Vertical integration regulations: policy declared null and void by Constitutional Court to become law |29 July 2019

Mr Bastienne

Following the Constitutional Court’s ruling earlier this month in which it was stated that the tourism Vertical Integration policy is “null and void” and therefore unenforceable against tour operators, the cabinet of ministers has approved the provisions for the introduction of the Vertical Integration regulations.

At a cabinet briefing on Thursday, deputy cabinet secretary for Institutional Affairs, Johnny Bastienne, explained that the content of the policy and the regulations remain the same but the regulations have the effect of a law and thus cannot be challenged in the Constitutional Court as was the case with the policy.

“There was the introduction of the policy last year in May 2018 but the cabinet of ministers has decided that there needs to be the introduction of the law on vertical integration. Reason being is that the policy cannot be enforced by law but the regulations will fall under the Tourism Development Act which is currently being finalised. Once the Act is assented to by President Danny Faure, the regulations under the Act will also come into effect,” Mr Bastienne noted.

The tourism vertical integration policy seeks to ensure locals have a chance to fully participate and benefit in the tourism industry so that the whole economy gains from tourism, and the consumer is best served through competition and diversity.

In a bid to eradicate unfair advantage and monopolies while promoting healthy competition and diversity, the policy sets out restrictions to make certain that everyone can operate and compete equitably in an environment where all stand to benefit.

As per the policy put in place last year, tour operator, or a person with ultimate beneficial interest in a tour operator, can own or operate a hotel provided that the aggregate number of rooms is not more than 150 rooms.

With regard to hotel car hires, the policy states that a hotel of 24 rooms or less or a person with ultimate beneficial interest in a small hotel, may own or operate a car hire at the same time (or vice versa). Hotels of 25 rooms or over are not allowed to invest in car hire because they would be in a position that would disadvantage independent car hire operators. Small hotels and car hire are reserved for Seychellois only; while the majority of hotels of 25 rooms or over are foreign-owned, this policy is in line with the overall objective of allowing locals to fully benefit. This provisions apply to establishments on Mahé whereas on Praslin, a hotel, or a person with ultimate beneficial interest in a hotel, may not own or operate a car hire at the same time (or vice versa).

The policy also makes provision for boats for excursions stating that a hotel, or a person with ultimate beneficial interest in a hotel, may be allowed to own or operate one boat as hire craft with a maximum of 12 seats (or vice versa). This applies to boat charter, glass bottom boats or yachts or live board services.

Hotels on islands other than Mahé, Praslin and La Digue, or where it is not serviceable by a public transport system, are allowed a number of boats, as necessary means of transport, subject to meeting the requirement and approval of the tourism department and other regulatory bodies. The number of boats shall be based on the number of rooms. An establishment is permitted 2 boats for the first 25 rooms and it can have an additional boat for each full stock of 25 rooms that are licensed for the transfer of clients and guests and employees.

Only small hotels (24 rooms or less) are allowed to own or operate a dive centre subject to the policy on accommodation and dive centre.

A hotel is allowed to offer non-motorised water sports on a complimentary basis to its clients only from its base of operation. As for motorised water sports, a hotel is allowed to offer it to its clients if provided that it is contracted out to a Seychellois.

Under the policy,five-star hotels are to have a maximum of two chauffeur-driven courtesy cars to cater to its clients.

In terms of bicycle hire, the policy states that on La Digue, accommodation establishments of more than 5 rooms are not allowed to own a bicycle business, directly or indirectly. As for Mahé and Praslin, accommodation establishments are allowed to offer a bicycle service to their own clients as a complimentary service.

In a bid to foster entrepreneurship, the policy obliges large hotels to make available shops or retail outlets located on the hotel premises to local entrepreneurs selling local products.

The policy also addresses tour operators stipulating that a tour operator or a person with beneficial interest in a tour operator, cannot own or have interest in a car hire at the same time.

Tour operators are restricted to a maximum of 5 boats. They are permitted to own or operate an interisland ferry service provided that it does not exceed the maximum capacity of 1450 seats in the total fleet.