Govt to take stake in Grand Lucayan

The Grand Lucayan Resort.

As of Thursday, July 27, 2017

By RASHAD ROLLE

Tribune Staff Reporter

rrolle@tribunemedia.net

PRIME Minister Dr Hubert Minnis revealed in his national address last night the government is negotiating to become temporary joint owners of the Grand Lucayan Resort in Grand Bahama in a bid to boost the hotel until it can sell off its equity.

“The government is now involved in negotiations with the owners of the assets of Grand Lucayan in Grand Bahama and related assets for the joint ownership of those assets in partnership with a number of investors,” he said.

“As was done by the United States during the 2008 Great Recession, my government’s intent is to resuscitate and grow business to the Grand Lucayan as rapidly and as sustainably as possible, and thereafter sell its equity to one of the existing partners or other investors.

“We have no intention of remaining as an owner in the hotel business for any extended period of time. All signs point to the beginning or renovations at the resort within the next month with the facility ready for business for the winter season.”

Dr Minnis did not give specifics about the plan and it is unclear what amount of investment the government is willing to make in the resort.

The nation’s leader said his administration has identified “a number of integrated travel and hospitality companies that can bring quality brands to Grand Bahama but also much needed air transportation.”

Grand Bahama, whose economy has floundered for years, took a big hit after Hurricane Matthew devastated the island last year.

When contacted by The Tribune, former Bahamas Chamber of Commerce and Employers Confederation (BCCEC) Chairman Gowon Bowe emphasised yesterday the government must have a clear entry and exit strategy for seeking to acquire the resort’s assets even as he expressed concerns about its plan to do so.

“Based on what I’ve been told about the cost of renovations required, if the government is prepared to inject that amount of money into it, that is a major investment and there must be a very clear exit and entry strategy,” Mr Bowe said. “It shouldn’t just be a reaction to the current circumstances on the island but should be methodical and well thought out.

“If the government goes in as co-investor, what are the terms? What equity stake are they taking? Will they recover their investment as a priority investor if they sell their stake?

“When we look at history in terms of the Bahamas Hotel Corporation and properties they purchased back in the day, the Nassau Beach, the Wyndham, they didn’t turn out to be success stories because the unfortunate element is government owned assets are perceived to be able to lose money without consequence. When you look at running hotels, it is a costly venture and one that requires having a finger on the pulse,” Mr Bowe continued.

“The government deciding to invest in those types of investments need to have very careful planning. But is this a knee jerk reaction to try to kick start something without a proper strategy to make sure it doesn’t become a burden to the public purse? The better route would be to become a better promoter to get a private transaction done, stimulating interest in initiatives around the economy.”

Nonetheless, Grand Bahama Chamber of Commerce President Mick Holding has encouraged the government to take over the Grand Lucayan “if all else fails,” saying it is crucial to the economy of his island that the resort be open for the winter season.

“It is essential the hotel opens as soon as possible, and whatever it takes to do so should be considered,” he told Tribune Business last week. “If it’s good for the economy of Grand Bahama, how could anyone oppose it?”

Among those said to have considered investing in the Grand Lucayan are former Baha Mar developer Sarkis Izmirlian and ex-South Ocean investor Roger Stein. Other parties said to be interested are Warwick Hotels and Resorts, the owner/operator of the former Holiday Inn on Paradise Island, and a New York-based group.

In his speech Wednesday night, Dr Minnis also said his government is also focused on stimulating growth for smaller hotels throughout the country.

He said he has appointed a National Economic Advisory Council to advise his administration on specific proposals for economic diversification and economic growth.

“I have appointed an Ease of Doing Business Committee, appointed to make speedy recommendations for reducing red tape for domestic and international investors,” Dr Minnis also said.

“In due course, I will announce targeted investment and trade missions to attract international investors, who may want to partner with Bahamian investors in areas such as renewable energy, agriculture, aquaculture and other industries.

“My government is giving consideration in transforming the Hotel Corporation into a Tourism Development Corporation, which will have as its mission diversification within tourism and the development of more boutique resorts in the Family Islands.”

Dr Minnis said his government will introduce incentives for small hotels to use local produce and will also build a native food market for locals and visitors.

There are also plans for the Antiquities, Monuments and Museum Corporation to draw up guidelines for the development of public-private partnerships with respect to public historical and heritage sites.

This will include, after public consultation, the development of fee structures for the sites, Dr Minnis said.

The_Oracle 6 years, 8 months ago

If there are so many "interested" private sector parties sniffing around, why is the Government Jumping in? An "Ease of doing Business" committee is classic oxymoronic. Bad Move.

sealice 6 years, 8 months ago

No one wants to invest because between the PLP and Hutchy Wampy Freeport is dead. People fought to long to control the whole damn thing and now the whole damn thing is junk....

sheeprunner12 6 years, 8 months ago

The Chinese have dumped this hotel .......... So let Sarkis or Freeporters own it now

TalRussell 6 years, 8 months ago

Comrades! Who would have imagined when they marked their 'X' for the red party that ahead of removing VAT from everyday poor and near poor people's 'bread basket' items - that the Minns regime would quickly reach back for the days of the PLP's Bahamaland Hotel Corporation's past - to get back into the Hotel Ownership Business?
Comrade PM, where in the hell are the BILLIONS Dollars in foreign investments that you and your red colleagues were all over the Bahamalnd - promising would be prepared to invest - but not under the PLP government? Lies and more damn election lies. Certainly, It's not the time for your loyal Freporter's - who voted all red on May 10, 2017. Comrades, except go lock citizens up, chase after poor and near poor people for student loans, done borrowed close BILLION Dollars, reduce operating costs buhiness owners, spend millions dollars (all not tendered) on Audits - what in hell else has this red regime achieved?
Comrades, there is an urgency brewing if you're done 'near poor' and don't want be relegated to down 'poor statu' - under this red shirts regime.

sheeprunner12 6 years, 8 months ago

Tal and the PLPs can have all kind of smart comebacks from Minnis' speech ........ but it doesn't change the fact that the PLP Cabinet wasted at least $2Billion during its last term taking care of themselves, friends, families and lovers ............. The FNM Cabinet must do what it is doing now to save the State

birdiestrachan 6 years, 8 months ago

I hope he knows what he is doing. He said the Government and other interested parties. It can not be the web shop owners, because he was against them. I hope it works for Grand Bahama. Government can end up putting money in a sink hole. The owners of the hotel have money and they should have had insurance .What happened to the Whyn group.?

themessenger 6 years, 8 months ago

Speaking of sink holes Birdie, what would you call BAMSI? Dey gat all kinda Sink Hole, Ocean Hole an PLP a..holes in da Big Yard . Maybe if Doc dem had some a dat $80 million the Gray Grinder dem put in dat sink hole dey could better afford to bail dem poor Grand Bahamian people out dat toilet. By the way PLP's live in Freeport too.

birdiestrachan 6 years, 8 months ago

Sheep runner did doc say where he was going to get the money from to invest into the hotel? it is going to be a lot of money/

TalRussell 6 years, 8 months ago

Comrades! - You casually talk about the government's money. It's the Freeporter's taxpayers' that IS NOT being asked to invest their money in some failed hotel venture. All hell was ready be unleashed when the red shirts were warning the PLP government - not to get involved ownership at Baha Mar.

killemwitdakno 6 years, 8 months ago

Co invest?? And they're still going to wear you down for port concessions?

Trade. Damn scums.

Kots 6 years, 8 months ago

Hopefully the government will put pressure on the owners of Xanadu as well. The hotel is just sitting there. With such a beauticul beach there is no reason why pressure isn't being placed on reopening this grand resort at the same time which will help breathe life into this section of Freeport again. There needs ro be a focus on reopening the Grand Lucayan and Xanadu (which is Bahamian owned) and then go after Harcourt to redevelop the Princess resort. Let's make grand bahama grand again.

banker 6 years, 8 months ago

Oh for fook's sake - the Grand Lucayan is a jinxed property, just like the Atlantik Beach Hotel before it, and just like Silver Sands up the road from it, that is now a gang and drug hangout. Freeport een a tourist location.

A good corollary is some gas stations that you see around town. They never seem to prosper. It is almost like the location is jinxed or something. They open up to great fanfare, and then months later they shut down. Someone opens them up again with hand painted signs and they shut again. It is almost as if the location is cursed. Freeport is like that. Look at the casino and International Bazaar -- it is a ghetto. Some of the luxury shops like Versace still have the pillars and signs and are rotting.

Freeport needs to be taken away from its owners and a special economic zone needs to be created where anyone can come and create a knowledge-based business, for free with work permits. Freeport is a total bust as a tourism attraction, and the government taking a stake in the hotel is throwing good money after bad.

This is what I meant when I said that the Minnisites do not have a clue on how to future-proof the country. They are trying to sell the same old tired chestnuts, and they will fail and we will be further behind. I know that the government has been pitched visions of transformations, but either they are too proud or too ignorant to act on them.

Taking a stake in this hotel is wrong. As someone stated on another page, the government should not be in business. They should be complete servants to business, not be in it.

Economist 6 years, 8 months ago

The only way this will work is if they take Bankers idea of encouraging foreign companies to set up.

They will need and support facilities such a food stores other local retailers, restaurants and hotels (they will invite friends and colleagues to come).

That should make the hotel viable and provide the Government with an exit strategy.

John 6 years, 8 months ago

Government should then make those shares exclusively available to Bahamians. This is one way Bahamians can begin to take control of their economy. Remember when Atlantis made shares available to Bahamians. Then they quickly bought the shares back. They claimed they took the company (back) private because they didn't want persons to take control of the company VI's a VI's the New York stock exchange. Or was it that Kerzner did not want the public to know what Atlantis was really making. And in the end he still lost ownership.

banker 6 years, 8 months ago

John, you wouldn't want shares in Bahamian tourism. You would lose your money. Take a look at the stats -- it's been a downward spiral. The only thing that would save it, is a massive investment in experiential tourism.

The guy that sits next to me now, has both a son and a daughter who are millennials. His two kids, and their boyfriend and girlfriend just came back from a trip to Costa Rica. They were zip-lining in the tropical forest canopy birdwatching and doing the ecology thing. It was eco-tourism mixed with Aztec/Inca culture. During the day, they zip-lined and during the night they made primitive pottery around a campfire all the while a shaman told them stories about aboriginal beliefs. There is no way these kids with (parent's) money would visit Baha Mar or the Grand Lucayan.

We need to develop experiential tourism if we want to keep the industry alive.

sheeprunner12 6 years, 8 months ago

Banker .......... that is what tourists get when they visit the real Out Islands ...... But we have an airlift and fees efficiency problem that makes it more expensive than a Costa Rica ........ The silo tourism product is obsolete

baldbeardedbahamian 6 years, 8 months ago

A government run hotel what a great idea, it is bound to make lots of money. Perhaps we could try a government run airline or radio station, they too would be bound to make lots of money for the government. Wouldn't they?

TalRussell 6 years, 8 months ago

Comrades! Even I would'na thought get out the 'Loss Free Enterprise Economy Flashcards' under a Red Shirts Regime. It will be fun to watch how "Mr. Baha Mar's Free Enterprise-er" and former Izmirlian Director, Tourism Minister Dionisio goin attempt to use one his Big Boy machines to wash, dry and press and iron this anti-capitalist communist Freeport move clean? Had PM Christie and his AG even attempted such a bold Bar Mar move - Minnis,'KP,' Brent and Dionisio - would've lead a street march calling for the imprisonment the PM and his entire PLP cabinet. {No, not even The Comrade - could've made this one up that the Red Shirts Regime would sign-off to kill what little is left Freeport's Free Enterprise System }.

DDK 6 years, 8 months ago

BID BAD IDEA! I thought we were on an austerity drive. Whose time is it?

sheeprunner12 6 years, 8 months ago

The government has to find a way to stimulate the private sector while making the public sector more lean and efficient .......... it starts with CONFIDENCE Transparency and accountability will go a long, long way .... This is not austerity per se .......... This is cutting the PLP pork

birdiestrachan 6 years, 8 months ago

Banker no lie. They say the property was stolen from a poor black woman. Dead and gone many years ago . But she up and down through Our Lucaya. A white woman painted a picture of her A black woman very, very black with a broad brim straw hat, It was the ghost of the former owner. "A GHOST STORY" But I love it. told to me by Bahamian she was serious It made me laugh I enjoyed the story . I d not believe in Ghost. But you may have a point. As to why the hotel never succeeds.

TalRussell 6 years, 8 months ago

Comrades! If The Hawksbill Creek Agreement was an agreement signed in 1955 between the government of Sir Stafford Sands and' ex convict' Wallace Groves to establish a city and free trade zone on Grand Bahama Island - that never was intended to spur economic development that would include native Freeporter''s - much less to include the rest the populations from the islands..... Then why would anyone native to the Bahamaland - expect it to do in 2017 - what it was never intended to do in 1955?
To those Comrades who have and continue to live under the constraints bubble of the 1955 Hawksbill Creek Agreement - thy're too well familiar that although both are long dead - the ghosts Sir Stafford and Groves - still hangs over Freeport. Foreigners still play a major role in disciplining what the natives can do and not do in Freeport.

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