The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Resorts World Bimini’s “entire operations are in peril” as a result of the US government banning a key aspect of its business model due to alleged immigration violations, Tribune Business can reveal.

Court documents exclusively obtained by this newspaper reveal how Genting’s Miami cruise ship service, and its investment in the Bimini Bay Resort and expansion, billed as creating 500 new Bahamian jobs, have been jeopardised by US Customs and Border Patrol’s (CBP) decision to ban the vessel’s night-time sailings

The filings in the US District Court for Columbia (Washington D. C.), where Resorts World and its affiliates have launched a Judicial Review-style action challenging CBP’s decision, make clear their Bimini development model cannot survive without the revenues produced by their cruise ship’s night-time excursions.

And they confirm that the Genting-owned company faces the “potential loss of its $275 million investment in a destination resort and dedicated cruise ship” - the resort being Bimini Bay.

These developments provide a new twist to the controversy that has surrounded the Bimini Bay project, which is the subject of a Judicial Review challenge launched against it by the Bimini Blue Coalition, a group of Bahamian environmental activists.

While the Bimini SuperFast’s daytime sailings to and from Bimini are unaffected, the documents reveal that Resorts World has also been using the vessel for night-time excursions into international waters.

Passengers sail out from Miami for gambling and partying on the high seas until dawn, thereby generating a revenue stream that Resorts World admits is vital to sustaining its entire $275 million investment in both Bimini and south Florida,

The court documents make clear Resorts World’s business model could collapse as a result of the night-time sailing shutdown, which CBP has imposed under the US Immigration and Naturalisation (INA) Act.

It has done so on the grounds that ‘cruises to nowhere’, meaning the vessel does not call on another port, have to be 100 per cent crewed by US citizens or permanent residents. The Bimini SuperFast does not meet these criteria.

Gregory Karan, the senior vice-president of Bimini SuperFast Operations, the cruise ship end of Resorts World’s operation, made the impact on the company’s wider Bimini/Bahamas plans crystal clear in an affidavit filed on December 13, 2013.

“Without the evening excursion, Resorts World Bimini simply cannot generate the revenues need to continue the day excursions [to Bimini], meet our financial commitments and otherwise continue the foregoing contributions to the local economy in Miami,” Mr Karan said.

He added that replacing the entire 600-strong workforce on the cruise ship side of Resorts World’s operations would require it to pay millions of dollars in severance pay, “and place the entire operations of Resorts World Bimini in peril”.

A Resorts World Bimini spokesperson, when contacted by Tribune Business for comment, said they knew of the CBP issue and that it was “serious”, although they did not believe there was any impact for the Bahamian side of the operation.

The court documents suggest otherwise, and no formal statement was received from Genting/Resorts World Bimini prior to press time last night.

It is unclear whether the Christie administration has been appraised of the situation, given that it is relying on Resorts World Bimini’s $150 million hotel expansion project to increase Bimini Bay’s workforce from 300 to around 800 and stimulate the island’s economy.

Resorts World Bimini’s motion for an injunction that would lift the CBP ban, which the Karan affidavit supports, added: “The operations of Resorts World Bimini are still in a start-up phase, they are not yet profitable.

“When it made its quarter-billion-dollar-plus investment, Resorts World Bimini originally projected that its initial operating losses would not be permanent.

“To achieve profitability, however, Resorts World Bimini cannot afford to have the vessel idle. Without the Evening Excursion, Resorts World Bimini simply cannot generate the revenues needed to sustain its financial commitments and keep the business running.”

The US District Court, though, has so far refused to grant the injunction that Resorts World Bimini and its affiliates are seeking, although it has set a tight case management timetable.

The Bimini resort owner/developer alleged, though, that the CBP had performed a ‘u-turn’, giving the evening sailings an initial go ahead, only to change its mind and impose the ban after they had started.

“Resorts World Bimini faces harm that is - both in fact and as a matter of law - irreparable,” its attorneys alleged in court filings.

“This irreparable harm, as set forth in the accompanying affidavit of Gregory A. Karan, includes but is by no means limited to Resorts World Bimini’s inability to recoup, and potential loss of, its $275 million investment in a destination resort and dedicated cruise ship.

“While Resorts World Bimini stands to lose a lot of money, money damages alone cannot make Resorts World Bimini whole for a number of reasons....... The $275 million investment that is now in jeopardy because of the November 28, 2013, CBP decision was not one that Resorts World Miami made lightly.”

Mr Karan confirmed that night-time sailing by the Bimini SuperFast had been suspended from November 28, 2013, with the company having to cancel all its December schedule.

“The revenues from such cruises were anticipated to easily surpass the roughly $500,000 in revenues from the last full month of operations in October,” Mr Karan said.

“During the first full two months of operations alone, our evening excursion revenues had doubled and were on pace to help us begin a move away from primarily absorbing start-up losses.”

Mr Karan said Resorts World Bimini had suffered direct losses of $1 million from having to cancel two months’ worth of cruises, and the “elimination” of half its cruise schedule.

Yet he added that the total losses were “incalculable”, because the damage was undermining Resorts World Bimini’s reputation, as customer complaints started to come in.

“Resorts World Bimini anticipated building brand loyalty for the ‘total package’ consisting of the resort destination [Bimini], the day excursion and the evening excursion,” Mr Karan said.

“The resultant loss of future repeat business is significant but cannot be quantified with certainty.”