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Ex-Minister: Govt Must Be Gb Tourism's 'Driving Force'

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

An ex-tourism minister yesterday urged the government to become "the driving force for Grand Bahama's resurgence", agreeing that this cannot be left to the private sector.

Obie Wilchcombe, pictured, called on the Minnis administration to seize "a great opportunity" to restructure the island's tourism product and differentiate it from Nassau, arguing that any Grand Lucayan purchase should be viewed as "the beginning of anew" rather than a last resort option.

The former West End MP said there were "too many properties sitting idle" for the Government not to intervene, pointing to the Royal Oasis's near 14-year closure and the Xanadu's search for a buyer as further reasons for its involvement.

Mr Wilchcombe warned against depending on the private sector to lead any Grand Bahama tourism revival, conceding that the former Christie administration - of which he was part - had suffered for doing so. He added that it endured an endless wait for investors to make things happen, only for potential deals to "die".

His call came as the prime minister's press secretary, Anthony Newbold, confirmed Tribune Business's July 12 revelations by revealing that the Wynn Group's proposal to purchase the Grand Lucayan was "unacceptable to the government" and had been "rejected".

While Mr Newbold did not explain the reasons for its rejection, Tribune Business sources previously suggested Wynn had effectively been looking to the Government to finance its $70 million purchase for it through a combination of tax breaks, marketing and airlift subsidies and other concessions.

"Wynn is expecting the Government to pay for it, and they walk in as owner," one contact, speaking on condition of anonymity, previously said. "I can tell you the Government isn't interested in that, and has no choice but to start to look for another buyer immediately."

The Minnis administration is now scrambling to try and find a new Grand Lucayan purchaser within the next 30 days, with the property's current owner, the Hutchison Whampoa offshoot of Cheung Kong (CK) Property Holdings, warning it will close the entire resort by then if no buyer is secured.

Arguing that the Government needed to view the situation as an opportunity, rather than a challenge, Mr Wilchcombe told Tribune Business: "I think the Government has to find a way to capitalise the Hotel Corporation and utilise it to be the driving force for the resurgence of tourism in Grand Bahama.

"There are too many properties sitting idle. We have to think about what exists. I agree with the Prime Minister that the Grand Lucayan is the heart of the tourism plant right now and some effort must be made."

Should the government have to acquire the Grand Lucayan by itself, it will need to find considerably more financing that the $25m set aside in the 2018-2019 budget to fund its acquisition of a minority equity stake - believed to be 20 percent - in Wynn's majority purchase of the property.

Apart from likely having to match Wynn's $70m offer, Tribune Business sources said the government will need at least a further $25-$30m to fund the necessary renovations so the property can re-open.

That will take its total outlay to near $100m, quadruple what is allocated in the budget, and creating a sizeable fiscal hole in its plans that will have to be filled by extra borrowing or re-purposing monies from other areas. Some sources even predicted that between $150-$200m might ultimately be required.

While acknowledging that a government acquisition of the Grand Lucayan was "the last resort" option, Mr Wilchcombe said it could also represent "the beginning of anew".

To reduce any upfront purchase costs, he suggested that the Government seek to lease the resort from CK Property Holdings while also taking an option to purchase. The former minister added that it could also offset any acquisition price by "relaxing" the taxes paid by Hutchison Whampoa's other Grand Bahama interests, such as the Grand Bahama Development Company (DevCo), Freeport Container Port and Freeport Harbour Company.

"The Government needs to have an impact on the tourism industry in Grand Bahama right now," Mr Wilchcombe told Tribune Business, "because we have to appreciate that if nothing happens the tourism appeal is going to be lost, and it will take a lot more time and money to bring Grand Bahama back.

"The Government is going to have to give to get. It's going to have to do that to make that happen. They should let the Hotel Corporation work on getting the entire tourism plant restructured, talk to Carnival about its tourism development in east Grand Bahama, talk to the owners of Xanadu, and look at the Royal Oasis again as a venue for conferences and events.

"I think it's an opportunity, a great opportunity, for the Government to take ownership of the tourism plant in Grand Bahama," the ex-minister continued. "The Government has to take the lead in getting it done, and not take the dependency route like we had done.

"What happened is people came in, we were waiting for them, the wait goes on for ever and it dies. The Government has got to become the driver, getting it done, and doing it in a timeframe that favours it. They can put business people in there to make it work. I think we can do it."

The Grand Lucayan's post-Matthew closure has resulted in much of the property being shuttered for 21 months, causing the loss of over 1,000 jobs and 59 per cent of Grand Bahama's hotel room inventory - effectively taking the island off the stopover tourism map.

CK Property Holdings had been running a sales process for the Grand Lucayan when it was interrupted by Hurricane Matthew. Wynn then emerged as the potential buyer with a $110 million offer just prior to the 2017 general election, but was unable to close the deal. It walked away, and the Minnis administration then revealed its plan to take an ownership stake in a purchasing group.

This prompted Wynn to return with a $70 million all-cash deal, which was accepted by CK Property Holdings. The Government suspended its plan, and the two companies signed a Letter of Intent (LoI) for the Grand Lucayan's purchase just before Christmas 2017.

Dr Minnis suggested then that the purchase would close by end-February 2018, but no deal was forthcoming and the Grand Lucayan's fate has dragged on for five more months with no resolution seemingly in sight.

In the meantime, Wynn has broken ground on its $120 million Goodman's Bay condo-hotel in New Providence, with many observers questioning why the Government allowed this to proceed because it meant surrendering any leverage it had over the Grand Lucayan negotiations.

Tribune Business sources have previously suggested that the former Christie administration encouraged Wynn to look at the Freeport-based resort in return for helping to sort out covenant and zoning restrictions that were then-impeding its Goodman's Bay development.

Comments

proudloudandfnm 1 year ago

This is one dishonest government. They rejected Wynn???? No. They approved Wynn. For a hotel in Nassau. How stupid do they think we are????? Wynn could not afford a quarter of a billion for two hotels. Why do they insist on lying????

Wow...

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BahamaPundit 1 year ago

Yep. It's becoming clear as day that Minnis and his crew are just another PLP government hiding in FNM clothing, and Minnis himself is just another Perry Christie. We voted for change but got more of the same.

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hrysippus 1 year ago

Is it not strange that the poster with the handle Proudloudfnm only posts comments that attack the very party that his name suggests that he supports. I suggest that he is really a plp troll that thinks his negative commentary will gain more traction if thought to be from a fnm supporter.

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tetelestai 1 year ago

Or, he/she really could be a 'hardcore' FNM, who really thought that this iteration of the FNM actually represented positive change for the country...only to be severely disappointed. As, it appears, are most people.

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ThisIsOurs 1 year ago

Not sure how long you've been commenting, but proud is definitely an FNM supporter and was quite vocal about that support in the run up to the election and for quite some time after the election. It's really only been the last few months that they have accepted that something is not right. The actions don't line up with transparency or Bahamians first.

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BahamaLlama 1 year ago

A government cannot create tourism, or create business. It can only provide the best environment for private enterprise to flourish, and the most secure environment for tourists to visit. And that involves getting the absolute hell away from private business - the opposite direction this moron is suggesting.

New rule for government ministers - if you need to take a test to show you can drive a car, you need to pass an economics test to show you can understand how a market works.

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The_Oracle 1 year ago

There are subtle difference between PLP and FNM, Example Corrupt vs. inept, just to think or one quickly. No Obie, Government can do nothing except drive G.B. into a wall, much like they've done with the country. Government is half the equation for G.B's current deplorable state. If however, by private sector you are referring to the GBPA, then no, you cannot depend on them for anything but more of the same. They are quasi-governmental, a "municipal Government in Private hands" Unfortunately they have adopted Government worst practices instead of Private sector best practices, which defies logic and sensibility but stands as a testament to everything that can go wrong, has.

.

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BahamaPundit 1 year ago

Re: The_Oracle I'v thought about the differences between the FNM and PLP too. Please don't use the word "inept" when describing the FNM. Most of them are multimillionaires and fit as a fiddle when it comes to managing their own money. I am of the view that both the FNM and PLP parties have no problem using their office to personally prosper. They believe in party before country. They both value secrecy over transparency. Most importantly, they believe in might makes right and "if you don't get caught, it's not a crime." With all that said and done, the key difference is that the FNM uses construction (road works) and complex business transactions (sale of BTC) to redirect money from the country. The PLP is much more blunt, blatant and go straight for the funds (BOB). So, the two parties differ in the style in which they steal the country's wealth, but I am convinced that both parties spend 95% of their time in office seeing how they can personally prosper during their term.

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ThisIsOurs 1 year ago

"Please don't use the word "inept" when describing the FNM. Most of them are multimillionaires"

Banana Republics are market anomalies. You can get ruch in a number of ways, be a family member of the ruling party, be corrupt, be at the top of the party that governed the country for decades, be willing to pay politicians for lucrative contracts, steal land, have a strangle hold on new business openings...there are any number of ways to get rich in this country that have nothing to do with competence. As far as I can see, Dr Sands and Brent Symonette are the only ones who come out clean, yeah I know Brent Daddy was rich but he seems to be quite savvy himself. I'd add Bannister but I don't know him.

I completely agree with you though, both parties spend their time figuring how to make themselves rich. Watch what Minnis does, he appoints a smart person to the second highest position in the organization so he can talk about promoting Bahamian talent. Then he appoints his stooge to the top position, some dimwit he can order around, or who's compromised/corrupt enough not to ask too many questions or who's to arrogant and happy with a power position to care. Look at Finance.

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The_Oracle 1 year ago

Point Taken BP, and I agree with Thisisours also(last paragraph), but will say I was highlighting their Glaring or highest ranking qualities. Sad thing is they all become overnight Experts once elected/appointed, as if rank bestows knowledge. Nor does wealth denote intelligence, and if derived from stripping someone else or the treasury, a lack of ethics.

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Dawes 1 year ago

If the hotel hasn't worked up to know there is no point in Government owning it. There has to be an underlying reason hotels don't work in Freeport, if they don''t fix that we are just going to have another money sucking corporation being paid for by the Bahamian people.

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TheMadHatter 1 year ago

The FNM in dealing with Grand Bahama needs to:

1) Get into no more deals or loans or lease to own or anything whatsover with any Chinese or anyone related to Chinese;

2) Concentrate 100% on the development of East End primarily and West End secondly and fully ignore the Freeport Port Authority zone. Remove all Govt restrictions on the Port so they cannot point fingers at Govt for their failure and after such removal set about on a weekly basis to point out publicly in the newspapers and on television EVERY FAILURE by the Port to develop Freeport. Every week. Meanwhile showing them how it's done with success story after success story in East End.

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