The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Hotel Corporation's chairman yesterday blasted that critics of the government's Grand Lucayan deal have been "left with egg on their face" as it prepares to receive a net $50m from the sale.

Michael Scott, who also headed the resort's board, told Tribune Business that transferring the property to the ITM Group/Royal Caribbean joint venture represented "the first step in redressing a legacy of failure" that has haunted Freeport's mega hotel and wider tourism sector.

He revealed, though, that the government will receive a net $50m from selling the Grand Lucayan because ITM Group/Royal Caribbean - and their Holistica joint venture - will receive a credit from the insurance recovery on the resort's Hurricane Dorian claim.

The "gross price" remains the $65m that was agreed when both parties signed the Letter of Intent (LoI) for the Grand Lucayan deal in late March 2019, and Mr Scott disclosed that the property had submitted an insurance claim for between $27m to $28m that was still "in process".

"It's $65m but we're giving them some credit from the insurance recovery," the Hotel Corporation chairman explained of the "net" figure. "The price is $65m less the credit we're giving them out of the insurance recovery.

"The net price is $50m; the gross price is $65m. The claim is in for $27m to $28m, and has been in process for a little while now." The Grand Lucayan's insurance is understood to have been placed through Bahamas-based property and casualty insurer, RoyalStar Assurance.

The government's political opponents, and other critics of its decision to commit $65m worth of taxpayer monies to meet Hutchison Whampoa's full asking price for the resort in September 2018, are likely to seize on the differences between the gross and net proceeds that will be received from the Holistica partners.

However, Mr Scott argued that the Progressive Liberal Party (PLP) had little basis on which to criticise because the former Christie administration had previously failed to resolve the post-Hurricane Matthew situation at the Grand Lucayan which resulted in the departure of Canadian hotel operator, Memories.

"They're left with egg on their face because they contributed to this legacy of failure, this pall of doom that has overshadowed the island for so long," he said of the Government's political opponents following yesterday's Heads of Agreement and resort sale documentation with Holistica and its partners.

Describing the signing ceremony as "the end of the beginning" for the Grand Lucayan and Grand Bahama's wider tourism industry, Mr Scott added: "If I could be prophetic I would say this signals a new dawn in Grand Bahama.

"Grand Bahama has been a field of broken dreams. There has been, on this little island, a legacy of failure that stretches back into previous administrations. This is the first step in the right direction to redressing this balance, and for Grand Bahama to come into its own and achieve the potential for which it was designed."

Other Freeport-based hoteliers also hailed yesterday's signing for a project billed as creating 3,000 full-time jobs, both direct and indirect, via a $300m total investment covering both the resort and the harbour.

Magnus Alnebeck, the Pelican Bay Resort's general manager, told Tribune Business that while the construction phase for the ITM Group/Royal Caribbean project was likely to take just over 20 months any increased employment and income circulation will benefit an economy that has "hit rock bottom".

He added: "Any economic activity in Grand Bahama at this present time is good. We have really hit rock bottom. Anything that starts happening now, and putting money into circulation, is good and really needed. Hopefully this [signing] will have the effect of helping the airport get sorted out as well. It's a very good day for Freeport. We have time to sort the airport out and get everything in place."

Mr Scott, meanwhile, said the real "game changer" in the ITM Group/Royal Caribbean project is the creation of an aquatic, water-based adventure theme park along with harbour village-style amenities at the expanded cruise port.

With visitors set to come by both sea and air, he added: "You have all these components that make the deal a game changer and a win-win for all. They are going to cater to many different markets - from the young market to the old market to the middle class market. There will be something in it for everybody."

Mr Scott said part of the Grand Lucayan hotel complex will remain open during the construction phase. He added that some of the existing structures will be demolished, while others will be remodelled, refurbished and rebuilt.

He added that the Government-appointed Grand Lucayan Board will remain in place in an oversight role to ensure that the developers deliver on what they have promised.

"It's up to us on the Board to exercise our collective skills to police this, and do due diligence to ensure what is promised is delivered," Mr Scott told Tribune Business. "We have a residual role to police this to ensure it is carried out in the best interests of Grand Bahama and, by extension, the entire Bahamas."

Dionisio D'Aguilar, minister of tourism and aviation, yesterday said the Heads of Agreement makes provision for the developer to offer small business loans, and ensure that the project's retail, restaurant and transportation aspects are provided by Bahamians. The developer has also pledged to use Bahamian artwork and cuisine.