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Chamber chief backs nationalising Grand Lucayan 'if all fails'

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Grand Bahama Chamber of Commerce's president yesterday backed a Government takeover of the Grand Lucayan "if all else fails", arguing that the Bahamas must do "whatever it takes" to secure its imminent re-opening.

Mick Holding told Tribune Business that given the resort's importance to the survival of Freeport and Grand Bahama's economy, the Minnis administration could not permit efforts to secure a new owner to carry on indefinitely.

He suggested that even if a sale was closed in the next few weeks, hurricane repairs and upgrades meant the Grand Lucayan and its 1,000 rooms were unlikely to re-open before 2018.

This means 59 per cent of Grand Bahama's hotel inventory could miss the first half (Thanksgiving and Christmas) of the peak winter 2017-2018 season, and Mr Holding said Port Lucaya Marketplace and others reliant on the Grand Lucayan for business and jobs urgently needed to be given "hope to hang on to".

Emphasising that a government acquisition of the Grand Lucayan could only be a temporary, stop-gap measure, he added that he had interpreted comments by the Deputy Prime Minister at last week's Chamber luncheon as a sign the Minnis administration was considering this option.

"The fact that the Government are presently considering it, that would be welcome if 'Plan A' fails," Mr Holding told Tribune Business.

"Rather than let things carry on and carry on, if they can't find a commercial buyer now, for the Government to take it over - it would ultimately have to be sold-on - but it would least be some progress.

"It is essential the hotel opens as soon as possible, and whatever it takes to do so should be considered. If it's good for the economy of Grand Bahama, how could anyone be opposed to it?"

K P Turnquest did not rule out the Government 'nationalising' the Grand Lucayan, telling Tribune Business on Monday that it was looking at "all options" for the property's re-opening and/or sale.

The Deputy Prime Minister, when asked whether it would be prepared to acquire the resort in a 'worst case' scenario, replied: "We're looking at all options in that regard. We have not ruled out any contingencies.

"It is critical to our restoring the economy of Grand Bahama, everyone recognises that, and it's in everybody's interests to get that property open and back in operation as quickly as possible.

"All parties at the table are cognisant of that, and are being as diligent and aggressive as we can to effect that."

Mr Holding yesterday said he had interpreted Mr Turnquest's "back stop plan" comment at last week's Chamber luncheon as implying that the Government would be prepared to take over the Grand Lucayan as 'a last resort' option, "or something of that nature".

"I said only the other day that it's going to take, and I hate to use the word 'miracle', but even if a deal is signed in the next few weeks we'll be unlikely to see anything open before 2018," the GB Chamber president told Tribune Business.

"I thought a really hard push could make Thanksgiving, but having sustained damage from Hurricane Matthew and being left dormant for almost 10 months, it's not something where you can open the door, turn the vacuum cleaner on and let people in. It will be much more than that. But if it happens quickly, Thanksgiving could be a target date."

Mr Holding said some progress towards the Grand Lucayan's re-opening and/or sale was vital to restore faith in the future among Port Lucaya Marketplace tenants, tourism industry operators and employees, and suppliers to the hotel industry.

"It would give the supporting industries around the hotel, those businesses that rely on the tourists from it, some hope to hang on that things will pick up in December, January and February," he told Tribune Business.

"At the moment they can't see that. There are thousands of people in supporting businesses - taxi drivers, tour operators, bars, restaurants, souvenir shops - all sorts of people desperately hanging on this hotel."

Mr Holding emphasised that whatever happened, "the ultimate goal must be to find a hotel/tourism operator to own and run that business. That's what we need. We need a brand name to attract the tourists' back".

Carey Leonard, the former Grand Bahama Port Authority (GBPA) in-house counsel, on Tuesday suggested that the Government use its 'compulsory acquisition' powers to takeover the Grand Lucayan if its present owner does not offer acceptable terms and price.

However, doing this would be fraught with difficulty given the owner's considerable investment and other assets on Grand Bahama. The Grand Lucayan is owned by Cheung Kong Property Holdings, the real estate arm of Hutchison Whampoa, which also has majority interests and/or management control at the Freeport Container Port, Freeport Harbour Company, Grand Bahama Development Company (DevCo) and Grand Bahama International Airport.

Thus any Government move on the Grand Lucayan could have negative repercussions for other key economic and infrastructure assets on Grand Bahama, not to mention the employment of many Bahamians.

Reaction to any potential Grand Lucayan nationalisation was mixed yesterday, with some observers suggesting it was a necessary short-term measure to save Grand Bahama's economy, while others argued it represented "a slippery slope" towards more government control over the economy.

Any purchase funded by the Bahamian taxpayer will likely add to the huge fiscal strain already imposed on the Public Treasury by a $7 billion-plus national debt and $300 million-plus annual deficits.

And, given the Grand Lucayan's recurring annual losses, subsidies to cover this 'red ink' would also have to be included in every Budget. Such a purchase would also represent an expansion of government at a time when the Bahamas needs to shrink it - something the Minnis administration said it would seek to do.

Talk of 'nationalisation' will also bring back unhappy memories for many Bahamians of the Hotel Corporation's 'heyday', when the Pindling administration took control over much of the Bahamas' hotel plant.

Another downside is the negative messages that will be sent to other foreign investors by the use of 'compulsory acquisition', which could cost the Bahamas the FDI inflows it desperately needs to grow GDP and reduce unemployment.

Tribune Business earlier this year revealed that the Canadian-based real estate developer, the Wynn Group, had emerged as the front-runner to acquire the Grand Lucayan.

Wynn signed a Letter of Intent (LOI) for the purchase in late April, and paid a deposit to prove its intent. However, this newspaper's sources yesterday said little progress was being made towards closing a deal, despite social media reports that an agreement was close.

Among those also said to have looked at the Grand Lucayan are former Baha Mar developer, Sarkis Izmirlian, and ex-South Ocean investor, Roger Stein. Other parties said to be interested are Warwick Hotels and Resorts, the owner/operator of the former Holiday Inn on Paradise Island, and a New York-based group.

Comments

The_Oracle 6 years, 11 months ago

And this guys is head of the Chamber? The advocate of which side of the equation? Yikes. Mick, get a grip!

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