The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Atlantis has been paying its BEC bill before receiving it to boost the cash-strapped Corporation’s cash flow, its top executive warning that lower energy costs were “imperative” for Bahamian economic success.

George Markantonis, Brookfield Hospitality’s president and managing director, said that while the Paradise Island resort was “well positioned” for 2015, there were several key issues that had the potential to alter that outlook.

Apart from adequate airlift into Nassau and rising crime levels, Mr Markantonis warned that high energy prices continued to undermine the Bahamas’ tourism competitveness in a market where travellers were constantly seeking value.

And he warned that the fall-out from the first-ever Ebola case in the US, coupled with geo-political events in the Middle East, held potentially “very serious” consequences for the Bahamas as they impacted consumer confidence and the willingness to travel.

“We have to watch how expensive our destination is becoming,” Mr Markantonis told Tribune Business. “Consumers are looking for value, and in many instances it’s hard to provide the value where electricity costs are through the roof.”

Bahamian energy costs are constantly cited as being between three to six times’ higher than Florida’s, which is why the Government - realising this and BEC’s internal financial woes could short-circuit the entire economy - embarked on the ongoing quest to restructure the Corporation and, possibly, part-privatise it.

Atlantis is BEC’s largest private sector customer, incurring a monthly $5-$6 million bill, and Mr Markantonis disclosed that the resort has effectively been ‘pre-paying’ the Corporation to ensure it has sufficient cash flow.

“We are probably the biggest private utility user in the country, and as the chairman [Leslie Miler] has said, we pay our bill sometimes before we receive it to make sure there is liquidity,” he revealed.

“We hope all efforts to contain energy costs are successful, because they are imperative to everyone’s success.”

Atlantis is among those best-placed to reduce its energy costs via renewable energy. Apart from its relatively ‘deep pockets’, its owner, Brookfield Asset Management, already possesses $19 billion worth of renewable energy assets.

Its Brookfield Renewable Energy Group owns 234 renewable energy generating facilities spread between the US, Canada and Brazil, meaning Atlantis has considerable resources and expertise to draw upon should it decide to reduce its reliance on BEC - or go off-grid entirely.

Such a move would be disastrous for BEC as it would lose its largest, and most reliable, payer. The potential for Atlantis to do this is thought to have been a key factor in the Government’s decision to begin the BEC restructuring process, with the Corporation using over $20 million annually.

Mr Markantonis, though, told Tribune Business that Atlantis and Brookfield were waiting to see what resulted from the BEC reforms before making any renewable energy-related decisions for the Paradise Island property.

“We are still, at Brookfield offices, evaluating the situation, and waiting to see to what BEC and the Government come forward with,” he confirmed. “It would be premature for us to intervene in the middle of that. Let’s see what’s produced.”

Elsewhere, with Nassau/Paradise Island requiring an extra 400,000 inbound airline seats per annum to meet the demand generated by the 2,200 room increase in Baha Mar’s inventory, Mr Markantonis said airlift would be “critical” to both Atlantis and other hotel properties in 2015.

“If I had to say what could be an issue for us, and it’s not something new, is that the issue of crime is getting more and more international publicity, and that could potentially come to hurt us,” he also warned.

And, with an OECD report ranking the Bahamas’ as the world’s fourth most vulnerable economy to external shocks, Mr Markantonis said developments in the past week had reinforced this message.

“We’re very susceptible to world events,” he told Tribune Business, describing the fact that the Ebola virus had reached the US as “very, very serious for a place like the Bahamas” with its tourism-dependent economy.

This, together with the growing conflict in the Middle East, threatened to undermine consumer confidence and the will to travel in the US and other key source markets.

“These are the kinds of geo-political events that can affect us,” Mr Markantonis said. “When we benefit is when people fell they’re in a stable world economic environment, and their wealth, houses and retirement funds are stable. Anything that undermines that, we’re vulnerable.”