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Sandals asks Bahamas gov't for help on struggling Exuma resort

Published:Wednesday | October 3, 2012 | 12:00 AM
Adam Stewart, CEO of Sandals Resorts International. - File

Sandals Resort International (SRI) hotel group chain has invited the Perry Christie government in The Bahamas to assist with solutions to high costs faced by its Emerald Bay hotel in Exuma, to prevent the closure of the unprofitable resort.

On Friday, Sandals issued a statement which indicated that 600 jobs might be lost unless the government took action.

"It is a fact that the hotel is facing severe difficulty in continuing operations at Emerald Bay because of the multitude of high costs associated with operating from the family islands of The Bahamas. Some of these costs could never have been anticipated and make the Emerald Bay resort unlike any other we operate," the release said.

"The cost to operate the facility is proving to be unsustainable with the highest utility costs we face as a hotel chain, limited airlifts to the island, the continuing need to subsidise airlifts, high fuel and transportation costs, added to a series of costs associated with overcoming the limited pool of trained professionals on the island...," said SRI.

Top local employer

The statement also highlighted Sandals' status as a top local employer.

Sandals Resorts, which is owned by Gordon 'Butch' Stewart, operates hotels in six Caribbean countries.

The chain, which has been around for 30 years, picked up deals during the recession, including the purchase of the former Four Seasons hotel at Emerald Bay in Exuma.

Sandals acquired the hotel for US$26.5 million and then spent another US$18 million on upgrades.

SRI Chief Executive Officer Adam Stewart said on Tuesday that Sandals has invested a total of US$85 million in refurbishment, marketing and airlift subsidies. Sandals Emerald Isle became operational in 2010.

"We have made an enormous investment in developing Sandals Emerald Bay into a Five Star Plus hotel which sits on 500 acres of land and includes a Greg Norman-designed Championship Golf Course," said Sandals.

"However, the unusual level of input costs make doing business there almost impossible, especially during a time of economic downturn."

Sandals Group, since the economic downturn of 2008, has kept all but two of its properties on the market - Sandals Dunn's River and Beaches Sandy Bay which were operated under lease. Two new properties were added in the period - the Exuma resort and Beaches Turks & Caicos.

Stewart said Sandals no longer manages properties under lease.

"We have taken a position of moving away from that model where there are people looking for returns while we face the major expenses of renovation and maintaining the brand," he told Wednesday Business.

Asked for more details on the Exuma property's financial position, Stewart said that the press release amply represented the position of the group.

"The difficulties we are facing can be solved with a determined resolve and a prompt and creative approach to ensure sustainability," the release stated without going into the hotel's financial position.

"We are by no means seeking a bailout. What we have done is to put the situation squarely to the government and asked them to investigate ways in which they can work with us to bring some respite to the impossible economic environment we are facing in the family island," it said.

The release also hinted that Sandals expects a positive response from the Christie administration.

"So far, we have been encouraged by the response of the government which recognises the problems as well as the need for government and investors, such as Sandals, to work together to arrive at a model to enable quality sustainable tourism to operate and grow in The Bahamas."

The chain noted that over 1,400 full-time employees were engaged at resorts in the islands, including the Sandals Royal Bahamian, Fowl Cay and Sandals Emerald Bay.

Sandals International operates hotels in Jamaica, Antigua, St Lucia, The Bahamas, Turks & Caicos Island, and Cuba - which employ a combined 11,000 staff, according to Stewart.

The chain originated in Montego Bay when founder Butch Stewart acquired Bay Roc hotel in 1981.