‘Rethink’ Lucayan deal via complex break-up


Carey Leonard


Tribune Business Editor


A former Grand Lucayan Board member yesterday urged the Government to “rethink” its strategy for selling the resort by splitting up the complex and re-opening the largest hotel property.

Carey Leonard, speaking after the Government confirmed that the $100m deal struck with Electra America Hospitality Group had collapsed, told Tribune Business that successive administrations “have been desperate to sell rather than understanding how to sell” Grand Bahama’s largest resort property.

He explained that the original Lucayan Renewal Holdings Board, of which he was part, had at the start of its tenure proposed re-opening the 550-plus room Breaker’s Cay property to give the Grand Lucayan complex critical visitor mass.

Suggesting that the Davis administration revisit this strategy, and find a hotel brand or management company to operate Breaker’s Cay on its behalf, Mr Leonard told this newspaper that it should also seek to split-up the resort by selling off separately the two other properties - the Lighthouse Point and former Memories hotel.

This, he argued, would result in fresh investment that drives commercial value while also increasing the potential sale price for Breaker’s Cay. “I think the Government needs to rethink their way of selling the hotel,” Mr Leonard said. “Whether they like it or not, they need to renovate and open up Breaker’s Cay with 550-odd rooms.

“There’s no reason why they shouldn’t find a management company to run the hotel for them. Marriott, for example, operates hotels without owning them. Yes, the Government is going to lose some money on it, but the original Board suggested right from the beginning that it open up the larger hotel, Breaker’s Cay.

“It’s just that successive governments have been desperate to sell rather than understanding how to sell. I think they need to open up Breaker’s Cay, use a company to run it and sell-off the other two properties with other brands or developers. Break it up and sell it as individual units.”

The Davis administration, having blasted its Minnis predecessor for costing Bahamian taxpayers $150m-plus in purchasing the hotel and subsequent monthly subsidies to keep it afloat, will be loathe to commit fresh investment into a property that it remains desperate to exit. Upon announcing the Electra America deal’s collapse, it promptly asserted that it has begun talks with a new, unnamed potential purchaser.

However, all previous efforts and strategies to sell the Grand Lucayan have failed to meet with success, and Mr Leonard asserted that his break-up plans merits a closer look. Turning to Lighthouse Pointe, which has around 194 rooms, he said: “Lighthouse Pointe has had several interested people wanting to turn it into high-end residences.

“Those companies wanted to flatten Lighthouse Pointe and develop it into a high-end residential building. That seems something that’s do-able. You’d get some of your money back on that if you were the Government, and by causing additional commercial development you will improve the revenue the Treasury receives from Grand Bahama.

“And by opening a 550-odd room hotel you actually have some rooms. We’re bringing in passengers, and I’m delighted that we’ve got flights from Carolina and all those destinations, but if we don’t have the hotel rooms where are they to go?”

Meanwhile Magnus Alnebeck, the Pelican Bay resort’s general manager, said the Electra America deal’s failure - which was announced with great fanfare in early May - was the latest example of successive administrations “over promising and under delivering” when it came to Grand Lucayan and Freeport/Grand Bahama in general.

“The reality in the short-term is that the majority of that hotel has not been open for six years,” he told Tribune Business. “It just continues the doom and gloom. It doesn’t get any worse; it continues the doom and gloom. A lot of people were waiting for this deal to happen to do other investments and do their own thing.

“I think everybody understands the importance of getting this done, but it’s not an easy deal to get done. Successive governments have over promised and under delivered and that’s just where we are. I sometimes think they are announcing these things prematurely and that is part of the problem.

“It needs to be repeated. It’s as simple as that. It just means that people who come to Grand Bahama, and go past that area, see the big empty hotel with no lights on just standing there. They ask: ‘How long has that been closed?’. Six years. They can’t understand what’s going on,” Mr Alnebeck continued.

“We need to find somebody to take it on and get it going in a good way. When it comes to the Grand Lucayan, it was a Westin and Sheraton, then became a Radisson and Reef, and then became a Radisson and closed down. It’s gone through a steady downward spiral over the past 20 years.”

Mr Alnebeck said its only period of “decent occupancy” and airlift occurred when the Reef was operated by Memories, which via its links with Sunwing, its airlift partner and affiliate, was better able to control costs. Memories pulled out after Hurricane Matthew struck Grand Bahama in late 2016, and it was unable to agree new terms with owner Hutchison Whampoa - especially over the use of the insurance claims proceeds.

Resolving the Grand Lucayan’s fate is vital “to getting us back on the map”, the Pelican Bay chief said while, agreeing that this will not be achieved overnight - even if a sale is concluded - because much of the resort will have been closed for over six years and renovations will take time.

“It needs somebody who either has a brand or relationship that comes with airlift, a Sunwing/Memories or Sandals type, somebody attractive enough to immediately get going,” Mr Alnebeck said of the potential buyer. “Or the new Sir Sol Kerzner. Sometimes you have to take the chance with them.

“When Sir Sol came to The Bahamas he wasn’t the most well-known hotel brand in the world, and Atlantis was a dream in the back of his head. When Gordon ‘Butch’ Stewart opened his first hotel in Montego Bay, he was a used air conditioning salesmen and look at what the Sandals brand is today.”

Describing the Grand Lucayan as “the number one thing that has to be solved in Grand Bahama”, Mr Alnebeck added: “That’s just standing there. It doesn’t work. Any investor who comes to look at the island, they say: ‘Why doesn’t this work?” We need to get it open and get it going.”

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