Baha Mar blames BPL for $8.5m hit to profits

BPL-related concerns. Kerry Fountain, the Bahamas Out Island Promotions Board’s executive director, told the same meeting:

“I just want to echo what Graeme Davis said. That is the concern with these blackouts. We’re paying more and getting less.

“Not only is it causing a poor customer experience, but it’s also increasing costs to the hotel operators as every time something like that happens they have to replace equipment. I’m hoping we can get this matter resolved as quickly as possible.”

His and Mr Davis’ hopes for urgent relief when it comes to BPL’s prices, as well as the inconsistency and unreliability of power supply, are likely to be somewhat optimistic. While the utility is forecasting that its fuel charge will drop, the decline is only predicted to be by three cents per kWH during the three months between September and November this year, and even that will depend on spot prices in the volatile global oil markets.

Robert Sands, the BHTA’s president, pledged that the industry body will continue to push for better quality and more affordable power as this is key to not only the visitor experience but the ability of The Bahamas’ largest industry to remain competitive against global and Caribbean rivals on a cost basis.

“We will continue to have a conversation with our partners at BPL as it relates to the provision of consistent, quality, affordable power throughout the archipelago,” Mr Sands said. “I have spoken about this publicly, and we will continue to advocate on the matter as it is vital to our ability to function as a nation and provide our guests with our best version of ourselves.”

Mr Davis and Baha Mar’s owner, Chow Tai Fook Enterprises (CTFE), will be hoping that the robust postCOVID tourism recovery continues to drive business at the mega resort and help offset the financial impact of high BPL bills. Having enjoyed “a very, very strong” 2023 first quarter, where there was “a very large increase” in business volumes due to weak prior year comparatives as a result of COVID’s Omicron variant, Baha Mar’s president says the momentum has endured.

“Of course the second quarter was very robust last year, so we’re looking at about a 10 percent increase for the second quarter [this year] as we just wrap up June’s financials,” Mr Davis told the meeting. “As we go into July, we start to get into the thick of the third quarter. We’re looking to be just as strong, up about 2 percent over last year. Of course, there was some strong demand.

“Going into the fall, it’s going to be a very soft fall with a sprinkling of a little bit of group business. Our properties are certainly maintaining the occupancy levels we have budgeted and forecasted so, barring any storms, we’ll certainly look forward to a good soft landing by the end of the year.”

Confirming that the Melia Nassau Beach resort’s demolition is underway, and targeted for a fall

TAX DODGERS ‘DOMINATE’ FOREIGN YACHT CHARTERS

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This, though, was vehemently rejected by Mr Wilson, who said the Ministry of Finance had entrusted the ABM with “non-public information” when it called its senior executives in to explain the problems and why the Government had ordered that SeaZPass payment mechanism to be shut down

Those reasons were not divulged yesterday, but Tribune Business previously revealed that the online portal was closed over a dispute as to whether Omni had remitted the full fee sums due to the Public Treasury.

Omni asserted that all sums due and owing had been paid in response to Ministry of Finance allegations that some $5m remained outstanding, and this newspaper was informed that progress has been made in resolving this dispute. However, several sources questioned why, if the Government had concerns, it simply did not require that the digital payments provider be changed and allow SeaZ Pass to continue with a new provider.

The SeaZPass controversy erupted prior to Mr Wilson asserting yesterday that the Government plans “to make sure we get our fair share of revenues from the marine sector”. Successive administrations have long believed that many foreign charter vessels failed to pay the 4 percent levy to the Port Department prior to July 2022’s imposition of VAT on the same contract, which more than tripled the effective tax rate to 14 percent.

“This, for us, has been a vexing issue because of continued misconceptions about what our intentions are,” Mr Wilson said in relation to foreign yacht charters. We hear comments about yachts not visiting marinas because of the application of VAT and so forth.

“I personally do not understand; we don’t understand from this side... The foreign yacht charter business in The Bahamas is dominated by a couple of large businesses that have over 100 yachts chartered in The Bahamas. Those businesses have not, and have admitted to not, being consistent with taxes paid. That is a concern.

“All this discussion in the media by persons, they seem not to appreciate people have to pay their fair share of taxes. It is inconceivable to me that we have a business generating $8m$10m in annual revenue in The Bahamas that believes the obligation to pay taxes doesn’t exist for them. That’s what the situation is.”

Mr Wilson did not identify the companies involved, but returned to the issue later during questions from hotel and tourism executives. “We are sorting through significant issues with the foreign yacht charter business,” he reiterated. “That business is dominated by a couple of large firms that are largely non-compliant and have always been non-compliant, and it will take a while for us to sort through these issues.”

The financial secretary’s comments came just one day after Obiama Knowles, the Atlantis dockmaster, told this newspaper that the resort’s marina had sustained a 20-25 percent drop-off in large vessel traffic - boats 180 feet and upwards - since VAT was imposed on foreign yacht charters. He added that it was “definitely hurting the small man” more as there were fewer boats to provide work for day cleaners, mechanics, provisioners and other professions.

As for SeaZPass, Mr Williams said the ABM first came up with the idea to develop an online portal for the collection of boating-related fees as far back as 2015. The Association viewed it as a mechanism “to simplify” foreign charter fee payments, permit approvals and the associated bureaucracy, and also a means to encourage their clients to come in and pay since it would be “a lot easier for them”.

Disclosing that the initiative was put on hold in 2017, after the Government and Customs moved to develop a single electronic gateway via Click2Clear, the ABM president said the idea was revived in 2017 due to

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The proposal, he added, saw SeaZPass developed at no cost to the Government or taxpayer, and with all revenues deposited to the Government’s account. The developer was to receive a 2 percent commission to recover its costs, which was to be shared with the ABM, and Omni 1.5 percent to cover operational expenses. The ABM was to use its share of the 2 percent to help maintain navigation aids.

“We have a significant problem around the country with navigation aids,” Mr Williams said yesterday. The SeaZPass portal was

2023 completion, Mr Davis indicated that Baha Mar’s owner is waiting on “direction” from the Government so that it can determine its future plans for the sevenacre site that will soon be completely raised.

“I will say we are moving forward with our demolition,” he told the BHTA meeting. “That is starting to come down. We’re expecting to have that completed by fall. We’re hopeful that we can work with the Government here on having future plans to announce.

“It really is right now with the Government, and hopefully we’ll have some direction soon that we can announce on future plans. We’re certainly hopeful that we can make a positive impact for the tourism product here in Nassau and certainly for the community.” said to have collected $4m in yacht charter fees and cruising permits, with regular reports sent to the Port Department on what was being collected and deposited to the Government’s account.

The ABM and Omni were said to have yet to receive a commission payment from the Government prior to the online portal’s shutdown, and Mr Williams said there had been no response to inquiries as to how the Davis administration plans to move forward. He said the closure meant boaters and yachters lack a convenient mechanism to pay due fees to the Government.

“This is the most pressing thing for the ABM,” he added. “We are at a standstill. This is one of the most pressing issues that we are facing. We are pursuing it, trying to find out what the situation is with regard to this. We were told an audit was done [by Deloitte] but don’t have any information with regard to that.... We are now in limbo with respect to that.”

Jackson Weech, general operations manager at Atlantis, told the same BHTA meeting that the 2023 first half has “certainly been robust” with revenue and occupancy percentages “pacing in line with projections”. With rates higher than pre-COVID levels, he added that the Paradise Island resort’s group business “continues to show encouraging growth”, while all holidays for 2023 to-date “exhibited exceptionally high occupancy and attendant rates”.

With both the Thanksgiving and Christmas/New Year’s holidays showing “great momentum in terms of build”, Mr Weech also affirmed that Atlantis has “now completed the full renovation of the Royal Towers” with the west tower finished some seven to eight weeks ago.

Mr Wilson, though, said the ABM and its executives knew full well why the Government had ordered SeaZPass’ shutdown. “This commentary about the decision of the Government not to use a portal that was utilised to pay fees. When that decision was made, the relevant Association was called into the Ministry of Finance and provided with an explanation as to what was occurring,” he added. “It is not fair for the commentary to be such that they didn’t know what was happening. What we as Ministry of Finance officials do, we try to be as transparent as possible..... The portal that we took offline was because we were having a challenge, and the challenge is well known to the ABM. We were explicit. We told them non-public information, and were as transparent as we possibly could be.”