The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Freeport’s largest resort will be closed unless its current owner can find a buyer “within a reasonable period of time”, a move that would threaten hundreds of Bahamian jobs and deliver a major blow to its tourism economy.

The warning on the Grand Lucayan was delivered to the Government’s Hawksbill Creek Agreement Review Committee last summer by Hutchison Whampoa’s property division, which has now been spun-off and renamed Cheung Kong (CK) Property Holdings.

It came in a response sent by Graham Torode, a Hutchison Lucaya director, to the Committee’s question on the company’s plans for the Grand Lucayan, and whether it had identified a buyer or new investor.

Mr Torode responded: “The Lighthouse Pointe property is currently being refurbished to put it back into stable condition.

“Upon completion, the entire resort will be placed on the open market. If a buyer cannot be identified within a reasonable period of time the resort will be closed.”

The latter development, should it arise, would have major ramifications for the quality of Freeport’s tourism product, given that the Grand Lucayan is the largest - and ‘anchor’ - property on Grand Bahama, acting as its sole mega resort and casino gaming attraction.

It would also represent another body blow to the already hard-pressed Grand Bahama economy, given the several hundred lay-offs that would result and the subsequent ‘ripple effect’ throughout society.

Mr Torode’s response also suggestes that the multi-million dollar Lighthouse Pointe upgrade was only undertaken to make the Grand Lucayan more attractive to a potential buyer.

There has been no indication of any change in CK Property Holdings’ thinking towards the Grand Lucayan since Mr Torode’s June 11, 2015, e-mail, especially since the formal sales process for the resort has commenced - just like he said it would.

CK Property Holdings has appointed HVS Capital Corporation as its adviser and manager for the sale of the 409-acre resort via a sealed bid auction, which is due to be held exactly a month from now on June 10, 2016.

Prime Minister Perry Christie, in unveiling the Government’s agreement with the Grand Bahama Port Authority (GBPA) on reforms to Freeport’s governance and investment climate, yesterday said the Grand Lucayan sales process was “going well”.

He provided no details, other than saying the Government was working closely with HVS, a possible sign of the importance surrounding its ability to find a purchaser that satisfies CK Property Holdings’ needs.

“As part of the process of revitalising the tourism industry on Grand Bahama, the owners of the Lucayan Beach Hotels, casino and golf courses are engaged in the process of securing new investors with the resources and expertise to acquire and successfully operate these prime assets,” Mr Christie said.

“I am advised that the process is going well. My Government has agreed to work closely with HVS Corporation, which is handling the sales process, as well as the owners of these properties and prospective buyers with a view to achieving an outcome that will inure to the benefit of the people of Grand Bahama.”

The closure threat may also be why Prime Minister Perry Christie blasted union threats of strike action at the resort earlier this year, a development that would give CK Property Holdings further incentive to act.

The Grand Lucayan has incurred consistent operating losses of between $10-$20 million per year since opening in 2001, forcing the Hong Kong-based conglomerate to subsidise the property by injecting millions of dollars annually.

Thus the keeping the resort open could be seen as an ‘act of charity’, given that CK Property Holdings complained about the relatively high cost of Bahamian labour - and associated productivity - when it met with the Government in London pre-Christmas 2015.

While CK Property Holdings’ preference is to sell the Grand Lucayan complex as a single transaction, bids for individual hotel, casino and other assets will be considered. It will also provide financing to “appropriate bidders” to assist any purchase.

The Memories-operated part of the Grand Lucayan, though, is likely to be exempted from any closure, with Mr Christie yesterday crediting it for cutting the Government’s previous $29 million Grand Bahama tourism subsidiary in half.

The Grand Lucayan Resort complex has a total of 1,271 guest rooms. The resort complex includes four hotel elements: the 10-storey, 528-room Breaker’s Cay tower; 198-room Lighthouse Pointe, newly renovated as all-inclusive; 23 Lanai Suites - all with 12 food and beverage outlets and three swimming pools; plus the 522-room Memories Beach Resort (presently leased to a third-party operator).

Other amenities include a 40,000 square feet conference centre, including a 15,000 square feet ballroom; 16 breakout rooms; 50,000 square feet of outdoor function space; a 23,375 square feet casino with 25 gaming tables and 195 slot machines; a 25,000 square foot destination spa and fitness centre; two golf courses; four multi-surfaced tennis courts and 15,000 square feet of retail space.