By Krista A.M. Montealegre,
BUSINESSES continue to navigate through the haze of uncertainty in the aftermath of the government’s decision to close the island of Boracay for rehabilitation.
Shares in Leisure & Resorts World Corp. (LRWC) fell 0.60 or 10.08% to close at P5.35 each after President Rodrigo R. Duterte said, in a press conference before he left for China, that he is against the development of casinos in the country’s top tourist destination.
While the government was evaluating plans to facilitate the island’s recovery, LRWC and Galaxy Entertainment Group Ltd. (GEG) was awarded last month a provisional license by the Philippine Amusement and Gaming Corp. to develop an integrated casino-project in Boracay.
“As per various news reports of the statement of the President pertains to this timetable: During the closure period, no building, construction, etc. while Boracay is still closed,” Freddie B. Reyes, investor relations officer at LRWC, said in a mobile phone message.
“GEG’s provisional license is in full effect and there is nothing in the President’s statement to state otherwise,” he added.
“GEG is eager to push ahead with the project in compliance with the local rules and regulations, in particular paying attention to those relating to the environment, whenever the government and the island is ready,” Mr. Reyes said, noting that the Department of Environment and Natural Resources (DENR) has confirmed that the project site is classified as “alienable and disposable.”
Likewise, the operator of Friday’s Boracay Beach Resort expects to take a hit from the “impulsive” decision to shut down the island, prompting Boulevard Holdings, Inc. (BHI) to ramp up the sales of its property in another tourist destination.
President Duterte had approved the six-month closure of the famous tourism destination beginning April 26.
The holding firm of the Panlilio family said in a disclosure to the stock exchange on Tuesday that Friday’s Holdings, Inc., owner and operator of Friday’s Boracay Beach Resort, is fully compliant to laws mandated by DENR and the Department of Interior and Local Government (DILG).
The shutdown has resulted in almost P22 million in advanced deposit cancellations from places like China and Germany since the closure coincides with the peak season.
BHI estimates monthly foregone revenues of P6.5 million for seven months from April to October totalling P45.5 million. The company will also suffer another P35 million in losses due to fixed costs and expenses to be incurred representing utilities, maintenance, repairs, depreciation, personnel costs for engineering, housekeeping, accounting and other general expenses.
The resort’s work force of 80 people, who are receiving a monthly salary between P15,000 and P20,000, will be mostly laid off. About 15 to 20 of them will be transferred to the new Friday’s Puerto Galera Beach Resort, which opened last December.
To compensate for the losses in Boracay, BHI is working on increasing the sales at Friday’s Puerto Galera to P10 million in May, P9 million in June, and P9.5 million each month until the high season in November, from only P4 million in April.
“This six-month closure came suddenly and whimsically, without rigorous thinking,” BHI said, while issuing a recommendation to the government that non-violators like the company should be allowed to start operations sooner.
At the current market price of P120,000 per square meter, the 1.5-hectare prime beach frontage parcel of Friday’s Boracay is worth P1.8 billion excluding the value of the building.
“It will soon not be yielding anything good to support BHI’s livelihood. BHI and its people will be living on razor thin earnings because of the close of our crown jewel,” the company said.
BHI believes Friday’s Boracay Beach Resort’s financial operations will improve once the government reopens the island to tourists.
“(W)hen Boracay re-opens for business it will give optimistic outcomes due to improved yields in the future: higher revenues in terms of higher average room rates and occupancy rates since various resorts which are DENR/DILG non-compliant will be permanently closed for business which will ultimately reduce the available room keys in Boracay Island,” BHI said.