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Lucayan Managers In New ‘Reasonable’ Proposal To Govt

The Grand Lucayan resort.

The Grand Lucayan resort.

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Grand Lucayan’s managerial union is seeking a ministerial meeting early this week after submitting a “reasonable” offer to resolve the long-running payout impasse.

Obie Ferguson, the Bahamas Hotel Managerial Association’s (BHMA) president and chief negotiator, told Tribune Business it had sent a new proposal to Dionisio D’Aguilar, minister of tourism and aviation, on Thursday after the two sides met last Monday.

Suggesting that there was “a willingness to resolve” the seven-month dispute among both parties, Mr Ferguson said he and the BHMA expected to receive a formal response from the minister early this week.

Revealing that the union would then seek to meet again with Mr D’Aguilar, the BHMA president added that “it’s in the best interests of both sides” to settle the voluntary separation packages (VSEP) terms and benefits - especially with the Government’s selection of a preferred bidder for the Grand Lucayan thought to be imminent.

Tribune Business sources, speaking on condition of anonymity, suggested that the Board of Lucayan Renewal Holdings - the Government-owned special purpose vehicle (SPV) that owns the Grand Lucayan - was due to meet on Friday to discuss the preferred bidder recommendations submitted by Colliers, the Canadian-headquartered real estate firm that was administering the resort’s sale process.

Michael Scott, the Lucayan Renewal Holdings chairman, previously told this newspaper that he had set end-March 2019 as the deadline for identifying a preferred bidder and submitting its recommendations to the Government - a timeline that will be hit by the end of next week.

While no details have been forthcoming on the Board meeting’s outcome, multiple Tribune Business sources expect that the ITM/Royal Caribbean joint venture will likely be selected as the preferred bidder.

The Mexican port developer and cruise line are proposing to transform the Grand Lucayan, and the surrounding area, as well as Freeport Harbour into a destination product using water-based adventure theme parks. Both sides bring considerable expertise and development resources, with Royal Caribbean adding an extremely large customer base to the mix.

But, with around 90 of the BHMA’s 114 Grand Lucayan members willing to accept the VSEP packages if the terms are right, Mr Ferguson said those involved were becoming increasingly anxious to reach a settlement with the Government so they could move on with their lives.

“I’m waiting on a reply from the minister,” he told Tribune Business. “I put forward a position to him, and we’re waiting to hear back from the minister of tourism. I’m satisfied that something will happen. I think I would hear from him early next week.

“We had a meeting with the minister of tourism on Monday, March 18, where he put forward his understanding as to the whole thing and we gave an undertaking we would go back and look at our numbers. He indicated he would do what he had to do from his side, and we wrote him a letter yesterday [Thursday] outlining what we consider reasonable.”

Negotiations between the BHMA, and Lucayan Renewal Holdings/the Government, have become contentious on several occasions with the latter arguing that there is simply no more money available for VSEPs due to its desire to minimise taxpayer exposure.

Mr D’Aguilar told Tribune Business on March 14 that the Government was not increasing the total value of its payout offer beyond $3.1-$3.2m. The BHMA is demanding $5.5m, a figure that includes the retirement annuity, leaving them some $2.4m apart.

But, adopting a far more conciliatory tone, Mr Ferguson told this newspaper that the BHMA will seek “a meeting early next [this] week” with the minister in a bid “to see if we can’t put this behind us”.

Declining to reveal specifics on the BHMA’s latest proposal, he added: “My concern is trying to resolve it amicably, and certainly in the interests of the members, but also the company.

“We are exchanging communications with a view to having it resolved. I feel very certain that it’s in the best interests of both sides to resolve it.”

Mr Ferguson said the BHMA’s Grand Lucayan members, especially those wanting to take the VSEPs and leave, were becoming increasingly anxious and frustrated by the contentious negotiations and wait to have the matter resolved.

With future plans and financial well-being on hold, the BHMA president added: “It’s having an effect in that regard, no question about it. That’s why I have it on the burner to work on quite quickly to get it resolved.

“They’re very concerned, quite frankly, at this point because they themselves thought it would be complete by this point. I thought it would be complete as well. I gave them assurances that I’m working on it assiduously to find resolution that will be mutually beneficial to them.

“I’m certain the other side is trying to find a formula to meet and resolve the situation. It’s in the best interest of all parties to have it resolved. I think there’s a willingness to resolve the matter, and resolve it very quickly,” Mr Ferguson continued.

“Hopefully next week, once the minister has had a chance to review our position, we will be seeking a meeting with him with a view to getting the matter resolved.”

The BHMA recently moved to revive the Grand Lucayan dispute previously filed with the Industrial Tribunal, and Mr Ferguson said it had given both sides until May 20 to see whether they could resolve the matter.

“If we do not resolve it by then, we have to go back to the Tribunal and see if they can use their conciliation mechanisms to bring the parties together, but I hope it will not be necessary,” the BHMA president added.

The Government and Grand Lucayan Board have argued that the union’s comparisons with previous VSEPs are inappropriate because those involved operating businesses in the process of being sold or restructured, while the Grand Lucayan has yet to be disposed of.

The Government is also basing the VSEP offers on the Employment Act, which caps payouts at 12 years of service, but the BHMA and its 114 Grand Lucayan members are arguing that this applies only to redundancy/terminations - not voluntary departures.

The union’s total $5.5m payout figure also includes the workers’ retirement annuity, but the Grand Lucayan Board’s position is that it needs to take this issue up with Hutchison Whampoa - not the Government.

Some observers will likely argue that the Government should have left the staff payouts to the Hong Kong conglomerate rather than take responsibility itself, as this could have avoided the present impasse.

The Government is also taking increasing fire from the Opposition over the costs it is incurring over the Grand Lucayan’s purchase, and operations, as it bids to secure a buyer that will transform the resort into a profitable, sustainable tourism destination.

The Minnis administration’s six-month “fiscal snapshot”, covering the first half of the 2018-2019 fiscal year, revealed that it injected $45.4m into the Grand Lucayan resort, including $13m to cover its operational costs, during the period to end-December 2018

Comments

DWW 7 months ago

Is it reasonable to make the statement that a business such as this fails as a result of poor management?

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