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Grand Lucayan sale can’t be ‘slow death’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government was yesterday urged not to permit the Grand Lucayan’s sale to become “a slow death”, the resort having suffered an $11.18 million loss in 2016.

Carey Leonard, the Grand Bahama Port Authority’s (GBPA) former in-house counsel, told Tribune Business that Hutchison Whampoa needed to “stop playing games” and commit to the property’s sale to a bona fide buyer who could meet its purchase price.

Now an attorney at Callenders & Co, Mr Leonard said the Grand Lucayan’s sale and re-opening were “the critical first step” towards reviving the Freeport economy and fulfilling the Minnis administration’s ambitions for Grand Bahama.

He suggested that the Government held leverage over Hutchison Whampoa via the potential imposition of real property tax and the Grand Bahama Development Company’s (DevCo) commitment to produce a master plan for its real estate holdings by end-April 2017.

DevCo, in which Hutchison Whampoa owns a 50 per cent stake, and has Board and management control, undertook to produce such a plan within 12 months of the April 26, 2016, Memorandum of Understanding (MoU) that was signed between the Christie administration, the GBPA and its related entities.

It is unclear whether DevCo has complied with this obligation, with Deputy Prime Minister, K P Turnquest, referring Tribune Business questions on the matter to the Office of the Prime Minister.

Mr Leonard, though, suggested this - and the threat of imposing real property tax on both DevCo and the Grand Lucayan - remained potential bargaining chips for the Government in negotiations with Cheung Kong Property Holdings, the company into which Hutchison Whampoa has spun-off its real estate assets.

“They should think about selling this thing, selling it quickly and stop playing games,” Mr Leonard told Tribune Business of the Grand Lucayan. “Dealing with Hutchison is like a slow death.

“In the meantime, no one has any employment, and Port Lucaya is suffering.”

Mr Leonard said he had seen the disastrous consequences of the prolonged Memories and Breaker’s Cay closures for himself when he visited the Port Lucaya Marketplace after work on Monday evening.

“I decided to take a walk round Port Lucaya, and got there at 5.30 pm,” he recalled. “I was the only person apart from the employees who was walking into the jewellery stores, like Colombian Emeralds International and John Bull.

“I also looked at a number of other stores that were closed, and apart from half-a-dozen tourists, those were the only persons I saw.”

Mr Leonard said Port Lucaya Marketplace’s bars and restaurants had more activity, since their customer base included Grand Bahama residents as well as tourists. He added that these entities had fared well last week when the USS Iwo Jima, an amphibious assault ship, brought several thousand sailors to Freeport.

“I think the most critical thing is that they have got to get this hotel sold and open, one way or another,” Mr Leonard told Tribune Business. “I don’t care how they do it; the right way, wrong way or the difficult way, but they’ve got to get this hotel open so business can rebuild.”

While the Minnis administration has confirmed it is talking to potential Grand Lucayan purchasers, many observers are questioning if it is doing the same with Cheung Kong and Hutchison Whampoa - which is arguably the more important player.

Some have suggested that the Grand Lucayan situation be handed to Dionisio D’Aguilar, minister of tourism and aviation, whose family background in hotel ownership and operation - combined with his experience in dealing with the Chinese at Baha Mar - is viewed as positioning him well for this task.

The Grand Lucayan and Memories closures have taken 1,000 rooms out of action, leaving Grand Bahama with just 41 per cent of inventory currently active. As the resort industry’s largest or ‘anchor’ property, hundreds of direct and indirect jobs have also been lost.

Cheung Kong’s 2016 annual report illustrates how the Grand Lucayan is a relative ‘blip on its radar screen’, with the resort and the Bahamas’ operation likely low on the conglomerate’s priority list amid its extensive real estate holdings in Hong Kong, mainland China, Singapore and the UK.

The report makes no mention that much of the Grand Lucayan is closed, or of Hurricane Matthew’s impact. The sales process that Cheung Kong initiated for the property last summer is also ignored, along with the interest of prospective buyers such as the Wynn Group.

Cheung Kong does confirm that the Grand Lucayan lost $86 million Hong Kong dollars in 2016, a figure equivalent to $11.18 million. That is a slight increase upon the previous year’s $10.53 million loss.

The 2016 performance was achieved on an average occupancy rate of 49.8 per cent, with average daily room rates standing at $97.63.

Mr Leonard, meanwhile, argued that there needed to be “significant pressure” on DevCo and the GBPA’s Freeport Commercial and Industrial, as Freeport’s two largest landowners, to meet their infrastructure improvement obligations.

“Failing that, they ought to be paying real property tax. The Government has some serious leverage there,” he told Tribune Business.

“If they spend the money on infrastructure, they are the biggest beneficiaries since they are the largest landowners. Unfortunately, they’re not the ones spending the money. It’s the people paying the service charges.”

Comments

proudloudandfnm 7 years ago

Keep it up. Thank you Mr. Leonard!

Please help us keep Freeport in the news! We are broke, unemployed and hungry.

Freeport needs help now!

ashley14 7 years ago

Did the Hurricane Damage to Freeport cause these losses? Freeport was the place to go in the 70's and 80's. The island is so beautiful still. I've been lately. It seemed like a ghost town. When the cruise ships came in you saw a few people, but overall it just felt lonely. The Bahamian people were great with hospitality and encouraging your return. This Island could be a major tourist attraction again. I remember my mom and I walked all over this Island late 70's. Out to 8 mile rock, all of the beaches and fishing docks. We were always welcomed and looked out for by the locals. We would buy our fish off of boats coming in. Boiled Fish is my favorite breakfast. Which isn't made here in the states. I miss so many things about the Bahamas and Freeport is a big part of those memories. It breaks my heart to see the people suffering. Please help these people and put Freeport back into the vacation plans of many.

proudloudandfnm 7 years ago

The sale process is in fact a slow death. And now thanks to the PM's speech last weekend we know there is no deal yet. His speech was essentially a death sentence for many businesses...

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