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Tourism Rides Supply Chain ‘Roller Coaster’

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ROBERT SANDS

• Hotel chief reassures rebound not endangered

• But sector sees disruption ‘across entire gamut’

• Orders taking three times’ longer to arrive

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Tourism’s post-COVID rebound will not be undermined by global supply chain woes, a top hotelier reassured yesterday, despite the industry enduring a logistics “roller coaster”.

Robert Sands, the Bahamas Hotel and Tourism Association’s (BHTA) president, told Tribune Business that this nation’s main economic driver was witnessing disruption across “the entire gamut” of product orders with some deliveries now taking three times’ as long to arrive compared to pre-pandemic expectations.

With orders that normally arrive in 30 days now taking 90 or more, he added that the resort industry had learnt “to become even more creative” by planning earlier, ordering “long lead” items quicker and switching to alternative supply sources should the need arrive.

Voicing optimism that The Bahamas “will not get to that particular point” of the visitor experience being impacted, Mr Sands said the hotel/tourism industry was also being impacted by price increases - especially on inputs that are in high demand, but minimal supply.

Suggesting that supply chain woes will be present as long as COVID-19 is around, the BHTA chief added that “working through the problems” had caused the industry ongoing frustration but had yet to impact operations as it targets a return to full pre-pandemic visitor volumes by the 2022 first quarter.

“There’s no question that certainly the supply chain has impacted the timeliness of delivery, and hotels have had to make adjustments in that vein, and also adjust in terms of lack of availability of certain items and brands,” Mr Sands told this newspaper, “but it has not been to the detriment of being able to deliver the experience to customers.”

Asked which products and sectors had been impacted, he replied: “It’s multiple areas. The food chain, supplies for operations, construction materials, which is key for areas where improvements are taking place. It’s across the entire gamut.

“It’s not just shortages, but with business momentum picking up and demand, most items are increasing in price. Some hotels have to order out front for those items that have long lead times for delivery. It can vary. If your order took 30 days, you now may be looking at 90 days. It depends from product to product.”

Pointing out that Bahamian hotels are “at the whim” of local wholesalers and other suppliers, and their ability to source product, Mr Sands added: “It’s a question of managing the process. While it’s a somewhat frustrating process, working through it has not been to the detriment of operations.

“It’s plan out longer and source things to get them here for whenever they are require. Other items are coming back as various parts of the supply chain generating world economy get back to work. It’s a roller coaster situation. It’s not across the board, but it has created challenges and opportunities for the hotel sector.”

The “opportunities” include developing alternative supply sources, with better prices and improved delivery times. Multiple factors, stemming from the COVID-19 pandemic, have resulted in global supply chain disruption that many believe will last well into 2022 before it begins to ease.

Labour shortages at US ports and in the ground transportation are being blamed for late deliveries and increasing costs, while the price of shipping containers from China has either doubled or tripled depending on which merchant is speaking. Manufacturer order backlogs stemming from COVID lockdowns, as well as the post-pandemic demand surge, are other factors in a volatile mix. 

“I can honestly say it’s a problem we wish we did not have,” Mr Sands told Tribune Business of the supply chain issues. “It’s part of the new normal and we have to manage ourselves accordingly.

“Some of this is coming with increases in prices, which is not the way we would like goods and services to go, but with supply and demand, if there is small supply and high demand, with price yield management the prices of those items will be more than they were a year ago. All individual properties will cost out their business and make adjustments accordingly.”

Asked whether these woes will ultimately impact the quality of visitor experiences, the BHTA president replied: “It has not gotten to that particular point. I don’t think we’ll get to that point if we put in place reasonable timelines for receiving these goods, and also the ability to find substitutes and make changes wherever possible to fill the void.

“This has taught the hotel industry and businesses to become even more creative and pay extra attention to their trade so that these types of issues do not interrupt sustainable operations. A lot of this is directly related to COVID-19, and appearance of COVID, so as long as COVID is with us this will be an issue for us as well.”

Mr Sands was unable to provide figures on the price increases being experienced by the resort sector. Harbour Island hotelier Benjamin Simmons, proprietor of The Other Side and Ocean View properties, yesterday said he had experienced no supply chain setbacks yet “touch wood” as he prepares for today’s re-opening ahead of the winter tourism season.

“We’re a small business,” he added. “I would feel a lot more nervous if I was a 100-room hotel trying to get large volumes of stuff. I haven’t had any issues so far, but other vendors have. My mum’s store was trying to stuff in and there were delays. I haven’t really heard of anybody else in the industry having issues like that. Fingers crossed we don’t, but we’ll see.

“We’ll rely on local vendors if we need to. It’s about time we think about local product, self-sufficiency as a nation. We have to think more local than global. We’re up to the challenge.”

However, Kerry Fountain, the Bahamas Out Island Promotion Board’s (BOIPB) executive director, told Tribune Business that the global supply chain crisis was “particularly” pinching his member resorts and others on Abaco still trying to recover and rebuild from Hurricane Dorian.

“The problem is exactly what you said, whether its furniture or whatever,” he added. “Not only are orders or shipments delayed but it’s the matter of supply and demand that, if if you have greater demand than supply, prices are going up. There’s a delay in receiving goods and the cost you’re paying is now much higher than it was pre-Dorian and pre-pandemic, especially on Abaco.”

Mr Fountain described the price increases as “noticeable”, and added that resorts doing refurbishment and renovations are “feeling the pinch” more than their counterparts focusing solely on operations.

“The only consolation is that everybody is going through the same thing,” he said. “Even here in south Florida we have people talking about delays in receiving items ordered and noticeable price increases, so it’s not just us.”

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