The Tribune

• Up to 300 jobs lost with two-year closure

• Unprofitable to stay open amid COVID-19

• Minister indicates surprise at ‘sucker punch’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Baha Mar will cut its losses by closing the Melia Nassau Beach property until 2023 for a $100m renovation, its president revealed yesterday, resulting in up to 300 hotel job losses.

Graeme Davis, the mega resort’s top executive, told Tribune Business it would simply be unprofitable to keep portions of the resort open during the construction work due to COVID-19’s devastating impact on travel demand and occupancies.

He added that the potential “disruption” from the hotel’s upgrades could “damage the brand and reputation of the property”, which was another factor that Baha Mar and its ultimate parent, Hong Kong-based Chow Tai Fook Enterprises (CTFE), took into account when deciding to close the Melia Nassau Beach for two years until Spring 2023.

Pledging that impacted staff, which he estimated at between 200-300 persons, will receive their full severance pay and benefit entitlement, Mr Davis did not, though, commit to giving existing Melia staff “first preference” when the resort begins to re-hire ahead of its return.

And, while promising that the renovations will create “almost a new resort”, further positioning New Providence as “an upscale luxury destination” for when the pandemic ends, the Baha Mar chief said “no decision has been made” on whether the Melia brand and/or its all-inclusive model will be retained after the property’s transformation.

Explaining the rationale for the two-year closure, which takes effect on March 1, 2021, Mr Davis told this newspaper: “Based on the economic conditions of where we are with the demand, we just don’t see it to be profitable [to re-open] based on the current pandemic crisis, and with the reduction in inventory and the disruption to the guest experience.

“That will also be a factor throughout the renovation work, which can damage the brand as well as the reputation of the property.” The “reduction in inventory” refers to how many of the Melia’s 694 rooms, and 32 suites, will be off-limits at any one time due to the construction-related upgrades.

Resorts typically use off-peak times, when occupancies and customer demand is low, to minimise renovation-related disruption to the guest experience. And, with the Melia still closed due to record-low business volumes as a result of COVID-19, Baha Mar has decided it makes more sense to keep the property shuttered instead of re-opening and incurring extra losses.

The upcoming redundancies effectively represent a ‘second wave’ of terminations given that the Melia Nassau Beach Resort terminated around 328 staff last summer alongside the 1,200 who were released from the major Baha Mar campus.

Mr Davis said the impact on affected staff was “always in the front of our minds, and we’ve always taken the approach to support our associates however we can and wherever we can since we closed.

“We are paying the full severance as required by law.... We wish them well, and they’ll have the opportunity to reapply when the property re-opens”. However, he did not confirm whether those being terminated will have ‘first preference’ to return to their jobs when asked by Tribune Business, only replying: “No comment at this time.”

Mr Davis pointed out that some of the full-time hotel job losses will be partially offset by the 150 Bahamian construction jobs created during the renovations. It is unclear, though, whether the majority of jobs and construction work will go to overseas contractors.

Describing the proposed renovations as “extensive”, the Baha Mar chief said of the Melia: “It will almost be a new resort. It will certainly be exceptional in every way, and will be adjacent to the Baha Bay luxury water park. It will certainly have some great access to the water park, and these renovations will certainly set a great foundation for its future success for the ownership and The Bahamas.

“It will have a tremendously positive impact to the tourism product in The Bahamas, and will continue to reposition New Providence and Nassau as an upscale, luxury destination.” Mr Davis, though, said “no decision has been made” on whether Baha Mar will retain the Melia brand and all-inclusive model come Spring 2023, adding: “We are looking at all options at this time.”

The upgrades to Melia’s rooms, common areas, restaurants and bars, and outdoor spaces including three freshwater pools appear designed to enhance and refresh its product, as well as ensure the resort better complements the neighbouring high-end Baha Mar resort campus and Baha Bay water park.

However, Dionisio D’Aguilar, minister of tourism and aviation, last night indicated that he and the Government were somewhat blindsided by Baha Mar’s decision to close the Melia Nassau Beach for two full years. He described the move, especially for impacted hotel workers, as “a sucker punch”, “gut punch” and “body blow”.

“It was a bit of a sucker punch and a bit of a surprise that they were going to close the hotel,” Mr D’Aguilar told Tribune Business, “but Baha Mar has been talking about the renovation of that hotel for quite some time and, typically, when you renovate a hotel you do half or a certain number of rooms at a time so that the hotel remains operational during the renovation.

“However, with the effects of then pandemic upon us and relatively low levels of occupancy that they were running, they probably determined that it was more cost effective to shutter the hotel and do the renovations one-time rather than do the them when the hotel is operational.

“I think the pandemic has probably resulted in Baha Mar deciding that it probably allows for a quicker, more cost effective renovation and refurbishment than incurring significant losses that would occur were you to try and renovate that hotel and keep it open when you have so many competitor properties around it with lots of inventory to sell.”

Mr D’Aguilar said the noise, dust and general disruption caused by construction-related renovations could have placed the Melia Nassau Beach resort at “a severe disadvantage to its competitors” had it elected to remain open at a time when travel and tourism business was at an all-time low.

Estimating that industry earnings were down 70 percent compared to pre-COVID levels, the minister said the planned renovations would likely have wiped out the remaining 30 percent. Nevertheless, he admitted that Melia’s soon-to-be-terminated staff will find it challenging to obtain new employment in a depressed jobs market, even if these losses will be offset by fresh hires at Baha Bay.

“For the people working there it is a sucker punch, a gut punch and a body blow,” Mr D’Aguilar told Tribune Business. “It’s a very, very challenging market to operate a tourism product in at this time.”

While Bahamian tourism was presently “at rock bottom”, he voiced optimism that the industry’s outlook and performance will improve as 2021 progresses and more persons become vaccinated both locally and in The Bahamas’ major source visitor markets.

Mr Davis, in an earlier statement on the Melia closure, said: “As the global travel industry continues to evolve in the midst of the global pandemic, we have decided to close the property and complete an extensive renovation of the resort over the next 24 months.

“We are deeply thankful to the resort’s associates who have been on this long, difficult journey, and we commend their strength, contributions and perseverance through the past 12 months. We look forward to the day when we unveil the renovated resort to distinguished and valued guests from all over the world, furthering the long-term economic health and prosperity of The Bahamas.”

Baha Mar is pledging that the upgrades will create “significant new employment opportunities” when the Melia re-opens in two years time. It is also set to recall a further 700 staff to work when its Rosewood and SLS properties re-open on March 4, taking the total workforce brought back since its re-opening to around 2,500.

Atlantis, which recalled 2,500 staff pre-Christmas, and is said to have brought another 1,000 back for the Cove’s re-opening, combined with Sandals’ re-opening on March 31, will also help offset some of the Melia fall-out.