Although immediate disaster relief remains the top priority across storm-devastated areas of the Bahamas, Hurricane Dorian has also left in its wake myriad long-term challenges for the destination's hospitality sector.
"It's certainly important to recognize that there are immediate needs right now and that those needs are really dramatic," said Frank Comito, director general and CEO of the Caribbean Hotel and Tourism Association. "But the other thing that people lose sight of after the initial impact is the incredibly difficult and incredibly long road to recovery that follows."
Much of that recovery effort hinges on the Bahamas getting its tourism and hospitality industries back up to full strength. While resorts across the heavily impacted regions of the Abaco Islands and Grand Bahama remain shuttered, properties throughout the rest of the country were largely unscathed, and Comito emphasized that communicating that the Bahamas is "open for business" will play a vital role in fueling a destination-wide comeback.
"The main economic engine for Bahamas tourism are the areas of Nassau and Paradise Island, and those areas never closed down," he said. Out Islands like the Exumas, Eleuthera, Harbor Island, Cat Island, Andros and others were also spared, he said.
"The resorts there are open, and tourists are enjoying themselves in those areas," Comito said. "So a way people -- and particularly the travel trade -- can help the Bahamas is to understand fully that there are plenty of vacation opportunities there, and they're open and available right now."
Prior to Dorian, the Bahamas' hospitality sector had been enjoying a period of robust growth, with nationwide occupancy up nearly 19% year-to-date through July, to 74%, according to recent STR data. RevPAR also rose over the same period, up 25%, to $231.
Rick Newton, founding partner at the hospitality advisory firm Resort Capital Partners, predicted that the Bahamian hotel industry might actually see those numbers spike higher over the next few months, as properties in Nassau and other areas see a surge in guests responding to and displaced by the hurricane.
Also expected to keep bolstering demand is the continued strength of undamaged resort complexes like Nassau's recently opened Baha Mar as well as the Paradise Island-based Atlantis, which together account for nearly a third of the Bahamas' total room supply.
Newton stressed, however, that the temporary spike might not be enough to completely offset the estimated 2,500 to 3,000 hotel rooms across the Abacos and Grand Bahama that are now "offline for an indefinite period of time."
"It will certainly be a significant impact, especially when there's less than 20,000 rooms across the whole jurisdiction," he said. "And in a place like the Abacos, where you have maybe 50 to 75 properties that are almost exclusively independent and on the smaller end, with 25 keys or 50 keys, these are places that are going to be very dependent on insurance proceeds, and that will be a struggle. Some may choose to rebuild, but some may choose to exit."
Indeed, navigating the insurance landscape will likely prove daunting and time-consuming for most impacted resorts, regardless of size.
Insurance processing delays
Stephen Figlin, senior vice president at Young Adjustment Co., said, "It's not uncommon for the adjustment of an insurance claim that's sizable to take some period of time, longer than just weeks. If the hotel is dependent on cash flow and can't get it from their insurer, it puts them in a difficult position. Also, a large property can have very sizable deductible from flood or windstorm coverage, such as a five-, six- or seven-figure deductible."
Other factors that can delay a property's insurance processing include damage so severe that engineering studies might be required or the addition of code-related changes that might need to be factored in to insurance adjustments.
Some claims, including those involving lost profits related to business interruption, can simply be impossible to calculate in the short term.
"It may take some time for adjusters or accountants to figure out what the damage and losses really are," Figlin said. "It may not be something that can be seen in a snapshot on Day One. It may be something that you have to wait until there's some period of time, whether it be recovery time or shutdown time, to understand the impact on the financial operation of the business."
Meanwhile, Resort Capital Partners' Newton predicted that it will likely take a minimum of two to five years for the hospitality sector across the Abaco Islands and Grand Bahama to reach some semblance of normalcy.
"I say that because if we look at the Virgin Islands or Puerto Rico as an example, they're mostly back online two years [after the 2017 hurricanes] and will be fully back by three years," Newton said. "But the Bahamas doesn't have the U.S. taxpayer or the British taxpayer to come in with a multibillion-dollar rescue package. So it's going to take longer, and it's going to cost more. Ultimately, that's going to be the big question: Who's going to pay for it?"