The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Atlantis is working feverishly to get “all ducks in a row” on Value-Added Tax (VAT) compliance, its top executive yesterday disclosing the resort will have to spend a “seven-figure” sum in preparing its 22 different software systems.

George Markantonis, Brookfield Hospitality’s president and managing director, told Tribune Business that getting the Paradise Island property’s systems ready for January 1, 2015, was “our biggest concern”.

Saying he was “not going to speculate” on whether Atlantis would be ready for the VAT kick-off, Mr Markantonis said “some large teams” from the resort’s information technology (IT) and finance teams were working on the issue, together with the various software vendors.

“Our biggest concern is probably making sure all our ducks are in a row and being ready for the implementation of VAT on January 1,” Mr Markantonis told Tribune Business.

‘That’s where a lot of focus is going. We have a huge amount of work to be done. Because of the numerous software systems we have at this property, and the fact it [VAT] will impact every division one way or another, we have some large teams working on it, and we’re still waiting on clarity in one or two areas, particularly in the casino area.”

The Government’s current VAT legislation and regulations proposed to treat all forms of gaming as ‘exempt’, meaning that patrons/gamblers will not see their winnings taxed at 7.5 per cent.

However, ‘exempt’ status for casino gaming would mean that resorts such as Atlantis and Baha Mar would be unable to reclaim their VAT input payments in proportion to the contribution this industry makes to their overall business.

In Atlantis’s case, a Standard & Poor’s report said casino gaming accounts for 16 per cent of the resort’s total revenues (around $130 million).

This means that ‘exempt’ status for gaming would leave Atlantis unable to recover 16 per cent of its VAT input payments, and the industry as a whole is pressing for it to be ‘zero rated’ - both to allow it to recover these taxes and maintain its competitiveness.

Meanwhile, detailing the scale of VAT preparations that Atlantis is having to undertake, Mr Markantonis told Tribune Business: “We’re evaluating 22 different systems with various vendors. Some are large, some are small.

“Our IT team is working extremely hard with our finance team to be ready. We have not had feedback from all our vendors, but the number [cost] is going to be in the seven-figure range.”

Atlantis, with its 3,389 rooms spread across five properties, and numerous points of sale and amenities, which include 39 bars and restaurants, will have one of the more costly and expensive VAT preparations.

It, though, provides an insight into just how expensive and complicated getting ready for January 1, 2015, will be, especially in businesses that currently lack the necessary staff and supporting computer, accounting and software systems.

Elsewhere, Mr Markantonis said Atlantis was also focusing on consummating its marketing partnership with Marriott International’s Autograph Collection, and “getting ready to welcome all those additional guests to the Bahamas”.

“We do know other hotels in this collection have seen a very large increase in room night visitations from those travellers,” Mr Markantonis added.

Atlantis is hoping its 10-year franchise deal with Marriott International will generate an extra 50,000-100,000 room nights per year, based on the direct access it will now have to the 45 million-strong global customer base in the latter’s loyalty programme.

Mr Markantonis, though, said Atlantis remained “very concerned” by the Bahamas’ high crime levels, with some six persons murdered in this nation since Friday.

“We’re very concerned,” he told Tribune Business. “I know everybody is concerned around the country. These aren’t the kinds of headlines that encourage visitation. I just hope we can get it under control sooner or later.”

While acknowledging that the Royal Bahamas Police Force and authorities were doing their best, Mr Markantonis added: “It is a concern if it carries on.”

The Atlantis chief also said sufficient airlift into New Providence, to accommodate the extra 2,000-plus rooms Baha Mar will launch into the market come 2015, remained another worry.

While not privy to the outcome of recent airlift discussions between the Ministry of Tourism and Baha Mar, Mr Markantonis reiterated previous concerns that all New Providence hotels would miss their occupancy and financial performance forecasts if the market did not have sufficient airline seat capacity.

He indicated, though, that Baha Mar’s decision to push its ‘Grand Opening’ back until Spring 2015 had created some additional ‘breathing space’ for the Government and private sector to get the necessary airlift in place.

Mr Markantonis said airlines would not add extra seats and capacity until they were sure sufficient market demand existed, and more clarity would likely be required on this issue.