The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Grand Lucayan’s chairman yesterday said he had been “assured” the resort’s sale, and associated harbour project, will be sealed by mid-December, adding: “I think we’re finally getting to the end.”

Michael Scott, pictured, told Tribune Business that the $275m development proposed by Royal Caribbean and its joint venture partner, the Mexican-based ITM Group, was “still on track” despite the Hurricane Dorian-related delays and complexities caused by the number of parties involved.

While the Holistica duo are negotiating with the government and Hotel Corporation over the Grand Lucayan’s $65m purchase, they are also talking to Hutchison Whampoa - in its capacity as controlling shareholder of Freeport Harbour Company - over the addition of extra cruise ship piers and that area’s redevelopment into a water-based adventure theme park for passengers and guests alike.

Tribune Business sources yesterday suggested that the negotiations between Royal Caribbean/ITM and Hutchison had become bogged down, with some blaming the latter while others suggested the cruise line and its partner had demanded “the kitchen sink”.

Mr Scott, though, said he was unaware of any potential obstacles to closing the deal. “They’re still on track,” he told this newspaper of the parallel negotiating processes. “We’ve had delays. It’s one multi-faceted, comprehensive deal.

“It will all happen at the same time, but I don’t expect the signing to take place much before mid-December... What I am assured is a deal will happen, but it’s not likely to happen much before mid-December.” He declined to comment further.

Dionisio D’Aguilar, minister of tourism and aviation, similarly told Tribune Business that the Grand Lucayan talks are “inching closer every day” to a conclusion. He, too, added that the government was unaware of any problems relating to the harbour negotiations given that it was not directly involved in those particular discussions.

One well-placed source, speaking on condition of anonymity, said: “We expected that they were going to sign the harbour deal within 30 days and, right after that, they would sign for the hotel. We thought it could be signed in two weeks; apparently everything was agreed. The lawyers were just settling on the language. Royal Caribbean wanted the kitchen sink but that was settled.”

Another contact, also speaking on condition of anonymity, suggested it was optimistic to believe the deal will be signed before year-end 2019. “I know they’re still going and everybody is working towards getting final things done, but as to timing I have no idea,” they added of negotiations.

“I think everyone’s a little ambitious thinking that this will get done by the end of the year but we’ll see. We’re 15 months down the road and these things take time.”

The Royal Caribbean/ITM project, which involves the creation of some 2,000 jobs via a $195m first phase investment that includes the resort purchase price, is among the projects the Government is banking on to revive the Bahamian economy post-Dorian and return it to 2.1 percent growth by 2021.

“The project is poised to act as an economic stimulus to Grand Bahama, bringing approximately two million passengers annually to make use of the associated facilities which will include a five-star hotel property, water-based family entertainment, as well as dining, gaming and other entertainment options,” the Government’s just-released Fiscal Strategy Report said.

“The additional cruise passengers will also present an opportunity for local vendors, taxi drivers, arts and crafts artisans and other souvenir businesses to benefit from increased sales. Negotiations to finalise this sale are expected to be completed by end-2019.”

The Government is also likely to be extremely eager to exit the resort ownership business, and get the Grand Lucayan off its books, given the $43m that it pumped into the hotel to cover its operating losses and other costs during the 2018-2019 fiscal year.

Selling it will also reduce its contingent liabilities by some $35m. While the $65m purchase price may not recover the Government’s entire Grand Lucayan outlay upfront, it will be hoping that the increased economic activity and extra employment created by the Royal Caribbean/ITM project will more than offset this on the back end.

The ITM/Royal Caribbean project was branded “a game changer” for Freeport’s economy when revealed by this newspaper 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.

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.