The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Freeport hotelier believes the Government's Grand Lucayan 'rescue plan' can work provided it does not interfere in management and operations.

Magnus Alnebeck, Pelican Bay's managing director, told Tribune Business that the Minnis administration's proposal was "not perfect" but could be viable if it confined itself to being a passive real estate investor.

Reiterating that Freeport and its tourism product were running out of time, Mr Alnebeck warned that it "will be very difficult to come back" if the Grand Lucayan status quo lasts for the whole winter 2017-2018 season.

Suggesting that the word 'nationalisation' ought to be avoided because of the "negative tone" it set, the Pelican Bay chief said of the Government's plan: "It's not perfect, but I think that as long as they see themselves as investors in real estate on behalf of the Bahamian people, and stay away from the operations aspect of it, finding a good brand and operator to run it, then it could be solid.

"The problem is when you get involved in the operations side that you're not experienced in. As long as they see themselves as investors in real estate, find a solid operator and use this as a short-term measure, it's not perfect but it's better than nothing."

Mr Alnebeck added: "If there is no other way, it's a brave step for them [the Government] but something that needs to be done.

"The problem arises if Government is in there trying to run a private business. As long as they are not getting involved in the hiring, pay and marketing I think it can work provided they have a solid operator. Hopefully that increases the value of the property, and at some point the Government can exit and make a profit on behalf of the Bahamian people."

Mr Alnebeck said there was precedent for the Government's Grand Lucayan model elsewhere in the world, with Sandals managing resort properties in Jamaica that were owned by that island's government.

The model of government ownership, private operator has also met with modest success before in the Bahamas. Prior to its sale to former Baha Mar developer, Sarkis Izmirlian, the then-Radisson Cable Beach resort (now the Melia) had generated a small net profit for the Government under its Bahamian operator, the Myers Group, based on accounts seen at the time by Tribune Business.

Mr Alnebeck also likened the Government's 'last resort' bid to reopen and/or sell the Grand Lucayan to the Bahamian taxi industry's structure, pointing out that most vehicles were driven by persons who did not own the plates.

"There are many taxis in the Bahamas owned by people not driving them. The driver is doing a good job and the person who owns it is irrelevant," the Pelican Bay chief said.

He added that numerous successful hotels worldwide were owned by real estate developers, pension funds and other financial investors, who were not involved in the daily operations - having outsourced this to brand operators and management companies.

While no details have yet been provided, Prime Minister Dr Minnis indicated the Government was in talks to partner with other, unnamed investors and take an equity stake in a group that would ensure the Grand Lucayan's re-opening in time for the winter 2018 season.

Dr Minnis said the Government viewed this action as similar to the auto and banking industry bail-outs undertaken by the Obama administration and UK government during the 2008-2009 recession.

He added that his administration's strategy was similar, too: Re-open the Grand Lucayan, turn it around, and then the Government would sell its equity stake to its partner investors or someone else.

Mr Alnebeck, meanwhile, said that while Pelican Bay was "doing very well" because of its corporate customer base, the remainder of Freeport's tourism market was almost entirely reliant on the Bahamas Celebration cruise vessel to generate business.

"We need it open," he told Tribune Business of the Grand Lucayan. "If it doesn't re-open for at least part of the upcoming winter season, it is going to be very difficult to come back.

"If somebody comes in and that leads to the opening of at least 50 per cent of it, at least we're stopping the downward spiral. But if you're looking at an end of summer [2018] opening it's going to be very difficult to come back."

Mr Alnebeck continued: "The tourism industry is almost non-existent apart from the Bahamas Celebration. We have some boaters coming, but nothing that's equivalent to the Sunwing Vacation programme of the last two years.

"Things turned around when Sunwing came in, opened Memories, and then sales were going up again. We had a long way to go to get back to 2005-2006 numbers, but we were going in the right direction.

"But then the storm came, Hutchison shut the property and that took the bottom out of the whole thing."