The Tribune

• Resort ‘lobbied as hard as we could’ on BPL hike

• But ‘still setting revenue records’ through Q1 2023

• ‘On all cylinders’ but issue finding entry-level staff

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Atlantis yesterday revealed it is bracing for a $17m year-over-year hike in electricity costs despite “still setting revenue records” through 2023’s winter tourism season and into the upcoming peak Easter weekend.

Vaughn Roberts, senior vice-president of government affairs and special projects, told Tribune Business that the Paradise Island mega resort and wider tourism industry had “lobbied as hard as we could” over the up to 163 percent fuel charge increase unveiled by Bahamas Power & Light (BPL) but were informed by the Government there was “nothing it can do”.

Disclosing that Atlantis has “been in these waters before”, with energy costs soaring to similar levels during the 2011-2013 period, he added that this gave it no extra comfort over what itself - and thousands of other Bahamian businesses and households - will have to endure over the summer and into fall 2023 as BPL seeks to regain $90m in non-recovered fuel costs.

“It’s a significant cost increase for our business,” Mr Roberts told this newspaper of BPL’s fuel recovery “glide path”. “I think we benefited for the past several years with a low-cost environment for electricity, and that had to do with the relatively low price of oil and the hedge that was in place at BPL.

“We recognise the situation is what it is, and the cost has to be passed through. We don’t like it, but clearly we have to support power generation here. We lobbied as hard as we could, Atlantis and the wider hotel and tourism industry, and the Government came back and said there was nothing they can do.

“Prices will be similar to what we saw in 2011, 2012 and 2013. We’re in waters we’ve been in before. We don’t like being here, and think the long-term solution is to add more renewables into the generation mix.” Asked by how much Atlantis’ 2023 electricity bill is expected to increase year-over-year due to BPL’s fuel charge hike, Mr Roberts replied: “I think it’s $17m over the course of the year. It’s a significant increase.

“The focus has got to be on how we put more renewables in place based on the environment at BPL. There is not much we can do as a single property, but maybe together we can put more focus on renewables, how we finance them and how we get them in place.”

Atlantis’ projections give an insight into the likely stress and pain many Bahamian businesses and households will feel through summer 2023, and well into the fall and winter months, as a result of BPL’s so-called “glide path” to recoup under-recovered fuel costs.

BPL’s previously-unveiled projections for the fuel charge, which typically accounts for between 50-60 percent of customer bills, is forecast to peak at 27.6 cents per kilowatt hour (kWh) over the three-months between June 1 and August 31, 2023.

That is the period when consumption it at its highest due to summer air conditioning demand. It will then fall slightly to 25 cents between September and November for consumers using more than 800 kWh, before falling further to 18 cents between December 1, 2023, and February 28, 2024. Yet BPL itself has admitted that these movements and figures are not guaranteed due to global oil price volatility, with prices spiking again last week after output cuts by producer nations.

With the worst yet to come, and BPL’s fuel charge now rising steadily through a rolling series of increases every three months, the issue has already been embroiled in political controversy with the Opposition Free National Movement (FNM) alleging that the situation has resulted from the Davis administration’s decision not to execute trades that would have secured more cut-price fuel to support the existing hedge when it had the opportunity to do so in late 2021.’

Atlantis and other Bahamian resorts, which alongside food stores are BPL’s biggest energy users and customers, must hope that continued pent-up travel demand continues to drive top-line revenues such that this growth offsets - either in full or partially - the erosion of profits and cash flow caused by skyrocketing electricity prices. Atlantis and Baha Mar combined account for 15 percent of BPL’s revenues, or almost one out of every $7 of its income.

Mr Roberts yesterday said the Paradise Island mega resort’s outlook remains “very strong” throughout 2023. “This weekend going into Easter we’re full, which is above 85 percent occupancy,” he explained. “The first three months of the year have been really strong, and it’s shaping up to be a really strong Easter and beyond.”

Adding that the June and July period, when Atlantis hosts numerous families during the school vacation, were equally robust, Mr Roberts told Tribune Business: “The business over the next three to six months looks really strong. The first three months have exceeded our budget significantly.

“It’s largely been driven by ADR (average daily room rate) and spending per occupied room. We’re excited about how we’ve performed. It’s still looking good for the balance of the rest of the year.” While 2023 first quarter numbers are still being finalised, he added that all business areas - rooms, food and beverage, the casino and water park - had performed “beyond budget” during the peak winter season.

“We’re seeing excellent gains beyond budget,” Mr Roberts said. “We expect to see a really strong summer that will go into the September/October timeframe. Last year was better than pre-pandemic in terms of pattern; we didn’t see the slowdown in business we normally see in September/October, so we’re seeing a strong performance through the balance of the year.”

Despite continued pessimism in some quarters about the possibility of a US recession and downturn in other major economies, which has resurfaced following recent bank collapses and rescues, no signs of a slowdown are yet being detected in the Bahamian resort and tourism industry’s booking numbers.

“People are spending more for vacations, and spending more on food and beverage and activities,” Mr Roberts said. “Spending per occupied room is up, ADR is up. We’re seeing in trend patterns that it’s holding even in periods where we normally see a drop.

“It’s just strong in general with pent-up demand. People are looking for experiences and more than buying goods and services, or shopping and purchasing a car. They want experiences, which has been good for The Bahamas. We’re still setting records with our business in terms of revenue.” Mr Roberts acknowledged that some of this increase was driven by inflation, but added that high travel demand remained the primary factor driving revenues.

Atlantis currently employs around 5,700 full-time staff, he added, along with numerous part-time workers. “The Beach Towers are still off-line but we’re on all cylinders and having trouble finding entry-level folks for cooking and some of the areas,” Mr Roberts disclosed.

“Every year there’s hundreds of people who graduate from high school. We just need to develop a pipeline and spend time with the students in high school and have them consider Atlantis as a career and develop them as they start. We’re trying to make sure we retain the best people as well.”