product containing information about ongoing environmental projects in the Seychelles will greatly help. It can be given to visitors upon paying the fee, and marketed to make them feel that they are part of an environmental club. They will bring this home and will keep it as a souvenir or a gift as it is tangible. It will also serve to act as a promotional tool.
The little ‘passport’ can even contain a QR code, through which visitors can access websites or platforms, such as that of the department of environment. This would be unique to Seychelles.
Compiled by Laura Pillay