Thursday, December 4, 2014
By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
Utility costs are “the single biggest deterrent” to Sandals Emerald Bay’s expansion, it was revealed yesterday, with energy consuming 18 per cent of the resort chain’s Bahamian revenues.
Patrick Drake, Sandals Royal Bahamian’s general manager, told the Bahamas Energy Security Forum that the Exuma-based property’s growth through the addition of “hundreds of rooms” was being held up by concerns over astronomical energy costs.
He added that the company had spent “close to $8 million” on utility charges for 2014 to-date.
He joined others calling for the resort industry, and wider Bahamian economy, to “find urgent ways” to reduce energy costs that were making the sector uncompetitive and deterring property upgrades.
“Before we can even look at what we’re doing, we spend 18 per cent of revenues on energy payments before we even put heads on beds,” Mr Drake said at the Bahamas Chamber of Commerce and Employers Confederation (BCCEC) organised conference.
“On Exuma, the single-biggest deterrent to those expansion plans - we have hundreds of rooms designed and ready to go - comes down to utility charges. The decision should not be the light bill or additional rooms.”
The proposed Sandals Emerald Bay expansion thus provides a ‘case study’ on how Bahamian employment, spin-off entrepreneurial opportunities and economic growth, are being stunted by high energy costs and structural inefficiencies in the economy.
Mr Drake, meanwhile, pointed out that while the Bahamas was in a “global competitive marketplace” for tourists, its resort industry was being forced to choose between meeting payroll or investing in badly-needed property upgrades.
“Unfortunately, in the Bahamas we have an ageing product,” Mr Drake warned.
Without the facilities to make its resort industry attractive and globally competitive, the Bahamas was “going to get left behind”.
Yet, as the Sandals Royal Bahamian general manager pointed out, the high cost ‘squeeze’ on profits, especially for small and medium-sized resorts, was preventing them from adding even basic facilities such as Jacuzzis and bakery ovens.
“Your guests are not looking at you as a Third World destination,” Mr Drake said, pointing out that visitors wanted the same comforts and facilities that they would find in Paris and Miami.
“Unfortunately, in the Bahamas we are faced with decisions on whether to pay the electricity bill or add these needed facilities,” the Sandals executive added.
“We need to find urgent ways to reduce these costs. If not, the future is not going to look bright, because we will not be able to expand.”
Mr Drake cited Sandals’ third Bahamian property, Fowl Cay, as an example of “what we need to grow the industry”, being a unique, boutique Family Island destination.
“We have been stuck in time,” he added. “Most of the product is well in excess of 50 years old. We are holding back revenue because of the challenges we have.”
Mr Drake said the Bahamian hotel and tourism industry also needed to “find ways” to ‘go green’ and enhance its eco-tourism reputation.
With travellers increasingly demanding such destinations, he added that European travel agents and tour operators would “not even consider selling you” unless a resort could demonstrate its ‘green’ credentials.
What resorts did with their reverse osmosis and ‘grey water’ plants was becoming increasingly important, and Mr Drake added: “It’s way past the days when a man checked back in and checked back out, with no interest in your infrastructure.”
Sandals Royal Bahamian had just invested $500,000 to heat one of its swimming pools with solar energy, giving it “something new and different” to pitch to the international tourism market.
“You can imagine if we had to do that through normal, traditional methods, what that would have done to our bottom line,” Mr Drake said, in a reference to the Bahamas’ relatively high energy prices.
He called on the Government to “lead the way” in reforming “some of the archaic laws” governing the Bahamian energy sector, thus paving the way for the introduction of renewable energy and new technologies.
“Tourism, in the medium term, is really the salvation of these islands,” Mr Drake said.
Comments
The_Oracle says...
Have no fear, Mr. Davis is gonna save you!
He has promised $0.30/Kwh in short order!
Some damn fool is gonna come in and work miracles
cause he says so!
Posted 4 December 2014, 3:13 p.m. Suggest removal
GrassRoot says...
well unfortunately 30 cents/kwh will not safe the economy. 10 cents or so will. However Sandals had offers on their table to set up their own energy facility and they thought it was to expensive to make that investment. Well had they acted when they had the proposals on their desk, their cash flow would look much different now - and customer appreciation as well I take.
Posted 7 December 2014, 1:36 p.m. Suggest removal
duppyVAT says...
BEC is ruining more than the bottom lines of hotels ............. Leslie says that they don't pay their bills on time anyway ............ if the hotels don't make money, they should just close down or is the government incentives to hotels attractive enough to keep them open?
This is not a sustainable model for a tourism industry ....................... lose - lose for us
Posted 4 December 2014, 5:10 p.m. Suggest removal
GrassRoot says...
frankly duppy VAT it is not BEC that is ruining the economy. What is ruining the economy is that the government has not taken action to change the system early enough. BEC needs to be shut down, the union contracts scrapped, net metering allowed, and a third party should get a contract to produce electricity at 10 cents/kwh for the next 10 years (and yes this is possible). The only reason why Bahamar, Albany and other large developments don't have their own energy models is, because they were BEC's cash flow life lines and the government went out of its way to shut down any, ANY initiative by these resorts/developments. BEC is damned if Bahamar etc. does not contribute cash to keep BEC afloat, and BEC is damned when they have to provide the extra amount of electricity Bahamar needs. So all this is only happening (or not) because the government wants to keep BEC alive. Scrap the company, write off the debt (well put a 5 cents/kwh recovery tax to all the bills for two years and the money is back in the treasury - and all are happy).
Posted 7 December 2014, 1:47 p.m. Suggest removal
duppyVAT says...
Yes I agree ............ BEC "as is" must be scrapped and a new energy model developed .............. no use amending the Act ............ its failed us.
Posted 7 December 2014, 7:01 p.m. Suggest removal
ChaosObserver says...
Guess hotels/resorts could just shut down, fire everyone then have government come in and run them much more efficiently...just like they do everything else, right?! hahaha...(ok, i'm joking)....unless the government gets their heads out of they A** these resorts/hotels will find more favorable places to go, thus taking jobs, income, tourist with them...(but maybe that's what the government actually wants....)..."Government" another word for "idiots"...
Posted 4 December 2014, 8:24 p.m. Suggest removal
duppyVAT says...
No Chaos ........ we need a sustainable tourism model founded on small scale eco tourism hotels maximum 100 rooms on the Family Islands........ no sandals or Resorts World on Bimini ......... thats unsustainable. mass tourism may work in an urban setting but the support services/activities must be present. Nassau is dead after dark (except for criminality).
Posted 5 December 2014, 10:15 a.m. Suggest removal
GrassRoot says...
1000% agreed. Look at the tourists that choose the out islands over new providence/Freeport. They may not buy t-shirts and eat at senor frogs, but they leave serious $$ in places that need the $$ directly and not via the disbursement and subsidy from a corrupt central government. Tourists in the out islands spend usually more time than the average visitor to New Providence, leave less garbage and are more in tune with eco, nature and sustainability. So yes duppyVAT, we need a tourism that favours small hotels and pensions and operators, Costa Rica is the perfect model. Start with educating the out island tourist operators on how to set up websites, websales, social media, allow them to get exchange students from reputable hotel schools around the world to work for a few months and bring in know how and relationships, etc. all this does not cost any money, finance renewable energy that will allow local farming etc. all doable and possible even without that much money.
Posted 7 December 2014, 1:54 p.m. Suggest removal
Sickened says...
You are all missing the point here. You know how the PLP works. Mr. Davis is subtly offering his services to these large establishments... donate $5 million to the PLP and your $8 million annual bill will disappear. An immediate savings... for free. It's a no-brainer. A win-win for everybody (except of course the average Bahamian who will pay the difference through a Fuel Surcharge)???
Posted 5 December 2014, 10:05 a.m. Suggest removal
GrassRoot says...
yes. that will happen unfortunately. it really looks like that. look at the mess with the stadium, same here. Losses are transferred to the general public after the private investors took their money out.
Posted 7 December 2014, 2 p.m. Suggest removal
GrassRoot says...
Private Public Partnerships they call it.
Posted 7 December 2014, 2 p.m. Suggest removal
countryfirst says...
I think you have it backwards out island tourist operators know what they're doing they make more money per visitor than Nassau
Posted 7 December 2014, 5:55 p.m. Suggest removal
countryfirst says...
BEC is a failure privatize it now and take this burden off the taxpayer.
Posted 7 December 2014, 9:08 p.m. Suggest removal
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