A new Atlantis in China
Executive says $1.5 bn project will be a plus for Bahamian resort and employees
ALISON LOWE Guardian Business Editor firstname.lastname@example.org
Published: Oct 11, 2013
Kerzner International will partner with a Chinese conglomerate to establish a $1.5 billion Atlantis Resort in Hainan, China, in a move which will ensure “brand awareness” and cross-training and employment opportunities that will be a “huge benefit to The Bahamas”, an Atlantis executive has stated in an exclusive interview with Guardian Business.
George Markantonis, president and managing director of Atlantis Paradise Island, said that the plans for Kerzner to partner with Chinese conglomerate Fosun International Ltd. to build an Atlantis resort overlooking the South China Sea represent a “new strategy” for Kerzner International of purely focusing on managing, not owning, hotels and is a step in the right direction “following all of the difficulties of the last two years” for the debt-strapped former-Atlantis owner.
Kerzner International was forced to sell its Paradise Island assets to Brookfield Asset Management after running into debt problems following the company going private in 2006, shortly before the 2008 financial crisis.
After developing the Dubai Atlantis in partnership with the Dubai government in 2008, the company sold its 50 percent stake in Dubai Atlantis to a Dubai government fund for $250 million last year, part of the process of reducing Kerzner’s debt to $120 million from $500 million.
The Chinese venture, announced yesterday by both companies, will provide Kerzner International with the opportunity to again manage but not own the hotel, as it now does with Atlantis Paradise Island and Atlantis Dubai and to enter one of the world’s fastest growing tourism markets.
“It certainly is a positive step forward for Kerzner International following all the difficulties over the past two years, and it is even more significant because it establishes the brand in the largest country in the world where the possibilities appear limitless.
“Kerzner International’s CEO, Alan Leibman, has made it very clear that this is the future direction of the company and it definitely makes sense from a risk point of view. It enables the company to be very nimble in acquiring global management contracts without the added distractions that real estate ownership can bring,” said Markantonis.
With $28 billion in assets, Fosun International Ltd. is the largest privately-owned Chinese conglomerate and claimed yesterday in the Wall Street Journal to already have all of the funds in place to construct the 153-acre property in the city of Sanya, in the Hainan province.The resort will include 1,300 hotel rooms, 18 bars and restaurants, a water park, dolphin shows and other marine life. Groundbreaking is to start this year, and the resort is to be completed in 2016.
As with Atlantis Paradise Island, the 78-year-old South African head of Kerzner International, Sir Sol Kerzner, will drive the “design and development” of the resort, Markantonis said.The resort executive suggested the chance to enter the Chinese market is a huge opportunity for Kerzner International.
“This is part of the Atlantis brand expansion globally, and Kerzner international has made it quite clear that it is a unique brand and they want to establish it globally. China has a huge population that is becoming more sophisticated in the travel arena and so its no surprise that this would be the next location for an Atlantis.
“Sanya is a short haul holiday destination point in China which is key to travel over there. It is already the preferred holiday destination in China; the economy of Hainan has more than quadrupled in the past 10 years mainly fueled by tourism growth in Sanya. They have two airports and in 2012 served 10.7 million passengers. There is a planned expansion to grow their airport capacity to handle 30 million passengers by 2020.” Rather than detracting from visitor numbers to Atlantis Bahamas, Markantonis said he expects the establishment of Atlantis in China will boost arrivals to Paradise Island.
“Certainly what it means for Atlantis in The Bahamas is that it will introduce the brand and the product to the Chinese traveling public and a significant difference will be that the Atlantis in The Bahamas also offers a casino, which the one in China will not. There’s more likelihood of getting visitation from people who can already identify with the brand. Right now we have hardly any visitation to the Atlantis in The Bahamas from China; it’s just too great a distance.”
Casino gambling is presently illegal in China outside of gambling mecca, Macau, which would explain why the resort has not opted for a casino facility.
However, Hainan, as a popular tourist destination, has long been touted as an area where further gambling liberalization could occur. Markantonis added that with the establishment of the Sanya-based project, Kerzner International will also be opening a regional sales office in Hong Kong.
“We’ll be able to utilize that from this part of the world as well,” he added. With respect to opportunities for Bahamian Atlantis employees to possibly take up employment and cross training opportunities at the new resort, Markantonis said he anticipates a lot of benefits.
“A huge amount of Bahamians went to Dubai,” he said, adding: “We have had a considerable amount of employees go to assist with the pre-opening then for cross training and in numerous circumstances for permanent career advancement. The Senior Vice President for Human Resources at the Atlantis Palm (in Dubai) is a Bahamian.”
Notwithstanding Markantonis’ positive interpretation of the development in terms of its implications for The Bahamas, the announcement is likely to spark significant speculation about the impact of a new China-based Atlantis resort for The Bahamas, both for Atlantis Paradise Island, and the Baha Mar resort, set to open in December 2014.
Markantonis told Guardian Business that there are “always talks” going on with respect to new Kerzner- managed properties and he is “sure Mr. Leibman and Sir Sol Kerzner won’t be stopping at just this project”.