The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Cabinet minister is still “optimistic” the Grand Lucayan’s sale and redevelopment will proceed even though COVID-19 may make the deal look much different to its original version.

Dionisio D’Aguilar, minister of tourism and aviation, told Tribune Business that Royal Caribbean - despite the multi-billion stresses imposed by the pandemic - and its ITM Group partner “still seem to be interested” in closing the resort’s acquisition and redevelopment of Freeport’s harbour.

However, he indicated that the Holistica joint venture partners are seeking to restructure the terms of what was initially billed as a $300m investment to revive Freeport’s tourism industry and wider economy because of the uncertainty surrounding the timing and strength of the cruise industry’s rebound.

In particular, Mr D’Aguilar said the previously-anticipated 2.5m extra annual cruise passengers brought to Freeport as a result of the Royal Caribbean/ITM project may not materialise to that extent, with the partners “not as certain as they once were” over demand due to the pandemic’s fall-out which saw numerous outbreaks on vessels.

Acknowledging that Grand Bahama residents “have heard this story 1,000 times” from politicians, and will likely only be interested in hearing from politicians once “we’ve got” a completed agreement, the minister told this newspaper: “As far as I can tell the talks are very robust, very focused and we’re making progress.

“It may not be the deal we had prior to March 3, but to say it’s not going anywhere would be an incorrect conclusion. They [the Holistica partners] still seem very interested, and you have a wiling seller and a willing buyer negotiating terms. The willingness is still there.”

Mr D’Aguilar declined to give details on what remains outstanding in the negotiations, with numerous suggested closing timelines having arrived with no conclusion. He indicated, though, that Royal Caribbean and ITM may be adjusting their valuation and projections given COVID-19’s continued devastating impact on the cruise business and tourism in general.

“You’ve got a situation where the world has changed,” Mr D’Aguilar told Tribune Business. “You’re not as certain of your passenger loads that you would have assumed prior to March 2020 or the shut down of the cruise industry.

“Obviously you do not have the same certainty that was once there in terms of visitors. You are actively building or trying to construct a deal that takes into consideration that takes into account that the passenger loads may not be as robust as they once were, and not as certain as they once were.

“It doesn’t take a rocket scientist to figure out that the situation on the ground has completely changed, so you are trying to build in safety valves or trying to build in components of the deal that mitigate or take into consideration that your load factors are not as certain as the once were,” he continued.

“Obviously August 2020 is not the same as February 2020, so obviously you are going to change some terms to take into consideration the facts have changed. It’s very unfortunate, but it is what it is.”

Together with the one million brought by Carnival, the Royal Caribbean/ITM project and redevelopment was expected to bring an extra 2.5m passengers and arrivals to Freeport/Grand Bahama pre-COVID-19, bringing the total to some 3.5m.

Besides the near six-fold increase in visitor arrivals, it was forecast to create 3,000 new jobs and increased economic activity via the addition of new cruise berths at Freeport Harbour and the creation of a water-based adventure theme park and other activities/attractions between that location and a remodelled Grand Lucayan.

The $300m investment was also designed to relieve the Government of the at-least $100m in costs it has incurred from owning the resort since its September 2018 acquisition from Hutchison Whampoa. Mr D’Aguilar, though, said he remains hopeful that the ITM/Royal Caribbean negotiations will successfully conclude despite the recent $1.6bn loss suffered by the cruise line.

“I remain optimistic the deal will close,” he told Tribune Business. “I wouldn’t say overly, but I remain optimistic. Certainly the willingness from the other side; they’re very interested in concluding or reaching a deal.

“The loss you noted with Royal Caribbean, obviously it has had some impact on the negotiations, but they still seem to be interested in concluding one.” Mr D’Aguilar, though, declined to give a timeline for when talks will end as he acknowledged that many Freeport residents are likely suffering from deal fatigue.

“We have predicted the successful conclusion of this agreement on many occasions,” he added. “The time now is to stop predicting and when we get it done, we get it done, and we will release it at that time.....

“The people of Grand Bahama have heard this story 1,000 times. The only thing we can advise them is we’re working very diligently and very hard to conclude a deal, and we’re very sensitive to the fact that Grand Bahama needs this transaction.

“Actions speak louder than words. I’m sure the people in Grand Bahama do not want to hear politicians speak on this any more. They will say: ‘Once you’ve got something, bring it’.”

Mr D’Aguilar also conceded that talks on the Freeport Harbour component of the deal, which are taking place between IBM/Royal Caribbean and the Hutchison Whampoa-controlled Freeport Harbour Company, “need to be concluded”, although he added: “I’m advised it’s moving in the right direction.”

With the Bahamian economy shut down for four to five of the past six months, the minister said Royal Caribbean/ITM’s construction start still remains delayed by around six months.