The Tribune

* Hotelier fears more taxpayer losses on February 1

* Says operator, airlift and marketing plan all missing

* Island 'invisible from marketplace' for four years

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Grand Lucayan's February 1 re-opening threatens to inflict more losses on Bahamian taxpayers because it lacks the "three legs" required to sustain its revival, a hotelier is warning.

Magnus Alnebeck, the nearby Pelican Bay resort’s general manager, told Tribune Business that the Government and its Grand Lucayan Board have yet to reveal whether a hotel operator has been hired to manage the property or if marketing and airlift initiatives have been readied.

While acknowledging that it was better for Freeport's 'anchor resort' to be open than closed, he voiced fears its Lighthouse Point property will "just stand there because no one is coming" and cause "a big expense" for taxpayers unless these three elements are in place before February 2021.

"By itself it's not going to bring any guests," Mr Alnebeck said of the planned re-opening. "Grand Bahama has really been closed to the tourist market for almost four years since Hurricane Matthew. It's a bit better that the hotel is open than closed, but opening by itself is not going to solve the problem. Having an open hotel with no guests is not the solution.

"It needs to open with the right operator and right product so there's demand for it, there needs to be a marketing programme in place and, what is really important, is that full airlift is in place. It's good that they're going to open, but they need to open it right as opposed to saying let's open it and see, especially if people are going to a destination that's been closed down for four years more or less.

"It's really three legs that are needed to open the hotel. The first is having an attractive product consumers like, and second, they need to market so people understand it's open. Then you need to have the airlift and boat lift so people can get to Grand Bahama otherwise it's just going to end up costing you money."

Mr Alnebeck said that if an operator, marketing initiative and air/sea lift for the Grand Lucayan were in place "they haven't been announced yet". He added: "What would have made sense to me would be to get an operator like Sunwing or someone who knows what they're doing, come in with airlift and a marketing plan, and get the numbers to work.

"Otherwise the danger is that the hotel opens at a big expense but it just stands there because no one is coming. It needs to be combined with a serious airlift programme and serious marketing plan. All the airlift we have for Grand Bahama at the moment is one American Airlines flight per day from Miami, Silver from Fort Lauderdale five days a week, and whatever Bahamasair flies.

The Pelican Bay chief estimated that Grand Bahama is presently averaging around 100 daily air arrivals on five days per week - a figure that is far below the numbers necessary to sustain the Grand Lucayan and other properties that are more reliant on leisure guests than his hotel.

"Grand Bahama has never been a destination that has worked connecting through Nassau for our tourist market," Mr Alnebeck said, adding that the continued wait for the island's airport to be rebuilt post-Dorian, combined with the continued absence of US pre-clearance facilities, were further obstacles to securing the necessary airlift.

And sealift, which has been responsible for generating the greatest volume of visitors to Grand Bahama, has all but come to a standstill amid the Balearia ferry's wait for the Government to approve its resumption while Bahamas Paradise Cruise Line continues to grapple with the COVID-19 demands of US health regulators.

Bahamian taxpayers, via the Public Treasury, have already injected over $100m into the Grand Lucayan - including the $65m purchase price - since the Government acquired the property from Hutchison Whampoa's real estate arm in 2018.

The Minnis administration is likely becoming desperate to get the loss-making resort off its and the taxpayer’s books, given the staff termination packages, subsidies to cover operating losses and other expenses it has incurred over the past two years. Philip Davis, the Opposition's leader, recently argued that the total cost to taxpayers was likely to be around $150m.

The Government believed it had found the correct buyer to revive the Grand Lucayan, and Freeport's wider tourism industry and economy, in the shape of Royal Caribbean/ITM Group's joint venture partnership, Holistica. However, those hopes quickly foundered on the COVID-19 rock, with the joint venture subsequently using the pandemic to water down the deal's terms to their advantage.

Dionisio D'Aguilar, minister of tourism and aviation, yesterday confirmed he had received the KPMG accounting firm's report on the merits of the Royal Caribbean/ITM deal as it now stands and whether they are sufficiently beneficial to The Bahamas and its people.

However, he said he had yet to review the findings, and declined to comment on the concerns voiced over the Grand Lucayan's planned February 1 re-opening. Michael Scott, the Grand Lucayan's chairman, who previously described the present Royal Caribbean/ITM terms as "a bad deal", was off-island when contacted by this newspaper and said he would respond to these fears later.

However, one source familiar with developments, speaking on condition of anonymity, told Tribune Business it was impossible to find an operating partner for the Grand Lucayan until the Government determined how it wanted to proceed with the Royal Caribbean/ITM deal.

"The problem quite frankly is that you really can't get an operating partner as long as the Government won't give an answer on what they want to do," the source said, explaining that it would be impossible to determine how long to contract a hotel brand for.

"With respect to airlift, that's not so challenging to do. You can create your own airlift in two-three months once you know what you're doing. The Government bought the hotel to save the economy, and they need to focus on saving the economy.

"It seems someone has got politics on their mind, and wants to save face. They fear they will be further fall-out if the deal falls through; the Government doesn't know what it's doing, it's screwed it up. It seems they're prepared to do anything at anyone's expense so they don't have to lose face on the deal. That's very disconcerting."

Other observers, though, have argued that the Government has little choice but to stay the course with RoyalCaribbean/ITM as the pool of alternative buyers willing to offer a reasonable price and terms will have shrunk considerably due to COVID-19.

Mr Alnebeck, meanwhile, told Tribune Business: "At the moment we are basically non-existent as a leisure destination. We had several nights at Pelican Bay in December where we were running 60-70m percent occupancy thanks to the Shipyard and ship's crews changing, but over the Christmas period we had less than 10 percent occupancy, including 8 percent on Christmas Eve.

"That shows how little tourism activity we have. Grand Bahama has basically been invisible from the tourist marketplace since 2016-2017." He suggested that the absence of airlift and a marketing plan for Grand Bahama was likely to have been a factor in Viva Fortuna delaying its re-opening.