Hyatt’s retracted payment plan reflects wider problem

The “pull-back” by the HYATT Regency management regarding the requirement for having all cash payments made in US and other hard currencies is interesting. First of all, to have reached so far as having the intention mentioned on its website indicates a thinking by the management; perhaps strangled along the line by one of the financial authorities of the State.

It will, however, be interesting if the reasons were given behind what was a clearly planned strategy of the hotel because of its dependence on hard currency to operate in the global marketplace.

Most assuredly, Hyatt, like other hotels of its size and orientation, depends heavily on imports and because of its other interactions in the international marketplace. Understandably, therefore, the hotel management is apparently seeking to get away from paying foreign dollars for products and services and selling them on the local market for TT currency, and then facing the difficulties of acquiring foreign currency to restart the process of purchasing in hard currency and selling in local dollars.

The situation of the Hyatt management is a miniature version of the national problem; that being having to pay for its overwhelming appetite for international products and services, while in control of only a few exports to earn what is required to keep up the tastes and habits structured around foreign consumption.

The hotel management, through its thinking of accepting only hard currency cash, must be of the view that being the earner of hard currency from overseas visitors and having to purchase goods and services with such cash must think itself deserving of payment in US greenbacks.

For a number of reasons, the financial authorities, including the Government and the Central Bank, cannot afford to allow individuals and corporations to make their own determination on the right to charge only foreign currency for their products and services. For one thing, that will open the floodgates for others to follow suit.

The considerations against allowing such to happen are many. Most importantly among them, it will effectively relegate the locally issued currency to total irrelevance and cause a serious fraction in the social equality (already high) of the society, so that those who do not have access to US and other forms of internationally tradable dollars will not be able to enjoy a dinner, a night-out, even a short vacation at a hotel owned by the State. If that were allowed to happen, where will it all end? It will be an existential nightmare for the government, business, citizens and eventually for all of Trinidad and Tobago.

All of that and more notwithstanding, saying “no” to the Hyatt does not in any way eradicate one major problem, arguably the most challenging: the desperate need to broaden the base of the economy outside the energy sector to earn increased quantities of foreign exchange on a consistent and predictable basis.

Until that need for transformation from the historic nature of the economy can be attempted and succeeded with on a long-term basis, the side effects will remain the same.

What can be said of this manifestation of the need for foreign currency earnings is that soon enough, it can engulf the economy and society.

The post Hyatt’s retracted payment plan reflects wider problem first appeared on CNC3.