The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Freeport resort operator yesterday asserted that a revamped Grand Lucayan needs to “be the driver of the destination”, adding: “It is high time to put us back on track.”

Magnus Alnebeck, Pelican Bay’s general manager, told Tribune Business ahead of Thursday’s Grand Lucayan Heads of Agreement signing that “there is nothing else in the pipeline” for re-establishing Freeport as a tourism destination and providing thousands of extra hotel rooms needed to attract airlift and critical visitor mass.

Speaking after Thursday’s signing between the Government and Concord Wilshire, the $10bn Miami-based developer that is acquiring the Grand Lucayan, was confirmed, he acknowledged that Freeport has moved from a “functioning destination” to “a semi-functioning destination” with sharply-reduced room inventory capacity in the eight-and-a-half years since Hurricane Matthew struck.

This newspaper was told that last week that Concord Wilshire has teamed with multiple development and operating partners to transform the Grand Lucayan site into a six-resort property akin to Atlantis and Baha Mar, and Mr Alnebeck agreed that Freeport’s revival requires something similar albeit differentiated from the two mega New Providence resort destinations.

Emphasising that hotel rooms, airlift and an airport that can “cope” with this demand are critical ingredients for a tourist destination to flourish, he also suggested that the Grand Lucayan deal signing will spark the long-awaited Grand Bahama International Airport redevelopment as Concord Wilshire and its partners are unlikely to proceed with their investment in the absence of progress guarantees.

“It needs to be the driver of the destination,” Mr Alnebeck said of a revived Grand Lucayan. “There is nothing else in the pipeline that is ready to put us on the road to get us back to what we once were. They need to be the driver of the destination. That does not happen overnight, but it’s great that we’re finally on the road to start it.

“It’s going to be interesting to hear what they actually announce. I don’t know the details of it, but I’m obviously positive something is happening. It’s been almost nine years more or less since Matthew. It is high time to put us back on track.

“We don’t have the room inventory, we don’t have the critical mass to attract airlift. That’s what we need. Now, of course, everything like this takes a bit of time to get it revamped, to get it renovated, to get it rebuilt. I’m not privy to the plans they have. We’ll see exactly what they’re going to announce.”

The Pelican Bay chief, evoking comparisons with what the now-closed Sandals Emerald Bay resort did for Exuma, said: “We need something that has enough appeal for the consumer and something to market us. Look at Sandals. Even though it’s closed it started the engine in Exuma.

“That has still got the airlift, and it got the small hotels and Airbnb market to take-off. We need something like that to start the engine.” Mr Alnebeck said that “as soon as there is some movement happening”, and construction work actually begins at the Grand Lucayan, it will raise optimism and confidence among all Freeport residents and businesses. 

He added that it was vital Concord Wilshire and its partners “give us critical mass so we can attract airlift again”. The Pelican Bay chief described this as the first, and most important step, in Freeport and Grand Bahama’s revival than the much-touted, but not seen, $200m airport revamp.

“It’s three things - open rooms, airlift and an airport that can cope with it,” Mr Alnebeck said. “Without these three things, it’s difficult. You can obviously get by with a temporary structure for the airport, which we have been doing for years, but obviously I’d like to see us getting a functioning airport, and the ultimate goal must be to get US pre-clearance back.

“Without knowing the intent of the Heads of Agreement, I would presume an investor like this would have figured this one out [the airport] a long time ago. I’m sure there’s not only been conversations with the Government but an agreement on what needs to happen. If the whole thing is going to work, the airport will have to happen.

“We have gone from a functioning destination with thousands of open rooms to a semi-functioning destination. I think this is vital to put the economy back into Freeport and with all the other things happening in the industrial sector and the Shipyard, we need the hotel rooms. If this works, then it’s going to be the start of the solution.”

Dillon Knowles, the Grand Bahama Chamber of Commerce’s president, told Tribune Business he is optimistic that Concord Wilshire and its partners are planning to develop a “destination product” at the Grand Lucayan - which is what Freeport needs - rather than simply “revamp” the existing property.

He argued that Grand Bahama’s tourism product has withered because it failed to develop an alternative attraction, or reason to come, once the gaming industry that the sector was founded on in the 1960s and 1970s started to decline as Florida opened casino gaming.

“My perspective is that Grand Bahama has kind of suffered from not having created a replacement to gaming,” Mr Knowles said, recalling how the industry developed following the imposition of the US embargo on Cuba in the early 1960s. “Everything we did from a tourism perspective revolve around gaming, whether it was the night life associated with it or the golf and day life associated with it.”

The explosion of casino gaming in Florida “signalled the slow death of tourism in Grand Bahama”, he added with the 2004 hurricanes of Frances and Jeanne merely accelerating rather than causing the decline. Mr Knowles said that while there has been much talk about Grand Bahama’s airport and infrastructure, visitors do not travel to tourist destinations for these reasons.

“We haven’t replaced gaming with an attraction or experience since the early 2000s,” the GB Chamber chief said. “What we need in Grand Bahama is a tourist attraction. What we need is for the hotel to step up, the hotel property to step up, and become an attraction and not just a hotel.”

While the cruise lines have “stepped up to fill the void” with their own private destinations, Mr Knowles said an attraction that is also accessible to the public is now required. “While I don’t know the details of what the Prime Minister is going to announce on Thursday, what I’m hoping he announces is a destination product and not just a revamp of the hotel as a standard hotel,” he told this newspaper.

“I tell people all the time that Atlantis is not a hotel. Atlantis is a family-based theme park with a hotel attached to it. The attraction is the theme park, not the hotel-based amenity. We need a destination attraction, something that’s going to drive traffic to Grand Bahama. I’m very hopeful that is what this whole exercise is going to be leading towards otherwise I think it’ll just be another transaction.”

The Grand Lucayan was acquired from Cheung Kong (CK) Property Holdings by the Minnis administration for $65m to head-off the resort’s threatened closure by its former owner.

Efforts to find a private buyer for the resort, including the Royal Caribbean/ITM Group deal submitted to the former administration and the bid by Electra America Hospitality Group, have thus far failed to secure a purchaser. And, in the meantime, the Bahamian taxpayer has been forced to subsidise the Grand Lucayan’s annual losses to sustain its operations.

The 2024-2025 Budget provides a $17m subsidy for the resort and its immediate holding company, Lucayan Renewal Holdings, which matches the current fiscal year’s allocation. However, the $17m provided for the 2023-2024 Budget year was virtually exhausted at end-March 2024, with some $16.632m having been spent, meaning that Bahamian taxpayers will almost certainly incur cost overruns.

And, given that the Government provided Lucayan Renewal Holdings with $17.882m in the 2022-2023 fiscal year, the resort is set to cost taxpayers close to $54m by the time the upcoming fiscal year closes at end-June 2025. Given this subsidy run rate, taxpayer exposure to the Grand Lucayan now likely exceeds $200m with much of this sum unlikely to be recovered via a sale.

Among the projects that Concord Wilshire has been involved with is the development of the Diplomat Golf Resort on Hallandale Beach, Florida, featuring 938 hotel keys and 250 residential condo units in partnership with Greg Norman’s company, which handled the golf course revamp. The entire project involved a $548m revamp.

Other Florida resort developments include the Diplomat Resort on Hollywood Beach, featuring 1,000 hotel keys and 200,000 square feet of meeting space, in a $535m investment that also had connections to Atlantis owner, Brookfield.