The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

SuperClubs Breezes' owner yesterday branded concerns over Baha Mar's rate discounting as "a distraction", warning: "We'll all go hungry if we don't expand airlift."

John Issa told Tribune Business that the Nassau/Paradise Island resort industry "can't lose focus" on the "fundamental" need to increase incoming airline seats and total visitor numbers, thus ensuring there was sufficient supply to sustain all properties.

He suggested that a "large portion" of the Ministry of Tourism's promotional budget should be dedicated specifically to generating increased airlift to New Providence from "more gateways", given that Baha Mar's full net 2,300 room increase is set to take effect from March/April 2018.

"We should be concerning ourselves now with air service and air seats into Nassau," Mr Issa told Tribune Business. "That is really the fundamental matter that should be of concern.

"Treating a promotion by Baha Mar as a fundamental problem is a distraction from what needs to be done. If we don't expand the supply of airline seats and airline passengers, we'll all go hungry."

Industry projections suggest that Nassau/Paradise Island needs to attract another 314,000 airline seats annually to ensure there is sufficient visitor supply to fill Baha Mar's additional room inventory and all existing hotels.

"A large portion of the Ministry [of Tourism's] Budget, which it allocates to the Promotion Board for traditional-type promotions, should be separated by the Ministry and assigned to investing in generating additional airline seats and service from more gateways into the island," Mr Issa said.

"That's why I would not want to comment on one promotion. It's a distraction from the substantial issue."

Mr Issa spoke out after the hotel industry was last week gripped by jitters over Baha Mar's steep promotional discounts, which other resorts feared would undermine their own room rates/yields and lead to a 'price war'.

They were especially exercised by the $4.2 billion development's 'Buy Once, Stay Twice' promotion, which closed on Thursday last week. This gave guests who stay at Baha Mar between July 24 and August 30 an opportunity to enjoy a second, equivalent stay between September 4 and December 17, 2017.

The second stay was priced at $50 per night, which is equivalent to just 29.4 per cent of the Nassau Paradise/Island hotel industry's lowest monthly average daily room rate (ADR) for 2016.

Ms Issa, though, acknowledged that Baha Mar needed to build its business and "get off the ground" by attracting visitor bookings.

He emphasised that SuperClubs had to contend with rate promotions and discounts being offered by rivals throughout the Caribbean, and withstood this by frequently refreshing its product quality and offerings to provide a unique guest experience.

Mr Issa said room rate discounting was not a sustainable long-term strategy for any resort property, and added: "We've always had competition with other all-inclusives in Nassau when someone is running a promotion.

"In my part of the business, where you have the Melia and RIU, there's constant price-related promotions, and we have to constantly watch what special rates are out there."

Pointing out that it was no different in his home market, Mr Issa added: "In Jamaica, we've always had to put up with some large new hotel opening with ties to a tour operator and offering low prices.

"We have to make sure our product is unique or has a new twist to it. We've been doing this for a long time. Using price as an attraction is not a good thing. We cannot lose focus because of one promotion, and Baha Mar has to get off the ground."

Both Howard Karawan, Atlantis's top executive, and Gary Williams, Sandals Royal Bahamian's general manager, last week expressed fears that Baha Mar could 'cannibalise' the customer bases of existing resorts and create a 'price war' that ultimately benefited no player in the tourism industry.

However, Mr Issa, as Baha Mar's closest neighbour, takes a different perspective - arguing that the $4.2 billion development will upgrade the Cable Beach area to the benefit of all.

"I don't want to be the only shop in the Mall and the others are empty," he told Tribune Business, recalling how the former Wyndham and Nassau Beach Hotel properties were starting to degrade until their 2005 purchase by Baha Mar's original developer, Sarkis Izmirlian.

Mr Issa, meanwhile, said "progress" continued to be made on concluding the 'land swap' with Baha Mar that is vital to facilitating SuperClubs Breezes' long-held expansion plans.

"It's a process; there's no dispute," he added. "The lawyers are working to complete the process. Once it's done, we'll assess the marketplace and try to move forward."

Mr Issa confirmed that the 'land swap' would pave the way for what could be a 400-room expansion to SuperClubs Breezes' existing property, which would create "at least" 200-300 jobs.

"I couldn't put a date on it," he added, "but it could be up to 400 rooms. We have to assess the market situation, but it is part of our plans."

SuperClubs' land swap agreement with Baha Mar was set out in a 2011 Letter of Intent between the two resorts. This involved swapping a 0.66 acre parcel, upon which SuperClubs Breezes wastewater treatment plant stood, for land of the same size, upon which Baha Mar was to build a replacement plant at its expense.

The agreement also involved Baha Mar's then-golf course-owning affiliate, BMP Golf, transferring another 2.27-acre parcel to SuperClubs Breezes. The latter also agreed to change the leasehold boundaries of its property, surrendering two areas and gaining an equivalent-size piece of land, to help Baha Mar.

But delays in executing the Letter of Intent impeded SuperClubs Breezes' expansion plans, and even resulted in legal action, prior to the two sides agreeing to resolve the outstanding issues following Baha Mar's change of ownership.

Mr Issa recalled how the delays, both to the land swap and Baha Mar's opening, had forced him to "rip up" previous government-approved plans for a 200-room expansion and the development of associated amenities.

Noting that "hundreds of thousands of dollars" had been spent on developing those plans in 2008-2009, he added: "I don't want to waste any more money until I know it can succeed."