By NEIL HARTNELL
Tribune Business Editor
The Minister of Tourism yesterday expressed relief that top-tier brands were “finally” eyeing Freeport’s solitary casino, with both Hard Rock and Genting’s Resorts World format looking at taking over the property’s management.
Obie Wilchcombe confirmed to Tribune Business that Hard Rock had been brought to the table by Sunwing and its Memories resort brand, while the Government had itself invited Resorts World to look at the Grand Lucayan casino.
He revealed that other parties in discussions over the casino include Margaritaville, the brand inspired by singer Jimmy Buffett, which operates casinos in the US state of Louisiana, and a US-based casino management group.
“Hard Rock has been in with Sunwing, and have been in discussions with us over an involvement in Grand Bahama, inclusive of running the casino,” Mr Wilchcombe told Tribune Business.
He explained that Hard Rock was looking to potentially partner with Sunwing and its Memories resort brand in reviving the Grand Lucayan’s casino, which has gone through several unsuccessful operators over the past decade.
The Minster was responding after Tribune Business asked him about the potential involvement of both Hard Rock and Genting/Resorts World at Freeport’s largest resort property, having been tipped to their interest by well-placed contacts.
Mr Wilchcombe said there were “three other pieces on the table” besides Hard Rock, confirming that Resorts World “has the possibility of being in Grand Bahama”.
“They’re interested more in the casino [than the hotel] by way of invitation from us, by the way,” he added, disclosing that the Government itself had encouraged Resorts World’s interest in Freeport.
The company already operates the casino at the Bimini Bay Resorts, which Mr Wilchcombe said “did very well last year”.
He indicated that there were potential synergies between Resorts World’s Bimini operations and the casino at the Grand Lucayan, given that the company was in discussions over a replacement ferry service that would make trips to both islands.
Mr Wilchcombe indicated that Resorts World was likely to launch the new service in April, and told Tribune Business on the casino: “We want Freeport to be co-branded with some major brands to help it continue on an upward trend.
“Finally, there’s some interest being shown. The casino never really got off to a wonderful start. Once Hutchison Whampoa agreed to it in 2003, 2004, we had a group that did not have the database, did not have the client base.”
That operator was Isle of Capri, which eventually withdrew from Freeport to be replaced by Treasure Bay, another brand that also failed to enjoy success.
“Treasure Bay didn’t have the database,” Mr Wilchcombe added. “We want a brand with a strong client base. All of that is on the table; all of that is up for discussion right now.”
The Minister added that he was due to meet with Sunwing/Memories this week, during which he anticipated receiving an update on their interest in purchasing the Grand Lucaya from Hutchison Whampoa.
Tribune Business understands that while the two sides are technically still at the negotiating table, they are more than $100 million apart on the price that should be paid to acquire the resort.
This newspaper understands that the Hong Kong-based conglomerate is seeking a minimum $230 million for the Grand Lucayan, while Sunwing/Memories are only willing to offer $110 million.
“I think the whole question of price has been an issue,” Mr Wilchcombe told Tribune Business. “Hutchison has always said they have not done well in that hotel, and probably don’t want to be involved in it.”
He added, though, that any purchaser “must be in the ball field with the right price”.
The report by the Government’s international consultants, McKinsey, confirmed that it is seeking a “better owner” for the Grand Lucayan, and suggested Hutchison Whampoa may be prepared to sell for less than $180 million.
McKinsey said Grand Bahama’s hotel product might improve if the Hong Kong conglomerate sold the property to an entity with Caribbean tourism experience.
It added that the Grand Lucayan had incurred consistent operating losses of between $10-$20 million per year since opening in 2001, while Hutchison Whampoa’s interest in the property - and effecting a turnaround - “appears limited”.
Pointing out that the Grand Lucayan’s occupancies (pre-Memories at least) averaged around 49 per cent, compared to an industry average of 75 per cent, McKinsey said: “The owner’s interest appears limited.
“Interviews suggest a lack of operational expertise and insufficient maintenance. Hutchison owns other hotels in Asia, but they are high-end business properties, not resorts. It did not come to Grand Bahama for the hotel.”
Detailing the consequences for Grand Bahama’s overall tourism and hotel product, given that the Grand Lucayan is the largest resort property, McKinsey’s report said: “The largest hotel is owned by Hutchison, which does not appear to have broader ambitions for developing tourism on the island, notably when faced with challenges of expensive airlift and lack of critical mass of other hotels, restaurants and activities on the island.”
The report warned, though, that getting a new owner for the Grand Lucayan was not without difficulties or risk to all involved, including Grand Bahama and its economy.
Apart from finding a new owner/operator with sufficient expertise and knowledge of the Bahamian tourism market, McKinsey added that any sales price needed to satisfy both sides.