Grand Lucayan
By RASHAD ROLLE
Tribune Staff Reporter
rrolle@tribunemedia.net
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.”
Comments
TheMadHatter 5 years, 8 months ago
Wow. At least this proposed move by the government is bringing the behind the scenes sip-sips up to at least the level of whispers.
An improvement in itself :-)
John 5 years, 8 months ago
The government should not buy this hotel! Even if they must sweeten the pot to get Wynn or another hotel operator to buy and operate it Government should listen to Hubert Ingraham's and other experience peoples' advice and stay out of the hotel sinkhole. Then it should bring pressure on the owners of the Port Authority to invest and revitalize Freeport. And it should partner with stakeholders to advertise and market Freeport. If misguided Minnis and his government purchases this property, they will be right back here next year, in front of the Bahamian people, not with cap in hand and with humility, but in an arrogant way, increasing taxes and seeing an increase in the national debt and still borrowing. Yes, a government cannot heal its financial woes with an ailing economy that needs fixing, but it must dig a bigger financial hole by acts of desperation.
gbgal 5 years, 8 months ago
In my humble opinion, the essential issue is bringing the bodies in to put in the beds no matter who buys them! Resolve that and maybe they will come. Heard a comment on the BBC Travel Show that the Bahamas had nothing to offer visitors so they should go elsewhere! But that's another issue.
geostorm 5 years, 8 months ago
I think the government is making a big mistake. They really need to think this through. Freeport is in dire straits and they need someone who has the extra capital to do this. The government can not afford to purchase or maintain a hotel. Dr. Minnis you need to re- think this one.
FPO 5 years, 8 months ago
The Freeport Bahamas "Brand" is one of poor service, very expensive & atrocious airfares.
My children in Toronto can go "all inclusive" to Cuba and Mexico for less than the cost of the flight from Toronto to Freeport. The $555- (Canadian) Sunwing flight isn't over the top expensive but, you have to fit their Saturday to Saturday schedule.
I know much of the nations debt is in U.S Dollars but our Dollar needs to be no higher than 70-cents U.S. to make us the least bit competitive. Nassau hotels seem to be doing OK but part of that is because a lot of resort inventory in the Caribbean suffered extreme hurricane damage.
BahamaPundit 5 years, 8 months ago
A hotel is not a building!!!!! Idiot FNMs please note!!!! Like a church is not a building but its congregation, a hotel is its guests. No guests = no hotel. The FNM can buy worthless buildings all day long for exhorbitant prices, but they won't have bought a hotel!!!! That's the problem that must be solved here, not this worthless SOB building. The problem that needs to be solved is nobody wants to go to Freeport, because it's boring and ugly period. You can put a lipstick on a pig and it's still a pig. You can make an idiot a PM and he's still an idiot.
CaptainCoon 5 years, 8 months ago
Nationalize the port and re-privatize it. Take back this country and save Freeport. But if the government of the Bahamas runs anything it will fai!. These baboons can't be trusted to even run a post office! SAD!
ThisIsOurs 5 years, 8 months ago
Some people have said of late that Minnis and Ingraham have the same personality, bullheaded. I say Ingraham intelligent.
For a year now while people kept saying give them time, it was evident that nothing would change. Minnis will continue to make bad decision after bad decision. BP is saying the entire BEC board was just relieved of duties. The question is why. It can't be poor performance, (if that was the case Minnis should step down too) everyone know they need new equipment. So why would they all be fired? What wouldn't they agree to that Minnis wanted done? Is this Oban 3.0?
I'm waiting to see how many MPs will once again give the we don't want to but speech. They already see how disingenuous KP VAT argument was. First they let the rich people off Scott free and tax the poor now they want to buy a hotel, does that mean despite all the flying around the islands on the vat tour, we on the road to Haiti?
Damifiknow 5 years, 8 months ago
Govt.owned hotel run by union hotel people will be like going to Road Traffic Instead of waiting on your new license for 6 weeks to arrive you can expect the same service To get a room . We want to have your room clean .but the maid off and washing machines broke down
Sickened 5 years, 8 months ago
How many jobs we looking at loosing if this final wing (?) of the property closes? 400? It would be far cheaper to give each staff member $25,000 a year until they find a job. And, I'm guessing that $25k is more than they are earning now. I fear that if government buys this property they will be losing their $65mio investment plus tens of millions a year in maintenance and financial losses.
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