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Memories Operator In $110m Group Bid For Grand Lucayan

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government has committed $2.5 million to speeding up repairs on Freeport’s Memories resort, with its operator part of a potential $110 million bid to acquire the Grand Lucayan property.

Obie Wilchcombe, minister of tourism, confirmed the size of the Government (taxpayer) investment in accelerating Memories’ re-opening during a brief interview with Tribune Business yesterday.

And he also affirmed information received by this newspaper last week, namely that Memories and its parent, Sunwing Travel Group, was part of a potential consortium seeking to acquire the Grand Lucayan property from Hutchison Whampoa.

Tribune Business can reveal that Sunwing/Memories is seeking to team with Hard Rock and fellow Canadian-headquartered developer, the Wynn Group, to purchase Freeport’s largest resort property from the Hong Kong-based conglomerate.

Prime Minister Perry Christie alluded to the increased activity surrounding Freeport’s still-closed hotel plant at last Thursday’s Progressive Liberal Party (PLP) candidate ratification ceremony.

Acknowledging that the Government had previously “bragged” about Memories, and its impact on Freeport’s economy and tourism sector, Mr Christie said the Government had “committed millions of dollars” to ensuring the resort opened by April - just in time for a likely general election.

The Prime Minister did not reveal a dollar figure for how much had been committed, how and for what purpose, but Mr Wilchcombe disclosed some of these details yesterday.

“I think it’s about $2.5 million,” he said when contacted by Tribune Business, “to assist in ensuring how we can get things done. We’re trying to move forward the renovations and everything else.”

The Minister of Tourism previously confirmed that Hutchison Whampoa, which is Memories’ landlord as well as the Grand Lucayan’s owner, had been awaiting the proceeds of its Hurricane Matthew insurance claim before starting storm repairs at both properties.

However, Mr Wilchcombe yesterday indicated that Freeport’s hotel product could wait no longer, explaining: “The insurance is taking a while longer than expected, so we’re trying to move things forward more quickly.”

The damage inflicted by Hurricane Matthew has removed 1,500 rooms from Grand Bahama’s hotel room inventory, with Memories totally closed. At the Grand Lucayan, just 200 rooms are open at the Lighthouse Point section, with Breaker’s Cay also entirely closed following the Category Four storm.

The closures have not only negatively impacted stopover tourist arrivals and staff employment but also the wider Grand Bahama tourism economy, especially overnighting cruise passengers and businesses at the Port Lucaya Marketplace.

Hurricane Matthew arrived amid efforts by Hutchison Whampoa’s property arm, Cheung Kong Property Holdings, and its HVS Capital Corporation adviser, to sell the Grand Lucayan - a process that has been underway since early summer 2016.

Mr Wilchcombe yesterday confirmed that Memories/Sunwing was seeking to partner with Hard Rock and the Wynn Group on a joint bid to acquire the entire Grand Lucayan resort - including its own property.

“That’s actually under discussion,” the Minister confirmed, when Tribune Business raised the bid. “Those names have been mentioned, and that group of companies have been considering a partnership to pull the deal off, but it’s not been confirmed yet.”

When asked about the $110 million figure, Mr Wilchcombe added: “That number, it’s somewhere around there.

“They’ve been trying to put a package together to present to Hutchison, and expect to get some return. It wouldn’t be a bad group to put together.”

While Sunwing, through its Blue Diamond affiliate, would provide the hotel management and operational services, Hard Rock would likely be the casino partner.

The Wynn Group, meanwhile, has been interested in the Bahamas for several years, having in 2015 proposed a $65 million condo hotel project at Goodman’s Bay in New Providence.

It was billed as creating 200 construction jobs and a further 150 permanent jobs, but little has been heard from it since, possibly because it was designed to complement Baha Mar.

However, Khaalis Rolle, minister of state for investments, recently praised the Wynn project over its “strategic partnerships with high-end brands’, indicating that it may be back on track.

Meanwhile, K P Turnquest, the FNM’s deputy leader, yesterday suggested the Government’s commitment to the Memories/Grand Lucayan situation might be as high as $20 million, although he did not know whether it would be in the form of a direct cash injection or investment incentives.

He added that he had been informed the Government was also prepared to “bridge the gap” between the price the Memories consortium was willing to pay and what Cheung Kong Property Holdings is seeking.

Unsure of the sums involved, Mr Turnquest said: “We recognise that without the Memories property, we are in a very uncertain position in the tourism sector. We need that property opened, but need to make sure we get a good deal when we do it.”

He urged the Government to provide more information on the extent and nature of its “commitment” to get Memories re-opened, and give details on how many hotel workers would be returned to work and how quickly.

Mr Turnquest also suggested that the Government’s direct intervention was “a desperate move as they realise they’ve done nothing for Grand Bahama, and that they’ve failed the island and failed that hotel”.

Hutchison Whampoa/Cheung Kong Properties have endured sustained losses of $10-$20 million per year since the Grand Lucayan’s 2001 opening.

McKinsey, in its late 2014 report on the options for Freeport’s growth, said the Government was seeking a “better owner” for the Grand Lucayan resort. It suggested Hutchison Whampoa may be prepared to sell for less than $180 million.

The report added that Grand Bahama’s hotel product might improve if the Hong Kong conglomerate sold the property to an entity with Caribbean tourism experience.

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.”

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