The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Struggling retailers in the Port Lucaya area are demanding that the Government “hold Hutchison Whampoa’s feet to the fire” and claw back the 20-year extension of its tax breaks, should it fail to co-operate in solving Grand Bahama’s economic woes.

David Fingland, proprietor of The Jewellery Box, which is set to close on April 1 after 25 years, told Tribune Business that the Christie administration needed to overcome its seeming “reluctance” to put pressure on the Grand Lucayan’s owner.

“The Government need to hold Hutchison’s feet to the fire,” he said. “They’ve just given them an automatic 20-year extension under the Hawksbill Creek Agreement with no taxes.

“They should tell them to get a new operator in there [the Grand Lucayan] and get this place going, or you’ll lose those tax concessions. The Government needs to hold their feet to the fire, but they seem reluctant to do that.”

Mr Fingland’s comments were echoed by Christopher Paine, a retail tenant in the Grand Lucayan itself, who said it was “obvious” that a Grand Lucayan sale was the only way to revive Freeport’s fading resort and tourism product.

“Myself, and I’m sure many other tenants in the area, be they hotel or Port Lucaya tenants, are hoping Hutchison will come to the table and do a deal,” Mr Paine told Tribune Business.

“That’s obviously the thing that has to happen. We’ve already lost the winter tourism season, and summer is going to be pretty bleak if things stay the way they are.

“If there’s a deal done soon, there may be a chance of getting business back on track by next winter. That’s the best I can see it at the moment. It’s really, really poor. We’re sucking air at the moment.”

Many Freeport businesses and residents see Hutchison Whampoa as the major culprit for the loss of 1,500 hotel rooms post-Hurricane Matthew, especially after Memories’ parent, Sunwing, blamed its resistance and lack of co-operation over storm repairs for its pull-out - a move that has cost Grand Bahama between 500-600 jobs.

The Hong Kong-based conglomerate has maintained a stony silence despite the criticism being levelled against it on Grand Bahama, where it is the island’s largest investor, with around $1 billion sunk into the Freeport Container Port, Grand Bahama Development Company (DevCo), Freeport Harbour Company and the Grand Bahama Airport Company besides the resort

Prime Minister Perry Christie, in his first public comments on Grand Bahama’s woes following Memories’ pull-out, gave an upbeat assessment of the situation last night.

He said the Government was “firing on all cylinders on Grand Bahama”, confirming it was still talking to Sunwing/Memories, although he made no mention of the key player - Hutchison Whampoa.

Mr Christie also confirmed previous exclusive Tribune Business revelations that the Canadian-based real estate developer, the Wynn Group, was seeking to acquire the Grand Lucayan.

The Prime Minister said he was talking to Paul Wynn, the company’s principal, while also referring to its proposed $65 million condominium development at Goodman’s Bay in Nassau.

Tribune Business previously reported that Wynn, together with Memories and Hard Rock, had submitted a $110 million offer to acquire the Grand Lucayan, a bid that is said to be still ‘on the table’ and awaiting a reply from Hutchison Whampoa.

Sunwing has already made clear its interest in returning to Grand Bahama with Memories as a hotel operator, but this will not happen for as long as Hutchison Whampoa remains its landlord as the Grand Lucayan’s owner.

Messrs Fingland and Paine’s calls for a tougher approach by the Government will likely be supported by many on Grand Bahama, with prominent attorney, Terence Gape, already having urged such an approach.

However, there are several reasons why the Government is likely to resist taking such action, not least the need for Hutchison Whampoa to give a ‘waiver’ of its port monopoly on Grand Bahama to facilitate Carnival’s $200 million cruise port in the island’s east.

Mr Christie said the Government would likely sign the agreement with Carnival next week, and the promised $300 million Phase V Container Port expansion is another factor likely to influence his administration’s talks with Hutchison Whampoa.

Many Grand Bahama residents, though, are especially upset about the conglomerate’s failure to start hurricane repairs more than four months since Matthew’s passage, the excuse being that it is waiting on the insurance claim to be resolved.

Exacerbating anti-Hutchison Whampoa sentiment is its pocketing millions of dollars in tax concessions from the Government just last summer.

The Government, as part of efforts to restructure its relationship with the Grand Bahama Port Authority (GBPA), granted the Hong Kong-based conglomerate and all its Bahamian subsidiaries a ‘blanket’ 20-year extension of their real property tax, income and capital gains tax exemptions.

In contrast, all Bahamian and other foreign investors in Freeport have to apply to receive the same incentives, and these are reviewable every five years as the Government seeks to tie tax breaks to ‘performance’.

Hutchison Whampoa has yet to demonstrate its gratitude by beginning essential repairs in earnest, which is having knock-on effects for all of Freeport and Grand Bahama.

Many observers, and members of Freeport’s private sector, have privately confided to Tribune Business their belief that the Government gave up all its leverage over Hutchison Whampoa in return for the cruise port waiver (to facilitate Carnival’s project) and the $300 million Phase V container port expansion.

There was a widespread feeling that the imposition of real property tax would have forced the Grand Bahama Development Company (DevCo), 50 per cent owned and managed by Hutchison Whampoa, to become proactive and start developing its 70,000-80,000 acres in order to offset the new ‘carrying cost’.