Page 104

Real Estate

Financial Services Recovery

T

he BVI’s twin pillars of the economy, tourism and international finance, were both impacted by Irma, albeit in markedly different ways. Many firms operating in the financial sector evacuated their employees from the BVI either just before Irma, or in the days and weeks after. With many offices in the BVI severely damaged or destroyed, satellite offices were quickly established in other jurisdictions such as Grand Cayman, Jersey and Aruba so that company incorporations, and financial sector business, could continue uninterrupted. Within the jurisdiction, companies quickly relocated to temporary locations with many firms sharing space, allowing a reduced operation in the BVI to continue. The office rental sector was very active throughout 2018 as companies sought temporary or alternative office locations, with the office rental market settling down at the start of 2019 to more normal levels of activity. While the financial sector in the BVI has shown itself to be resilient to the impacts of Hurricane Irma, a range of policy decisions from the UK, EU and the US affecting the operation of international finance jurisdictions remain a challenge for financial services in the BVI.

Tourism Recovery

I

n contrast, the BVI’s tourism industry was devastated by Hurricane Irma with the sector still in recovery. Prior to Hurricane Irma, overnight visitors in the BVI reached a record high of 407,764 in 2016. In the immediate aftermath of the storm, airlift was restricted to emergency and evacuation services and, with much of the accommodation damaged or destroyed, very few tourists arrived in the BVI for several months. The annual average count of overnight visitors declined from 413,704 in August 2017 to 142,691 in August 2018, before increasing again, reaching 222,722 by February 2019 as shown on Chart 1. The Government estimated that the number of available hotel rooms (including villas) fell from 2,700 prior to Irma to just 336 rooms as at 1 March 2018. While many villa properties are now available to rent for the 2018/19 high season, most of the major resorts in the BVI remain closed. These include Bitter End Yacht Club (86 rooms) which has now been demolished, Biras Creek Resort (33 rooms) which has been closed since 2015, Little Dix Bay (100 rooms) which is due to reopen at the end of 2019, Peter Island Resort (52 rooms) with no announced reopening date, and Long Bay Resort (56 rooms) which was destroyed but is now under new ownership with rebuilding plans in hand. With so many resorts requiring substantial investment, the long term recovery of the hotel sector remains a work in progress. The BVI villa rental market, like the yachting industry, has been able to recover far more quickly than the resort sector, with individual home owners able to repair their properties once insurance claims have been resolved. While many owners undertook repairs through the first six to nine months of 2018, most villa owners were able to commence rental operations by the 2018/19 high season. The villa rental market has therefore been a vital component of the BVI’s tourism offering, particularly while the major resorts remain closed. Guests staying in rental property will typically rent cars, provision for a week, frequent local bars and restaurants and take day trips, ensuring that many of the service businesses which suffered significantly last year, are also able to be back up and running. The indications are positive for a strong 2019/20 high season. British Virgin Islands: Annual Overnight and Cruiseship Visitors 2006 - Feb 2019 (12 month moving average)

CHART 1 710,000

ANNUAL VISITORS

608,571 507,143 405,714 304,286 202,857

Overnight visitors Cruiseship

101,429 0

2007

2009

2011

2013

2015

Source: Central Statistics Office, Govt of the Virgin Islands, Compiled by Smiths Gore BVI Limited

102

JULY 2019

2017

2019

While the land-based tourism sector will take further months to fully recover, the yachting industry has demonstrated remarkable resilience and is primarily responsible for the significant increase in over-night visitors to the BVI post Irma. Many of the bareboat charter companies were operating close to full capacity by the end of 2018 and were expecting strong charter bookings in the 2018/19 high season. This trend should continue to improve into next season. The ability of the charter companies to quickly reorganise following a major hurricane, and the resulting positive impact in maintaining over-night tourist arrivals, must be recognised by the Government. A unique attribute of the yachting sector is its economic contribution to the sister islands of Anegada, Jost Van Dyke, Cooper Island, Norman Island and Virgin Gorda without which many of those islands would be struggling economically post the hurricanes. Fortunately, the converse is true and they are doing very well as the sector rebounds. This is clearly another benefit of a diversified overnight accommodation sector. However, there are concerns that the private crewed charter sector of the yachting industry has seen a reduction in the number of crewed yachts based in the BVI. This is partly due to the impacts of Irma, where some owners have decided not to replace damaged vessels, but also the continued impacts from the relaxation of the “six pack” legislation in the USVI in 2015 which has made St Thomas a more competitive home base for crewed charter yachts. Crewed yachts can just as easily access the Spanish Virgins of Vieques and Culebra from their St Thomas base, rather than sail east to the BVI where cruising permit fees increased in August 2017. Crewed yachts based in the BVI contribute significantly to local businesses through provisioning, maintenance and fueling prior to charter and to local bars and restaurants during charter and their continued use of the BVI as a base should be encouraged. At a time when the Government is looking to increase hotel rooms in the BVI, supporting the crewed charter industry will do much to increase the supply of luxury accommodations in the Territory. Chart 1 also shows the return of cruise ships to the BVI with cruise operators delaying their return until they were satisfied that the BVI had sufficiently recovered as a destination to again be attractive to their passengers. The first of the larger vessels returned in August 2018 and the 2018/19 high season has seen a number of cruise lines return to the BVI. The Cyril B. Romney, Tortola Pier Park suffered modest damage and was repaired following Irma with many of the retail outlets continuing to operate. Cruise ship passengers peaked at 700,000 arrivals in 2016, falling to 200,000 arrivals in 2018. However, there is a steep upwards trend in cruise ship arrivals and the cruise ship industry is projected to be back to pre-Irma arrivals next season.

Profile for Business BVI

Business BVI July 2019  

The theme for the July 2019 edition is ‘A View Beyond the Horizon’, which is intended to reflect where the territory is post 2017, while at...

Business BVI July 2019  

The theme for the July 2019 edition is ‘A View Beyond the Horizon’, which is intended to reflect where the territory is post 2017, while at...

Advertisement