The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Freeport timeshare resort is blaming the loss of “about 80 per cent” of its business on the 15-year failure of successive Royal Oasis owners to live up to their access and amenity provision obligations.

Jack Grobowsky, Freeport Resort & Club’s president, told Tribune Business he had seen his timeshare unit owners dwindle from 1,800 to around 500 today after losing their ‘right of way’ across Sunrise Highway and access to the Bahamia Beach Club and golf courses.

He added that Freeport Resort & Club has had “to quit marketing” its product as a result, and accused both the Government and Grand Bahama Port Authority (GBPA) of giving two consecutive Royal Oasis owners - Driftwood Hospitality (Freeport) and Harcourt Developments - “a pass” on their obligations to his clients.

Detailing the “damage” to his own business interests, Mr Grobowsky said the saga had also hurt Freeport’s timeshare industry and wider economy.

He estimated that his clients, all annual vacation returners, had injected at least $100 million into the city’s economy over a 37-year period - a spend that has shrunk every year since the millennium.

Mr Grobowsky, a 37-year investor in Freeport, explained that he was induced to purchase several lots in the Bahamian subdivision by a Canadian realtor that marketed the opportunity on behalf of then-Royal Oasis owner, Princess International.

To obtain approval to solicit such investments in Canada, the sales prospectus had to be filed and registered with the Ontario state government.

This occurred in September 1977, and Mr Grobowsky said lawyers had advised him that several of its terms represented binding legal obligations that remain in effect until today.

These gave purchasers, including Freeport Resort & Club’s timeshare owners, access to the two Royal Oasis golf courses, the Bahamia Beach Club and associated facilities.

Mr Grobowsky said these attractions encouraged him to develop his timeshare business, along with a 1981 easement agreement with the Grand Bahama Port Authority (GBPA) that created a 500-yard ‘right of access’ across Sunrise Highway to the shops in the International Bazaar.

He told Tribune Business that problems only started to occur upon Driftwood’s ill-fated purchase of the Royal Oasis from Princess in 2000.

Apart from failing to rebuild the Bahamia Beach Club, Mr Grobowsky said Driftwood’s takeover resulted in increased gold course rates and reduced benefits, and an increase in land service charges in the Bahamian subdivision by 60 per cent.

His timeshare owners also lost access to both golf courses upon their closure in 2004, as Driftwood ‘cut and ran’ from Freeport, picking up the hurricane insurance monies while simultaneously shutting the Royal Oasis and leaving behind around $25 million in debts.

Mr Grobowsky, though, said that equally as damaging was the GBPA’s 2002 decision to divert the Sunrise Highway so Driftwood could build a man-made beach for its hotel guests.

This eliminated Freeport Resort & Club’s ‘right of way’, making trips to the International Bazaar “seven times’ longer”. Mr Grobowsky summed it up thus: “It screwed us on our access; our shopping access.”

Although Driftwood and its financier, Lehman Brothers, ultimately sold the Royal Oasis to Harcourt Developments in 2007, the Canadian businessman said the Irish-headquartered property developer had done little to restore the rights previously enjoyed by Freeport Resort & Club’s timeshare owners.

“We’ve lost about 80 per cent of our business since 2000-2001,” Mr Grobowsky told Tribune Business. “We’re now down to about 500 owners, when we previously had about 1,800, with an average of three per family.

“Most of them would like to come back, but don’t come back. This year we’re getting about $600,000 less in revenues than we did before the big problems happened.

“The owners are dropping on me, quitting on me. I have offered to the Port, and also to the Government, that if you would just enforce the obligations of the prospectus and come good on the easement agreement, you don’t have to be in default. I don’t know why they can’t see the light.”

Mr Grobowsky told Tribune Business he had been left with no alternative but to take his plight public, after some 1,700 letters written by himself and his clients to successive Bahamian governments gained no response.

He added that litigation in the Supreme Court, via the late 2011-early 2012 action he launched against Driftwood, Harcourt and the GBPA, had also failed to bring the desired resolution.

GBPA senior executives, Mr Growbowsky said, were also refusing to discuss the situation with himself and his clients on the grounds that the matter was before the courts.

“I’ve been trying for 15 years,” the businessman said. “I’ve been very patient. People just have to know what their leaders are doing to the economy.

“I went into this with eyes wide open and got knocked off off my feet. My business is damaged, and I have had no timeshare owners for the last three weeks. Most of them have quit.

“I had to quit marketing several years ago because the product is so diluted, and I’m not going to delude the buyers.”

Turning to the wider impact, Mr Growbosky added: “Some 1,200 of our 1,800 unit week timeshare owners were denied these benefits, so quit coming on vacation.

“Not only did this negatively impact Freeport Resort & Club’s developer’s ability to keep the resort operating, but it has substantially increased the costs to vacation at Freeport Resort & Club along with substantial reductions in promised benefits.

“Freeport Resort & Club has been forced to sell/close down and stop operating as a result.”

Mr Grobowsky added that 93 per cent of his timeshare owners came from the US, as he blamed the failure to enforce what he described as legally-binding provisions in the Ontario prospectus and the easement agreement for his business’s demise.

He took his grievances before the Government-appointed Hawksbill Creek Agreement Review Committee on March 10 this year. It is possible that this led the committee, as revealed in an e-mail by Harcourt’s attorney, Kirk Antoni, to grill himself and the company’s Bahamian ‘point man’, Donald Archer, on precisely what the Irish company plans to do with the Royal Oasis.

Mr Growbowsky complained that Harcourt failed to recognise the denial of amenities that his clients had suffered after it completed its $33 million purchase of the 425-acre, 1,000-room Royal Oasis property in 2007.

And he argued that successive governments had given the Irish property developer “a pass” on its obligations both under the purchase and to Freeport Resort & Club.

Freeport’s economy nosedived from late 2004 onwards as a result of Driftwood’s decision to close the property, which cost 1,300 direct - and probably more indirect - jobs.

The city has never fully recovered from that, with the Royal Oasis closure subsequently exacerbated by events such as Edward St George’s passing and the four-year shareholder feud that divided the GBPA.

Harcourt has yet to make clear what it intends to do with the Royal Oasis. The 2008-2009 financial crisis and subsequent recession, coupled with its own highly leveraged position, saw it place the resort into ‘cold storage’ - a position from which it has yet to emerge.