The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A prominent hotelier yesterday sounded the alarm for small Out Island resorts as he revealed his property will make a $2m loss this year on revenues barely able to cover "25 percent of the light bill".

Magnus Alnebeck, the Pelican Bay resort’s general manager, told Tribune Business that small Family Island hotel casualties were likely as he warned that the Government may have to provide financial assistance to ensure some are able to re-open.

Pointing out that boutique, niche properties will be "much more attractive" in a COVID-19 environment, due to the greater ease of social distancing, Mr Alnebeck queried whether The Bahamas' tourism industry model was "suitable" for the pandemic's demands following the recommendation that all hotels and beaches be allowed to open to visitors from October 15.

The wider industry, featuring tour, attraction and excursion providers, will open on November 1, but the Pelican Bay chief said this nation lacked the number of all-inclusive type properties viewed as ideal for the mandatory 14-day quarantine period that visitors will have to undergo upon arriving in The Bahamas.

Mr Alnebeck said The Bahamas had largely shied away from the tourism business model that COVID-19 is pushing it to adopt, as he noted that effectively keeping guests within the confines of their resort property will also prevent the greater distribution of wealth that occurs when visitors participate in off-property experiences.

Agreeing that this nation had little choice but to rapidly re-open its largest industry, given its dependence on tourism for jobs, economic growth and foreign exchange earnings, Mr Alnebeck said numerous uncertainties surround the second restart effort - not least of which is whether travellers will feel comfortable coming to The Bahamas amid all the restrictions and surge in COVID-19 cases locally and globally.

Detailing the impact that COVID-19 lockdowns have had on his property, the Pelican Bay chief told this newspaper: "We average 10 rooms every night, and that's 5 percent occupancy. At least we are open and there is some light in the building, and we are maintaining it.

"Like everyone else we are leaking money. It is very substantial. Our revenues pay 25 percent of the light bill but we've been dipping into our reserves for a long time. You want to spend that money on other things. That's unfortunate, but is the first thing that happens when you go through something like this. You subsidise your operations from funds you want to have spent on marketing as opposed to covering losses.

"I would think this year, my numbers are relatively small but we are probably going to do a $2m loss. That's on 184 rooms."

Mr Alnebeck expressed particular concern over whether some Family Island properties, which may have been closed for up to six months as a result of COVID-19 restrictions, will have the necessary financial strength to cover what could be significant re-opening costs.

"You have to have very deep pockets to re-open, and that's my concern," he explained. "Some of the smaller hotels in The Bahamas that are really showcasing what the country is all about, they might not have the cash to be able to re-open.

"To re-open a hotel costs money, and it takes a few months to get to positive cash flow. If they don't have the cash to begin re-opening, start cleaning the place up, get people back to work and pay them for the first few weeks, how do you start?

"The big hotels have the money, but what about the smaller properties in the Family Islands? Your smaller Out Island hotels at the moment are much more attractive for consumers than the big hotels."

Asked whether he feared some small resorts may never re-open, Mr Alnebeck replied in the affirmative and said: "I hope the smaller hotels get some support in some way so that, if we are re-opening, they are able to re-open."

Backing the Government's decision to push forward with tourism's return at the second attempt, the Pelican Bay manager said COVID-19's demands will force it to move away from its traditional business model to one that has been embraced by Jamaica and other regional competitors.

"As long as we have a two-week window in place, a protocol that we are not allowed to call a quarantine, there's only a certain group of hotels that are suitable for that model and that is the all-inclusives," Mr Alnebeck told Tribune Business.

"Jamaica and St Lucia have done very well with it, and have basically been able to create a bubble around each all-inclusive facility, provide shower facilities for staff and have some staff stay in. There are two questions: Will that model work in The Bahamas; that is the first question, and number two, is it really the right thing to do:? Is the virus going to spread anyway."

The Bahamas' all-inclusive properties include the two Sandals resorts, Royal Bahamian and Emerald Bay in Exuma; SuperClubs Breezes; the RIU Paradise Island; Viva Fortuna on Grand Bahama; and Club Med on San Salvador.

Suggesting this represents an insufficient all-inclusive inventory, Mr Alnebeck added: "The question is: Will Atlantis and Baha Mar re-open and try to control the guests that they have under the VIP (Vacation in Place) protocol. It will be quite hard. That is a model that we have never been keen on in The Bahamas, although we have it in certain instances.

"That is a model we have been very much against, all-inclusives, in Nassau because traditionally we have created products that are open and people come and go. Sandals will be one of the properties that will be suitable to re-open as soon as they can, and it's very important we all support that. It's a product that's going to work better until consumers are more confident with the normal Bahamas product."

Mr Alnebeck added that Bahamian tourism will likely endure "a slow ramp-up" following its return with the key issue being whether travellers have sufficient confidence to visit The Bahamas or any other destination.

"I just hope we don't do another 180 degree turn or 90 degree turn like we did in July," he told Tribune Business. "We have to show we are ready for this and see it through. Let's just say that what we have done in the past might not make every comfortable we won't do it again, but let's hope it doesn't.

"It's very important that, in what we're dealing with at the moment, we don't constantly change the course. Set the protocols and stick with it. We can't keep saying to tourists you are welcome but can't go on the beach. To come to The Bahamas and not be on the beach is a bit like going to the Universal Theme Park and being told you can't go on the rides."

The Bahamas' beaches are due to open on October 15 along with the hotel sector.