The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The government was yesterday urged to seek alternative purchasers for the Grand Lucayan following confirmation it has reverted to plans to take an ownership stake in the property.

Carey Leonard, pictured, the former Grand Bahama Port Authority (GBPA) in-house counsel, told Tribune Business this suggested to him that the Toronto-based Wynn Group, the long-time front-runner to acquire Freeport's "anchor" resort property, was "not the right match" as its owner.

The now-Callenders & Co attorney said revelations by Carl Bethel QC, the attorney general, that the Government had committed $25 million in its Budget to financing the equity stake and other support - despite no deal having been concluded - suggested a sale was "as far away" as ever.

A Tribune Business source recently suggested that the Government is going to take a minority 20 per cent equity stake in the Grand Lucayan's purchase, with Wynn holding the majority 80 per cent interest, although that has not been confirmed.

They added that Planet Hollywood was among the resort/casino brands being talked of as operators, with the Government having seemingly returned to the plan announced 10 months ago by the Prime Minister when he first revealed its intention to take an equity stake in the Grand Lucayan purchasing group.

But, assessing Mr Bethel's comments, Mr Leonard told Tribune Business: "It seems to me that we don't have a deal yet, and we're as far away from it as we have ever been. It doesn't look like they've made any progress at all. They've [the Government] been talking this up for the last year and nothing has happened.

"I really think we ought to go looking and find someone else to buy the hotel, as either these guys [Wynn] either don't have the wherewithal or don't have the plan to make it work. I don't think they're the right match for this hotel."

Next week will mark the 19th month of the Grand Lucayan's post-Hurricane Matthew closure, which has cost Freeport's economy around 1,000 jobs and its tourism product some 59 per cent of its room inventory.

The closure of two of the resort's three hotel properties has left the city with little stopover product to market, leading it to 'miss' two winter seasons with a third fast-approaching, and forcing the closure or downsizing of many businesses in the Port Lucaya Marketplace and wider Lucayan strip.

Mr Leonard yesterday suggested that a golf-based plan was needed to revive the Grand Lucayan, exploiting its two golf courses and others that exist in Freeport to attract a high-end niche market that the Bahamas typically targets.

"We really need to go looking for somebody who has the proper plan, and I think it ought to be related to golf," he told Tribune Business. "We harp too much on the water, sun and sand. We have two golf courses, the one at the Princess [Royal Oasis] and there's a nine-hole course.

"Golfers have much more money, and it's the type of market we go after. The more I think about it, it's apparent Wynn is not the right match. We need someone focused on the golf side who can bring high net worth people to the island. We really need a good group to go in and make it work."

Mr Leonard said business tenants in the Port Lucaya Marketplace, who rely heavily on the Grand Lucayan to produce the majority of their customers, have been "waiting with bated breath" for the resort's sale. "I don't know how much longer they can hold on," he added."

Cheung Kong (CK) Properties, the entity into which Hutchison Whampoa spun-off its real estate assets, had been running a sales process for the Grand Lucayan when it was interrupted by Hurricane Matthew. A dispute with Memories, the resort operator affiliate of Sunwing, saw the Canadian brand depart from the resort after laying off its Bahamian staff.

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 $65 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.

Prime Minister Dr Hubert Minnis suggested then that the purchase would close by end-2018, but no deal was forthcoming and the Grand Lucayan's fate has dragged on for four 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. Paul Wynn, its principal, reassured that negotiations on the Grand Lucayan were making progress, but gave no specifics and was very vague.

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

Now, Mr Bethel, under pressure from Opposition senators over a 125 percent increase in the budget for the Ministry of Finance's "tourism contractual obligations", has confirmed some $25 million has been allocated to finance the Government's Grand Lucayan equity stake along with marketing and airlift support.

This is despite no deal having been concluded, with the Government's ownership plan having aroused previous controversy. For some it rekindled dark memories of Hotel Corporation ownership during the Pindling administration, when millions of taxpayer dollars were squandered on financing loss-making government resorts.

The Government, though, always presented its plan as akin to the US auto and UK banking industry bail-outs in the aftermath of the 2008-2009 recession, with the intention being to exit its ownership investment as rapidly as possible.

The airlift and marketing support, however, call into question its previously-announced intention to wean the Grand Lucayan - and Freeport's wider tourism industry - off subsidies that at one point hit $29 million per annum.

The Government has always talked about transforming the resort and wider strip into a 'destination' product that can support itself, with Wynn as the 'real estate owner' and a variety of high-end resort brands providing the operating expertise.