The Tribune

By Natario McKenzie

Tribune Business Reporter

nmckenzie@tribunemedia.net

SANDALS’ chief executive has told Tribune Business “you could buy a hotel” with the monthly electricity bill generated by its Emerald Bay resort,with the property targeting a 6-7 per cent increase in its 2013 average occupancy rate.

Adam Stewart said Sandals Resorts International remains “fully committed” to the Exuma resort, with the company hoping its average occupancy hits the mid-70 per cent range next year. Disclosing that Emerald Bay had “come a long way” since Sandals purchased it from receivership in 2010, Mr Stewart told Tribune Business the resort chain was looking to combat high BEC costs through the use of solar energy. He added that Sandals was also spending $1 million subsidising airlift to Exuma, and had invested $80 million in Emerald Bay`s upgrade to-date - including $2 million pumped into the golf course. Mr Stewart, in an interview with this newspaper, reiterated that Sandals was not looking for a “bailout” for Emerald Bay, but rather an economic environment where the hotel could be financially viable.

“We’re fully committed to Emerald Bay,” he said. “We have a significant minvestment down there, over $80 million so far. Our discussions with the Government started because the input costs to run that hotel were even higher than anyone could have anticipated. The Government has been very serious so far and demonstrated a real desire to make it right.

“It has always been our plan to expand Emerald Bay and put in more facilities; we have the land. You can’t borrow money now to go and expand the hotel before the fundamentals are fixed. We don’t have a fixed agreement yet to make that hotel strong, but we are very happy with the discussions we are having with the Government.”

Mr Stewart described Emerald Bay’s energy costs as “much higher than anything we have ever seen before”.

He added: “The hotel which we bought was not designed with energy in mind. We have had to spend millions of dollars to try and bring our consumption down. The cost per kilowatt hour there is so much more expensive than anything we’ve ever seen. You could buy a hotel with what we pay for electricity every month.

“We’re trying to pioneer right now a solar project down there to see if there’s a way we can use solar technology. The high cost of electricity is something that is affecting all Exumians. The fuel is expensive down there. They sell it to the airlines, and because it’s expensive the tickets to come there are expensive.”

Mr Stewart said Sandals has demonstrated its commitment to improving its product on Exuma.m “When we purchased the former Four Seasons Property, there were only two restaurants. We increased that to seven,” he told Tribune Business.”There were no entertainment facilities; we had to construct those. The rooms were poorly maintained, the pool was nowhere near the type of quality we have now, and we improved the gardens as a whole and installed the only European wedding garden in the Caribbean right here in Exuma.

“We even spent another $2 million upgrading the golf course. We did all of this to bring the property up to a true five-star level.”

Mr Stewart said that despite the high operational costs, Sandals was generally happy with the hotel’s performance.

“It has come a long way from when we bought it. The hotel is on the rise,” he added. “Making a hotel profitable is a function of the rate and the occupancy that you get. When we went into Emerald Bay the hotel was averaging in the 30s in terms of annualised occupancy. We started off in the 50s in our first year.

“We ended last year at 67 per cent. It’s a very high cost operation, so next year we’re hoping to get a stable 6-7 per cent on top of that in terms of occupancy while maintaining the rates,” said Mr Stewart.

To achieve this it is vital, he said, for Emerald Bay to establish and maintain the high repeat visitor rate that other properties in the Sandals chain enjoy.“This can only be done if the service is of the highest standard. We have dedicated a lot of time, money and expertise into training our Bahamian workforce, and we have to say we are very proud of the advancements that have been made over the past three years,” Mr Stewart said.

The Sandals chief executive said the company had spent almost $1 million a year subsidising airlines to come to Exuma. He added: “Our group was able to get Delta to fly down there, to get American Airlines to put a jet in, to get Air Canada to come down twice a week to Exuma and all the other hoteliers get the benefit of it, but it’s our pioneering that got those planes to come there and it has totally changed the landscape of the island.” Mr Stewart pointed out that these direct flights mean increased opportunities for Exumians as well.

“Right now you can’t get a direct flight between Exuma and Grand Bahama, but because of the connections we have made, an Exumian can fly directly into Toronto from the island,” Mr Stewart said. He added that Sandals has spent millions of dollars promoting Exuma.

“It’s important for people to realise that Nassau is a much better know destination than Exuma. Exuma is gorgeous, it’s the exotic place that you dream about, but the truth is much of the world has no idea where it is. We have taken money that was earned elsewhere and invested into Emerald Bay. We feel that we have been tremendously successful. In terms of making money we have not made a dollar,” said Mr Stewart, noting that the company was looking for a turnaround “as soon as possible”.