The Tribune

By NEIL HARTNELL Tribune Business Editor All Grand Bahamians need to realise the Grand Lucayan resort is in a "perilous position", a senior Hutchison Whampoa executive told Tribune Business yesterday, adding that the Hong Kong-based conglomerate was "frankly desperate" to reduce the property's power bill. In an e-mail, reproduced on Page 3B in Tribune Business today, Dr John Meredith, group managing director for Hutchison Port Holdings, said it was "a tribute" to the Hong Kong conglomerate that it had subsidised the Grand Lucayan's "heavy annual losses" - amounting to "tens of million dollars" annually - for so long. "We have from the start been quite open as to the level of losses sustained at the hotel, which amount annually to some tens of millions of dollars," he told Tribune Business. "As we all know, any other local establishment losing that amount would have closed years ago, and it is a tribute to the group that it has kept the hotels open despite these heavy annual losses." While some "minimal inroad" had been made into these losses, after responsibility for the Grand Lucayan was placed under Hutchison's Port group, Dr Meredith told Tribune Business more needed to be done. "We have, by careful husbandry, reduced our power bill, but not nearly enough to make a material difference, and we are frankly desperate to seek a way to lower electricity costs at the resort," Dr Meredith revealed. "We have also reduced costs by closing the Reef hotel. This has had a negative impact on the local community, and we would love to see it reopened, subject to improved visitor numbers. To effect this we would need to put in place a competitive regime, and that can only come about through the support of all involved, and in particular those working in this industry." Then, in what could be interpreted as a warning that Hutchison might close the Grand Lucayan if its heavy loss-making was not turned around, Dr Meredith said: "When all is said and done, we need to meet the needs of our shareholders', and that means returning the properties to a sustainable positive bottom line. "We are now at a point where everyone who has an interest in the future of Grand Bahama island needs to realize the perilous position the resort faces, and to acknowledge the historical support of the investors and what is needed to continue that support." Dr Meredith's e-mail said it represented his personal views, and were not those of Hutchison Port Holdings, but the concerns are clear. It appears to have been prompted by Tribune Business's article on Friday, which addressed the Grand Lucayan's situation. He also confirmed that Hutchison was exploring new markets in Europe, Latin America and Asia in a bid to turn the Grand Lucayan around, as well as the fact that Hutchison's Ports group has taken responsibility for the hotel following a restructuring that aimed to cut costs. "We have, as reported, attempted to reduce costs whilst at the same time seeking new markets. This has not been easy in the current economic climate, but we are trying our best and have made fledgling efforts to attract visitors from Latin America, European and even Far East originations," Dr Meredith told Tribune Business. "As you will also be aware, in order to see whether, through cost sharing between the various Hutchison entities, it might be possible to turn around the hotels, I became involved with a somewhat larger portfolio earlier this year." Gary Gilbert, the Freeport Container Port's (FCP) chief executive, told Tribune Business on Friday that the consolidation of the Grand Lucayan's operations into the Manor House property had slashed the resort's electricity bill. March's downsizing, which saw the lay-off of some 200 workers, reduced the Grand Lucayan from 1,200 to 500 rooms, and the staff to 550 full-time and 200 contracted employees. Mr Gilbert said: "We've significantly reduced the losses already through a strong focus on the cost structure. "Have we turned it around? Have we taken it to profitability yet? No, but we've done a number of things to stem the losses. "We've been able to save a significant amount of money, significant, but we are still not at a profitable state."