The Tribune

By KHRISNA RUSSELL

Deputy Chief Reporter

krussell@tribunemedia.net

PROGRESSIVE Liberal Party Deputy Leader Chester Cooper says he does not trust the Minnis administration’s handling of the Grand Lucayan deal following its announcement two days ago that a letter of intent was signed with Royal Caribbean and the ITM group for ownership of the hotel.

Among his concerns are the government purchased the resort for $65m and incurred closing costs along with severance pay for line staff and managers among other things, but sold the resort to the new developers for the same price it was acquired.

Earlier this month, The Tribune reported the government spent $9.2m on operations and payouts to line staff since it temporarily took ownership of the resort. This broke down to $6m for operations and $3.2m to line staff who chose to separate from the hotel.

Ahead of Mr Cooper’s comments, The Tribune raised the issue with Lucayan Renewal Holdings Chairman Michael Scott. He said the government was expected to “break-even” with the sale, adding there were sweeteners in the deal that compensated for the purchase price.

An initial investment of $195m, which includes $65m for the purchase of the hotel, has been earmarked for the first phase of the development, which will take place over a 24-month period, it was revealed Wednesday during the signing announcement.

“The profit is going to come in the development. Don’t people get it?” Mr Scott told this newspaper.

Asked about operational costs being taken into account, he said: “No one pays operational costs. If you’re selling your house, if you can’t make a profit you at least break even and then the operational costs are the operational costs. That’s stupid.

“Now where the government is making a profit on this is with the commitments over a two-year period to redevelop the hotel, add a theme water park to the to the Lucayan complex, add the multi-mobile transportation linkage between the hotel, Port Lucaya and the Freeport Harbour and the development of the Freeport Harbour. That’s the sweetener in the deal.”

Mr Scott said the government ultimately decided not to renovate any part of the Grand Lucayan as was initially planned.

“We negotiated the price. It’s a break-even price for the hotel. So why would we pump more money into renovations? Let them do that. Besides why would you renovate that and they are probably going to substantially restructure the Grand Lucayan complex, which means that some parts of it may come down.

“We are not going to anticipate their final plans which are being worked out now nor are we going to put money into something, which will be effectively negative.”

In a speech to constituents in Bimini last night, Mr Cooper chided the government, saying given its handling of the Disney Lighthouse Point deal, he was sceptical.

He told supporters while this was a good thing for the Grand Bahamian economy, “some darkness” was likely in the details.

“I notice the prime minister didn’t talk about the Grand Lucayan in his national address,” he said. “But all of a sudden yesterday they announce an LOI was signed with Royal Caribbean Cruises to buy the hotel and redevelop the port.

“So, the government pays $65m for the hotel and for the closing costs for the sale and pays millions for renovations, and pays for back pay for the employees and separation for the line staff, and now separation for the managers and Royal Caribbean just comes in and picks up the hotel and the port and is on the hook for nothing?

“The government must also explain as we asked them before, how much are the Bahamian people on the hook for and how much will they write off? I predicted before that the government would spend well in excess of $100m, which if my calculation is correct, would equate to a write-off of tax-payer’s money of at least $40m.

“I got to tell you, I’m sceptical.

“If this deal ends up helping the people of Grand Bahama, I’m all for it. But I don’t trust the FNM. Every time you hear about a deal, one of their fat cat friends isn’t too far behind. Every time you see an FNM sign a contract, you better read the fine print, some darkness is probably behind it.”

He also said: “If we look at it, and they pay $65m for the hotel, that means that the investment in development is really $135 million. That don’t sound like enough to create 2,000 jobs in two years,” he also said.

He also questioned whether Royal Caribbean will reduce its number of calls in Nassau as a result of the deal and will it mean new money in the economy.

Mr Cooper said so far it did not seem to be meaningful investment for the island.

“Because last I checked, cruise ship passengers don’t stay in hotels. Is there a plan to increase airlift on Grand Bahama to get paying guests in the hotel?

“Where are the guests going to come from?”

This was something Mr Scott also spoke of yesterday.

“This is a game changer because it provides the additional component of sea lift as well as airlift and day traffic as well as stay traffic because there is going to be recreational, entertainment and commercial opportunities that Bahamians are going to be able to participate in at an entrepreneurial level both at the Freeport Harbour and at the Grand Lucayan,” Mr Scott said yesterday.