The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

The Grand Celebration’s owner has warned that its restructuring hinges on a new agreement with the Ministry of Tourism, and that a pull-out from Grand Bahama would be a “worst case scenario” which costs the Grand Lucayan 50 per cent of its pre-Matthew business.

David Johnson, a former Bahamas tourism director-general and consultant to Bahamas Paradise Cruise Line, said the company’s return to this nation might be “temporary”, as it was having “some challenges” in talks with the Government.

He warned that failure to reach an agreement with the Christie administration might cost the potential sale of the Grand Celebration, and “have a negative impact on tourism” at the worst possible time for Grand Bahama.

Giving an insight into the economic devastation that might be created, Mr Johnson said the Grand Celebration brought 280,000 passengers to Grand Bahama annually, with 100,000 or more than one-third staying overnight in a hotel.

He added that the Grand Lucayan would be “deeply harmed” if the Grand Celebration did not return, as the vessel’s ‘overnighting’ passengers accounted for 50 per cent of its pre-hurricane business.

Between Grand Celebration and Sunwing/Memories, Mr Johnson said 80 per cent of Grand Bahama’s tourism business was accounted for.

He told Tribune Business that Hurricane Matthew had “dried up our business” to Grand Bahama and, with “no hotels to go to”, the company had steered its vessel to Bimini until repairs to the Grand Lucayan are completed and it can return. That return is slated for January 13, 2017.

“The company is in the process of negotiating a sale of the ship, the Grand Celebration,” Mr Johnson confirmed. “The existing owners still own Holiday Cruise Line, the tour company. They’re selling the ship to veterans in the cruise industry, although I can’t name them at this time.

“The Government, and our key partners in Grand Bahama, are aware that we are looking to restructure the company so that there are two engines as opposed to one core group trying to do both, so that we can be more successful.”

Mr Johnson continued: “The restructuring is also a recapitalisation to allow us to heal our wounds from the hurricane and plan a staged growth going forward.

“We are in sensitive negotiations with the Government. We are at a point where we thought that we should say to our vendors that we are having some challenges and our return could be temporary.

“We have not completed our restructuring, which is hinged to reaching an understanding with the Ministry of Tourism, and we are hopeful that that can be quickly resolved. The failure to reach an acceptable arrangement for both parties could impact our restructuring, could cost us the sale and could have a negative impact on tourism at a difficult juncture on Grand Bahama.”

Many cruise lines receive funds from the Government via the Ministry of Tourism, which are tied to the rebates they get for the volume of passengers they bring to the Bahamas.

Mr Johnson said Bahamas Paradise Cruise Line was looking to assign its current agreement with the Government to the purchaser on the same terms. That agreement is in its third year, and the company is looking to extend it two more years.

Mr Johnson added that Grand Celebration brings around 280,000 visitors to Grand Bahama per year, with close to 100,000 staying in a hotel, unlike most cruise lines.

The 280,000 annual visitors are up from the 225,000-230,000 its smaller Bahamas Celebration cruise vessel facilitated. The company operated that ship for six years until it ran aground off Grand Bahama in November 2014.

“The Grand Lucayan is the biggest recipient of our business. We are at least 50 percent of their total business, and they would be deeply harmed if we didn’t return,” Mr Johnson told Tribune Business.

“Worst case scenario is pull-out. We are a big reason for Grand Bahama’s rebound in 2015 when the Canadian market slowed down; our business stayed strong.”

Mr Johnson said the Grand Celebration, along with Sunwing, generates almost 80 per cent of the tourism business in Grand Bahama.

“Our commitment with the purchasers is that they would be there for the next five to 10 years,” he told Tribune Business. “Regarding the agreement we have now with the Government, it’s just the question of it being assigned to the new owners on the same terms.

“There are three years on that agreement right now, and we would wish that it be extended for two years. Those are the details we are waiting for the Government’s concurrence on. We are hopeful we will get it. We are not looking at any extraordinary new arrangement.”

Under an agreement between Bahamas Paradise Cruise Line and the purchaser, there is a commitment to keep the ship in Grand Bahama for 10 years regardless of what arrangement is made with the Government.

“The destination, as a result of reaching a mutually satisfactory agreement with the Government, would be assured of 10 more years of the cruise line operating in Grand Bahama, and maybe even a second ship, because the business model calls for a second ship to have even greater economies of scale,” said Mr Johnson.