Anyone heard this rumor--Atlantis

[komosatp]

There are many articles to read about the dismal room occupancy rates of late 2008, but none of the resorts I have read about have levels as low as 40%. In addition most resorts are slashing room rates to try and increase occupancy. If Atlantis feels they are too good to drastically reduce their rates, more travelers will choose other locations and their occupancy levels will go even lower IMO.

There's no question that Atlantis hurting....but how bad is hard to discern.

Some things to think about: Have you been to Atlantis in Hurricane season? I have. In a good year, the cut back operations and closed the Beach Tower for September and October...which is what they did this year, but in a more concentrated way. The layoff they did this year made the news....but we have no way of knowing how much bigger these layoffs were than in typical hurricane seasons.

When Sol Kerzner built Atlantis, I'm sure he looked at a map. He saw that the Bahamas was in the path of fall hurricanes. Like every other resort in the Caribbean, Florida, Yucatan Peninsula, and Gulf Coast, occupancy drops off during hurricane season. In previous hurricane seasons, the resort quieted, at they were able to keep most staff by filling it with weekend guests and conventions. 2008 comes along with a weak economy and hurricane season bookings are below previous years. So Atlantis implements its cost cutting plan....which it probably had on the books but never had to implement as significantly.

In addition, Atlantis has been doing gangbusters business since its opening in 1999-2000. Six to twelve months of below average bookings probably doesn't break the bank. Atlantis was fantastically profitable (for a hotel) when it was a public company. I used to listen to its inventor conference calls and there was a remarkable trend at the resort: people booked the more expensive rooms before they booked the cheap rooms! They would often sell out the Royal Towers in the spring and summer and have available reservations in the Beach!

Which is all a long way of saying that Atlantis is probably in better shape than most destination resorts.

Which is not to say that Sol Kerzner might not be having trouble with his piece of the Atlantis partnership, as I said earlier in this thread:

The Kerzner's took Atlantis private in 2006, which was they heyday of easy credit. Given what's been going on in the financial markets since 2006, its likely that Sol is having some financing problems. He likely could be in the position where his PERSONAL fortune is in jeopardy because of changes in these markets since then. His financed portion of the buyout could be in trouble. He could be in violation of some of his debt covenants because cash flow at the resort is below a certain threshold, or insurance he was required to buy to insure his debt payments have become prohibitively expensive. Or any other number of complications in his DEAL, not in the resorts profitability or operations.

Atlantis-proper likely is not at any risk because of the Dubai owners could buy the Kerzner's share of Atlantis, probably out of their personal checking accounts, not having to go to the capital markets to raise money. But Sol would likely have to sell to them cheap so he's likely exploring all options.

But from a longer term perspective, I think over the life or our investment at Harborside, Atlantis will change hands once, if not several times until it either ends up in the stable of a gaming, hotel, or integrated media/entertainment company. In those industries, Atlantis is currently a niche-y boutique-y company. It's likely on the radar of the big companies in those industries as an acquisition, were it to come up for sale at the right price.

 

[tombo]

Excerps from this article are below
http://www.bahamasb2b.com/news/story.php?title=140-laid-off-from-atlantis-harborside-resort

"Nearly half of the staff at the Harborside Resort was terminated yesterday from the resort's sales, marketing and administrative areas. These lay offs come five days after the Atlantis Resort & Casino - the country's largest private employer and joint venture partner with Harborside's owner, Starwood Vacation Ownership - laid off 800 employees.

Starwood blamed the "increasingly challenging economic environment" for the downsizing of the 140 employees. Mr Matheson said after the firings Harborside was left with 150 employees: 80 persons in sales and marketing and 70 in resort operations."

Funny how they kept 80 sales people, but only 70 employees to handle resort operations. Looks like they are a typical developer more worried about sales than operations.

They are doing what they have to do to survive by cutting employees, but why aren't they drastically slashing room rates to try and get people to come? I thought they were cutting rates like every other casino, but now I looked and it seems as thought they are keeping their prices ridiculously high while occupancy levels plummet. Why would other high end resorts like Wynn have drastic reduction in room rates while Atlantis sticks there head in the sand and says we built it, so they will come?

Another quick read:

http://consumertrack.blogspot.com/2008/11/wheres-atlantis-oh-yeah-thats-right.html


Low occupancy rates in hurricane season are understandable, but I doubt they ever reached a low of 40% prior to this year unless a hurricane warning or watch had been issued.. The big problem is that hurricane season is over and the occupancy rates are still abysmal.

 

[influential_ar]

What's going on over in the Beach Tower area? Are the sharks, turtles, and rays still in all those lagoons?

Was the River Pool, Lazy River, Kiddie Pool, and/or Goombay slide open?

Yep, everything seemed relatively normal and the rides were open. Restaurants etc. all open once the placed went from 40 to 90+% occupancy.

 

[calgarygary]

Excerps from this article are below
http://www.bahamasb2b.com/news/story.php?title=140-laid-off-from-atlantis-harborside-resort

"Nearly half of the staff at the Harborside Resort was terminated yesterday from the resort's sales, marketing and administrative areas. These lay offs come five days after the Atlantis Resort & Casino - the country's largest private employer and joint venture partner with Harborside's owner, Starwood Vacation Ownership - laid off 800 employees.

Starwood blamed the "increasingly challenging economic environment" for the downsizing of the 140 employees. Mr Matheson said after the firings Harborside was left with 150 employees: 80 persons in sales and marketing and 70 in resort operations."

Funny how they kept 80 sales people, but only 70 employees to handle resort operations. Looks like they are a typical developer more worried about sales than operations.

They are doing what they have to do to survive by cutting employees, but why aren't they drastically slashing room rates to try and get people to come? I thought they were cutting rates like every other casino, but now I looked and it seems as thought they are keeping their prices ridiculously high while occupancy levels plummet. Why would other high end resorts like Wynn have drastic reduction in room rates while Atlantis sticks there head in the sand and says we built it, so they will come?

Another quick read:

http://consumertrack.blogspot.com/2008/11/wheres-atlantis-oh-yeah-thats-right.html


Low occupancy rates in hurricane season are understandable, but I doubt they ever reached a low of 40% prior to this year unless a hurricane warning or watch had been issued.. The big problem is that hurricane season is over and the occupancy rates are still abysmal.

You can not compare the reactions of Atlantis mgt. to the reactions of LV resorts to the current drops in tourism. Wynn is in a very overbuilt LV market and needs to do what is necessary to keep people moving through the casino. Although very successful, Wynn does not have the capital behind him to survive an extended downturn in revenues so must be pro-active in maintaining his market share. Atlantis has massive capital behind it and can utilize the current situation to obtain even more concessions from the Bahamian government. Unfortunately, the employees are pawns.

 

[komosatp]

Low occupancy rates in hurricane season are understandable, but I doubt they ever reached a low of 40% prior to this year unless a hurricane warning or watch had been issued.. The big problem is that hurricane season is over and the occupancy rates are still abysmal.

Tombo....do you have some insight on what Atlantis occupancy level were in 2007 and before, during hurricane season and the week before Christmas? You might have not seen this post before your last note:

Yep, everything seemed relatively normal and the rides were open. Restaurants etc. all open once the placed went from 40 to 90+% occupancy.

In any case, I don't understand what your position is. Are you trying to say that you think that Atlantis will be closing it's doors soon? Just as the peak spring break season starts?

And Harborside is nearly sold out....they weren't going to keep that sales staff there forever...and now that things will be slowing down, it's really not that surprising that they cut the sales staff.

And I think you might have made an incorrect jump in your analysis: we don't know how many people were on the general staff at Harborside before the recent layoffs, so we can't really know if any were laid off from resort operations, and if 70 was the number before. Given that Harborside is pretty much sold out and at near occupancy levels year round, I don't think many of the cuts were there.