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Covid Alters Grand Lucayan Agreement

Tourism Minister Dionisio D’Aguilar.

Tourism Minister Dionisio D’Aguilar.

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Cabinet minister is still “optimistic” the Grand Lucayan’s sale and redevelopment will proceed even though COVID-19 may make the deal look much different to its original version.

Dionisio D’Aguilar, minister of tourism and aviation, told Tribune Business that Royal Caribbean - despite the multi-billion stresses imposed by the pandemic - and its ITM Group partner “still seem to be interested” in closing the resort’s acquisition and redevelopment of Freeport’s harbour.

However, he indicated that the Holistica joint venture partners are seeking to restructure the terms of what was initially billed as a $300m investment to revive Freeport’s tourism industry and wider economy because of the uncertainty surrounding the timing and strength of the cruise industry’s rebound.

In particular, Mr D’Aguilar said the previously-anticipated 2.5m extra annual cruise passengers brought to Freeport as a result of the Royal Caribbean/ITM project may not materialise to that extent, with the partners “not as certain as they once were” over demand due to the pandemic’s fall-out which saw numerous outbreaks on vessels.

Acknowledging that Grand Bahama residents “have heard this story 1,000 times” from politicians, and will likely only be interested in hearing from politicians once “we’ve got” a completed agreement, the minister told this newspaper: “As far as I can tell the talks are very robust, very focused and we’re making progress.

“It may not be the deal we had prior to March 3, but to say it’s not going anywhere would be an incorrect conclusion. They [the Holistica partners] still seem very interested, and you have a wiling seller and a willing buyer negotiating terms. The willingness is still there.”

Mr D’Aguilar declined to give details on what remains outstanding in the negotiations, with numerous suggested closing timelines having arrived with no conclusion. He indicated, though, that Royal Caribbean and ITM may be adjusting their valuation and projections given COVID-19’s continued devastating impact on the cruise business and tourism in general.

“You’ve got a situation where the world has changed,” Mr D’Aguilar told Tribune Business. “You’re not as certain of your passenger loads that you would have assumed prior to March 2020 or the shut down of the cruise industry.

“Obviously you do not have the same certainty that was once there in terms of visitors. You are actively building or trying to construct a deal that takes into consideration that takes into account that the passenger loads may not be as robust as they once were, and not as certain as they once were.

“It doesn’t take a rocket scientist to figure out that the situation on the ground has completely changed, so you are trying to build in safety valves or trying to build in components of the deal that mitigate or take into consideration that your load factors are not as certain as the once were,” he continued.

“Obviously August 2020 is not the same as February 2020, so obviously you are going to change some terms to take into consideration the facts have changed. It’s very unfortunate, but it is what it is.”

Together with the one million brought by Carnival, the Royal Caribbean/ITM project and redevelopment was expected to bring an extra 2.5m passengers and arrivals to Freeport/Grand Bahama pre-COVID-19, bringing the total to some 3.5m.

Besides the near six-fold increase in visitor arrivals, it was forecast to create 3,000 new jobs and increased economic activity via the addition of new cruise berths at Freeport Harbour and the creation of a water-based adventure theme park and other activities/attractions between that location and a remodelled Grand Lucayan.

The $300m investment was also designed to relieve the Government of the at-least $100m in costs it has incurred from owning the resort since its September 2018 acquisition from Hutchison Whampoa. Mr D’Aguilar, though, said he remains hopeful that the ITM/Royal Caribbean negotiations will successfully conclude despite the recent $1.6bn loss suffered by the cruise line.

“I remain optimistic the deal will close,” he told Tribune Business. “I wouldn’t say overly, but I remain optimistic. Certainly the willingness from the other side; they’re very interested in concluding or reaching a deal.

“The loss you noted with Royal Caribbean, obviously it has had some impact on the negotiations, but they still seem to be interested in concluding one.” Mr D’Aguilar, though, declined to give a timeline for when talks will end as he acknowledged that many Freeport residents are likely suffering from deal fatigue.

“We have predicted the successful conclusion of this agreement on many occasions,” he added. “The time now is to stop predicting and when we get it done, we get it done, and we will release it at that time.....

“The people of Grand Bahama have heard this story 1,000 times. The only thing we can advise them is we’re working very diligently and very hard to conclude a deal, and we’re very sensitive to the fact that Grand Bahama needs this transaction.

“Actions speak louder than words. I’m sure the people in Grand Bahama do not want to hear politicians speak on this any more. They will say: ‘Once you’ve got something, bring it’.”

Mr D’Aguilar also conceded that talks on the Freeport Harbour component of the deal, which are taking place between IBM/Royal Caribbean and the Hutchison Whampoa-controlled Freeport Harbour Company, “need to be concluded”, although he added: “I’m advised it’s moving in the right direction.”

With the Bahamian economy shut down for four to five of the past six months, the minister said Royal Caribbean/ITM’s construction start still remains delayed by around six months.

Comments

proudloudandfnm 1 year, 3 months ago

Has government re-hired all the staff they let go last month? Ya'll fired them because you were closing the deal. So what now? Thank you for once again putting another nail in GB's coffin....

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rodentos 1 year, 3 months ago

it will end with Grand Lucayan being demolished.........in 20 years..... I see it coming

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thps 1 year, 3 months ago

Lets look at the non-Rocket Scientists who couldn't see what was evident.

May12 Robert Shamosh, Holistica Destinations’ chief executive, in an e-mailed response to Tribune Business inquiries reaffirmed the company’s “commitment” to proceeding with an investment deemed vital to reversing Freeport’s years of economic and tourism decline despite COVID-19’s shutdown of the cruise ship industry.

June 15 “By 2022 we ought to be back into single digit unemployment; the end of 2022,” he argued. “There are a number of anchor projects on stream. There’s a huge project in Grand Bahama with Carnival’s cruise port, and Royal Caribbean and ITM at the Grand Lucayan.” John Pinder

June 16 “Because of COVID they made some adjustment to the timeline and we expect that very shortly they will begin the process of redevelopment of the hotel and committing to an environmental impact assessment with the new cruise port.” Kwasi Thompson

June 2 A Cabinet minister yesterday said “it’s full steam ahead” on the Grand Lucayan’s redevelopment even though the ITM/Royal Caribbean joint venture is seeking “certain proposed revisions” to the deal. Dionisio D’Aguilar

If it was so clear then why would these officials make such rosy statements?

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proudloudandfnm 1 year, 3 months ago

Because they're liars?

Like when Wynn came back for a second round of negotiations. We were told things were going well and they'd have a deal shortly. And they did do a deal really quickly. For a hotel in Nassau...

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tribanon 1 year, 3 months ago

Can you just imagine ITM/Royal Caribbean executives negotiating with D'Aguilar and Minnis? They must feel that they've hit the royal jack pot because it's now only a matter of time before the Bahamas government will pay ITM/Royal Caribbean to buy the Grand Lucayan property. Yes you heard me correctly. Instead of ITM/Royal Caribbean paying the Minnis led government to sell the Grand Lucayan property to them, the Minnis led government is going to end up paying ITM/Royal Caribbean to buy the property from the Minnis led government. And that's no joke!

Buying the Grand Lucayan property from the Hutchison Whampoa Group (the Communist Chinese) was the second most foolish and stupid thing that Minnis did since becoming PM in May 2017. This Minnis instigated debacle has so far cost the Bahamian taxpayers well over $160+ million and counting. Of course prematurely reopening our territorial borders to the deadly Communist China Virus on July 1 was hands down the most foolish and stupidly dangerous thing that dumb D'Aguilar and even dumber Minnis ever did.

I've frankly lost track of the countless ways in which the Minnis led government has literally squandered, wasted and outrightly defrauded our country of many many millions of dollars since May 2017. Minnis is even worse than Christie was when one considers the loss of life on Minnis's hands as a result of his grave mishandling of both the deadly Hurricance Dorian crisis and now the deadly Covid-19 crisis.

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rodentos 1 year, 3 months ago

if they pay me, I'm interested too in "buying" Grand Lucayan :)

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trueBahamian 1 year, 3 months ago

Let's hope D'Aguilar doesn't have input here. After that CNN interview, I wouldn't have him order supplies for the Ministry of Tourism. That interview showed that he is grossly deficient intellectually. If he had an input here, we probably gave away the entire GB and promised to pay Royal Caribbean and ITM for taking it.

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TalRussell 1 year, 3 months ago

Compounds the imagination how this could possibly be the same comrade Washhouse Montagu man's who built his business conglomerate?
On top of his Grand Lucayan's $200 million fiasco - 'em's humiliating political career's setback now that none other than Bible Thumper Renward has jumped ahead in line become The Colony's acting prime minister in but matter days.
Just couldn't make this stuff up. Just couldn't. Nod Once for Yeah, Twice for No?

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birdiestrachan 1 year, 3 months ago

The deal never made any sense. Why did the Government buy the hotel from Hutchinson and then try to sell it to the Cruise line? The Cruise line already have a business relationship with Hutchison

Why did the Government become involved? something Is just not right about this deal

it is said that the Golf course was not a part of the deal.

it appears the Government will be struck with our Lucaya.

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birdiestrachan 1 year, 3 months ago

The FNM Government was duped. Now here comes the Airport.

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