By NEIL HARTNELL and NATARIO MCKENZIE
Tribune Business Editor and Tribune Business Reporter
Grand Bahama’s struggling tourism industry was yesterday forced to confront another “significant loss” of 30,000 annual visitors after Sunwing pulled the plug on its summer airlift initiative.
The tour operator, in a statement sent to Tribune Business, warned that it “may be forced” to also cancel flights for the 2019-2020 winter season as it blamed an “impasse” with the Government for its decision to cease all summer airlift to the island next year.
Sunwing, whose Memories resort affiliate exited Grand Bahama in January 2017, suggested that its airlift withdrawal would take the island’s stopover tourism product “backwards to its lowest levels in decades”.
Without the thousands of room nights its passengers generate between May to October, the tour operator said “many of our hotel partners will be closing for some or all of the summer months and reducing staff dramatically” - dealing a fresh blow to an already-beleaguered economy and society.
Janine Massey, the Sunwing Group’s chief marketing and technology officer, told Tribune Business that Grand Bahama’s tourism industry will lose over 30,000 summer visitors annually as a result of the tour operator’s move.
When pressed for details on Sunwing’s “impasse” with the Government, and the underlying causes for its pull-out, Mrs Massey replied: “Simply put, we were unable to get anyone to extend/renew our existing agreement which had been in place for four years.
“Right now we have only cancelled summer 2019. We will be concluding our planning for winter 2019-2020 in the coming weeks but, under the current circumstances, we may be forced to cancel all winter flights to Grand Bahama as well,” she wrote in an e-mailed reply to Tribune Business questions.
“Sunwing has been developing these routes for the last four years, and has lost millions of dollars each year in doing so, but saw it as a long-term investment and partnership. Last summer and this summer, the flights were going to lose less than they had in the past and, therefore, with the programmes getting traction and losses reducing we were very sad to have to abandon something which we have worked so hard to foster.
“In addition, these flights in the summer meant that a lot of our hotel partners did not have to close - and did not have to lay off staff - in the low season. We are concerned that without our flying programme more jobs will be lost.”
Sunwing’s original statement said it was ceasing summer airlift because its was no longer “viable”, even though load factors (passenger occupancy levels) on the flights from 13 US cities were running at 90 percent.
Mrs Massey wrote: “For the past four years, Sunwing has been operating a flying programme from key Canadian and American cities, representing the largest increase in passengers in the history of Grand Bahama.
“The US summer programme was a huge success, operating with a 90 per cent load factor and allowing many hotels to remain open and keeping people employed on a year-round basis. The previous operator of this programme ran flights that were more than half-empty, costing Bahamian taxpayers millions of dollars annually while failing to deliver local tourism revenue.”
She continued: “Although Sunwing Airlines has over-delivered on its promise each year by exceeding the number of customers brought to the island, we are sad to report that we have unfortunately reached an impasse with the Government which does not make it viable to continue with our flight operations to Grand Bahama.
“Therefore, we will no longer be operating to the island in [summer] 2019. As a result, we understand many of our hotel partners will be closing for some or all of the summer months and reducing staff dramatically.
“The Sunwing Travel Group has invested the last six years, and tens of millions of its own money, in the revitalisation of Grand Bahama. It is unfortunate for the island and the people of Grand Bahama that after all this hard work tourism is now going to go backwards to its lowest levels in decades.”
Magnus Alnebeck, the Pelican Bay resort’s managing director, told Tribune Business that Sunwing’s withdrawal was a “significant loss” for the destination. “For Pelican Bay, we are mainly a business hotel with guests who come to Grand Bahama for other reasons than being a conventional leisure tourist,” he said.
“We did, however, receive 2,403 room nights from Sunwing/Vacation Express between January-August; the majority of that being Vacation Express business for the summer months. That total represents 6 per cent of our room nights, but in proportion is much higher for the summer months.”
Mr Alnebeck added: “I am unsure of what this means for Viva Fortuna, Lighthouse Point and Castaways, which are the only other operating hotels in Grand Bahama, and I am also unsure about Island Seas (a timeshare operator). I would expect their numbers to be much higher than Pelican Bay and, yes, this is a significant loss for the destination.”
The Government and Ministry of Tourism yesterday appeared to be caught off-guard by Sunwing’s move. Dionisio D’Aguilar, minister of tourism and aviation, who is currently in Washington D.C., said he knew nothing of its pull-out and would have obtain information from his officials before commenting. He did not reply to a further What’s App message before press time.
Tyrone Sawyer, the Ministry of Tourism’s head of airlift development, added that he, too, only became aware of the tour operator’s action yesterday afternoon.
He told Tribune Business that he “didn’t have a clue” as to what Sunwing meant by an “impasse” with the Government, and added: “We have clean hands in it and a lot of goodwill in abundance.”
Mr Sawyer declined to comment further, saying the Ministry of Tourism and the Government would release a statement on the matter. Nothing was received before press time last night, though.
“I’m just hearing about it myself and, right now, I’m not able to address it,” he added of Sunwing’s move. “I don’t want to respond in a haphazard way. This demands a well-considered response that addresses it.”
Sunwing’s pull-out is especially ill-timed for the Government’s $65m Grand Lucayan acquisition, and deals a potential blow to its hopes of quickly selling the resort to a private sector buyer.
Reduced airlift will make the Grand Lucayan less attractive to potential purchasers, given that stopover visitor “access” to the island has been restricted. A buyer would likely have to invest more in rebuilding airlift and, in turn, may well request increased subsidies and incentives from the Government.
Michael Scott, chairman of Lucayan Renewal Holdings, the Government-owned special purpose vehicle (SPV) that controls the resort, conceded to Tribune Business that Sunwing’s move was “on the face of it, not good news” for the resort and wider Grand Bahama economy.
He questioned whether the relatively high fees levied on airlines by Grand Bahama International Airport were responsible for its pull-out, but suggested Sunwing might return once the entire Lucayan Strip’s redevelopment is triggered by the resort’s sale.
However, Mr Scott said that he, too, only learned of Sunwing’s plans yesterday afternoon. He added that he was unable to comment in detail, as he was unaware if the Ministry of Tourism had anticipated the move and activated alternative airlift plans.
“On its face it’s not great news, I accept that,” Mr Scott told Tribune Business. “But it’s like Lego; I don’t know to what extent there are other building blocks and pieces that factor into this.
“The bottom line is I don’t have enough information, and can’t comment seriously until I hear from the Ministry of Tourism whether this move was anticipated and factored into the airlift equation. It’s as simple as that.
“I’ve just seen this news today. I haven’t had a chance to discuss this with Dionisio, what the options are and whether alternatives are in place. There may be other options in the works,” the Grand Lucayan chairman continued.
“I don’t know to what extend this has been anticipated for some time by Ministry of Tourism officials, and whether there are other options that account for this development, and if they had notice of this happening. There are so many variables to this.”
Mr Scott suggested Sunwing was likely to “pivot” and reconsider its Grand Bahama exit once the Grand Lucayan was sold, and “concrete plans are afoot to redevelop the whole Port Lucaya area and make it attractive again”.
Sunwing and its Vacation Express affiliate withdrew from the summer airlift initiative once before, after Hurricane Matthew and the Grand Lucayan’s subsequent closure left Grand Bahama with insufficient hotel room capacity to accommodate all its passengers in 2017. Some 1,100 rooms were lost in the storm’s aftermath.
That cost Grand Bahama’s hotel industry some 30 per cent of its summer market, with the programme having delivered some 236,000 room nights over the previous three years.
The Vacation Express programme, which started in 2014, covered the period from May to October - traditionally the slowest part of the tourism industry calendar. It brought 68,587 room nights to Grand Bahama in 2014, and peaked the following year at around 110,000, before dropping to 57,800 in 2016 - a figure influenced by Hurricane Matthew’s arrival.
Sunwing, though, resumed the summer airlift initiative in 2018.
Some observers yesterday suggested that the tour operator’s statement, knowing the Government’s increased vulnerability and exposure through the Grand Lucayan acquisition, amounted to a “squeeze play” in a bid to extract more subsidies and tax breaks from the Treasury.