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Near-30% Pt Occupancy Rise 'Good For Us, Bad For Freeport'

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A MAJOR Freeport hotel says its near-30 percentage point increase in annual occupancy rates is "good for us but bad for the destination", which needs to be "made relevant again".

Magnus Alnebeck, Pelican Bay's managing director, told Tribune Business that the resort had just enjoyed "the best year-and-a-half ever" in its history even though the city's tourism market is effectively non-existent.

Pointing out that Freeport stands to miss three 'winter seasons' based on the Grand Lucayan's projected re-opening timeline, he warned that the island faced a major challenge to put itself "back on the map" with the travel industry, airlines and potential leisure visitors.

While Pelican Bay and other properties, such as Viva Fortuna, have benefited from the Grand Lucayan's two-and-a-half year closure driving visitor traffic to their doors, Mr Alnebeck said this meant the city's room inventory levels were woefully inadequate to support even reduced business levels.

He revealed that the Grand Bahama Shipyard was having to accommodate expatriate workers "on ships" whenever they were required for a vessel refit, while the reduction in American Airlines' service from Miami had sometimes pushed round-trip air fares as high as $1,300 for a short flight.

Mr Alnebeck said he understood the Government was "very close to having a deal done any minute now" for the Grand Lucayan's re-opening, something that was confirmed by Tribune Business sources familiar with the negotiations.

The Pelican Bay chief, though, warned that the Minnis administration and prospective purchaser needed to have a post-completion strategy for resurrecting Freeport's image as a major tourist destination, with much hinging on the identity of the resort's purchaser.

"The interesting thing is the majority of the Grand Lucayan will not be open for this winter season, which means it will already have been out for three winter seasons," Mr Alnebeck told Tribune Business. "It will be two-and-a-half years and three winter seasons that it's been out.

"We're going to end up being off the map for three of the winter seasons, and that's going to need some engagement to get us back on the map and be relevant again. It's going to be a challenge. Hopefully they can come up with a solution that we feel will get us back on the map. "They need to find an operator that can come in with a solid product, and the airlift and marketing, and hit it in one go. The only such operator I can see at the moment is Sunwing. At the present moment there is no reason to speak to an airline about adding airlift. They say: 'Come back when you are open'."

Tribune Business sources have disclosed that the current strategy is to re-open the property formerly operated by Sunwing's affiliate, Memories, by October this year. The Grand Lucayan's remaining two properties, Breaker's Cay and Lighthouse Pointe, both suffered more damage from Hurricane Matthew, and March 2019 is being targeted for their re-opening.

Contacts familiar with negotiations confirmed these timelines are correct, but both are dependent on the Grand Lucayan's sale being closed imminently. The Toronto-based Wynn Group signed a Letter of Intent (LOI) for the purchase pre-Christmas 2017, and this newspaper was told late last week that its deal - while yet to close - remains "on track".

However, Tribune Business was told that rival purchasers have surfaced, giving the Government a 'Plan B' option and alternatives should Wynn be unable to 'seal the deal' with Cheung Kong Property Holdings, the Grand Lucayan's owner, and the company into which Hutchison Whampoa spun-off all its real estate-related assets.

And Bradley Roberts, the former Progressive Liberal Party (PLP) chairman, last night suggested that the Grand Lucayan sale was off and that "negotiations have fallen flat".

"It has come to my attention that the now infamous on again, off again sale of the Lucaya Hotel complex in Grand Bahama is now off again, and the properties are back on the international market for sale," he said, without producing any evidence.

Mr Alnebeck recalled how Sunwing/Memories had pledged to re-open within three months of Hurricane Matthew in October 2016, provided Cheung Kong Property Holdings - as landlords - carried out the necessary repairs. This never occurred.

The subsequent closure resulted in near-600 jobs losses at Memories, and the loss of 1,100 rooms - some 59 per cent of Grand Bahama's total inventory. While the fall-out may have boosted other Freeport resorts, Mr Alnebeck conceded it had done nothing for the destination.

"There isn't really a tourist market here at the moment," he told Tribune Business. "Pelican Bay has had its best year-and-a-half ever, but our tourist business is actually down.

"The only thing we have is the Celebration coming in with passengers, but even they are having challenges selling overnight packages because there are not enough hotel rooms open.

"We don't have enough rooms for the corporate market. When the Shipyard is doing a big refit, they are struggling to find rooms and are keeping people on a ship instead."

Mr Alnebeck, showing how much Pelican Bay's business has grown post-Matthew, revealed that the resort's annual occupancies are now close to 80 per cent compared to the 40-50 per cent averages enjoyed before the storm.

"It's been extremely strong," he told this newspaper. "We've done very well except for the usual problems in October, which is always a slow month in Grand Bahama for tourism and corporate business.

"We're running on a yearly basis close to 80 per cent occupancies. Before that we were doing in the low 50s to high 40 per cents. It's good for us, but horrible for the destination."

Mr Alnebeck said Pelican Bay's corporate guests tended to focus their spending on rooms and rental cars, rather than distributing this to the retailers and restaurants like the missing leisure travellers.

Sunwing and its affiliates, Memories and Vacation Express, offer a vertically-integrated airlift, tour operator and hotel solution that is better able to control its costs - something that is critical in an expensive destination such as the Bahamas.

Vacation Express is resuming the summer airlift programme that it dropped in 2017 due to a lack of room inventory following the Grand Lucayan's closure, and Mr Alnebeck said Pelican Bay was doing everything possible to support the relaunch.

"We're trying to help them as much as we can," he told Tribune Business. "They [Vacation Express] called me yesterday and begged me to open up dates we'd closed out, and I did it as they are the only thing keeping us on the tourist map at the moment."

Mr Alnebeck said American Airlines had dropped its Miami-Freeport service from four flights per day to two, and reduce the size of its aircraft, due to lack of tourist traffic and demand. This, he added, had pushed round trip air fares as high as $1,300 - especially when flights were full due to Grand Bahama Shipyard workers.

Sources familiar with the Grand Lucayan negotiations told Tribune Business the Government is deliberately 'not counting its chickens before they are hatched', as it wants to avoid the premature release of any details in case the deal does not happen.

This newspaper was informed that the Minnis administration is taking a deliberate, painstaking approach to reviving Freeport's 'anchor property' in a bid to create a sustainable destination product that will enable the Grand Lucayan strip to 'stand on its own two feet' and compete with the likes of Nassau/Paradise Island.

"Things are very close to completion, but at the same time the attitude is: 'It isn't over until it's over'," one source told Tribune Business. "There's some pretty exciting stuff about to happen, but it ain't over till it's over.

"Grand Bahama has been the secondary destination in the Bahamas for a long period of time, and there's a good prospect now it will be able to stand on its own and compete with Nassau/Paradise Island and the region.

"The reason for a lot of the lack of success in Grand Bahama is a lack of recognition. You have to be something that's going to compete with that, rather than be inferior to Nassau/Paradise Island. Grand Bahama has enormous potential but it can only be realised when there's a very strong demand, and we think we have found something that will lead to that very strong demand."

The source added that the Government also wanted to end the previous multi-million dollar annual taxpayer subsidies that underwrote Grand Bahama's tourism product and the Grand Lucayan, which at one point hit $29 million.

"Getting out of the subsidy business is very important," they added.

Comments

proudloudandfnm 1 year ago

Correction getting out of hotel subsidies seems important to this government. But an oil terminal that will never see the light of day is a whole other subject.

They better get real and stop the bull. We need our hotels opened NOW!!!!

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