By NEIL HARTNELL and NATARIO MCKENZIE
Tribune Business Editor and Tribune Business Reporter
nhartnell@tribunemedia.net, nmckenzie@tribunemedia.net
Grand Bahama’s struggling tourism industry was yesterday forced to confront another “significant loss” of 30,000 annual visitors after Sunwing pulled the plug on its summer airlift initiative.
The tour operator, in a statement sent to Tribune Business, warned that it “may be forced” to also cancel flights for the 2019-2020 winter season as it blamed an “impasse” with the Government for its decision to cease all summer airlift to the island next year.
Sunwing, whose Memories resort affiliate exited Grand Bahama in January 2017, suggested that its airlift withdrawal would take the island’s stopover tourism product “backwards to its lowest levels in decades”.
Without the thousands of room nights its passengers generate between May to October, the tour operator said “many of our hotel partners will be closing for some or all of the summer months and reducing staff dramatically” - dealing a fresh blow to an already-beleaguered economy and society.
Janine Massey, the Sunwing Group’s chief marketing and technology officer, told Tribune Business that Grand Bahama’s tourism industry will lose over 30,000 summer visitors annually as a result of the tour operator’s move.
When pressed for details on Sunwing’s “impasse” with the Government, and the underlying causes for its pull-out, Mrs Massey replied: “Simply put, we were unable to get anyone to extend/renew our existing agreement which had been in place for four years.
“Right now we have only cancelled summer 2019. We will be concluding our planning for winter 2019-2020 in the coming weeks but, under the current circumstances, we may be forced to cancel all winter flights to Grand Bahama as well,” she wrote in an e-mailed reply to Tribune Business questions.
“Sunwing has been developing these routes for the last four years, and has lost millions of dollars each year in doing so, but saw it as a long-term investment and partnership. Last summer and this summer, the flights were going to lose less than they had in the past and, therefore, with the programmes getting traction and losses reducing we were very sad to have to abandon something which we have worked so hard to foster.
“In addition, these flights in the summer meant that a lot of our hotel partners did not have to close - and did not have to lay off staff - in the low season. We are concerned that without our flying programme more jobs will be lost.”
Sunwing’s original statement said it was ceasing summer airlift because its was no longer “viable”, even though load factors (passenger occupancy levels) on the flights from 13 US cities were running at 90 percent.
Mrs Massey wrote: “For the past four years, Sunwing has been operating a flying programme from key Canadian and American cities, representing the largest increase in passengers in the history of Grand Bahama.
“The US summer programme was a huge success, operating with a 90 per cent load factor and allowing many hotels to remain open and keeping people employed on a year-round basis. The previous operator of this programme ran flights that were more than half-empty, costing Bahamian taxpayers millions of dollars annually while failing to deliver local tourism revenue.”
She continued: “Although Sunwing Airlines has over-delivered on its promise each year by exceeding the number of customers brought to the island, we are sad to report that we have unfortunately reached an impasse with the Government which does not make it viable to continue with our flight operations to Grand Bahama.
“Therefore, we will no longer be operating to the island in [summer] 2019. As a result, we understand many of our hotel partners will be closing for some or all of the summer months and reducing staff dramatically.
“The Sunwing Travel Group has invested the last six years, and tens of millions of its own money, in the revitalisation of Grand Bahama. It is unfortunate for the island and the people of Grand Bahama that after all this hard work tourism is now going to go backwards to its lowest levels in decades.”
Magnus Alnebeck, the Pelican Bay resort’s managing director, told Tribune Business that Sunwing’s withdrawal was a “significant loss” for the destination. “For Pelican Bay, we are mainly a business hotel with guests who come to Grand Bahama for other reasons than being a conventional leisure tourist,” he said.
“We did, however, receive 2,403 room nights from Sunwing/Vacation Express between January-August; the majority of that being Vacation Express business for the summer months. That total represents 6 per cent of our room nights, but in proportion is much higher for the summer months.”
Mr Alnebeck added: “I am unsure of what this means for Viva Fortuna, Lighthouse Point and Castaways, which are the only other operating hotels in Grand Bahama, and I am also unsure about Island Seas (a timeshare operator). I would expect their numbers to be much higher than Pelican Bay and, yes, this is a significant loss for the destination.”
The Government and Ministry of Tourism yesterday appeared to be caught off-guard by Sunwing’s move. Dionisio D’Aguilar, minister of tourism and aviation, who is currently in Washington D.C., said he knew nothing of its pull-out and would have obtain information from his officials before commenting. He did not reply to a further What’s App message before press time.
Tyrone Sawyer, the Ministry of Tourism’s head of airlift development, added that he, too, only became aware of the tour operator’s action yesterday afternoon.
He told Tribune Business that he “didn’t have a clue” as to what Sunwing meant by an “impasse” with the Government, and added: “We have clean hands in it and a lot of goodwill in abundance.”
Mr Sawyer declined to comment further, saying the Ministry of Tourism and the Government would release a statement on the matter. Nothing was received before press time last night, though.
“I’m just hearing about it myself and, right now, I’m not able to address it,” he added of Sunwing’s move. “I don’t want to respond in a haphazard way. This demands a well-considered response that addresses it.”
Sunwing’s pull-out is especially ill-timed for the Government’s $65m Grand Lucayan acquisition, and deals a potential blow to its hopes of quickly selling the resort to a private sector buyer.
Reduced airlift will make the Grand Lucayan less attractive to potential purchasers, given that stopover visitor “access” to the island has been restricted. A buyer would likely have to invest more in rebuilding airlift and, in turn, may well request increased subsidies and incentives from the Government.
Michael Scott, chairman of Lucayan Renewal Holdings, the Government-owned special purpose vehicle (SPV) that controls the resort, conceded to Tribune Business that Sunwing’s move was “on the face of it, not good news” for the resort and wider Grand Bahama economy.
He questioned whether the relatively high fees levied on airlines by Grand Bahama International Airport were responsible for its pull-out, but suggested Sunwing might return once the entire Lucayan Strip’s redevelopment is triggered by the resort’s sale.
However, Mr Scott said that he, too, only learned of Sunwing’s plans yesterday afternoon. He added that he was unable to comment in detail, as he was unaware if the Ministry of Tourism had anticipated the move and activated alternative airlift plans.
“On its face it’s not great news, I accept that,” Mr Scott told Tribune Business. “But it’s like Lego; I don’t know to what extent there are other building blocks and pieces that factor into this.
“The bottom line is I don’t have enough information, and can’t comment seriously until I hear from the Ministry of Tourism whether this move was anticipated and factored into the airlift equation. It’s as simple as that.
“I’ve just seen this news today. I haven’t had a chance to discuss this with Dionisio, what the options are and whether alternatives are in place. There may be other options in the works,” the Grand Lucayan chairman continued.
“I don’t know to what extend this has been anticipated for some time by Ministry of Tourism officials, and whether there are other options that account for this development, and if they had notice of this happening. There are so many variables to this.”
Mr Scott suggested Sunwing was likely to “pivot” and reconsider its Grand Bahama exit once the Grand Lucayan was sold, and “concrete plans are afoot to redevelop the whole Port Lucaya area and make it attractive again”.
Sunwing and its Vacation Express affiliate withdrew from the summer airlift initiative once before, after Hurricane Matthew and the Grand Lucayan’s subsequent closure left Grand Bahama with insufficient hotel room capacity to accommodate all its passengers in 2017. Some 1,100 rooms were lost in the storm’s aftermath.
That cost Grand Bahama’s hotel industry some 30 per cent of its summer market, with the programme having delivered some 236,000 room nights over the previous three years.
The Vacation Express programme, which started in 2014, covered the period from May to October - traditionally the slowest part of the tourism industry calendar. It brought 68,587 room nights to Grand Bahama in 2014, and peaked the following year at around 110,000, before dropping to 57,800 in 2016 - a figure influenced by Hurricane Matthew’s arrival.
Sunwing, though, resumed the summer airlift initiative in 2018.
Some observers yesterday suggested that the tour operator’s statement, knowing the Government’s increased vulnerability and exposure through the Grand Lucayan acquisition, amounted to a “squeeze play” in a bid to extract more subsidies and tax breaks from the Treasury.
Comments
Well_mudda_take_sic 6 years ago
LMAO
DDK 6 years ago
Welcome back!
milesair 6 years ago
How is it something to laugh at when the people on Grand Bahama are suffering enough already. Hardly worth laughing at. You call yourself a "good" Christian? Show some empathy!
ThisIsOurs 6 years ago
But Mudda call him/herself a "good"Christian. It's possible they're an atheist. If you want to ask anyone about being a good anything, direct it to ?Minnis and DAguilar, they created this mess announcing to the world that they're desperate and they'll pay any price just to keep the hotel open. Sunwing is only the first, wait and watch
ThisIsOurs 6 years ago
"Didn't" call him/herself
bogart 6 years ago
WELL MUDDA TEK SIC...,!!!., After investing millions of dollats of pore Bahamian VAT dollars....forward thinking on borrowing millions and amortizing it to pay back so much monthly......like over months ago....fine tuning planning......right down to the INTEGRAL AN VITAL IMPORTANCE OF THE SECOND HAND USED GOLF CART VALUED LIKE $500. DOLLARS TO HOTEL SUCCESS.....removal of second hand golf cart.....an....an...an....an......all dese big time experts....couldnt figure deys wasnt going to jav no hotel guests....!!!!!........couldnt know one week in advance....big time airplame tour operator wasnt going to bring no more toirists......????......whichin govt airline expert responsible collecting Bahamian salary should be fired....!!!!
DDK 6 years ago
How about the one in D.C. who doesn't know what is going on with on with Sunwing? BIG SHAME on FNM AND PLP for putting GB and the Bahamas in such a vulnerable position.
BahamasForBahamians 6 years ago
LMFAO
Lets see how Lying Peter and Minnis will spin this once reporters ask what significance this has on Grand Lucayan's potential and would diminshed guest arrivals to a dying a destination affect the overall value ($65m) of the resort they just purchased.
I can't wait to see how our asshole of a prime minister reacts when the reporters grill him
geostorm 6 years ago
@BahamasforBahamians, come on man! You may not agree with his politics or the way he is managing the country, but to call the PM that word that you used is really disrespectful and in poor taste. I am sure you could have chosen a better word to describe him.
BahamasForBahamians 6 years ago
I'm calling him a name he's earned for himself!
DDK 6 years ago
Did you lose a post?
BahamasForBahamians 6 years ago
Nope. Rejected all posts offered by successive administrations.
all further questions can be forwarded to your recycle bin.
geostorm 6 years ago
It's a scare tactic!They are playing on the government's financial crisis. I believe Sunwing is owned in part by the guy who was trying to buy the hotel from the Chinese but failed to negotiate a sale. He then tried to work some deal with the government, but PM Minnis told him to "put the deal where the sun didn't shine" . Now he is pulling Sunwing out of the GB market. Oh well!..... let's just hope that there is something greater in store for Grand Bahama. They are really hurting.
realitycheck242 6 years ago
I dont think short of cities in a war zone have a city economy shrunk and went down hill as fast and as badly as freeport has.....It begs me to ask the question ...Why has the city and people of Freeport been forsaken ??? .....from one issue to the next......when one thinks it cant get worse....it gets worser with this sunwing departture.....my god what is next ????
Economist 6 years ago
If you had a 90% load factor why would you pull out? How much money was Sunwing extracting from us?
Something does not sound right.
John 6 years ago
So was SunWing (sounds Chinese) merely keeping on a smiling face until government completed the (here sucker) deal with Hutchinson? And then they, too, are flying the coop. Serious business. And Bahamians may need to stand together and fill the gap on this one. This may be a clear and patent message to both the government and Bahamians in general that the time has come to take charge of this Bahamian economy and start investing in it. Others will leave you high and dry. You will not realize the seriousness of Grand Bahamas’s economy until you meet people who moved there 20 years ago and have now returned to Nassau, despite the crime.
banker 6 years ago
Sunwing is Canadian ownership.
realfreethinker 6 years ago
Economist. You are on the right track. It makes no business sense to pull out if you are making money. It's quite clear that they were trying to extort some better concessions but the government told them it can't happen.
BahamaPundit 6 years ago
If the Government had just waited until this news broke, they would have a much stronger negotiation position and buy the hotel at a 50% discount. You either laugh or cry!
realfreethinker 6 years ago
Bahamianforbahamas. There don't need to be any spin here. If you would just take off your yellow glasses of political thinking you would see through the threats by sunwing looking to extort from the government. It's about time we tell these investors that the gravy train is off the track.
ThisIsOurs 6 years ago
Exactly, and start your timer for the next Minnis traveling circus when he tell us about why he had to sign Abaco and Andros over to Sunwing and pay them 50m to compensate for 3 years of losses to get them to stay. It was either that or end up like Haiti, what y'all want? I wonder what the grown ups in the room are getting out of this Minnis led disaster, must be something cuz they awfully quiet while Turnquest and Minnis screwing things up
bogart 6 years ago
Da someting not right....true....perhaps operating costs increased fuel..better opportunities elsewhere......neverthe less....somewhere in contract there should be period to give notice....common courtesies...businesses ...to adjust....And of course ....as when dey knows dey gats ya in a vulnerable spot......AN ANYONE COULD SEE WHEN YA NEEDS TO GETS THE ECONOMY GOING VIA the Hotel ....an do the maths.....dey gats ya.....Govt Experts shouldda see dis coming and prepared....matter of fact no business should leaves one so exposed....now ya needs to look at the remaining back ups.... Where are the govt people on aviation matters.....????...somebody ought to know these airline numbers for any negotiating to first happen....if push comes to shove why not do a ppp wid Randy Butler or Western Air an hook up wid the Canadian tour people...
bogart 6 years ago
BahamasForBahamians......Please dont be disrespectfull to the Prime Minister of the sovereign nation, the Commonwealth of the Bahamas an be calling him such obscene name. Respect.
DDK 6 years ago
Kind of hard to argue with your reasoning!!
proudloudandfnm 6 years ago
They've been flying in practically empty, of course they're pulling out. Next to pull out will probably be Celebration. Can't keep sailing to a dead port....
banker 6 years ago
The real enemy of Grand Bahama is the Port Authority. They were content to cut steaks off their racehorses (the licensees) while it fell in ruins around them. They had an ideal opportunity to make something out of Grand Bahama, and they just bled it dry.
The Hawksbill Treaty should be ripped up, the Port kicked out and Freeport should be nationalised.
The current management of the Port Authority is a bunch of corrupt do-nothings. Time for a change with the root cause of the problem.
sheeprunner12 6 years ago
Agreed ............ If the Bahamian government does not act fast to tear up the HCA ........ we will all see Freeport go further down ......... The time to nationalize GBPA is about 20 years overdue.
DDK 6 years ago
Too right. When you put the Port Authority together with the Government you have nothing but disaster for GB and Bahamians. It is time for the Port to go, as for the Government...........
realitycheck242 6 years ago
i have said over and over. The second and third generation of the founders of the GBPA lack the foresight and Vision of their parents. Without vision the people will perish. so goes the city of freeport
ThisIsOurs 6 years ago
"“Sunwing has been developing these routes for the last four years, and has lost millions of dollars each year in doing so, but saw it as a long-term investment and partnership. Last summer and this summer, the flights were going to lose less than they had in the past and, therefore, with the programmes getting traction and losses reducing we were very sad to have to abandon something which we have worked so hard to foster. In addition, these flights in the summer meant that a lot of our hotel partners did not have to close - and did not have to lay off staff - in the low season. We are concerned that without our flying programme more jobs will be lost."
Sounds like they get the memo that Minnis, Turnquest and DAguilar handing out "Come Goosey Us" contracts. CCA, CTFK , Kreiger and Wynn one why can't they?
jusscool 6 years ago
The problem with the Grand Bahama Port Authority is the thee old guard that was there that made sure the island was stabilized financially and economically has passed, God rest their souls. And now we have a new breed who have let the lifeline of Grand Bahama fall in a state of continued decay ! Look at the island back then compared to now. The island has grow unappealing every day. The maintenance on the island decreased. Everyone in charge is just sitting around on their behinds just doing nothing. This is just a sadd state!
ohdrap4 6 years ago
EASY. BUY THE AIRLINE AND BRING IN YOUR OWN PEOPLE.
KIND LIKE FEDEX.
John 6 years ago
Can we all go back to Family Island living: no phones, no computers, no Lucayan, no SunWing (sounds Chinese). No BPL, no cable, no vat, no Oban, no vat, only home made bacon, ..just fish and farm and kill a goat or chicken now and then and wait on old age and the mail boat.. both an em use ya take long ya come.
ohdrap4 6 years ago
nah, i need amazon.
TheMadHatter 6 years ago
Geostorm, i agree. The PM should not be called such foul language. I hope that poster apologizes here in this group. The PM position deserves respect regardless.
I myself wish to apologize for calling Zhivargo, the former head boy of Hawksbill High, an idiot yesterday. I just wish he had more care for his people and did not cast them into the belly of the WTO slave ships like that which was done to his ancestors. It's not good to repeat mistakes.
SP 6 years ago
This is the easiest to resolve no-brainer the country has.
Simply make Freeport a duty free shopping zone like Panama, and the Islands economy would do an "immediate" 180-degree turn. Airlines, hotels, and investors from Central and North America would be lined up begging to get in.
The worst case scenario is Freeport becoming excessively profitable within 12 months!
So what's the problem??
ohdrap4 6 years ago
Manaus, in Brazil, was modeled as a duty = free zone and is a Freeport copycat. The govt offers no giveaways such as land or VAT exemption, yet it generates oozes of money for the govt.
It is duty free for everyone, but you have to travel there to buy perfume, or liquor or electronics. But you have to get there, in the middle of the jungle.
This thing was modeled after freeport and has bested it many times over, look it up at wikioedia.
Suppose Bahamians could go to Freeport to shop for duty free things, yes, it would boom.
Bahamian manufacturers could also thrive if they did not have to pay duty on packaging and could enjoy reduced electricity rates. More Bahamian manufacturers would appear as well.
truetruebahamian 6 years ago
I really enjoy the commentary. Those empty barrels who flap their keyboards constantly usually have little concern or appreciation of the subject at hand. Their wisdom and comments are like a storm in a teacup. meanwhile, the Tribune would do well to update their online popular stories - the subjects of which are three months out of date. The acting Chief Justice has not only been appointed, but deceased for three months. Is this like our postal system, where in October i received May's electricity bill?
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