By RASHAD ROLLE
Tribune Staff Reporter
WITHOUT iron-clad agreements in place to ensure private companies will manage the Grand Lucayan resort and bring in guests, it would make no sense for the government to buy the resort, a former Cabinet minister said yesterday.
However, in a separate interview, Gowon Bowe, president of the Bahamas Institute of Chartered Accountants, insisted that securing a management company would not justify spending public funds to buy the hotel. Stressing that the government has not sought out all potential investors, he revealed he has spoken to several industry professionals in the hotel industry who are interested in exploring funding options related to the island.
The differing views reflect the intense debate the Minnis administration’s intention to buy the resort has sparked among stakeholders throughout the country.
“The government has to be driven by more than a flat-out purchase,” one prominent Christie administration figure said yesterday on the condition of anonymity. “To buy that, it’s fundamentally important that they have institutionalised in writing agreements with tour companies who will be a part of the purchase. When you are contemplating that kind of purchase, you first ask yourself the question, ‘how am I going to produce the bodies in the parts of the world that will be needed to secure this? Where is that market for the Lucayan?’ It’s the eastern seaboard, mid-west in the US essentially. Therefore who can do that for me? The resort had a big Canadian market as well so Sunwing, as an operator, was able to do it.”
The Sunwing Travel Group is not presently in discussions with the government to be an operator, The Tribune understands.
The former Cabinet minister also said: “I could only assume that they have as a basis of the purchase a proposed agreement with a group that will produce the bodies and fly those bodies in and deliver those bodies to the hotel itself. That has to be the basis of it. If they are smart they would then have asked for a management agreement possibly with the same group or another group that would offset other potential losses so that the government in off-season won’t have to keep people employed because it’s difficult for government to lay off people as hotels do during off periods. They will have to have an iron-clad management agreement with a company that will provide the necessary resources. That’s the only way that would make any kind of sense.”
However, Mr Bowe said history shows a management company is not enough.
“Sunwing was originally at the table and governments past and present opted to negotiate with Wynn,” he noted. “The Sunwing Group is part of the largest travel company in the world and should be approached to acquire the properties as they had originally expressed interest and were in the process of proposal. They own planes and can generate airlift, and provide the complete package.
“The Hotel Corporation had many management companies and the only party that made a profit was the management company as their fees come first. A management company solely is not the solution. Visit the Four Seasons in Exuma that had a management company but the owner could not sustain the costs and repay the loan.”
Mr Bowe said the government should be seeking out investors. Name-checking people like Ernest Cambridge, Stuart Bowe, Donald Archer and Robert Sands, he said the government should lean on senior officials currently in the hotel industry, “seeking to create a package that can be marketed and funds raised from private investors.”
“The objective is to get Grand Bahama’s economy moving,” he said. “There’s no evidence that having government buy and operate the hotel will achieve this. The hotel has been open and occupancy so low that impact on economy was marginal.”
So far, Mr Bowe said, the government has not revealed how it has solicited investors. “Certainly, there has not been active discussions on putting together a domestic group to own and operate the hotel,” he said, “none that covered who I consider the key stakeholders as I have not been made aware of such activities.
“It is important to leverage the industry heavy hitters that are Bahamian and investor houses at least for structure options and funding opportunities. It is something I would gladly support and work assiduously with government to make a valiant effort and I know the industry players would be willing to be part of such an initiative as I have spoken to several that have inquired as to how we can explore a funding vehicle to effect this transaction. We have no crystal ball and no guarantees but every avenue should be explored before committing government funds for an unknown impact on an economy. The cost benefit analysis is critical.
“This is not the initiative to cut teeth on. It is too risky and the losses of the past and subsidies are well known to the government. There should be less haste and more speed. Sustainable investment must be the prime objective, otherwise it’s cheaper to subsidise the unemployed and struggling businesses.”