BDO St. Maarten

RETHINK – NAVIGATING THE NEW REALITY WITH PAUL LUNGU – MANAGING DIRECTOR BDO SINT MAARTEN.

While St. Maarten’s economic outlook remains challenging, the pandemic has re-emphasized the importance of what business agility really means. The COVID-19 crisis will continue to affect businesses in different ways and at different times. It is accepted that the world will change as a consequence of COVID-19 and businesses need to imagine this ‘new reality’ as early as possible - and rethink how they will be positioned in it. We are discussing with Paul Lungu – Managing Director BDO St. Maarten about possibilities that can be used to manage business priorities, address issues and leverage thinking, acting as an extra dimension for strategic level consideration and discussion.

For over a year now we observed how the buzzing of activity that defines a visit to St. Maarten gave way to ghost towns when the pandemic hit. Though resorts, restaurants and casinos reopened, foot traffic remained light and businesses struggle to minimize losses. As a result, organizations focused on gaming and hospitality have had no choice but to rethink their business strategies to regain revenue lost from initial shutdowns and the continued lack of physical consumer presence, in addition to making investments to ensure and promote customer and employee safety. Certain trends that were developing before the pandemic have been accelerated, while previous ways of doing business may remain part of the past. The Sint Maarten economy is highly dependent on tourism, restaurants, hotels, and other tourism-related sectors account for about 45% of Gross Domestic Product (GDP), with a per-capita GDP of US$29,495 (IMF, February 2021). We believe that Sint Maarten has largely adapted to the international trends identified below and we are of the opinion that successful implementation of the National Recovery Program is instrumental for an accelerated recovery of our economy.

Now, more than ever, business leaders realize the importance of speed of reaction in response to changes in the market. Over the past months, the key enabler was the level of digitalization within each organization. We could observe an accelerated transformation of the operating model for various businesses operating in different industries in Sint Maarten. Irrespective of the their activity, all of them placed digitalization as their top priority and repositioned their processes around what proved to be the new normal. Working from home revealed how many distractions are at the office with most of our professionals spending a significant higher amount of productive hours during the lockdown period than when working from our office. While digital collaboration tools have become critical to remote work and will remain post-pandemic, the new way of work also unveiled the need for social interaction, where BDO Dutch Caribbean organized a number of internal events particularly created to mitigate this gap. Hybrid work models are anticipated to proliferate in 2021 and are likely to endure. To attract and retain these employees, companies, including BDO St. Maarten, are planning to provide more options to make hybrid work/life work for them.

HOSPITALITY

Hotel, restaurant and casino operators have had to implement new protocols during the pandemic to comply with safety measures. Because there is no telling how long the pandemic will last, even with vaccines in play, some of these new protocols—especially those that require significant investment—may become permanent. Internationally many casinos are replacing the traditional buffet with food halls, including grab-and-go and fast casual options, and offering technology that allows patrons to order from their tables. Other changes in the industry that may be permanent include revised gaming floor layouts that promote social distancing, with gaps between gaming positions and plexiglass barriers between dealers and gamblers. Until the vaccines are widely distributed and the pandemic officially under control, fewer player positions will be offered at tables. Other safety measures, such as requiring masks and temperature checkpoints upon entering, will linger for as long as the pandemic does, and are likely to continue past that.

The pandemic has accelerated digital adoption within hotels, restaurants and casinos, reinforcing trends that improve customer experience. Hotels especially have noted the value in implementing new technology with the intention of simplifying the guest experience and enforcing contactless interactions. Allowing customers to have control over their stay with mobile check-in and check-out has reduced the need for physical employee and guest interactions. Some international surveys indicate that up to 90% of hotel

guests prefer that hotels offer mobile check-in to eliminate unnecessary in-person encounters. This coincides with the trend of keyless check-in, which allows guests to use their mobile phones as key access to their hotel room. Many chefs are revisiting their menus and limiting their offerings to save on staffing and prep time. This will have an impact moving forward, as restaurants may choose to only serve their most popular meals, or those that are most suited for takeout.

The bottom line is that until the pandemic is officially over, competitive menus and contactless room service will remain the norm in hotels around the world. We anticipate the mobile trend allowing contactless payment and mobile bookings will extend to allow guests to also make purchases and even gamble. In short, operators in the gaming and hospitality industry are laser focused on high-tech/low-touch solutions using smartphones, and it is likely this technology will become commonplace in the years to come.

Since significant uncertainty still remains regarding the pandemic, it is vital that hotel and casino operators prioritize and promote employee and guest safety, while remaining cognizant of the impact precautions will have on the experience that customers expect.

CRUISE INDUSTRY

With enhanced measures in place, an initial resumption of cruising began in Europe and some other parts of the world earlier this year. In July 2021, Sint Maarten made history with the first ship to sail in North America in over a year. This success did not pass unnoticed and Port St. Maarten Group received in September 2021 the Seatrade Cruise Award, being the global cruise industry’s most distinguished award programme, in the category #WeAreBack. Worldwide, cruise industry’s restarted in September 2021 with around 205 ships in service, represented approximately 50 percent of the global oceangoing cruise fleet according to Cruise Industry News.

TELECOMMUNICATIONS

COVID-19 led to rising digital infrastructure needs, including for work-from-home and remote work, such as videoconferencing, data sharing, and cloud systems. The pandemic put pressure on telecom operators’ systems in terms of maintaining smooth functioning and connectivity under increased demand. In response, following global trends, one of the main telecom providers in St. Maarten announced a significant increase of the internet speed taking the fiber network infrastructure to a whole new level. Outside the traditional players within the industry, the StarLink project aims to be a direct competitor to telecoms, delivering internet via a network of satellites and has already been successfully launched. If the networks prove competitive – it could help to achieve broadband connection in remote areas where traditional fiber connections/full scale 5G networks economically are not meaningful.

FINANCIAL SECTOR

For the financial sector, there’s a mix of new opportunities and challenges. Increased financial digitization and digital transformation are among new opportunities, while the general economic slowdown and changing funding and market dynamics lead to increased challenges. For Fintechs, innovation remains imperative. There are historical examples of those companies who innovate during a recession better position themselves for future opportunities. However, there are also inherent risks with breaking barriers. There are a number of innovative opportunities for tech companies, including Big Data, AI, Robotic Process Automation, 5G and blockchain.

HELPING NAVIGATE DISRUPTION AND GRASP OPPORTUNITIES

Throughout the REACT, RESILIENCE and REALISE phases, companies will need to address a wide variety of business areas, processes, and strategies. Not only internally, but also in relation to partners, collaborators, customers, and clients. We at BDO are ready to assist your company throughout all the phases.

BDO has developed a Covid-19 business readiness diagnostic tool and action platform that can be used as a starting point for assessing a situation and formulating responses.

BDO’s Rethink Framework provides support to businesses in identifying the key stages, issues and opportunities available for succeeding. The three-stage model identifies React, Resilience and Realise as components of an integral system that should be embedded within any business.

BDO is monitoring developments across the globe with a focus on the +160 territories where we are present. Our ‘globally local’ DNA makes us the optimal partner for navigating aid and stimulus packages, as well as all other parts of the REACT, RESILIENCE and REALISE phases.

Our services cover all aspects, as well as all growth stages, of companies operating in various industries. Be it audits, business services, assurance, tax advice, M&A, funding, risk assurance and mitigation, etc., we are ready to assist your company.

BDO St. Maarten B.V. Sparrow Road 4, Philipsburg, ST. MAARTEN Tel: +1 721 543 0614 Fax: +1 721 543 0615 www.bdo.sx

ST. MAARTEN

Paul Lungu is a member of the Association of Chartered Certified Accountants (UK) and, amongst other certifications, he has an MSc in Professional Accountancy from the University of London, UK and an MSc in Business Administration from Bucharest University of Economic Studies. Paul describes himself as an innovative professional with a business-like mentality. Other team members and clients recognized him as a balanced leader, adaptive with well-developed social intelligence skills. Over the past 15 years’ experience in the profession, Paul has shown a proven experience in aligning business strategies and objectives and continuously developed himself from a merely technical auditor into a people focused leader, change agent and board room advisor.

BDO’s global organisation extends across 167 countries and territories, with 91,054 people working out of 1,658 offices – and they’re all working towards one goal: to provide our clients with exceptional service.

Our firms across the organisation cooperate closely and comply with consistent operating principles and quality standards. That means local resources who understand your business, your local and international markets and the specifics of your industry: all backed by a highlty recognized global organisation.

BDO Dutch Caribbean is a group of companies consisting of a number of allied private companies. BDO has offices on the islands of Curaçao, Bonaire and St. Maarten. BDO is an international network of public accounting, tax and advisory firms which perform professional services under the name of BDO. Each BDO Member Firm is a member of BDO International Limited, a UK company limited by guarantee, either as a voting or non-voting member.

Paul Lungu Managing Director paul.lungu@bdo.sx