The Tribune

By KHRISNA RUSSELL

Tribune Chief Reporter

krussell@tribunemedia.net

TOURISM Minister Dionisio D’Aguilar hopes the Grand Lucayan in Grand Bahama can be turned over to its purchasers by January, telling reporters COVID-19 had brought “frustration” to the deal.

Apart from the challenges brought on by the potentially deadly virus, Mr D’Aguilar said “everybody is suffering from cash flow deprivation”.

His statement came after Minister of State for Grand Bahama Kwasi Thompson’s announcement that officials were eyeing a turnover of the resort by the end of this year to the Holistica Group.

“What is really frustrating about this project is the fact that the world has changed so significantly,” the minister said. “Back in March we had a deal. It was clear cut (and we were) very optimistic the hotel was going to be sold.

“Of course, the main investor was the Royal Caribbean. So, everybody knows what happened to Royal Caribbean’s core business. It got destroyed and it still isn’t clear when it’s going to resume. So, they now have cash flow concerns and their partner ITM gets most of its revenue from businesses that cater to cruise customers and so the dynamic has changed in that regard.

“However, what is extremely encouraging is they are determined to complete the deal and they want to continue and they’re at the table all the time.

“Obviously the dynamics have changed as to what you can do and how fast you can do it and how much you can spend and all of that given what’s happened in the world of COVID as it relates to the cruise industry. But they are determined to complete the deal and they are always there always fighting to make sure that the deal comes to fruition.

“So, I am encouraged that the interest is extremely keen but just frustrated by the fact that the world has changed so significantly since March and it’s not bringing a timely conclusion to this project.”

Mr D’Aguilar continued: “Now everybody is suffering from cash flow deprivation and so they are having to work it as best as they can in order to make it work and it’s just very unfortunate that again Freeport seems to have on the cusp of launching this wonderful project with reputable investors who were well healed and well monied to run into this crisis of epic proportions, which has once again thrown a wrench in our well-intended plans.

“So, compound Hurricane Dorian on top of that makes it extremely frustrating but we remain…all indications are through the end of the year.”

Asked if the turnover would come by January, the minister said: “Yeah. There are two elements to this project. The first element is the hotel and the next element of course is the development of the substantial cruise port in Grand Bahama and so both of those projects have timelines and obviously you want both of them to happen at the same time. So, for the hotel they are dealing with us (and) for the port they are dealing with Hutchinson (Whampoa).

“So, first of all, you’ve gotta bring all four parties together at the same time in order to make the project go. That is somewhat complex, but it isn’t as if on January one they take control of the company. Let’s say then the hotel starts to fill up there is still substantial work that needs to be done to that property and a redevelopment and of course they have their development plans for that property. So, sadly it’s going to take some time even if you hand over operational controls there is going to be the need to do some investment to develop the product that you wish to have.”

COVID-19 has also altered the pace of the investment.

“There is no doubt that the speed at which they were going to do the investment has changed primarily because of the cash flow situation of the principles so certainly Royal Caribbean has indicated that they can only spend money on certain things because they have borrowed money.

“If they have borrowed billions of dollars and the condition of the loan is you can only do certain things with it. They are trying to navigate through the covenants of their loans in order to make sure that they don’t become in violation of them. On the other hand, they are able to make an investment. So, it makes for a challenging negotiation given the fact that COVID-19 has affected everybody, including us.”