The Tribune

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.