The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

An ex-tourism minister yesterday voiced optimism that the Grand Lucayan’s sale will be the “catalyst” that builds scale by luring other resort developers to Freeport, adding: “Lord knows Grand Bahama needs it.”

Dionisio D’Aguilar, who held the post under the former Minnis government, told Tribune Business that the $100m purchase price negotiated by the Davis administration with Electra America Hospitality Group appears “quite remarkable” and suggests the Grand Lucayan hold more value than previously thought.

Noting that the resort’s sale, and proposed $300m redevelopment under Electra America, will “go hand-in-hand” with the revival of Grand Bahama International Airport, he added that the island’s failure to regain critical mass and room inventory following the Royal Oasis’ 2004 closure had made it extremely difficult to attract sufficient airlift capacity and stopover visitor numbers for the past 17-plus years.

Mr D’Aguilar, speaking after his successor, Chester Cooper, deputy prime minister and minister of tourism, investments and aviation, unveiled further details on the Electra America deal in the House of Assembly, said the buyer will have to “create a Grand Bahama appeal and a destination that wows the customer” if the Grand Lucayan and, by extension, the island are to both differentiate themselves and compete with Nassau.

“I was delighted they have found a purchaser for the property,” the former minister told this newspaper. “Obviously our deal was scuttled by the arrival of the COVID-19 pandemic. It’s the start of a long journey, and there’s quite some time to go before it completes. It’s good that they’ve identified a credible developer that has some hotels in their portfolio. We hope they do well. Lord knows Grand Bahama needs it.

“We bought it for $65m, and they sold it for $100m. That’s quite remarkable. Obviously it had a little bit more value than we thought it had. There are some hidden costs in that transaction, obviously, the huge one being to get the airport renovated. The redevelopment of the airport has to go hand-in-hand with the redevelopment of Grand Bahama.”

Florida-headquartered Electra America Hospitality Group is effectively a joint venture between Electra America, a real estate developer, operator and financier, and AKA, which is billed as a luxury hotel residences specialist. The group’s website says their partnership, boasting $6.85bn in assets under management, aims “to capitalise on disruption in the hotel industry” via a focus on acquiring, renovating and managing “well located hotel assets with upside potential in major US markets”.

It currently includes two Florida properties, Hotel AKA Brickell in Miami, and Hotel AKA West Palm, in West Palm Beach, among its active portfolio, although the Grand Lucayan represents its first expansion outside the US and UK. “

“What I found as minister of tourism was that Grand Bahama lacked scale,” Mr D’Aguilar told Tribune Business. “They don’t have many hotel rooms, which made it difficult to attract airlift. When you bring on 1,200 rooms, that scale attracts airlift and it feeds on itself. Hopefully this hotel creates an attraction for other hotels and developers, and starts the ball rolling. Maybe this will be the catalyst that starts the process.

“The devil is in the details. They have to knock out the Heads of Agreement. I think, at this point, the deal’s returned a level of optimism as we were optimistic in March 2020. We remain hopeful at this time that Grand Bahama gets to the promised land. We thought we were there in March 2020. Who would have thought a pandemic would come along and scuttle a deal? We remain hopeful this will come to fruition.”

Mr Cooper yesterday said the Government has already begun work on increasing airlift to Grand Bahama. “Western Air has agreed to fly a Fort Lauderdale to Freeport route this summer, and Bahamasair will fly more flights from Fort. Lauderdale to Freeport as well,” he told the House of Assembly.

“Also, on November 10, an inaugural Bahamasair flight will be direct from Charlotte, North Carolina to Freeport, Grand Bahama. We promised to bring energy to the economy of Grand Bahama and we are doing just that.”

As for the Electra purchase, Mr Cooper said it has agreed a Memorandum of Understanding (MoU) with the Government and will pay a $5m deposit once a sales agreement is signed. That deposit becomes non-refundable after a 60-day due diligence period closes, with the $95m balance to be paid within 120 days of the MoU signing.

“The Government has committed to standard concessions under the Hotels Encouragement Act,” Mr Cooper added, although he gave no details. “Electra has committed to an estimated $300m renovation to rebuild the Grand Lucayan into an environmentally sustainable, luxury resort.”

Three resort properties were detailed. A four to five-star branded luxury lifestyle hotel, featuring 198 rooms and 24 villas and targeted at corporate and leisure business; a four-star convention hotel with 535 rooms, featuring an amphitheatre and convention centre; and a 257-room condo-hotel style family resort with suites that are double the size of the Grand Lucayan’s existing rooms.

“Among the amenities at the resort there will be a world-class marina, a casino operated by a renowned casino operator and a golf course with an internationally-branded country club that will feature additional newly-built facilities and activities,” Mr Cooper said.”At the golf club there will be a full-service restaurant and golf school, there will newly built golf villas on the golf course grounds.

“The new resort will have at least 11 world-class restaurants and ten bars featuring Bahamian and international food and beverage options..... We expect this deal to be complete by September at the latest, with renovations and new construction immediately after but no later than January 1, 2023. Construction will be phased and some component of the resort will remain open at all times.

“Electra intends to retain current staffing levels that now exist as a minimum, in the operations, during the construction phase. All renovations and construction are expected to be complete by January 1, 2025, with the first renovated hotel to come on stream at the beginning of 2024,” the deputy prime minister added.

“The casino renovation is expected to be complete in the summer of 2024, and the other renovations and new builds coming on stream from the beginning of 2025 through the summer of 2025. The resort reconstruction and reopening is expected to create approximately 2,000 construction jobs and 1,000 permanent jobs. At least 80 percent of all jobs are to go to Bahamians.”