The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A GOVERNMENT minister has admitted that "putting the right pieces together is not easy" as it bids to transform the Grand Lucayan and surrounding strip into a true tourist destination.

Kwasi Thompson, minister of state for Grand Bahama, conceded that solving the 18-month closure of Freeport's 'anchor' resort was "not an easy project", given the need to ensure it had the necessary hotel brands to attract and sustain the necessary airlift. Addressing the Senate in the mid-year Budget debate, Mr Thompson indicated the Government was seeking to balance the "urgent" need to re-open the Grand Lucayan with ensuring the resort - and surrounding tourist amenities - became profitable, standalone entities that were weaned off annual multi-million dollar subsidies.

"We are taking advantage of this opportunity with the Lucayan strip, and while the hotel must be redeveloped urgently we are seeking to create the right destination for Grand Bahama," the Minister explained.

"Putting the right pieces together is not easy. This includes airlift, cruise vessels, tours and activities, and dealing with cost of electricity, consumables and taxes. It is a careful balancing act."

The Grand Lucayan closed in early October 2016 as a result of damage inflicted by Hurricane Matthew, just when its owner, Cheung Kong (CK) Property Holdings (effectively Hutchison Whampoa's real estate arm) was running a sales process for the resort.

The Toronto-based Wynn Group emerged as the potential purchaser, and signed a Letter of Intent (LoI) with CK Property Holdings to acquire the resort when the former Christie administration was in office.

The deal, though, was never concluded and Wynn withdrew amid doubts over whether it had the necessary financing to complete the $110 million purchase. The Minnis administration, confronted with this after taking office, then announced it would participate as an equity investor in a deal to purchase the Grand Lucayan, likening its involvement to the US auto industry 'bail out'.

The Government emphasised it would have sought a quick exit, but suspended its plans after Wynn returned with a new, improved $65 million all-cash deal that was more to CK Property Holdings' liking.

The two sides signed a new LOI just before Christmas, with the Prime Minister suggesting the deal would close by end-February. That milestone was missed, and the 'chatter' surrounding the Grand Lucayan deal subsequently went quiet with little talk of progress nearly two months past that target.

Tribune Business sources have provided mixed information, with some alleging that CK Property Holdings is being "difficult", others suggesting the Government may again purchase the resort, and further claims that the taxpayer will finance Wynn's purchase through a combination of subsidies, tax breaks and promotional concessions.

One source suggested that the potential re-opening timeline involves the former Memories property opening in October, with the full complex operational by March next year. They suggested that CK Property Holdings may be motivated to close a deal because the business interruption payments it has been receiving end in June.

Mr Thompson admitted solving the Grand Lucayan's woes has "taken some time", with a "recognisable major hotel brand" key to establishing the resort as a destination.

Recalling the various acquisition attempts, he said: "When we came to office the parties had not agreed, and were nowhere close to agreeing the operators of the hotel. It therefore took some time to determine who the potential operators would be.

"Second, the financial demands of the operators where not acceptable to the Government, which led to the Government making an offer to purchase the hotel themselves. Third, it was only after the Government made this offer that Paul Wynn returned with an offer acceptable to Hutchison and led to the signing of a Letter of Intent in late December that came into effect in January.

"Since January, the Government has been engaged with all the parties in negotiating an acceptable Heads of Agreement. The Grand Lucayan is not an easy project and requires special attention to who will operate the hotel; proper and adequate airlift; protection of Bahamian employment during renovations and operation; and what concessions are needed to keep the operation viable.

"We are confident that we are at the end of this process and will soon see renovations and the reopening of the entire resort." Mr Thompson, though, provided no timeline for when this will happen.