The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Grand Bahama’s largest investor was yesterday slammed for failing to properly kick-start repairs to the island’s storm-ravaged tourism product, despite pocketing millions of dollars in tax concessions from the Government.

K P Turnquest, the FNM deputy leader, told Tribune Business that “the most ironic part of this whole situation” affecting Freeport’s stricken hotel assets was the concessions granted to Hutchison Whampoa earlier this year by the Christie administration.

The Government, as part of efforts to restructure its relationship with the Grand Bahama Port Authority (GBPA), granted the Hong Kong-based conglomerate and all its Bahamian subsidiaries a ‘blanket’ 20-year extension of their real property tax, income and capital gains tax exemptions.

In contrast, all Bahamian and other foreign investors in Freeport have to apply to receive the same incentives, and these are reviewable every five years as the Government seeks to tie tax breaks to ‘performance’.

Hutchison Whampoa, though, has yet to demonstrate its gratitude by beginning essential repairs in earnest at its largest resort property, the Grand Lucayan, which is having negative knock-on consequences for Memories, the Port Lucayan Marketplace and Freeport’s cruise industry.

“They were given those extensions without any guarantees of investment, and they’ve pocketed the tax breaks,” Mr Turnquest, the east Grand Bahama MP, told Tribune Business of Hutchison Whampoa, as he criticised the Government for striking a deal that had yet to benefit Freeport.

“Our backs are up against the wall, and they have no solution,” he added of the Christie administration. “They’re out of time and out of ideas.

“You’re either going to give the same incentives to everybody or tie them [Hutchison] to measurable, deliverable result. The Government has no idea how to get favourable results from them for the wider economy.”

Many observers, and members of Freeport’s private sector, have privately confided to Tribune Business their belief that the Government gave up all its leverage over Hutchison Whampoa in return for the cruise port waiver (to facilitate Carnival’s project) and the $300 million Phase V container port expansion.

There was a widespread feeling that the imposition of real property tax would have forced the Grand Bahama Development Company (DevCo), 50 per cent owned and managed by Hutchison Whampoa, to become proactive and start developing its 70,000-80,000 acres in order to offset the new ‘carrying cost’.

“They’ve business more difficult to do in Grand Bahama with no result,” Mr Turnquest said of the Government’s much-trumpeted Freeport reforms, unveiled this summer.

“There’s no incentive for Hutchison and the Port Authority to develop. All they’ve done is add a bureaucratic burden on Bahamians, and create a disincentive for investors to come to Grand Bahama.”

Meanwhile, Freeport’s beleaguered tourism sector continues to languish, with industry sources speaking on condition of anonymity telling Tribune Business that the situation - fast approaching the peak winter 2017 season - is getting worse by the day.

With Hutchison yet to begin repairs in earnest at the Grand Lucayan, 1,000 rooms at the island’s largest hotel remain out of action. And, given that the Hong Kong conglomerate is the landlord for Memories, that resort property also has yet to be repaired, leaving its parent and affiliates (TUI and Sunwing) unable to set a re-opening date.

Obie Wilchcombe, minister of tourism, could not be contacted for comment yesterday.

However, one industry source told Tribune Business: “There’s so little activity, especially at Memories. You can drive there at 6pm and there’s not a light on in the place.

In the day, there are a few cars there, but no one’s doing anything at all, which leads me to believe there’s something going on between Sunwing and Hutchison as to whose responsible for the repairs, and when they will start.

“It’s really awful; it’s like a ghost town. It’s somewhat shocking that the Government have been so silent. They seem to be ducking the issue.”

Another source, also speaking on condition of anonymity, added: “Memories have not given any indication as to when they’re opening.

“The work has not even started on Memories yet; the repair work. It’s scary. It’s really bad. This island is really hurting. There’s no tourists; absolutely none. You go to Port Lucaya on Saturday, and there’s absolutely no one there.”

Tribune Business was yesterday told that Port Lucaya Marketplace’s owner, recognising the struggles, had offered tenants a 50 per cent discount on their December rents provided they paid by a certain date.

Prime Minister Perry Christie said that in Hurricane Matthew’s immediate wake, he had written to Hutchison Whampoa urging it to begin effecting immediate repairs to the Grand Bahama-based assets damaged by Hurricane Matthew.

Meanwhile, Tribune Business contacts suggested that Hutchison Whampoa, which has submitted a $120 million insurance claim because of Hurricane Matthew, did plan to effect repairs, but progress to-date had been “painfully slow”.

Mr Turnquest, meanwhile, expressed concern that with the Grand Lucayan up for sale for several months now, Grand Bahama might see a repeat of the Royal Oasis situation in 2004, when that property’s owner shuttered the resort and left with the insurance monies.

“From day one, that’s been a concern,” he told Tribune Business. “The Grand Lucayan is closed and who knows when it will fully open? The casino is closed, there are lay-offs in the industrial sector. It does not bode well for the immediate future of Freeport.”

Mr Turnquest also pointed to the Government’s failure to-date to pay the 100-plus employees made jobless by the Treasure Bay casino’s closure, pointing out that this was its responsibility given that it had taken over payroll for the past two years in a bid to keep the facility open.