By NEIL HARTNELL
Tribune Business Editor
A Cabinet minister yesterday conceded it is “deeply concerning” that Baha Mar has delayed its re-opening amid plans to make “additional staffing reductions” that could result in hundreds losing their jobs.
Dionisio D’Aguilar, pictured, minister of tourism and aviation, told Tribune Business that a number of Bahamian resorts and tourism industry operators had chosen to “sit on the sidelines” due to a combination of COVID-19 uncertainties and insufficient visitor booking volumes to justify re-opening when the border restrictions are lifted on July 1.
Speaking after the Cable Beach mega resort informed staff it does not now plan to re-open until October 2020, Mr D’Aguilar said it was “sadly the reality” that the Bahamian tourism industry’s rebound from the pandemic will take time with businesses not requiring the same staffing volumes needed pre-COVID-19
Tribune Business understands that Baha Mar’s proposed cuts could impact between 15-20 percent of its workforce, meaning one out of every five to six workers could be in danger of losing their job. Robert Sands, Baha Mar’s senior vice-president of government and external affairs, yesterday declined to comment when reached by this newspaper and referred it to the letter issued to staff on Friday.
“Once again, it’s deeply concerning,” Mr D’Aguilar said of Baha Mar’s announcement. “I guess it’s sadly the reality that it’s going to take a while to ramp back up and, in the meantime, businesses are not going to require the same staffing levels they did pre-COVID-19.
“Some are saying it will take one to two years to see pre-COVID levels again. That’s the new reality, and people have to adjust their business models accordingly. I don’t think there’s the expectation that when we go back to business we open everything up at the same level.
“As minister of tourism of The Bahamas I’d like everybody to re-open right away and get back to some semblance of pre-COVID-19 numbers. But we’re going into uncharted territory, so a certain level of uncertainty exists, and until that uncertainty is mitigated a certain number of players are electing to sit on the sidelines and you cannot fault them for that.”
John Pinder, the Government’s director of labour, told Tribune Business that Baha Mar had still to provide his department with the exact number of employees that will be impacted by the proposed staff reductions.
Suggesting that the mega resort planned to operate with a “skeleton” workforce, he added: “I believe for the most part that the majority of persons there are going to find themselves without a job for a while.
“They [Baha Mar] say they have no bookings before October, and are going to have to start doing significant advertising to get people here and speak about what we’ve got to offer. I think we have a great opportunity with the protests in the US. People are looking to get away from that and the stress. We don’t have that in The Bahamas.”
Tribune Business was subsequently told that while the “majority” of workers will not be impacted by Baha Mar’s plans, the Cable Beach mega resort that features three properties - the SLS, Grand Hyatt and Rosewood - together with a casino and associated amenities, plus the Melia Nassau Beach resort, was looking at trimming a similar percentage to the British Colonial Hilton which also recently axed 15 percent of its staff.
Based on the 15-20 percent range, and between 5,000 to 5,500 associates, this would imply that Baha Mar may terminate from 750-825 and 1,000-1,100 employees when it announces those cuts within the next two weeks.
Baha Mar’s president, Graeme Davis, warned staff in a Friday, June 12, letter that the continuing uncertainties around the still-evolving COVID-19 pandemic had forced the push back of its planned re-opening to an unspecified date in October.
Blaming this move on “many variables”, which were not detailed, Mr Davis hinted that guest bookings/business levels for the three-month July to September period, which traditionally coincides with the slowest part of the tourism calendar, were simply not sufficient to justify re-opening Baha Mar given that financial losses would likely result. The rise in COVID-19 infections in key tourism source markets, such as Florida, appears to be another concern.
“Due to the many variables resulting from the evolving nature of COVID-19, we have made the difficult decision to postpone our re-opening date beyond the July 1 re-opening of The Bahamas,” Mr Davis wrote. “Instead, it is our goal to re-open in October. It is our hope that in extending our closing we are setting the stage for a more successful re-opening, one that will provide the much-needed economic relief and stability that all of us depend on.
“We will continue to monitor the impact COVID-19 and the economic downturn is having on the United States, as well as the willingness of our guests to travel, as we set the stage for a successful re-opening. I understand that this is disappointing news after weeks of uncertainty. I personally feel a tremendous sense of disappointment as well. It remains our goal to have as many of you return to work as possible when we re-open.”
Promising that Baha Mar would seek to recall as many staff as possible when it re-opens, Mr Davis warned employees the mega resort will cut its workforce at June-end to ensure staffing numbers are better aligned with expected business volumes upon the eventual re-opening.
Noting that Baha Mar had committed to supporting all staff for 90 days following the resort’s COVID-19 enforced shutdown, the Baha Mar chief warned that this period will soon expire. “As we near the end of this 90-day period, we will be making additional staffing reductions to align staffing levels with projected business volume upon re-opening,” Mr Davis added.
“At the end of June we will communicate to the individuals being impacted by the staffing reduction to discuss what we will do to support and assist you in making your transition as smooth as possible. We look forward to bringing back as many of you back as possible once our business returns to pre-COVID-19 levels.”
Baha Mar’s announcement, together with Sandals Royal Bahamian’s decision not to re-open until November 1, signals that kickstarting the country’s largest industry - its biggest jobs creator and source of foreign exchange earnings - is not as simple as flicking a switch, as the Government has attempted to do with the July 1 border re-opening.
It also indicates a significant chunk of economic output (gross domestic product) will be offline for more than six months of 2020, and only returning with much-reduced business volumes. While K Peter Turnquest, deputy prime minister, and the Ministry of Finance appear to have been validated in projecting no major revenues from the tourism industry for at least five-six months, Baha Mar’s move raises questions over projections of a “V-shaped” economic recovery.
A 15-20 percent cut to Baha Mar’s workforce would also further depress consumer demand and spending, impacting other Bahamian businesses as the ripple effects spread throughout the economy. Confidence and investment will also take a hit.
Suggesting that reduced near-term bookings were influencing tourism industry decisions, Mr D’Aguilar told Tribune Business: “I think some operators in the market feel the need to reach a certain threshold to make the business economically viable for them.
“Based on their projections, based on their belief about the market, they probably think there’s a certain level of uncertainty in the minds of the travelling public that will not make their business sufficiently economically viable. That’s probably what’s driving it. It’s disappointing, but this is free enterprise and everyone in business has a right to make a decision based on their interests.”
Mr D’Aguilar said all businesses, not just those in tourism, will suffer reduced top-line sales as they emerge from the COVID-19 lockdown and associated restrictions. “Everyone is finding, as they attempt to re-open, that sales are not returning to anything similar to what existed pre-COVID-19,” he added.
“Social distancing and the requirement for persons to keep a certain distance away. You cannot eat indoors, and have to eat outdoors. You cannot have too many people in a certain space. All this is resulting in certain economic realities. You cannot plan for maximum revenues. Not at this stage. These realities are affecting your business model, and you have to assess what is economically viable.”
Baha Mar’s planned staffing cuts also reinforce that not all workers will be recalled throughout the economy post-COVID. Mr Davis said it was critical that the mega resort implement a “safe environment” to give staff and guests “peace of mind”, as well as open “in a way that is prudent from both a health and business perspective”.
Staff who will be retained are to receive 30 percent of their base pay for the next 90 days, in addition to benefits from the National Insurance Board (NIB), while health insurance coverage will also be maintained.
Besides working on safety protocols, Baha Mar will also work to refresh its product ahead of re-opening. Its Baha Bay aquatic experience is scheduled to be completed by 2021, while retail and golf offerings are also being expanded.