The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Atlantis’s “very strong” 2016 group booking pace is 16 per cent ahead of this year, despite the twin threats posed by Value-Added Tax (VAT) and competition from Baha Mar.

George Markantonis, the resort’s top executive, told Tribune Business it would be raising its concerns over VAT’s potential impact on pre-booked groups “directly with the Ministry of Finance”.

The Government has attempted to alleviate hotel industry concerns about VAT’s effects on groups who booked dates post-January 2015 prior to the new tax becoming an issue, but Mr Markantonis said he was concerned it might be causing clients with an unsigned contract in front of them to reconsider.

The Brookfield Hospitality president and managing director, while acknowledging that group booking pace for 2014 had been “somewhat soft”, said Atlantis was currently on course to experience no such difficulties in 2015 or 2016.

“The problem we’ve experienced a little bit this year has, quite frankly, been our group pace,” Mr Markantonis told Tribune Business. “This year has been somewhat of a softer year.

“But our group pace for 2015 is about 10 percentage points higher than for this year at this time, and our group pace for 2016 is 16 per cent ahead of this year to-date. That’s very strong when you’re this far out. Any time you are ahead, it’s a good story.”

Mr Markantonis said the numbers were especially strong given that group meeting planners/organisers would have an alternative Bahamian mega resort/casino to consider from late Spring 2015 onwards.

“When we are able to close the deals, it means a lot for us, as in the latter half of 2015 and 2016, we have new competition down the road. Right now, that doesn’t seem to be impacting our group business,” he added.

Group bookings, which typically account for between one-quarter to one-third of business at resorts such as Atlantis, are highly sought-after. Since they are block bookings, often made several years in advance, they provide hotels with a stable mass around which they can arrange their more volatile, short-term leisure business.

Mr Markantonis, meanwhile, indicated that VAT posed a greater potential challenge to Atlantis’s group business than Baha Mar.

“We do have some concerns about pre-booked groups - people who signed contracts when VAT was not yet a possibility,” he disclosed to Tribune Business.

“We are also concerned about groups who may have contracts on the desk as yet unsigned, and perhaps heard about VAT and may be reconsidering. That is something we will be taking up with the Ministry of Finance directly.”

Aware of this particular concern, which is shared by the whole Bahamian hotel industry, the Christie administration has moved to minimise the VAT transition impact on groups who booked dates post-January 1 prior to the new tax coming on the scene.

It will exempt groups who booked post-VAT dates before August 31 this year from the 7.5 per cent levy, leaving them subject to the existing 10 per cent room occupancy tax - which will be eliminated after January 1, 2015.

Groups falling into this category would also be ‘exempt’ from VAT on their food and beverage, and any other costs, essentially maintaining the pricing ‘status quo’ and integrity of the contract they would have signed with a Bahamian hotel

There is, though, a catch for the hotel. Apart from having to register these group contracts before October 15, the Ministry of Finance will not allow them to reclaim, or ‘net off’, their VAT input tax payments on this portion of their activities - likely causing a cost increase.

These details were confirmed in an e-mail sent out by the Bahamas Hotel and Tourism Association (BHTA) to its members last week. It read: “Hotels which have executed contracts prior to August 31, 2014, for group business beyond January 1, 2015, and register their group bookings with the Ministry of Finance by October 15, 2014, will be permitted to assess a room occupancy rate of 10 per cent.

“These will be exempt from the 7.5 per cent VAT. Furthermore, any food and beverage costs and other resort costs, which are an explicit part of that contract, would be exempt from the 7.5 per cent VAT.”

Then the catch: “Hotels participating in this arrangement will not be permitted to claim input credits for these portions of their activities. Properties will have to provide a monthly update of changes in the number and value of contracts affected by these exemptions.”

Meanwhile, Mr Markantonis said Atlantis anticipated spending a seven-figure sum readying its 22 different computer systems for VAT. The property’s sheer size, and numerous revenue streams, mean it has more work to do than most Bahamian businesses.

“Things have become clearer. We are not at the finishing line yet,” he said in relation to VAT preparations. “Our team is still debating some items that impact us more than others, because of our various revenue streams.

“But we’re working towards the January 1 date as best we can. We’re giving it our best shot.”

Despite a softer 2014 for group bookings than anticipated, Mr Markantonis said Atlantis remained on course to close the year ahead of 2013’s performance.

“We will be ahead of last year. We won’t be where we had hoped to be. It’s as simple as that,” he told Tribune Business. “Most of the reason for that will be that our group base did not develop in the year for the year as we have historically seen, but we will definitely be ahead of last year.

“That’s a positive sign. With the improvement in the group base and everything we’re working on, we’d anticipate 2015 would be a better year.

Mr Markantonis also expressed hope that Baha Mar’s opening would attract more visitors to the Bahamas, and boost awareness of this nation existing and new source markets.