The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Grand Bahama’s departing casino operator has warned “it may take months” for the island’s tourism business to return to pre-Matthew levels, while uncertainty over its key hotel properties “could not have come at a worse time”.

Susan Varnes, in a November 18, 2016, letter to Treasure Bay Casino staff, said the combination of Hurricane Matthew’s impact, uncertainty over the Grand Lucayan Resort’s sale, and the December 4 expiration of its lease had prompted the operator to quit Grand Bahama.

In a communication to staff, which has been obtained by Tribune Business, the Treasure Bay president first inquired as to the welfare of her Bahamian employees before hitting them with an unwanted early Christmas present.

Ms Varnes wrote: “As many of you are aware, since Hurricane Matthew we have been working with government officials to formulate a plan which would best benefit all of you.

“Given the fact that our lease expires December 4, the sale of the resort is pending and it may take months for tourism to return to pre-storm levels, it has been determined that Treasure Bay will not be reopening the casino.”

She added: “We will be carrying out our closure over the next few weeks, and are working with government officials on the process to pay out each of you your redundancy pay.

“It is with a heavy heart that we are unable to transition with another operator, as had been our plan over the last several years.”

Ms Varnes’s confirmation that no replacement operator has been lined up means that the immediate future of Grand Bahama’s sole casino is uncertain, with closure a distinct possibility.

Tourism sources on Grand Bahama suggested that around 80-100 employees would be impacted by the casino’s closure, and Treasure Bay’s pull-out, although this could not be confirmed before press time.

They added, though, that the short-term outlook for Grand Bahama’s tourism industry was much bleaker than the Government was letting on, with much riding on how quickly the major resort properties - Memories and the Grand Lucayan - will fully re-open.

Obie Wilchcombe, minister of tourism, could not be reached for comment by Tribune Business before press time.

However, while Memories and the Grand Lucayan are supposed to re-open this month prior to the Christmas season, one tourism source said a website operated by the former’s affiliate was suggesting a later relaunch.

The first date that Sunwing is offering a Memories ‘package’ for is February 4, 2017, something that was confirmed by Tribune Business’s research.

Tensions between Sunwing/Memories and the owner of their Grand Lucayan landlord, Hutchison Whampoa, over when the latter will effect hurricane repairs to the property are also said to be persisting.

As for the Grand Lucayan, which has been in the midst of a sales process for several months, Tribune Business sources suggested that it had submitted a $120 million insurance claim to cover Matthew-related damages.

This newspaper was told that while little exterior damage was visible to the naked eye, numerous parts of the resort property had suffered water intrusion, with balconies and the grounds also hard-hit by the Category Four storm.

Tribune Business was told that Hutchison Whampoa, and its Cheung Kong Property Holdings affiliate, plan to use the insurance proceeds to effect repairs and improve the property. However, this work is likely to last into 2017, with March now being pegged as a possible opening date.

“It really is going to push this place back a minimum of a year until we get the Grand Lucayan open,” one tourism industry source said, speaking on condition of anonymity.

“It’s shocking, but that’s how it is. I think the next six months are going to be very difficult.”

With Memories and the Grand Lucayan largely ‘out of action’, and only 200 rooms at the latter’s Lighthouse Point now open, around 1,000 rooms have been taken out of Grand Bahama’s inventory.

This, Tribune Business was told, is having negative ‘knock on’ repercussions for other aspects of Grand Bahama’s tourism product, particularly the cruise ships.

The Celebration, which has currently been diverted to Bimini, is unable to resume its Grand Bahama voyages until sufficient room inventory is available for its overnight package guests.

The Memories closure, and uncertainty over whether the Grand Lucayan will have a new owner, is also impacting the search for a replacement casino operator. It was suggested that the Government, which has been heavily subsidising Treasure Bay to induce them to stay, may even take over operations itself - bringing back memories of the Hotel Corporation days.

And the loss of cruise ship business is also said to be taking a toll on businesses in the Port Lucaya Marketplace, while water sports operators are understood to be upset at the closure of the public beach access by the Grand Lucayan.

K P Turnquest, the east Grand Bahama MP, expressed similar concerns about the ‘vicious circle’ that was impacting all of the island’s tourism product as a result of the uncertainty surrounding its largest resort.

He questioned whether Hutchison Whampoa/Cheung Kong Property Holdings would make the necessary repairs to the Grand Lucayan, as they may elect to leave this to a buyer if the property’s sale is imminent.

This, Mr Turnquest added, could push the resort’s opening back even further, as he added: “There is other information that supports the view that the announced December opening may not happen. We’ll have to wait and see.

“If we can’t get those two major properties [Grand Lucayan and Memories] open, that is going to be a tremendous impact, not only with the island’s GDP contribution but the ability of a number of tourist-related businesses to restart.

“It has tremendous implications for employment, for people being able to meet their obligations, so there are knock-on effects throughout the economy.”

Mr Turnquest expressed hope that parts of Memories and the Grand Lucayan could be pressed “back into action relatively quickly”, identifying the former, in particular, as vital to the island’s tourism industry.

“We can’t afford for that to miss the winter season,” he told Tribune Business. “This situation could not have happened at a worse time, as we are heading to the busy season.

“This is when a lot of people make their annual income, and that’s going to have a significant effect on the whole economy when the insurance monies and reconstruction process die down. These things are really going to show up.”

While hopeful that Memories and Hutchison “will come through for us”, Mr Turnquest said a rapid re-opening was made even more urgent by the fact that Grand Bahama was already “losing position in the marketplace”.

“We can ill-afford this as we are already on a very weak path, so any loss of business is going to be disruptive for Grand Bahama,” he told Tribune Business.