The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Cabinet minister and Grand Lucayan Board members will today visit Miami to view an updated blueprint for Royal Caribbean’s multi-million transformation of the resort and nearby harbour.

Dionisio D’Aguilar, minister of tourism and aviation, confirmed to Tribune Business that he and other members of the delegation have asked the cruise line and its ITM Group partner for a new look at their “vision and plan” for the resort and surrounding area.

Voicing optimism that “a deal will be struck” to sell the Grand Lucayan to the joint venture as part of a wider development to overhaul Freeport into a destination product, Mr D’Aguilar said he hoped to conclude an agreement with ITM Group/Royal Caribbean “certainly by the end of the year”.

“We’ve asked them to update us on their vision and plan,” he told this newspaper of today’s Miami meeting. “As time goes on you’re always fine tuning and reworking, and I’m waiting to see their vision and plan on how they intend to redevelop the property. That’s kind of where we are.

“This is a natural progression of the discussion and vision of what’s going to happen there. Everything is on schedule, going to plan. We’re negotiating, and that has its ups and downs, twists and turns.”

Michael Scott, chairman of Lucayan Renewal Holdings, the government-owned vehicle that owns the resort, declined to comment when contacted by Tribune Business and directed this newspaper to Mr D’Aguilar.

Tribune Business sources, speaking on condition of anonymity, said the Government delegation was eager to see what ITM Group/Royal Caribbean are proposing and their planned overall investment in overhauling Freeport’s tourism product.

They added that the government, and Lucayan Renewal Holdings Board, are hoping to conclude a sales agreement for the Grand Lucayan’s disposal by the end of August given that the joint venture’s due diligence period will have expired by then following a previous month’s extension.

“They also want to finalise the concessions, subsidies and incentives under the Heads of Agreement, and see where everything is in terms of timing,” one source said of the group’s plans.

Mr D’Aguilar last night said he was “not absolutely certain of the deadlines and timelines” in the negotiating process, but added that he was aware of “a due diligence period, a period of acquisition and a transfer period”.

“It’s all part of the negotiating process,” he said, adding of the investment incentives: “It’s nothing out of the ordinary. Almost everybody coming into The Bahamas to do a project looks for concessions. They put forward their proposal, we negotiate and it goes to Cabinet for final approval.”

Tribune Business previously reported that ITM and Royal Caribbean, whose joint venture is called Holistica, have been working to tie down airlift and sealift components for the project before fully engaging the Government in talks to seal a Heads of Agreement and the resort’s sale.

This newspaper was told that ITM, in particular, had become increasingly uneasy over what it perceived as difficulties in tying down the Hutchison Whampoa-controlled Freeport Harbour Company over redevelopment of the harbour.

That project, and addition of extra cruise berths, is critical if ITM/Royal Caribbean are to generate the passenger numbers necessary to sustain a transformed Grand Lucayan. Multiple Tribune Business sources, though, said the harbour and cruise port deal between ITM and Hutchison was eventually signed at the beginning of July.

With sealift out of the way, attention has now turned to Grand Bahama International Airport - also ultimately controlled by the Freeport Harbour Company - given that securing sufficient airlift is also key to the ITM/Royal Caribbean plans.

Tribune Business previously reported that the airport “is on the radar” of all involved in the negotiations, given that its relatively high fees in comparison to regional rivals have been blamed in the past for deterring airlines from flying into Grand Bahama.

Mr D’Aguilar last night declined to comment on the status of negotiations over the airport, saying “that’s too specific and I’d prefer not to go there”. He did, though, maintain his optimism that a deal will eventually be concluded.

“I’m very confident that something will happen and a deal will be struck,” he told Tribune Business, “but long and hard negotiations are continuing. We’re still going through that process, which will probably continue on a good many months. I would hope that certainly by the end of the year it will be done.”

The ITM/Royal Caribbean project was branded “a game changer” for Freeport’s economy when revealed by Tribune Business earlier this year, as it promises a revival of the tourism industry that could - together with Carnival’s $100m cruise port - help drag the city out of a 15-year slump.

The Mexican port developer and cruise line have said the $130m first phase investment will cover a 24-month period, meaning that a revived Grand Lucayan - complete with water-based theme park and associated retail, gaming and restaurant amenities - may only be ready to receive its first guests come winter 2021 if the current timeline.

The joint venture, if the deal closes, will pay $65m to acquire the Grand Lucayan as part of a development aiming to create 2,000 new jobs in its first phase. This will bring in an extra two million cruise passengers to Grand Bahama every year, transforming the area into “a world class destination”.

As previously detailed by Tribune Business, the proposal focuses on developing water-based adventure theme parks at both Freeport Harbour and around the resort. The Grand Lucayan will be upgraded to “five-star hotel accommodation”, and feature multiple gaming, entertainment and restaurant experiences.

Although few specifics have been released, the joint venture envisions combining Port Lucaya and Freeport Harbour into a “unique destination” that will set Grand Bahama apart from its competitors, not just Florida and other Caribbean nations, but Nassau/Paradise Island and the Family Islands.