The countryﾴs leading resort developer and largest private employer, Kerzner International, yesterday reported a net loss of $11.2 million in the third quarter of 2004 and expressed doubts about proceeding with certain elements of the $1 billion Atlantis expansion.
Kerzner Internationalﾴs Chief Executive Officer Butch Kerzner made the disclosure during the companyﾴs quarterly conference call, at which time he admitted that the quarter losses were mainly the result of Hurricane Frances.
The company also reported that it has continued construction of Marina Village and an extension to the Harborside at Atlantis development.
Officials of Kerzner International say they will determine in December whether to proceed with the Phase III expansion of Atlantis. (Photo by Omar Barr)
But it said it has until December 31, 2004 to determine in its discretion whether to proceed with the remaining elements of the Phase III expansion that it has not commenced.
ﾓThe companyﾴs determination will depend on the assessment of many factors, including global economic and political conditions, the regional competitive environment, financing and the Government of The Bahamasﾴ proceeding with its commitments under the Heads of Agreement,ﾒ Kerzner International said in a statement.
The company reported that Hurricane Frances, which passed just to the north of Paradise Island, as well as subsequent hurricanes and tropical storms that hit the state of Florida, negatively impacted business in the week preceding Labor Day and in the weeks thereafter. This resulted in lower overall business levels in September, Kerzner officials reported.
Prior to this, Kerzner Internationalﾴs business trend had been ﾓveryﾒ positive with company officials forecasting a 15 percent increase in earnings and earnings per share between $0.27 and $0.31 cents.
Hereﾴs the big picture,ﾒ Mr. Kerzner said, ﾓbusiness during the quarter was running along extremely well, Paradise Island had a great July and a great August.
ﾓWe were running at 90 percent occupancy during these periods. But stating the obvious, because of all the hurricane activity that we had during the month of September ﾖ which is normally our slow month ﾖ this was not a great month for us.ﾒ
During this quarter, the companyﾴs flagship brand, Atlantis consequently saw a slip in its earnings, reporting a net revenue of $106.5 million, when compared to the same period last year when the hotel boasted earnings of $114.8 million.
Atlantisﾴ revenue per available room for the quarter stood at $173 when compared to $177, representing a two percent decrease over the same period last year.
Meantime, the companyﾴs One & Only resorts segment, which includes the Ocean Club Resort, saw its earnings increase to$19.9 million from the $8.9 million recorded during the same period in 2003.
Kerznerﾴs costs associated with Hurricane Frances were pegged at $4.6 million, which primarily consisted of clean up and repair costs, complimentary goods and services to guests of $3.4 million and a loss on damaged assets of $1.2 million, according to company officials.
Just prior to the storm ﾖ up to August 30 ﾖ the hotelﾴs leisure business was reportedly up by 22 percent. A few weeks later, it plummeted to five percent.
Despite recent hiccups, Kerzner officials admit that Atlantis has rebounded nicely heading into December.
ﾓWeﾴre noticing pretty strong trends,ﾒ Mr. Kerzner said.
He added, ﾓThis past Sunday, we are also on the cover in the story of the New York Times travel section indicating the effects of the storms on the CaribbeanﾅSo this is really a momentum that we had prior to September.ﾒ
Macushla N. Pinder, The Bahama Journal
