The Tribune

Fears were mounting yesterday that the continued delays to Baha Mar’s opening could spark litigation between the parties involved, a Caribbean tourism expert warning they had “better get their act together” to avoid lasting damage to the project and the Bahamas.

Scott Smith, senior vice-president at Atlanta-based PKF Consulting, expressed hope that any legal action involving Baha Mar, and its Chinese and hotel brand partners, would - “heaven forbid” - not cause any further roadblocks for the $3.5 billion project’s construction.

He warned that if this happened, it would leave the Bahamian government “on the hook”, and potentially “tarnish” the Bahamas’ reputation as a tourism destination.

Mr Smith, though, expressed hope that neither Baha Mar nor the Bahamas would suffer any long-term damage as a result of consecutive missed opening deadlines, suggesting “all will be forgotten by this time next year” provided there are no further setbacks.

This is a sentiment unlikely to be shared, at least for the moment, by the numerous visitors who have booked hotel room stays at Baha Mar for the end-March and April period.

They were busy slamming Baha Mar yesterday on its Facebook page, with several questioning why the developer could not have informed them that tomorrow’s opening was cancelled at the weekend, when they contacted it.

Nick and Mia Zuberbuhler wrote: “So many mixed messages. When we talked with you on Sunday, it was clear that the resort was all ready, just finishing some details with workers, restaurants, etc.

“This message makes it sound as if the resort isn’t even physically ready yet. We re-booked for May 16, and to be honest, I will be shocked if it happens. Ten hours on the phone with airlines already, and I am hoping that May 16th doesn’t bring the same thing.”

Amanda Wagner added: “This is so disappointing. I’m booked there for Friday. Two days notice is ludicrous and unprofessional.”

And Ree Mannino said: “How could you do this two weeks before we are booked? We just called two days ago to book our cabanas. This is beyond disappointing. Now what?”

Baha Mar’s social media operators were in full damage control mode yesterday, churning out fulsome apologies and promising that its reservations department would contact all impacted guests to reschedule their travel arrangements.

Yet there is little disguising the short-term damage to Baha Mar, and it is likely the Ministry of Tourism may have to get involved to ensure there is no wider fall-out for the ‘Bahamas’ brand’.

Robert Sands, Baha Mar’s senior vice-president of government and external affairs, last night said the developer would be “accommodating guests who have booked” and offering them alternative “options”.

He added: “We would rather face the short-term pain of this delay in exchange for the long-term satisfaction of delivering on our commitment to our guests.

“It has become clear that the March 27 date we established for our soft opening, based on CCA’s [China State Construction’s] assertions, would not allow guests to truly experience the unique aspects of Baha Mar. We expect to celebrate our grand opening as scheduled for May.

“Any project of this scope is subject to construction issues and other delays in its initial phase. Clearly, any developer would prefer not to change its schedule.”

He did not respond to Tribune Business questions over the litigation concerns, or the potential financial losses suffered as a result of the delayed opening.

Mr Smith, meanwhile, said he was “sure” litigation would flow from the delays, given the size and scope of the $3.5 billion Baha Mar project.

“Obviously, damages have been incurred by the brands and other people,” he told Tribune Business, referring to Baha Mar’s brand partners - SLS, Rosewood and Grand Hyatt.

“That’s a situation to be expected, but nothing to be surprised at...... Given the context of this development, and the developers, I would think there would be some sort of litigation.

“Hopefully it would be mitigated by arbitration and not go through the courts for everyone’s sake. What they don’t want is to have the Bahamas Government on the hook, and their reputation tarnished as a destination.”

The management contracts between Baha Mar and its three hotel brands likely contain specific performance clauses related to when the development is scheduled to open, and mechanisms to compensate for any loss of revenue sparked by delays.

And Stephen Wrinkle, the immediate past Bahamian Contractors Association (BCA) president, said he had been informed by Baha Mar president, Tom Dunlap, that the contract with China State Construction contained “time and place commitments”, and penalties if the contractor missed these targets.

Such construction and hotel performance-based contracts thus provide the basis for financial compensation claims and subsequent litigation between the various stakeholders at Baha Mar.

Yet any claim by Baha Mar against China State Construction will likely be complicated by the fact that the latter is also its $150 million equity partner in the project, plus the fact it is owned by the Chinese government.

“If it continues the way it has been, and there’s litigation, heaven forbid the construction stops,” Mr Smith told Tribune Business. “As long as it keeps going.... It’s no surprise a project of this magnitude runs into problems.

“With a development of this magnitude, everybody needs to perform the way they were contractually supposed to perform. That’s really for everybody’s good. They need to get this right.

“At the end of the day, it’s going to be a fantastic product and fantastic destination. It’s obviously going to make an impact on the destination and market. It’s going to be interesting, the next couple of years.”

Mr Smith said Baha Mar may suffer “negative stigma” in the short-term as a result of missing its second opening deadline, but suggested there would be no wider effects for the Bahamas as a tourism destination.

This was because Atlantis had already developed the market for mass travellers and wholesale groups, and he added: “If there’s any damage, it’s short-lived at this point in time.

“Next year, when it’s minus 20 degrees in the US, no one will remember any of this. This time next year, hopefully all this will be forgotten and it’s full steam ahead.

“But they had better get their act together.”