When Hurricane Irma hit the territory three years ago, John Klein had been in the process of expanding his Jost Van Dyke property White Bay Villas.
“The only reason we didn’t lose our doors and windows on those buildings is that we didn’t have them [yet],” he said.
Post-Irma, his road to recovery was long, he said, but by January of this year every part of the property was complete and the season was looking “fantastic.”
“And then it just got shot like an axe came down,” he said of the arrival of the Covid-19 pandemic. “So the current state of affairs is there is virtually no tourism. We’ve done a little bit of staycations.”
His staff is on reduced pay, and his main focus now is keeping them employed and busy with maintenance projects and keeping food on their tables.
“We are running on fumes,” he added.
Businesses across the territory are facing a similar situation.
After Irma, the private sector took the undisputed lead in the Virgin Islands’ climb back to normalcy, and by the start of this year the efforts were paying major dividends.
Tourism was approaching pre-Irma levels, and many hospitality businesses were expecting a record season. Small businesses were buzzing, construction had overcome initial obstacles with labour and supplies, and financial services firms were operating out of newly renovated offices.
Then the pandemic hit.
“Overall, businesses that were able to reopen since the 2017 storms were just at the point to where things were back to normal or better,” said Keiyia Jackson-George, executive director of the BVI Chamber of Commerce and Hotel Association.
“We are now in hurricane season, and while a weather system has not greatly affected the Virgin Islands, we are in the midst of an economic hurricane that is wreaking havoc on our businesses again.”
In March, Sharon Flax-Brutus, former BVI Tourist Board director, agreed, calling the shutdown of what she thought was shaping up to be a record season “devastating for business.”
Though financial services were able to continue largely uninterrupted thanks to well-honed continuity plans, other sectors have been decimated. Now many residents are asking themselves if there’s anything to be learned from three years ago.
For Ms. Flax-Brutus, the answer is yes.
“When [tourism] comes roaring back, and it will, we need to make sure we are ideally positioned to take advantage of it,” she said, adding, “Infrastructure and capacity remain our biggest challenges. We were able to rebuild from a marketing and PR perspective, where the visitors to the destination were coming. And we were seeing capacity challenges and problems of being able to handle the flow and the diversification of the product.”
Moving forward, she said, keeping a good relationship with the international business community — another lesson learned from Irma — will be key.
So will training the workforce. As of July, more than 7,000 people had applied for unemployment benefits. They will need to be prepared when jobs open again, said Ms. FlaxBrutus, who is now director of
operations at Virgin Gorda Villa Rentals and Leverick Bay Resort
and Marina.
“At the same time we need to be fixing roads, adding hotels, the culinary school, etcetera,” she explained. “It’s important that we look at our human resources, capital, and the relevant opportunities for customer service training.”
The community mentality that took hold after Irma, with neighbours helping neighbours, can still apply as well, she said.
To that end, in the past year, she’s spearheaded a new Virgin Gorda roundtable, aimed at business owners wishing to network and discuss concerns unique to the sister island.
“I encourage private sector business to foster a very good relationship with banks, mortgage holders, suppliers, because they’re experiencing some of the same challenges,” she said.
Recovery challenges
VI business owners have always known of the difficulties of building and rebuilding in a small island territory, and Irma brought those challenges home.
Overall, Mr. Klein feels that recovery progress has been slow, particularly on Jost Van Dyke, which he believes is often overlooked due to its small population.
“We feel that a lot more progress should have been made since Irma,” he said, adding that the issues aren’t purely to do with small-island geography. “I don’t think the issues of getting things done have to do with logistics per se; it has to do with … commitment and funding.”
According to Mr. Klein, last year’s completion of a temporary facility at the West End ferry terminal was instrumental in bringing tourism back to the sister island. However, “it did take a real long time to get together,” he said. “There’s a lot more that needs to take place at the West End dock [and] the access area to the port in Dog Hole [now
under construction].”
The pandemic has further slowed such progress, and help has been hard to come by, he added. After Irma, JVD residents received assistance from the likes of singer Kenny Chesney, the sailors of the “PuertomRican Navy,” and volunteers from around the world.
“With the pandemic, though, it’s difficult to get momentum to do anything,” Mr. Klein said. “There’s no consensus this time around. There are some people who say they want to wait until there is a vaccine and [other] people that are saying we need to bring tourists intomorrow. There’s not that same ‘pull together’ mindset. After the hurricane, there was momentum to improve things and do things.
In many respects, [Covid-19] is a far more stressful situation.”
Economic rebound
In spite of the catastrophic destruction wrought by Irma, the
storm was not able to completely disable the territory’s economy.
The financial services industry used continuity plans to continue functioning without much interruption, ensuring that the sector’s income, which makes up some 60 percent of public revenue, continued to fill the government’s coffers.
Tourism, the territory’s largest employer, was not so lucky.
The territory’s 900 charter yachts were among the most dramatic signs of the destruction to that sector. Roughly 500 of those were write-offs, experts said at the time, and most of the remaining vessels had to undergo major repairs.
But with ready access to new boats, charter companies were among the first to help tourism rebound in late 2017, and by last year, yachting and cruise ship sectors both were almost back to their pre-Irma capacity, with land-based accommodations not too far behind.
Last year, the territory reached its third-highest-ever total for visitor arrivals. In fact, in all of 2019, 894,991 tourists visited the Virgin Islands, reaching nearly 80 percent of preIrma levels and more than doubling 2018 numbers,
Premier Andrew Fahie announced in March of this year, adding that 1,606 available land-based rooms represented 59 percent of the pre-storm inventory.
On the marine side, he said, “we have about 4,400 berths on boats, which exceed our prestorm capacity.”
Furthermore, the latest 2020 arrival statistics provided by the BVI Tourist Board, for January and February, showed 65,320 stopover arrivals for those two months, amounting to a 21 percent growth over the same period in 2019.
The past year also has seen openings of a few major properties
that had been shuttered since the storm, including Wyndham
Lambert Beach Resort on Tortola, and Mango Bay Resort and Rosewood Little Dix Bay on Virgin Gorda, as well as De Loose Mongoose restaurant in Trellis Bay under new ownership.
The territory’s first largescale brewery, Tola Brewery, also opened in the spring.
“The private sector, I think, has been nothing short of miraculous in terms of how they’ve rebuilt,” Governor Gus Jaspert said last week, noting that private-sector donors have also been instrumental in rebuilding schools and other institutions around the territory.
“When you think about the devastation that we had, the business sector got out very, very, very quickly: rebuilt, got people back employed, kept people employed, got jobs going, and in many areas have rebuilt better than before.”
Pandemic arrives
However, beginning in March, much of that progress — and much other economic activity — screeched to a halt, all waiting for the resolution of the Covid-19 pandemic that has gripped the world, resulting in cancelled trips worldwide and prompting the closure of the VI’s borders to visitors.
Any major re-openings that had been planned for the rest of the year are now in limbo, according to the BVI Tourist Board.
“With respect to hotel openings, for many properties, that is up in the air given the current global situations,” BVITB Marketing Manager Keith Dawson said this week, adding, “Most properties are currently closed and awaiting updates from the BVI government with respect to reopening to visitors and they are also watching the situation in the markets where their clients come from.”
Cruise ship arrivals, which had more than doubled from 2018 to 2019 with the return of major lines like Disney and Norwegian, were among the first to be suspended in mid-March due to their status as potential hotbeds for the virus. Borders closed a little over a week later.
Charter yachts
The yachting industry took a similar hit. The Moorings, the territory’s largest bareboat charter company — which by the start of this year had already managed to exceed its pre-Irma offerings — announced large-scale layoffs shortly after the pandemic arrived, and other companies followed suit. The crewed yacht sector — which had yet to return to pre-Irma levels — has been similarly affected, according to Janet Oliver, executive director of the Charter Yacht Society.
By May, ongoing border closures, with little indication of an opening date, caused many crewed yachts to cut their losses and call it a season.
According to Ms. Oliver, CYS membership is still only at two-thirds
of pre-Irma levels and now is likely to remain that way for
some time to come.
“Some owners never returned to the industry and others, when they did replace their yacht, opted to base in the USVI,” she said.
Graham Gips, captain of the charter yacht Allende and chairman
of CYS, said the sector had been building back “with newer, larger and more expensive yachts following the loss of so many yachts in
Irma.”
Exacerbated challenges
But the pandemic, he added, will likely exacerbate existing challenges.
“Following Irma, we saw that many yachts decided to base outside the territory because of the perceived challenges to be fully licensed to operate in the BVI (obtaining trade licence, crew permits, vessel permits, et cetera),” he stated.
Fast-forward to Covid-19 and “the BVI yachts are available but our clients are hesitant to book a BVI trip given the uncertainty about BVI border opening and entry protocol,” he said.
A lack of clear communication from the government has played a
role in that, he said. The yachting industry’s recovery is, in part, measured by numbers, Ms. Oliver said.
“There will undoubtedly be owners who will not have been able to weather the economic storm that Covid carried with it,” she said.
“They will sell and get out of the industry. There will be others who will relocate.”
The Bahamas, which opened to tourism this summer, has already seen a migration of some VI-based yachts, she added. Even though loyal guests will eventually return to the VI’s waters, as they did in 2018 and 2019, she suspects boat owners may be the biggest casualties of Covid-19.
“Charter guests have much shorter memories than investors,” Ms. Oliver said.
“Every charter boat that bases elsewhere is a loss of revenue to the BVI.”
Construction
Other sectors of the economy have faced similar ups and downs after the 2017 storms. Dion Stoutt, president of the Contractors Association of the VI, observed that the post-Irma construction boom, in which hundreds of workers flooded the territory to help rebuild, was followed by a lull.
“When Irma came, everybody’s house needed rebuilding, so that that was how we used our time,” said Mr. Stoutt, owner of architectural and project management company STO Enterprises. “Normally, those projects would not have happened.”
Afterward, however, the boom left him with employees with not enough to do — a situation that the Covid-19 shutdowns, which left workers completely idle for at least a month, naturally exacerbated.
“There weren’t any new products to keep them going,” he said. “If you make $10 an hour and now you’re making five, it might be difficult.”
Direction from the territory’s leaders is needed to determine how much and how fast to keep building, he said.
“We as a country, the government, need to decide how fast you
want to grow,” he said. “And if we don’t want to continue to grow
fast, then unfortunately we’re going to have to let people repatriate, because if the country economically is not growing then you really can’t have a population [of the current size].”
Financial services
Meanwhile, in the more portable industry of financial services,
many firms are continuing to operate at full capacity, and the Covid-19 era is offering an opportunity to try out business continuity
plans in real time.
“It’s not only about moving business around within the territory, but within the world,” said BVI Finance CEO Elise Donovan.
“In the short run, it’s important that business continuity plans are not only on the shelf, but that they are pulled down and tested, and that we make sure that we have in place all the factors that will allow us to continue to do business.”
After Irma, those continuity plans were honed, she said, but Covid-19 has presented new challenges.
“Many of our practitioners were able to relocate temporarily to other jurisdictions [post Irma], but that might be a challenge in the Covid-19
area,” Ms. Donovan explained. “So we have to look at more self-sufficiency and more self-reliance internally [such as] positioning our telecommunications services to ensure more sustainability and resilience.”
Already this year, the territory has had success with digital services, digital marketing and digital court systems, all of which help keep the industry humming, even with offices closed and employees working
from home.
“I think the BVI financial services industry has continued to be very resilient in the face of any adversity we’ve seen that we’ve been able to adapt readily to remote working,” Ms. Donovan explained.
Successive governments, she said, have made inroads into fintech and the digital economy, hosting symposia and this year introducing a fintech sandbox regime, enabling startups to innovate with fewer regulatory burdens.
“We are fully into the digital disruption which has been accelerated by the Covid-19,” she said.
“And I think we ought to really look at the hurricane lens with: How can we do more within the confines of this environment?”