The Tribune

EDITOR, The Tribune.

It is unfortunate that the deal to sell the Lucayan hotel in Grand Bahama didn’t work out. The hotel has been closed since Hurricane Matthew late in the hurricane season of 2016.

The hotel closure caused more than 1,000 direct and indirect job losses in Grand Bahama. The FNM government wants it reopened. The last PLP government wanted it reopened. However, it seems no investor wants to pay the price to buy it, fix it and operate it.

The government is now saying it will buy the hotel. It wants to get people back to work and jumpstart Grand Bahama’s economy. That’s admirable but I warn the government to think carefully before pulling the trigger on a purchase.

Buying the hotel is one thing. Does the government have the money to repair and open it? I’ve read speculation in the newspapers that the repair and opening cost could be more than $100m.

After opening, it is the government prepared to pay salaries and energy costs and marketing costs open ended? If no guests are coming would the government be willing to close the hotel or would politics make it keep it open, losing more money?

The best option is to keep trying to find a private sector buyer. The government is better off sweetening the pot through tax breaks and other subsidies. If still no one wants the hotel, then the government and people of Grand Bahama might have to accept a harsh reality: The property is finished as a resort, for now.

A business has to be something desired by others that could at least carry the cost of its operation. When no one wants the product, or the business can’t make money to survive, closure is the best option.

In free market capitalism there are winners and losers. The weak die out and the strong persevere. Keeping alive zombie businesses is dangerous. It’s especially dangerous when a government tries to do it.

Businesses should be run with profit and efficiency in mind. Governments do things to keep the support of voters. When they try to run businesses they often lose lots of money because they don’t want to do the ruthless things necessary to make the business viable.

The government wants to do what is best for Grand Bahamians. What might be best for them is to let that hotel go and continue working on bringing new industry to Grand Bahama.

If the island’s economy were to become vibrant again, some investor might look at the old, over-grown Lucayan hotel and see a business case for purchasing it and fixing it up, or demolishing it and putting something modern in its place.

The government should be careful with what it is about to do. Getting stuck with that hotel might cause serious drain on the treasury at a time when money is tight.

DARWIN R LUTHER

Nassau,

August 7, 2018