Helping ensure a prosperous future for The Bahamas

First Published: 2009-07-03

This speech is reprinted here with the kind permission of Mr. Izmerlian

Bahamas Chamber of Commerce Speech
To be delivered by Baha Mar Resorts Chairman and CEO Sarkis Izmirlian
Wednesday, May 27, 2009

Thank you, Dionisio, and good afternoon Mr. Rolle and distinguished guests.

I am most honored to be before you today.  I have many thoughts to share with you but before I do so I want to take a moment and honor the outgoing President of the Chamber, Dionisio D’Aguilar.

Over the past two years, Dio, as we call him, has taken a vocal position to protect and enhance the business environment of the Bahamas.  His straight talk and frank approach has been a refreshing change.  Even with all the bad news in the papers over the past months, I always looked forward to reading the papers and learning of his latest crusade. I know the newspapers will miss him as much as all of us will.

We will miss him as the President of the Chamber but he will continue to be a pillar of this community.   Dio is not only an honest, hard working, straight talking business man, he is also a good family man.  In front of this Chamber, where his father has served before him, it is an honor to call him my friend.  One of the areas where Dio has been very vocal is the redevelopment of the Cable Beach Resort Area.  Some have said that he has been too vocal.  But what Dio has been saying out loud, is what many of us have been thinking.  Tourism is crucial to the continued economic growth of the Bahamas, and the new vision of Cable Beach is the best opportunity for that growth.  The redevelopment of the Cable Beach Resort District represents the single largest opportunity for the future.  It will put the Bahamas on the map as a truly world class resort destination, one that encapsulates the experiences, and entertainment options a sophisticated visitor expects in this day and age.

Let us not forget that Tourism for our country has an enormous multiplier effect in terms of capital inflows; property value enhancement; jobs and careers; and an improved quality of life for our children and our children’s children. Think of the thousands of jobs that have been created by all the businesses and people that directly and indirectly support our tourism trade.

Today, we are in the midst of a terrible global economic downturn.  Some have called it the Great Recession.  It is radically impacting industries, communities, capital development, and in many ways will impact how we see the future.

Depending on whether you call yourself a ”bull” or a ”bear” the predictions of the “ifs” and “whens” of economic recovery vary significantly.  Take your pick but under either scenario our world is going to be radically different going forward. We are already witnessing change and we must decisively act in the face of this change.

There is no question that the economic downturn is having adverse consequences here at home.  Investment projects of all sorts have either had to slow down, scale back, or worse, shut down.  This has translated into huge job losses and a ballooning deficit for the Government as revenue continues to nose-dive.

However, amidst all the doom and gloom, we are presented with the proverbial “glass half empty–glass half full” paradigm.  Yes, our community is feeling the adverse affects of the recession but at the same time our community has the opportunity to implement strategic initiatives so that we can be well positioned to take advantage of the economic recovery.

I urge all of us here today to marshal our best efforts so that positive CHANGE is our focus.  By “our” focus, I mean both the government and the private sector in the Bahamas need to change.

Some might say: “Sarkis, the basic business history of the Bahamas is tourism.  We have a pleasant climate, beautiful beaches, a friendly population, after this recession ends visitors will always come here to vacation.”

Not True!  Look around you. The global marketplace for tourism has become far more competitive than it was even just a few years ago.  Within the Caribbean alone, more and more islands have focused attention on tourism and the Bahamas is underperforming.

Let me give you some data points:

–    In Turks and Caicos since 2000 they have increased their hotel rooms by 33%.  In the Bahamas, without Atlantis, we have increased our hotel rooms by only 2%.
–    Last year, tourism arrival in the Bahamas went down by 4.3% yet in Cancun they were up by 7%, Cuba up by 9%, Jamaica up by 4% and Aruba up 10%.  Cruise arrivals were down last year in the Bahamas by 3.7%, yet in Dominican Republic they were up by 8.5%, Mexico up by 3.3% and Aruba up by 15%.
–    Just this month, in the middle of the Great Recession, the Government of Qatar invested $75 million to build a luxury 250 room hotel in Cuba.  We had contacted the Government of Qatar some time back about an investment in Baha Mar.  They made it very clear they had no interest in investing in the Bahamas.  At the time we chalked it up to the economic environment or the price of oil.  But maybe we should have looked closer to home for the reason.
–    Another event even closer to home is the closure of the Four Seasons in Great Exuma.  The closure of the hotel, which by the way was written about in today‚Äôs WSJ,  will create great hardship in the already weak Exuma economy, but did you know it is the only Four Seasons anywhere in the world to close since the beginning of the financial crisis?  That should tell us something.
–    In Cuba, with its much lower costs and even with the embargo in place, Tourism arrivals have grown in the past 5 years by 40%, in the Bahamas ours arrivals have declined by 3%.

While it may be impossible to stop Cuba from being a short-term novelty destination, if and when U.S. travel restrictions are lifted, we can and must ensure that the Bahamas is the tourism standard and the tourism destination of choice.

So I ask myself, what do these destinations have on us?

To our advantage, the Bahamas has many of the key defining elements of a best-in-class warm weather exotic vacation: fantastic beaches, clear waters that flow over amazing variations of aquatic life.  We have quiet, and we have night life.  We can handle the adventurers vacation; the wedding and honeymoon; the family vacation; the vacation pegged to a convention.  We offer delicious local cuisine as well as fine international dining.  We also offer a center of commerce that can support not only a tourist but also a business traveler’s needs.  We are a major port for cruise ships and only a relatively short time away by air from many of the large urban centers in the western hemisphere.  Most important of all, we have a strong democracy and stable Government.  Think of it.  How many vacation destinations combine all of these qualities!

Here is our challenge.  I believe we must seriously ask ourselves:  Are we making the best of these built-in advantages or are we taking them for granted?  I am worried that we increasingly risk letting ourselves down.  Unless we urgently focus on improving our education, service levels, and infrastructure; we will not be able to firmly establish the tourism “experience” that will make the Bahamas the “best-in-show” tourist destination. Without the ability to offer that unique, unparalleled experience, we will be on the losing end in the competitive struggle with other destinations.

We cannot allow ourselves, given our strengths, to be viewed as a so-called “commodity” vacation. People should want to visit the Bahamas because, taken together, the experiences we have to offer are hard to replicate anywhere else.

So how do we grow tourism in this country?  That is the Zillion dollar question, and I will address this by looking at several critical areas.

Education/Service:

Let me be blunt: unless we improve the education of all Bahamians:  schools for younger Bahamian children and trade schools or continuing education for mature Bahamians, we are doomed.

Related, we need to provide tourists and visitors high-quality personalized service. No matter what the experience: a hotel room; a meal, a taxi ride; a tour; a banking transaction, customs and immigration agents or any of a million interactions our guests have, this is how the Bahamas is judged.

When a visitor arrives in the Bahamas, our priority for that individual should be:  ‚ÄúYou are a guest in my country and home.  How can I make you a lifelong friend?‚Äù   All of us should have as their overarching tenet, absolute and unwavering dedication to high-quality service.  Every guest interaction is a moment of truth for our visitors and for us and we need to surpass their expectations.

Service is a major foundation block for assuring the Bahamas is a destination for repeat visits.  Service is not a luxury, nor is it a matter of discretion.  It is a basic expectation.  To help develop a culture of service, we need to train and invest in our teachers, not shy away from hiring great teachers, whether local or expat, and invest in better on-the-job training. There is no way any economy can achieve and sustain growth without a productive and well-educated workforce.

Each and every one of us must appreciate that tourism — which is such a significant component of our economy — is a service industry.  Yet, in the hospitality industry, we reward any service whether it is exemplary or terrible by automatically adding a 15% gratuity to all guest checks.  The message we are giving to our staff is “It does not matter whether you give good service or bad service, you will get compensated no matter what”.  How can that be justified in a culture of service or in a culture of excellence.

The current economic situation requires us to wake up and decide whether we are ready for a paradigm shift.

The Investment process:

While I know this is controversial, we must de-politicize the investment process for businesses that wish to become part of the Bahamas and help grow the opportunities that exist. Too many times over the years investment projects have been used by either side of the aisle for political purposes.  Headlines here in Nassau, can today be read anywhere in world.  The local paper is no longer the local paper. Investors deserve better.  Bahamians deserve better.  Investors do not come to the Bahamas to support a political party. My father has always said “Sarkis, we are guests of the Bahamian people”.  Investors come here to support all Bahamians.  Yes, they are interested in viable and hopefully profitable business opportunities, but most investors want to be a positive contributor to the success of the community.  As we compete for very scarce investment capital, it is crucial that we create the most investor friendly environment: speedy, efficient, transparent and  immune from the local partisan conflict.

Airport

Our airport needs to become among the most efficient in the world. The airport is the first impression a visitor has of the Bahamas. It is also the last one prior to departure. A visitor typically has only a few precious days to spend with us.  In many cases, he or she chooses to come to the Bahamas because of relatively short travel time.  It is imperative, therefore, that we be the easiest and most convenient place in the Caribbean to visit.

Modernizing the physical terminals of the airport has been helpful, but the total airport experience is still far from satisfactory in terms of creating both a strong, positive introduction to The Bahamas and a fond memory of time spent here.

Efficiency is the key. Upon arrival, visitors must be able to go through immigration and customs in a timely and efficient fashion. Visitors must also be able to locate and retrieve their luggage in an easy and fast manner.   This means luggage carousels that work not just sometimes but all the time.

Departure from Lynden Pindling International Airport can be a nightmare. Today, a person departing the Bahamas is subjected to multiple checkpoints:   two stand-alone checkpoints and an occasional check again at the gate. This is a tiresome, repetitive process which leads to grumblings and discontent among passengers.  Much of this is as ridiculous as it is unnecessary.

We must also urgently reduce the cost for airlines to fly into our airport.   For example, based on how we are staffed at customs and security check-in and departure points, air carriers are being forced to congest their arrivals during the busiest parts of the day because of overtime fees.  This make us uncompetitive.

Port and Downtown

Our port and downtown must also be modernized.  This is going to require a massive injection of capital, but the need for it is clear.  Like the airport, the port and its surrounding areas are the first part of the Bahamas that visitors who come by cruise ship experience.  This is their first impression about the Bahamas and it will heavily influence whether they will ever decide to return.

50% of all cruise line passengers do not leave their ship because of how these areas look and we are “shooting ourselves in the foot” economically.  Opportunities for business for our retail, dining and entertainment establishments are substantial.  I am very proud that Vaughn Roberts, who was one Baha Mar’s best executives, will be leading this effort.  We must however act with haste to recreate downtown into a complimentary tourism destination to Cable Beach and Paradise Island.

I would also suggest that creating new island experiences must be a critical component of the work to make Nassau much more compelling to visit. We need more creative content.  The more things we can create for visitors to do, and experience, will translate into longer lengths of stay in our hotels and a more enduring desire in our visitors to return to us again and again.  We should find unique ways for our visitors to take in our most significant assets, namely our beautiful waters, our culture and the romance of “island-life”.  Simply put, we need to impress upon them the magic of the Bahamas.

Privatization & Infrastructure

For the Bahamas to be a leading global vacation destination, it is essential that we have modern transportation, telecommunications and energy infrastructures.

The Government has begun to address this, but the only way forward for the Bahamas is to privatize state owned companies such as BEC, Batelco and Water and Sewerage. A modern efficient infrastructure is an essential differentiator that can distinguish the Bahamas from many other resort destinations, particularly those located on islands or developing areas.

Today the cost of energy is choking businesses all over the Bahamas. The manner by which it is being produced is killing our environment.  Yet nothing is being done about it.  As we hopefully become more and more successful in the tourism trade, our energy needs are going to continue to increase.   We must address our current and future needs in a cost-effective and environmentally sound manner.  I have said it before but the roadmap to a cost effective, environmentally sound energy solution has been written over and over again most everywhere in the world.  We should not be hesitant about bringing in the necessary competent private companies immediately to help us.

Gaming

One of the important tourist attractions we offer in the Bahamas is gaming.  Going back to Ian Fleming’s James Bond era, we have been identified as a favorite place to engage in this activity.  Gaming, which is a subset of tourism, should be an enormous cash generator for this country. A successful casino also creates around it the potential for successful hotel, restaurant, entertainment, and other amenities and businesses. Our gaming facilities, however, must be able to compete with Las Vegas, Macau and Monte Carlo.

To enable our country to capitalize on gaming as a major tourist attraction, we need to update both our Lotteries and Gaming Act and other related regulations so that our resorts can offer a more competitive and modern gaming environment.  In this regard our Casinos regime is woefully behind the times. Recently the BHA sent a list of recommendations in to government to accomplish this very thing.  I hope that these will be considered favorably and quickly so that they can implemented soon.

Much of what I have discussed here today, I have tried to incorporate in the Baha Mar project, which is intended to be a world-class resort destination providing its guests with best-in-class hotels, restaurants, beachfront, pools and golf course.  As the project progresses, and certainly at fruition, it will provide substantial job and career advancement opportunities for the people of the Bahamas. And as this happens, we are committed to providing the job training to ensure top quality service for our guests.

Our project, like much of the Bahamas, is not immune from the present recession. We are doing our best to be a caring and responsible citizen of the Bahamas. We are trying to be creative in managing our operating costs so as not to cause wholesale job layoffs and to avoid the consequences of severe economic impairment on the community.  We are also working to ensure that, despite these difficult times, we maintain the appropriate funding to continue to move the project forward in a way that serves the best interests of the project and the Bahamas.

Conclusion

My family and I are believers in the Bahamas and its long-term potential.  The enduring qualities of the Bahamian people contribute to our country’s uniqueness.  The Bahamas’ natural beauty has captured the hearts of millions of people from around the world.

The world, I am confident, will recover from the Great Recession. The Bahamas, however, must be better than ever when this happens. We have the resources and natural attributes as a country to be a worldwide leader in the tourist trade.

So how do we move forward?  I would like to suggest the formation of a joint public/private blue-ribbon task force consisting of leading figures from this country:  business (both local and foreign investors), legal, and Government (both sides of the aisle) to review the challenges facing this country and prepare a list of actions to solve them.  I can think of no better person to Chair this committee than Dionisio, and I am happy to confirm that he would be fully prepared to serve in such a role.

I really believe that the people of the Bahamas are demanding action like never before.  The business community is likewise demanding action, and the Government of the Bahamas seems poised to take and support necessary action.

Together I have no doubt that we can tackle our challenges successfully and thereby ensure for this country of ours “this country we all love so much” a prosperous future.

Thank you.

The views expressed are those of the author, and not necessarily those of the Nassau Institute (which has no corporate view), or its Advisers or Directors.

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