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Raising Atlantis?
Américas / November-December 1998

By Larry Luxner

NASSAU, Bahamas -- What's being billed as one of the world's largest island resorts is rapidly rising on Paradise Island, an 800-acre spit of land just over the bridge from Nassau.

Sun International Bahamas Ltd., a consortium controlled by South African multi-millionaire investor Sol Kerzner, is spending $450 million to more than double the size of its existing 1,138-room Atlantis Paradise Island resort to over 2,300 rooms. That would dwarf any other hotel in the Caribbean, and its 50,000-square-foot casino would be the largest in the world outside Las Vegas.

"This is probably the biggest private construction project the Bahamas has ever seen," says Timothy Brown, the company's project manager. "Once everything is complete, we're looking at an $800 million investment, with a total of 5,400 permanent employees," up from the current 3,500.

Adds Vincent Vanderpool-Wallace, director-general Bahamas Ministry of Tourism: "We believe this will be the most significant addition to our tourism plant ever, in terms of quality jobs and tourism income. There's no doubt about that."

According to Vanderpool-Wallace, the expanded Atlantis will pull in an additional 250,000 stopover visitors a year to the Bahamas. Based on an average $900 expenditure per tourist, that means an extra $225 million in foreign exchange -- not an insignificant amount in a country where tourism generates $1.4 billion a year, or 60% of the GDP.

Built in 1969, the property now known as the Atlantis had its ups and downs as it went through several owners and names -- the most recent of them being Merv Griffin's Paradise Island Resort & Casino. In December 1994, Sun International bought the hotel and over the last four years has modernized most of its facilities.

Construction on the new Royal Towers complex began in December 1996. A 100,000-square-foot entertainment center is scheduled to open this September, while the guest rooms and the rest of the hotel will be inaugurated in December.

Guests at the hotel already have access to a casino featuring 800 slot machines and baccarat, blackjack, roulette and craps, as well as a 14-acre waterscape park featuring a 3.2 million-gallon saltwater, open-air aquarium with more than 100 species of marine life in six exhibit lagoons.

"We're about to employ 2,000 additional workers," said chief operating officer Alan J. Leibman. "The spinoff for the economy is huge. There is great pride for people wanting to work for the Atlantis. Over 9,000 people applied for 2,000 jobs."

Yet not all is paradise on Paradise Island. Earlier this month, a 48-hour strike at the Atlantis and the island's other dozen or so properties resulted in frustratingly long check-in lines, reduced services, some cancellations and the closure of seven out of the resort's 11 restaurants. In all, 4,500 members of the Bahamas Hotel Allied & Catering Workers Union walked off their jobs in Nassau and Paradise Island. The strike ended after hotel management tentatively agreed on an unspecified salary increase pro-rated over the life of the contract.

Nevertheless, Leibman noted that in 1997, the once-marginally profitable Atlantis enjoyed a year-round occupancy of 88% at an average room rate of $173. This year, he said, "we're looking at pushing 88% at a rate of $189. We're obviously focused on bottom-line performance."

It certainly seems that way, given the hotel's 1997 earnings of $62 million on sales of $265 million -- making last year the most profitable in the resort's 30-year history. Roughly a third of total sales come from the casino, which is one of three in the Bahamas (the other two are on Cable Beach, Nassau, and the Princess resort in Freeport).

"We have an agreement with the government that, for the next 20 years, precludes the issuance of additional casino licenses on Paradise Island and New Providence," Kerzner wrote in a recent letter to investors. "Further, in recognition of the enormous investment we are making in the country, we recently concluded a new agreement that, as of Jan. 1, 1998, results in a reduction in our effective casino tax rate. We cannot conceive of a scenario in the medium term that would entail the development of another project in the Caribbean similar in scale to Atlantis."

The Atlantis may be the largest, but it isn't the only game in town. Hilton International has just signed an agreement to operate its first hotel in the Bahamas. The 290-room British Colonial Hilton Nassau will be managed on behalf of its owners, Toronto-based RHK Capital, following a $50 million renovation. Located in the center of Nassau, the prominent landmark -- which boasts its own private beachfront -- will target business travelers."

In fact, says the Caribbean Development Bank, the hotel building boom is helping fuel economic expansion in the Bahamas. In 1997, the country's GDP grew by 3.5% -- up from 1% in 1996 -- marking the fifth consecutive year of growth.

Sun International, whose executives tend to describe their Paradise Island project in superlatives, are pushing the gigantic resort as the reincarnated lost continent of Atlantis.

"Awaiting those in pursuit of the mythical past is a journey that will first begin beneath the surface of the turquoise sea," says a promotional brochure. "Ruins, chambers and underwater corridors will summon the curious and reveal perhaps, the stolen moments of Atlantean life. Surrounding this antediluvian labyrinth will be some of the most fantastic, living sea creatures you've ever seen."

Upon completion of the 23-story Royal Towers, with its 1,208 rooms and suites, the new Atlantis will offer more than 11 million gallons of water activities and attractions, including a five-story-high, life-size Mayan temple with water slides, and a dozen new restaurants and lounges.

"We don't want it to be a Disney World, which is very predictable, but we also don't want people to be camping and backpacking around the place," said Leibman. "We want to create a highly themed property."

Also planned is a 60-slip marina that will hold yachts measuring up to 200 feet, and a 100-foot-deep tunnel that that'll bring guests arriving by car. This will solve the problem of how to bring large yachts from Nassau Harbor to the new marina without tying up automobile traffic.

"With the quality of facilities, service and amenities we are building into this marina," predicted Kerzner in a press release, "we fully expect that Paradise Island will become a yacht harbor on a par with Monte Carlo and the other legendary marinas of the European Rivera."

Joining the two new towers like a bridge is the opulent, $25,000-a-night Imperial Suite -- a 6,000-square-foot palace that'll most likely be reserved for visiting heads of state and "high rollers" who'd think nothing of gambling $1 million or more in one evening. The Imperial Suite features two bedrooms, an 800-square-foot balcony, a bar and piano, his and her bathrooms with double walk-in shower, keyed-off elevator access and other amenities.

Brown said his team plans to tear down the existing casino and build a 25,000-square-foot convention center in its place, to be opened in April 1999. The casino will be relocated and doubled in size.

"The biggest single challenge we have is getting the materials here," said Brown. "Everything has to come in by boat. There are very few raw materials here except for sand, so we import the cement from Mexico. The aggregate is from Nova Scotia. It all gets consolidated in Miami and is shipped by Tropical Shipping to our suffrage port, where it's inspected by the Bahamian government. The logistics are phenomenal," he said. Another challenge is immigration. We actually have someone from Bahamian immigration working out of our office" to check the papers of 500 foreign employees -- including mechanical subcontractors from Mexico, marble setters from Portugal and steelworkers from Venezuela.

"This is the largest investment we've ever done," says Leibman, whose company also owns casinos and mega-resorts in Atlantic City, Las Vegas and the Indian Ocean islands of Mauritius and the Comoros. "Sun International is better-known throughout Europe than in the United States. About 40% of our guests come on package deals, though casino junkets are not our business. We are a resort that happens to have a casino. We've been in a position where we've not had to discount that much."

Currently, 40% of guests at the Atlantis come from South Florida; another 30-35% from the New York-New Jersey-Connecticut area, and the remainder from other U.S. locations, Europe and the Far East.

"Business has been very good," he said. "The economy is very good, and the resort has built a great name for itself. On weekends, for every reservation we turn six away. We just don't have the availability. In the last three weeks, we haven't had a day under 92% occupancy."

Brown said the hotel is "basically self-contained," with its own reverse-osmosis water desalination plant and sewage treatment facilities. "We've had to bring in our own tower cranes and generators to keep the project running," he said. "A few times we've run out of cement because we were pouring so fast."

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