The Tribune

• Royal Caribbean exec optimistic of ‘summer closing’

• But harbour talks with Hutchison ‘not completed’

• Project can’t proceed ‘as aggressively’ as planned

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A senior Royal Caribbean Cruise Lines executive yesterday voiced optimism that its Grand Lucayan acquisition will finally “close this summer”, adding that negotiations were “down to a handful of documents”.

Russell Benford, Royal Caribbean’s vice-president of government relations for the Americas, acknowledged to Tribune Business that many Bahamians are increasingly disbelieving that the resort’s redevelopment will ever happen but said the cruise line’s ambitions suffered a major hit when the entire industry was shutdown by COVID-19.

While asserting that Royal Caribbean and its ITM Group partner were “close” to sealing the deal for Freeport’s former ‘anchor resort’ property, he also confirmed that talks with Hutchison Whampoa over the accompanying redevelopment of Freeport Harbour also have yet to complete.

Mr Benford reaffirmed that Royal Caribbean/ITM, and their Holistica joint venture, remain intent on completing both deals at the same time. He added that the government’s acquisition of Grand Bahama International Airport from Hutchison-controlled Freeport Harbour Company had also given the partners greater confidence to move forward given that the facility was the hotel’s airlift “lifeline”.

“I think we’re close. I’ve been saying that for quite some time, I realise that,” Mr Benford told this newspaper in a nod to the protracted negotiations. “I’m hopeful that we close this summer, and I think we’re down to a handful of documents that need to be reviewed and a couple of financial instruments that have to go through the legal process, but we’re getting there and are hopeful of a summer closing.”

Tribune Business contacts, speaking on condition of anonymity, previously revealed at the time of the Grand Bahama International Airport purchase that the government had been hoping to close the Grand Lucayan’s sale to Royal Caribbean/ITM by June 15.

That timeline is only two weeks away, and appears unlikely to be realised. The government admitted as much in its 2021-2022 budget, allocating a $3m subsidy to Lucayan Renewal Holdings, the special purpose vehicle (SPV) that owns the resort, in a sign it fears it will be holding on to the property through September and the first quarter of its fiscal year at least.

Acknowledging the frustration among many Bahamians that the Grand Lucayan sale has yet to complete, with many now adopting a “believe it when we see it attitude”, Mr Benford pointed out that the deal - which took place just weeks before the COVID-19 lockdown - had been derailed by the pandemic.

With Royal Caribbean incurring billions of dollars in losses following the 15-month shutdown of the cruise industry, he explained that the cruise line remained committed to the project but will have to adopt a more phased approach to construction and redevelopment as cash flows allow.

“I think the timelines have shifted a little bit,” Mr Benford said. “We are not able to be as aggressive as we’d like with reconstructing the project at once. We have to do it in phases and explore what we can do. It’s taken us a bit longer to negotiate with Hutchison... COVID-19 was a tough time for all of us and to do business.”

Besides the Grand Lucayan’s purchase from the government, the Royal Caribbean/ITM proposal also calls for the addition of new cruise berths at Freeport Harbour as well as the creation of a water-based adventure theme park for the thousands of passengers that the cruise line plans to bring to Freeport on an annual basis.

That means the Holistica partners have to strike a deal with the Hutchison-controlled Freeport Harbour Company, as well as the Government, and Mr Benford confirmed that talks with the Hong Kong-headquartered conglomerate were “not completed” yet.

“We’re close,” he said. “Everything is moving in parallel to each other. The harbour is moving along with the hotel, and we’re trying to close at the same time for both those properties.”

Dionisio D’Aguilar, minister of tourism and aviation, told Tribune Business in late April that Hutchison Whampoa was “ratcheting up their game” to enable protracted negotiations for the Grand Lucayan’s sale to finally conclude.

He added that the Hong Kong-headquartered conglomerate “understands the urgency” to facilitate the hotel deal by reaching agreement with ITM Group/Royal Caribbean for Freeport Harbour’s redevelopment.

“I’m advised that it’s imminent,” the minister said then of the harbour agreement. “The local company [Freeport Harbour Company] is almost completely done with its negotiations with ITM and Royal Caribbean Cruise Lines. It’s very close. I’m advised that it will then be to Hong Kong for the final blessing.

“I’ve been advised they [Hutchison] understand the urgency that the government is applying, and are now ratcheting up their game to make it a reality.” Tribune Business has long reported that ITM/Royal Caribbean, and their Holistica joint venture, will not close the Grand Lucayan’s purchase until they have sealed the harbour’s redevelopment.

Closing on one before the other would give either Freeport Harbour Company, which is 50 percent owned and managed by Hutchison Whampoa, or the government the power and negotiating leverage to squeeze more concessions from ITM/Royal Caribbean knowing that the joint venture will be increasingly desperate to wrap up negotiations on the last component for its project.

The Grand Bahama Port Authority’s (GBPA) Port Group Ltd affiliate owns the remaining 50 percent in Freeport Harbour Company, whose agreement is vital to enabling the expansion of cruise ship berths and development of a water-based adventure park that will accompany a revived Grand Lucayan.

Mr Benford, meanwhile, said Royal Caribbean and ITM “feel a bit more confident in moving forward” now that the Government has acquired Grand Bahama International Airport and formally taken over its operations via the Airport Authority.

While the airport was not a deal breaker for the Grand Lucayan, he added that airlift was “incredibly important” to the hotel’s prospects of success. “Now the Government of The Bahamas has ownership of the property, we feel more confident it will be redeveloped,” he added. “We don’t know how it will happen, but it’s clear it has to be rebuilt in some form or fashion.”