By NEIL HARTNELL
Tribune Business Editor
The new Grand Lucayan Board will meet this morning to determine if a hotel operator is needed, its chairman asking critics of the Government's deal: "Do you want another Royal Oasis?"
Michael Scott, also chairman of the Hotel Corporation, told Tribune Business that the rundown condition of that long-closed resort and International Bazaar was "enough to make you cry", with a repeat of that experience something Freeport and its economy can ill-afford.
The well-known attorney said Lucayan Renewal Holdings Ltd, the Government-owned special purpose vehicle (SPV) that will own the Grand Lucayan, was aiming to receive all private sector bids to acquire the property via an open tender process that will close in mid-October.
The tender process is set to launch in mid-September, giving potential bidders around one month to craft their offers, with Mr Scott conceding that "a fair amount of leg work" is required to meet his objective of selling the Grand Lucayan within three to six months.
Carey Leonard, a fellow Lucayan Renewal Holdings director, told Tribune Business that the Government may have to hold the resort for up to two years to find the right purchaser (see other article on Page 1B), but Mr Scott pledged that the Board was "kicking into gear right away" to ensure state ownership of Freeport's anchor property was as short lived as possible.
The SPV chairman said no final decision had been taken on renovating and re-opening Grand Lucayan's former Memories property, something the Prime Minister last week suggested would occur under the Government, as he hit out at the property's previous owner.
Apart from the difficulty of obtaining the resort's Hurricane Matthew damage assessment report, Mr Scott said Hutchison Whampoa had never been fully committed to the Grand Lucayan - especially when it came to marketing and promoting the property.
He lamented that previous governments had "not fully addressed the issues" with the Hong Kong-based conglomerate, with the former Christie administration having given up all potential leverage by giving the Grand Bahama Development Company (DevCo) a 20-year extension of its real property tax breaks.
Hutchison Whampoa has a 50 percent equity interest and management control at DevCo, and Mr Scott argued that ownership change at another asset it controls - the Grand Bahama International Airport - was essential if Grand Bahama was to attract sufficient airlift to support the Grand Lucayan re-opening and future tourism growth.
He also revealed that, "while I'm not going to fire people left, right and centre", there was interest among some members of the Grand Lucayan's remaining 423-strong workforce in taking severance packages if the terms were right.
Mr Scott said he would lean heavily on advice from hotelier Russell Miller, a Lucayan Renewal Holdings Ltd Board member who has extensive experience in managing Grand Bahama hotels, to determine whether a resort management company was needed and, if so, which should be selected.
"The Board and I are meeting on Monday morning at 8.20am in Freeport, and we are going to make that decision then on how we approach who runs it," he told Tribune Business. "Lighthouse Pointe is fully functional. It probably needs some cosmetic work and some repair, but apart from that it's fully functional. The occupancy rate is 45 percent."
Magnus Alnebeck, managing director at Freeport's Pelican Bay resort, last week told Tribune Business that "under no circumstances" should the Government get involved in the Grand Lucayan's operations and day-to-day running. He argued that it needed to engage a hotel brand operator, or management company, as rapidly as possible.
Mr Scott, meanwhile, said potential repairs to the former Memories property was another issue facing the new Board. "We've got to do an assessment of what it will take to get that open," he added. "I understand that's possible, but I'm trying to get from Hutchison the damage assessment report."
The Hotel Corporation chairman revealed that the Government is already moving to develop a prospectus containing all essential information that potential Grand Lucayan buyers will wish to know.
"When I say quickly it's going to take some months," Mr Scott said of the sales process. "We're designing a proper prospectus now. We have a draft of one but that, in my respectful view, is not adequate. It's being properly designed and properly vetted.
"We're hoping to go out with the invitation to tenders process by mid-September, and to close receipt of bids by mid-October." Mr Scott last week suggested he hoped to effect a sale on the Government's behalf within three to six months, and he now added: "I'm doing my very best. I think it's possible, but it's going to take a fair amount of leg work.
"We're working with a number of international agencies, accounting firms, real estate agencies and so forth that will be connected to high-end developers and people of that strength. This is not something you put in the classified section of the newspaper."
The Government is unlikely to recoup the full $65m purchase price it has agreed to pay for the Grand Lucayan in any sale. Paul Wynn, chief executive of the Wynn Group, who was the last private sector buyer to emerge, revealed he had sought to renegotiate that price down to $40m to give him sufficient funds to rebuild airlift and marketing.
Hutchison Whampoa, though, refused and stayed firm at $65m. Replacing it, with the Government now acting as vendor, could make a sale faster and easier as the latter will not be so wedded to the $65m price. Accepting a lower offer could help attract the right buyer to restore the Grand Lucayan and generate sufficient economic activity such that the Government makes up for any losses incurred via taxes at the back end.
Mr Scott said Hutchison Whampoa's removal was "very important because I don't think they were ever committed to the hotel". He added: "They were never interested in the hotel. It was something they did reluctantly. It was never promoted, and was expected to almost promote itself.
"It was important for us to be involved in the process. We're the ones that can look at it from a national interest point of view and say what is needed. What is the creative package and vision that needs to be articulated. What is the right blend of capital, product and vision that is needed? What is the right development strategy? It's not enough to throw money at something."
The Lucayan Renewal Holdings Board, besides Mr Scott, includes attorneys Mr Leonard and Terence Gape; Mr Miller; accountant Ed Rahming; Willie Moss; and Linda Turnquest from the Grand Bahama Shipyard.
"We're kicking into gear and moving right away," the chairman said. "We have to consider whether to appoint a manager for it to ensure it's properly run and maintained, and maintain critical efficiencies by deciding which employees take packages and which to keep, as we need to maintain the resort in tip-top shape until we find the correct investor package and vision.
"We have a lot of infrastructural and administrative decisions to make. We have to make an assessment on whether or not it's feasible at this stage to look at getting Memories operational and what the timeframe will be on that."
Mr Scott said some Grand Lucayan employees had "indicated a desire to go subject to getting the appropriate package", although he would not know numbers until the Board met today with resort management.
"I'm not going up to fire people left, right and centre," he told Tribune Business. "Those who want to go and take packages, those will be available, and there are those that want to stay."
Mr Scott, meanwhile, questioned what alternatives Fred Smith QC and other critics had to the Government's Grand Lucayan purchase. "What are we supposed to do? Create another International Bazaar and Royal Oasis?" he asked.
"I walked through there the other day. It was enough to make you cry. What are we supposed to do? We've got to have some stability. Quite frankly, the real fault is in previous administrations not fully addressing the issue with Hutchison and not fully addressing the Grand Bahama Port Authority and its ownership."
Mr Scott argued that previous governments had conceded too much to Hutchison Whampoa, and agreed that new ownership was needed for Grand Bahama International Airport - which is owned and managed through the Hong Kong conglomerate's 50 percent owned Freeport Harbour Company.
"That's the sixth or seventh most expensive airport in the world to run," he told Tribune Business. "My vision for that is we need to start applying pressure to Hutchison. That should be taken over by a public-private partnership of some kind, much like the airport in Nassau operates.
"That's not just the gateway for the Lucayan but the entire island. You're going to have other developments coming on stream. We need to think about these things today. It's airlift and these linkages."