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TUESDAY, JUNE 2, 2020
$3.27 Restaurants ‘can’t survive’ with 60% sales devastation By YOURI KEMP Tribune Business Reporter ykemp@tribunemedia.net RESTAURANTS will simply be unable to survive if the loss of 60 percent of their sales persists amid continuing COVID-19 restrictions, one operator told Tribune Business. Mario Cash, the Burger King franchise’s operations manager, told this newspaper it was impossible to stay in business indefinitely with just half their normal topline sales volumes. “We’re all losing money. How long can any of us survive?” Mr Cash asked. “As a model, restaurant profit margins are generally between a five percent and a 12 percent margin. In the United State, restaurants at 12 percent is good, and in the Caribbean if you get seven percent you’re good. “So if you lose 20 percent of your business, you will not even turn a profit; you can’t break-even. So when you lose 50 percent to 60 percent of your sales, your top line revenue, you are definitely running some serious deficits every single month. There is no model for restaurants that can survive on 50 percent, none. It does not exist.” While fast food franchises have been able to continue offering drive-through services, and others pickup, delivery and curb-side service, patrons are still forbidden by the COVID-19 emergency powers orders to enter such establishments and order/purchase food. And, while the prime minister permitted fast food restaurants, takeaways and drive-throughs, plus those offering curbside and delivery services, to open from 6am to 7pm yesterday and on the upcoming Labour Day holiday, they have also lost significant sales over the past twoand-a-half months to the weekend lockdowns. Mr Cash added: “No business can run on 80 percent of their business, so when you lose 60 percent of your business there is no way you can survive. How long can you run $100,000 or $200,000 deficits every single month? You are paying out and you are not taking any single thing in. For restaurants it’s just not there. It’s tough.” Mr Cash added that food costs are very high, and the changeover to non-plastic utensils to accommodate the non-reusable plastic ban had already added to overall industry operating costs.
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‘Revisions’ sought to Grand Lucayan deal By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
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CABINET minister yesterday said “it’s full steam ahead” on the Grand Lucayan’s redevelopment even though the ITM/Royal Caribbean joint venture is seeking “certain proposed revisions” to the deal. Dionisio D’Aguilar, minister of tourism and aviation, told Tribune Business “there’s nothing significant” other than the duo’s Holistica partnership moving to adjust construction schedules and timetables which he conceded could be pushed back by up to six months due to the fallout from the COVID-19 pandemic. However, Michael Scott, the Hotel Corporation’s chairman, revealed to this newspaper that Holistica last week suggested several changes to the $300m project involving the Grand Lucayan’s acquisition and redevelopment of Freeport Harbour’s cruise port when it and the government’s representatives met
• Minister: ‘It’s full steam ahead’ • Completion extension is denied • Investors ‘entrenched’ on move
THE GRAND LUCAYAN RESORT
DIONISIO D’AGUILAR
MICHAEL SCOTT
by video conference. Declining to reveal what the proposed changes are because the matter is now being assessed by
the government, Mr Scott denied that Holistica had sought an extension to the deal’s closing as suggested by several Tribune
AUTO dealers say today’s full sector re-opening was increasingly becoming “a matter of life and death” with as much as “half the industry” in danger of folding had the Government not relaxed COVID-19 restrictions. Ben Albury, Bahamas Bus and Truck’s general manager, told Tribune Business that the industry’s cash flow/liquidity position was becoming precarious - due to the huge sums of money tied-up in vehicles they have been unable to sell - prior to the prime minister last week moving to Phase three of his economic re-opening. This allows so-called “non-essential” retail and store-front businesses to open their locations to customers with the necessary health safeguards in place, and multiple dealers
Business sources close to developments. The attorney, who also chairs the Government-appointed Lucayan Renewal Holdings Board that oversees the resort, added that Holistica and its ITM/Royal Caribbean backers remained “resolute and steadfast” behind the project and their investment despite the cruise industry’s worldwide shutdown since mid-March. He added that they were “entrenched” in their belief in the project, especially since Freeport’s proximity to Florida’s major cruise ports had only increased its - and The Bahamas - strategic importance to the cruise industry’s revitalisation once the COVID-19 shutdown ends. “They’ve made certain proposed revisions which the government is considering, and I can’t say any
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Atlantis further delays reopening to June 25 By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net ATLANTIS has delayed its phased re-opening until June 25 after informing staff over the holiday weekend that it is “unable to announce a definitive date at this time”. The Paradise Island mega resort has pushed back plans to re-open the Royal Towers, and associated amenities, by ten days just two weeks after unveiling June 15 as the target date. Atlantis spokespersons did not respond to Tribune Business messages seeking comment before press time last night, but in updates to guests posted on its website over the holiday weekend, Atlantis conceded that while it is now targeting June 25 this date cannot be set in stone due to ongoing uncertainty over when The Bahamas will open its still-closed borders to international travel. “Atlantis Paradise Island
• Pushes back target by ten days • Tells staff: ‘No definitive date’ • Minister: ‘We’ll try to help them’
ATLANTIS PARADISE ISLAND resort is temporarily closed from Wednesday, March 25, through Sunday, June 24, 2020,” the mega resort told already-booked guests and potential visitors. “While we don’t have a firm date yet, Atlantis is targeting June 25 for a phased reopening. The exact date is contingent on critical decisions such as
lifting travel restrictions to and from The Bahamas.” This was echoed in a May 29, 2020, letter to Atlantis staff which has been obtained by Tribune Business. “As we continue to navigate the uncharted waters of the COVID-19 pandemic, uncertainty abounds,” the missive, unsigned but on
Auto industry re-opening ‘matter of life and death’ By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
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• Dealer: ‘Half sector was close to folding’ • Foresees 30-40% rise in digital business • Others brand 2020 as ‘wipe out’ year
BEN ALBURY - Bahamas Bus and Truck, Nassau Motor Company and Auto Mall - confirmed to this newspaper that they plan to re-open their showrooms and sales offices to clients with effect from today. “From a cash flow perspective it was a matter of
life and death if we had not returned soon,” Mr Albury said of the full re-opening. “I still had millions of dollars of orders coming in, but it was difficult to handle that with no money coming in. If this had continued for much longer you would probably have seen half the industry fold. “I applaud the decision, and think the government will be very pleased to see how our industry holds out. It’s nice to do parts and service, but I had one [vehicle shipment that came in last week that was worth $500,000. That was not the biggest order you can get; you can have $1m orders.” With huge sums tied-up in vehicle inventories they have
been unable to sell since the COVID-19 lockdown was imposed in mid-March, and ongoing fixed-cost overheads such as rent, electricity, other utilities and bank loans to cover, auto dealers were facing a tightening cash flow squeeze that had lasted two-and-a-half months until this week’s reopening. Parts and services sales alone were insufficient to cover operating costs. “In our business, you need an incredible amount of cash to try to move it,” Mr Albury confirmed. “I can’t express from a cash flow perspective how debilitating this was. “I was fortunate to be in a business where the owners
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Atlantis-headed paper, said. “When we first closed the resort in March, we were hopeful that we would be able to reopen quickly. However, given the severity of the pandemic, we now know that was not possible. Although we are moving closer to reopening, unfortunately we are not able to announce a definitive date at this time.” Dr Hubert Minnis previously said the Government was seeking to re-open The Bahamas’ borders to international commercial flights “on or before July 1”, a date which is now less than a month away. His office, as the “Competent Authority” overseeing the COVID-19 emergency powers, yesterday gave the go-ahead for
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$3.23 From 160,000 to near zero at COVID-hit LPIA By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net MAJOR Nassau/Paradise Island resorts suffered a 28 percent room revenue fall for the 2020 first quarter just before COVID-19 unleashed its full fury with only 445 passengers exiting The Bahamas’ major airport during April. The Central Bank of The Bahamas, unveiling its monthly economic report for April, gave a first insight into the pandemic’s impact on the country’s top industry and foreign exchange earner by revealing that international departures through Lynden Pindling International Airport (LPIA) shrank by almost 100 percent - some 160,000 - after the country’s borders were closed. “Data provided by the Nassau Airport Development Company (NAD) revealed that during the month of April, total international departures contracted to a mere 445, relative to the prior year’s 18.3 percent growth to 160,275,” the Central Bank said. “In the previous year, the expansion was broad-based with US and non-US bound departures strengthening by 21.3 percent and by 2.8 percent, respectively. Over the first four months of the year, outward bound traffic reduced by 33 percent, a turnaround from a 21 percent increase in the preceding year. “By region, the dominant US component fell by 37.9 percent after growing by 23.1 percent last year. In addition, the non-US international component declined by 33.2 percent, overturning the 10.4 percent gain in 2019.” The sharp drop-off in tourism arrivals and business in March, normally the peak month for industry activity, also dragged down Nassau/PI hotel industry performance for the 2020 first quarter. “Data from The Bahamas Hotel & Tourism Association (BHTA) and the Ministry of Tourism confirmed the deterioration in hotel sector performance,” the Central Bank noted. “In March, the average hotel occupancy rate declined significantly to 41.8 percent from 86.7 percent in the same period last year. The number of room nights sold contracted by 56.3 percent, while the average daily room rate (ADR) reduced by 15.5 percent to
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