The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

An ex-tourism minister yesterday urged the government to become "the driving force for Grand Bahama's resurgence", agreeing that this cannot be left to the private sector.

Obie Wilchcombe, pictured, called on the Minnis administration to seize "a great opportunity" to restructure the island's tourism product and differentiate it from Nassau, arguing that any Grand Lucayan purchase should be viewed as "the beginning of anew" rather than a last resort option.

The former West End MP said there were "too many properties sitting idle" for the Government not to intervene, pointing to the Royal Oasis's near 14-year closure and the Xanadu's search for a buyer as further reasons for its involvement.

Mr Wilchcombe warned against depending on the private sector to lead any Grand Bahama tourism revival, conceding that the former Christie administration - of which he was part - had suffered for doing so. He added that it endured an endless wait for investors to make things happen, only for potential deals to "die".

His call came as the prime minister's press secretary, Anthony Newbold, confirmed Tribune Business's July 12 revelations by revealing that the Wynn Group's proposal to purchase the Grand Lucayan was "unacceptable to the government" and had been "rejected".

While Mr Newbold did not explain the reasons for its rejection, Tribune Business sources previously suggested Wynn had effectively been looking to the Government to finance its $70 million purchase for it through a combination of tax breaks, marketing and airlift subsidies and other concessions.

"Wynn is expecting the Government to pay for it, and they walk in as owner," one contact, speaking on condition of anonymity, previously said. "I can tell you the Government isn't interested in that, and has no choice but to start to look for another buyer immediately."

The Minnis administration is now scrambling to try and find a new Grand Lucayan purchaser within the next 30 days, with the property's current owner, the Hutchison Whampoa offshoot of Cheung Kong (CK) Property Holdings, warning it will close the entire resort by then if no buyer is secured.

Arguing that the Government needed to view the situation as an opportunity, rather than a challenge, Mr Wilchcombe told Tribune Business: "I think the Government has to find a way to capitalise the Hotel Corporation and utilise it to be the driving force for the resurgence of tourism in Grand Bahama.

"There are too many properties sitting idle. We have to think about what exists. I agree with the Prime Minister that the Grand Lucayan is the heart of the tourism plant right now and some effort must be made."

Should the government have to acquire the Grand Lucayan by itself, it will need to find considerably more financing that the $25m set aside in the 2018-2019 budget to fund its acquisition of a minority equity stake - believed to be 20 percent - in Wynn's majority purchase of the property.

Apart from likely having to match Wynn's $70m offer, Tribune Business sources said the government will need at least a further $25-$30m to fund the necessary renovations so the property can re-open.

That will take its total outlay to near $100m, quadruple what is allocated in the budget, and creating a sizeable fiscal hole in its plans that will have to be filled by extra borrowing or re-purposing monies from other areas. Some sources even predicted that between $150-$200m might ultimately be required.

While acknowledging that a government acquisition of the Grand Lucayan was "the last resort" option, Mr Wilchcombe said it could also represent "the beginning of anew".

To reduce any upfront purchase costs, he suggested that the Government seek to lease the resort from CK Property Holdings while also taking an option to purchase. The former minister added that it could also offset any acquisition price by "relaxing" the taxes paid by Hutchison Whampoa's other Grand Bahama interests, such as the Grand Bahama Development Company (DevCo), Freeport Container Port and Freeport Harbour Company.

"The Government needs to have an impact on the tourism industry in Grand Bahama right now," Mr Wilchcombe told Tribune Business, "because we have to appreciate that if nothing happens the tourism appeal is going to be lost, and it will take a lot more time and money to bring Grand Bahama back.

"The Government is going to have to give to get. It's going to have to do that to make that happen. They should let the Hotel Corporation work on getting the entire tourism plant restructured, talk to Carnival about its tourism development in east Grand Bahama, talk to the owners of Xanadu, and look at the Royal Oasis again as a venue for conferences and events.

"I think it's an opportunity, a great opportunity, for the Government to take ownership of the tourism plant in Grand Bahama," the ex-minister continued. "The Government has to take the lead in getting it done, and not take the dependency route like we had done.

"What happened is people came in, we were waiting for them, the wait goes on for ever and it dies. The Government has got to become the driver, getting it done, and doing it in a timeframe that favours it. They can put business people in there to make it work. I think we can do it."

The Grand Lucayan's post-Matthew closure has resulted in much of the property being shuttered for 21 months, causing the loss of over 1,000 jobs and 59 per cent of Grand Bahama's hotel room inventory - effectively taking the island off the stopover tourism map.

CK Property Holdings had been running a sales process for the Grand Lucayan when it was interrupted by Hurricane Matthew. Wynn then emerged as the potential buyer with a $110 million offer just prior to the 2017 general election, but was unable to close the deal. It walked away, and the Minnis administration then revealed its plan to take an ownership stake in a purchasing group.

This prompted Wynn to return with a $70 million all-cash deal, which was accepted by CK Property Holdings. The Government suspended its plan, and the two companies signed a Letter of Intent (LoI) for the Grand Lucayan's purchase just before Christmas 2017.

Dr Minnis suggested then that the purchase would close by end-February 2018, but no deal was forthcoming and the Grand Lucayan's fate has dragged on for five more months with no resolution seemingly in sight.

In the meantime, Wynn has broken ground on its $120 million Goodman's Bay condo-hotel in New Providence, with many observers questioning why the Government allowed this to proceed because it meant surrendering any leverage it had over the Grand Lucayan negotiations.

Tribune Business sources have previously suggested that the former Christie administration encouraged Wynn to look at the Freeport-based resort in return for helping to sort out covenant and zoning restrictions that were then-impeding its Goodman's Bay development.