By FAY SIMMONS

Tribune Business Reporter

jsimmons@tribunemedia.net

Atlantis and Baha Mar are expecting to enjoy a combined $8m in annual energy cost savings by next year amid industry calls yesterday for a further 43 percent slash in electricity rates.

Robert Sands, the Bahamas Hotel and Tourism Association’s (BHTA) president, said the sector is finally “seeing some action” on energy reform and expects the country’s two mega resorts to see a multi-million dollar reduction in their electricity bills by 2025.

Speaking during a panel discussion at the Ministry of Energy and Transport’s energy forum, Mr Sands said Baha Mar and Atlantis spent a combined $64m on electricity in 2023 but expect to see that amount slashed to $56m by the end of next year.

“Consistent, reliable, cost effective, environmentally-friendly electricity is very important, not only for our sector but for every single citizen of the Commonwealth of The Bahamas,” said Mr Sands.

“If you were to look at a snapshot by numbers of two major businesses in this country, Baha Mar and Atlantis, who spent last year over $64m in electricity costs between two companies, and are now realising savings that, maybe by the end of the next year, will take us to about $56m. We now have available for productive use some $8 m as a result of reform action and also a strategic plan that will go into place.”

Mr Sands said hotels use the same amount of electricity regardless of occupancy levels, and any reduction in fixed costs such as energy will allow them to be more competitive, grow and invest in upgrading their properties and the visitor experience.

“Tourism in general is faced with inelasticity. Whether we’re running 20 percent occupancy, whether we’re running 100 percent occupancy, our electricity usage does not change gradually. That is why the unit cost of such a provision is important for this particular sector,” said Mr Sands.

“The inelasticity of our business means that electricity is almost a high fixed cost per month, and in this day and age where we’re becoming more competitive, to drive for occupancy and rate. Our opportunity to grow the bottom line, more than often, is not in additional sales that we create, but in how we manage those fixed costs.

“Seeing the relief that has taken place is now allowing us to flow a little bit better at the bottom line because these fixed electricity costs are being reduced.” Mr Sands stressed that the resort industry is hoping for a further 43 percent reduction in electricity rates via ongoing reform as it seeks to “bridge the divide” between its target and the present 28 cents per kilowatt hour (KWh).

He added that a further reduction in electricity rates in line with international benchmarks would allow companies operating in The Bahamas to further increase their profitability.

“When we look at our kilowatt hour cost today, which has dropped from say 30 cents-plus last year to about 28 cents this year, and when we look at international rates being around 16 to 18 cents, we would like the powers that be to work together to bridge this divide somewhere between 16 and the 28 we achieved,” Mr Sands said.

“We would like to be under 20 cents. That will give citizens of The Bahamas and companies a level of productive money to spend.” He added that it is critical for Bahamas Power & Light (BPL) to meet the timelines promised to consumers as large companies use that information to plan their annual budgets.

“The only concern that I have for the energy sector is that, once we commit to a timeline, we have to live up to that timeline. Companies like ourselves depend on that information and plan as a direct result,” said Mr Sands.

He added that many resorts and large companies have also installed energy efficient appliances to allow greater savings and complement the Government’s efforts to implement more sustainable energy solutions.

“Many of the companies, such as the larger hotels, are employing energy efficient air conditioning cooling systems, which are major users of electricity, and they are state of the art, and we will continue to do so,” said Mr Sands.