The Grand Lucayan Resort.
The Deputy Prime Minister yesterday did not rule out the Government ‘nationalising’ Freeport’s Grand Lucayan resort, after a prominent attorney said such action is “not out of bounds”.
K P Turnquest told Tribune Business that the Government was looking at “all options” for the property’s re-opening and/or sale, after this newspaper questioned whether it would be prepared to acquire the resort in a ‘worst case’ scenario.
His comments came after Carey Leonard, the Callenders & Co attorney, said the “desperation” and “urgency” surrounding the Grand Lucayan’s continued closure may require the Government to undertake a ‘compulsory acquisition’ of the resort.
Mr Leonard, a former Grand Bahama Port Authority (GBPA) in-house counsel, told Tribune Business: “We are so desperate to have that hotel.
“It is such an integral part the economy and survival of Grand Bahama that I don’t think the Government of the Bahamas would be out of bounds to say: ‘This is what the hotel’s worth.
“‘You’re asking too much. We’ll give you two months, and then we’ll pay for it via compulsory acquisition, give you what it’s really worth, then sell it ourselves’. I think it’s that urgent, quite frankly.”
Mr Turnquest did not deny a potential Government purchase of the Grand Lucayan when Tribune Business put this to him, after being informed this was among the Government’s “back stop”options he referred to at last week’s Grand Bahama Chamber of Commerce luncheon.
“We’re looking at all options in that regard,” the Deputy Prime Minister said of Freeport’s ‘anchor’ resort property. “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 Turnquest was responding after Tribune Business was informed that the Minnis administration was considering a government purchase, or having to sweeten a private deal with millions of dollars in subsidies, tax concessions and the like, as a ‘last resort’ to re-open the Grand Lucayan.
A Government acquisition of the Grand Lucayan would be fraught with difficulty, and the prospect will likely be greeted with horror by many observers - especially those not living in Freeport or Grand Bahama.
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.
That ill-fated period was ended when the Ingraham administration was elected in 1992 and decided to exit the hotel business, realising its seasonality and high operating costs made it an extraordinarily difficult business to be in.
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 from Cheung Kong Property Holdings, Hutchison Whampoa’s real estate arm.
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.
However, time is rapidly running - if it has not already done so - to re-open the Grand Lucayan in time for the first half of the winter 2017-2018 season. Its continued closure means Grand Bahama has lost 59 per cent of its room inventory, and ability to attract new airlift, along with around 1,000 jobs.
Many Port Lucaya Marketplace tenants are increasingly fearful they will not survive, and there are ongoing concerns that Freeport and Grand Bahama will continue to de-populate as persons leave to seek work elsewhere.
It is almost 10 months since the Grand Lucayan and Memories closed in Hurricane Matthew’s wake, and the urgency of the situation was highlighted recently by Magnus Alnebeck, Pelican Bay’s managing director.
“It’s crunch time now,” he told this newspaper in a recent interview.
“I think that if parts of the Grand Lucayan are not open by the winter season - unless something is open by the winter season - it’s going to be very hard to turn around.
“In the next two to three weeks, there needs to be a sale [of the Grand Lucayan] to be able to save this.”
Comments
BMW 6 years, 8 months ago
This comment was removed by the site staff for violation of the usage agreement.
Economist 6 years, 8 months ago
Agreed. It seems that Hutchison is no better than the Chinese Construction Company in Nassau with Baha Mar and the Pointe.
TheMadHatter 6 years, 8 months ago
They are all Chinese They play joke They put pee-pee in your Coke.
Well_mudda_take_sic 6 years, 8 months ago
We simply cannot continue to allow Red Chinese oligarchs and their Chinese controlled enterprises to wreak havoc on our economy after we have granted them outrageously generous concessions of one kind or another. This is insanity. These Red Chinese oligarchs and their Chinese controlled enterprises are (on an aggregated basis) financially bigger than the entire economy of the Bahamas with their annual gross revenues well in excess of our country's entire annual GDP. For them to hold our economy hostage is unconscionable. If out of desperation we have to resort to some form of nationalization and resale plan to other interested investors with deep pockets who are much more responsible and respectful of our economy and the Bahamian people, then so be it! An ultimatum must be given to the Red Chinese enterprises behind both the Lucayan and Bah Mar properties, and the sooner the better.
The_Oracle 6 years, 8 months ago
Government seizing or compelling a sale of private property is a slippery slope. What next? What when they come for your property or business? No, it has been proven over and over that Government can run nothing. Not a postal system, not a hotel, not healthcare, not FDI, not a prison or court system, not any aspect of the country. There are mechanisms that can be used, but nationalization simply indicates a government desperate enough to use force. A very short sighted action, the discussion of which shows we have elected nothing new. That we have invited in Chinese national interests without understanding the beast is a mistake we will have to live with, another shining example of Government ineptitude.
Well_mudda_take_sic 6 years, 8 months ago
Yes I understand the slippery slope aspect. But you presume the Red Chinese enterprises concerned have acted in good faith - they have not! Furthermore, nationalization would have to involve a near simultaneous sale because, like you and so many others, I have zero faith in our government being able to own and run any type of business that properly belongs in the hands of the private sector. Saying its too late to do anything and that we must therefore live with the consequences of past governments having invited these corrupt Red Chinese enterprises to our shores is just too fatalistic an option to even consider. We are Bahamians in our own sovereign country and we have every right to be the masters of our own destiny.
Alex_Charles 6 years, 8 months ago
Nationalization is a slippery slope indeed, but the country is in a shit hole and Grand Bahama is pretty much a decaying corpse in the bush. Sad to say, nationalization and selling it, while we retain 49%, may be the best option.
I'm no fan of the beaten horse known as this Stafford Sands Tourism model but hot damn GB needs SOMETHING to start from.
The_Oracle 6 years, 8 months ago
The issue I have with nationalization is that it will make our current shit hole look like a garden party! Ask any Venezuelan. They are well down that slope but as bad as it is, they haven't hit the bottom yet. No, The problem is government thinking it can solve a problem it created in the first place, with the same old tired approach that created the problem. It is becoming apparent that this crew cannot think outside of the box (cliche but oh so true) nor listen to people who do. (Which includes Bahamians ) There are people in this country who can think, solve issues, we just don't elect them!
trae2013 6 years, 8 months ago
Slippery slope but if you do it for one resort it has to be done for all. Pressure has to be exerted on all resort investors to keep the properties presentable or open for business. Xanadu property and Princess Properties must not be neglected either. Grand Lucayan is important but all the large resorts are vital for Grand Bahama's rebirth. This island once had over 6,000 rooms and two casinos to provide entertainment to the tourist be gambling or casino shows. Night life is missing for the island even though you have day time activities. I do remember the drain that was on the Bahamian economy when the government had assets that it couldn't sufficiently operate or manage. To repeat this mistake should always be the last course of action for any government be it PLP, FNM or DNA for the Bahamian people..
sheeprunner12 6 years, 8 months ago
SARKIS IS DYING TO DEVELOP A HOTEL PROPERTY IN THE BAHAMAS ........ THIS IS HIS BEST CHANCE NOW ............. THIS SHOULD BE AN EASY SELL FOR THE FNM
The_Oracle 6 years, 8 months ago
No new or existing business will invest or have any comfort of stability under the threat of nationalization. Trae2013 is right, what of Xanadu, Princess, etc etc? Do we say no nationalization of Bahamian assets, foreign only or is it all on the table? What about other dormant businesses? Prime commercial land? waterfront? Tons of land bought on spec decades ago, what about all those lots? What about all the land east of the Port area owned by the ST. Georges and Haywards? Shall we nationalize that too? They aren't doing anything with it. Wasn't Sir Baltron in charge of the hotel Corp? Maybe he can run it all, he ran it all into the ground before right? Unmitigated Garbage.
proudloudandfnm 6 years, 8 months ago
I don't care how they do it. Just open our hotels. Freeport can't last much longer without them. Buy it. Take it. I don't care. Just open them as soon as humanly possible....
sheeprunner12 6 years, 8 months ago
Hotel development in Grand Bahama cannot be done without airlift, ground events and GB Airport fees reform ........... The other three factors must be considered as well at this time.
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