The Tribune

• Exploring 50-acre Club Med site possibilities

• Aims to ‘exceed’ 90% pre-COVID occupancy

• Room rates up 25-30% in inflationary offset

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Atlantis is on target to “exceed” 90 percent of pre-COVID occupancy levels for the 2022 full year, a senior executive has revealed, as it eyes “well over $500m” in new investment for this decade.

Vaughn Roberts, senior vice-president of government affairs and special projects, told Tribune Business the mega resort has “a bunch of things on the table” including the potential redevelopment of the 50-acre site that previously housed the Club Med property on Paradise Island’s southern shore. While not providing any timelines, he said consultants had advised Atlantis that the site’s optimum use would be as an “ultra luxury resort and residences”.

Together with ongoing renovations to the Royal Towers, and the redevelopment of the still-closed Beach Towers into Somewhere Else, in partnership with Grammy Award-winning musician and producer, Pharrell Williams, and his business partner David Grutman, Mr Roberts suggested Atlantis could enjoy half a billion dollars of investment over a five-to-seven year period as it targets new and improved facilities.

In the immediate term, he added that the destination resort is seeing “no headwinds” or “any danger in front of us” despite growing fears that the US may slip into recession as the Federal Reserve continues raising interest rates to counter inflation that is now at 40-year highs.

Revealing that Atlantis is seeing no let-up in the pace of guest bookings, which has returned to pre-COVID levels and presently remains strong through into 2023, Mr Roberts said the property was on track to either match or beat its target of reaching 90 percent of pre-pandemic occupancy levels for this year.

And, if occupancies dropped below budgetary projections, he revealed that this was being offset by average daily room rates (ADRs) that are 25-30 percent higher than previous year comparisons. As a result, Atlantis is “holding margins well”, with The Bahamas’ decision to eliminate COVID entry testing for vaccinated tourists both removing a potential travel deterrent and reason for travellers to select another destination.

“We’ve got a bunch of things on the table,” Mr Roberts told this newspaper, indicating Atlantis is not just focused on the immediate future. “There’s the redevelopment of the Beach Towers, the renovations to the Royal Towers. We have 50 acres of highly valuable land for future development where the former Club Med site is. So if you factor those things in it will be well over $500m over five to seven years.

“That includes some development on Club Med. There are significant opportunities in front of us to really improve our facilities and add new facilities as well.” Mr Roberts gave no development timelines but, while no construction start is imminent, he disclosed that Atlantis has been exploring which type of resort-related development on that site will yield the best return.

“The obvious opportunity is ultra luxury resorts and residences,” he affirmed. “I would think that’s the highest and best use for the site. That’s what all the consultants we’re talking to are saying, so that’s probably where it ends up. To the extent that The Bahamas is very attractive for development, that’s a very precious site.”

More immediately, Mr Roberts said Atlantis has seen no sign that growing concern over the US economy’s health is having any impact on its bookings and visitor interest. Besides the pent-up COVID demand that continues to hold, he added that the stock market’s previously strong performance and pandemic stimulus pumped into the economy by the federal government were also providing travel support.

“We’re not seeing any impact, any headwinds from that stuff in our bookings yet, even into next year,” the Atlantis executive said of global inflation woes. “People want to get out and see the world. Obviously being so close to our main market, business is still strong.

“We’ve returned to pace on future booking levels, seeing continued strength in the bookings through the rest of this year into next year. In the group market, which in its traditional booking window, books a year out - sometimes two to three years out - we’re not seeing anything in our booking pace that suggests there’s any kind of slowdown in the next 18 months.

“If the US falls into recession, which would have wider global implications, some of that business on the books now will fall away but we’re not seeing anything to suggest at this point that there’s any danger in front of us other than what we’re hearing in the financial markets.”

Mr Roberts, as a result, voiced confidence that Atlantis will hit - or even beat - its target of returning to 90 percent of pre-COVID occupancies for the full year. “We’re getting much closer to closing in on where we were pre-pandemic,” he told Tribune Business. “We’re projecting this year, budgeting this year, to be about 90 percent of where we were pre-pandemic. Across the year, we’re trying to get to 90 percent of where we were.

“We’ve built up to that very well. The year is half-way through, and our performance against budget is very good and very strong. Even when occupancy numbers are lighter than budgeted, we’re seeing so much uptick in room rates that margins are holding well. We’re very confident that we’re going to meet and exceed our budget, which is 90 percent of pre-COVID occupancy. We’re very happy with where we are and what we see for the next six months.”

Mr Roberts said the “higher ADRs than budgeted” have helped Atlantis to offset, and counter, its own increased costs and expenses that have resulted from inflation and supply chain backlogs. “The rates are priced up so from a cost perspective we’re managing through inflation on supplies and supply chain issues, and paying very close attention to what is happening here with utilities,” he added. “We’re very carefully watching that.”

Average daily room rates (ADRs) are up 25-30 percent on prior year comparatives for the same period, and the Atlantis executive said this was being driven by a combination of higher visitor demand and reduced room inventory at both the resort and wider destination.

Apart from the Beach Towers closure, rooms at Atlantis’ Royal Towers are also presently offline due to renovations. In addition, both the Melia Nassau Beach Resort and British Colonial properties are presently closed with the former also undergoing upgrades while the latter awaits a new brand partner.

“You have to bear in mind a large portion of the room inventory is closed,” Mr Roberts said. “It’s well over 1,500 rooms out of service in a destination that has 11,000 to 12,000.” Thus the supply restrictions, coupled with post-COVID demand, have combined to give Atlantis - and possibly other Nassau/Paradise Island resorts - higher room rates.

He added that, after two years of grappling with COVID, the Nassau/Paradise Island destination appeared poised for “a good run”. Pointing out that both Atlantis and Baha Mar had both enjoyed “record years” in 2019 prior to the pandemic, Mr Roberts said “there’s still upside” for both properties as their combined marketing spend helps to draw new visitors to the destination.

Despite concerns over the airline industry’s continuing travails, involving flight cancellations and pilot/staff shortages, Atlantis is focusing on what it can control by “driving demand” for the resort with help from the Ministry of Tourism and Nassau/Paradise Island Promotion Board. Once that proves successful, airlift will expand accordingly from key source markets such as Miami and Atlanta and the key connecting hubs that service them.

And with both The Bahamas and US easing/eliminating their COVID entry testing requirements, Mr Roberts said a potential reason to choose either Florida or the Caribbean over this nation has been eradicated. “It’s continued to strengthen our business,” he said. “Our business has been rebounding anyway in the first half of this year, and we’d been advocating for the Government to relax the protocols.

“We knew all along that they would not take action until the US acted on its protocols. They moved very quickly when they did. It’s removed one more hurdle. We had larger groups concerned about how we could test 400 people within the required time. We’ve done a good job setting up testing facilities, it was a concern for group producers.”

Mr Roberts said both Atlantis and Baha Mar were “packed” last week following US Independence Day as families take advantage of the summer vacation season to travel. “We’re seeing new patterns in some of this,” he said. “The first two weeks in June typically might have been softer weeks. In some of the shoulder periods we’re seeing stronger demand than has historically been there.”