The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Grand Lucayan’s Board has “unanimously” recommended to the Davis administration that it exit the ITM/Royal Caribbean deal and “move on” with alternative options.

Multiple Tribune Business contacts, speaking on condition of anonymity, told Tribune Business that the existing directors have all advocated breaking the hotel’s sale off from ITM/Royal Caribbean’s plans to redevelop Freeport Harbour.

While the joint venture would still be free to add new cruise berths and develop a water park at that site, provided they can close an agreement with the Hutchison Whampoa-controlled Freeport Harbour Company, the Government has been advised to make alternative plans for the Grand Lucayan as negotiations “have dragged on long enough”.

While the resort holds the most potential economic benefits for The Bahamas and its people, this newspaper understands it had become “an after-thought” for ITM/Royal Caribbean who are more focused on the harbour.

The original deal struck with the Government has been watered down since the COVID-19 pandemic struck to such an extent that the original two-year timeline for redeveloping the Grand Lucayan has been pushed back to ten to 15 years - a factor that means the agreement “makes no sense” for The Bahamas as presently structured.

Chester Cooper, deputy prime minister and minister for tourism, investments and aviation, together with Ryan Pinder, the attorney general, and Ginger Moxey, minister for Grand Bahama, met with the Lucayan Renewal Holdings Board just weeks after the Davis administration took office to get a briefing and update on the resort’s sale.

“They certainly got a very clear message from the Board,” one contact familiar with developments told this newspaper, confirming that directors had recommended ending talks with ITM/Royal Caribbean. “That was their unanimous advice to them.”

Another source, confirming this information, told this newspaper. “They [the Board] urged them to decouple or bifurcate the agreement, bring the ITM/Royal Caribbean deal to a close, cancel the contract, give them the deposit back and move on. That is the advice all the directors gave to the incoming government.

“They said this has dragged on long enough. The deal reconfigured by ITM/Royal Caribbean was not only unsatisfactory in their opinion but insulting. They wanted to leverage the concessions and subsidies that they would gotten, and other rights they would have gotten under the Heads of Agreement, and leverage those on the mortgage they would have received from the Government.”

Confirming that ITM/Royal Caribbean was seeking vendor financing from the Government, the source said just $10m of the $65m purchase price was to be paid up front. “The redevelopment timeline, which was to initially have taken two years, was now to take 10-15 years. The deal makes no sense,” they added.

“Royal Caribbean looks at the hotel as an after-thought. Their focus is on the port. The catalyst and engine driving them to consider the hotel” was the planned Royal Beach Club investment on Paradise Island’s western end.

Mr Cooper could not be reached for comment, despite multiple requests and attempts, while Michael Scott QC, Lucayan Renewal Holdings chairman, declined to speak. He and the Board appointed by the Minnis administration have all remained in place currently, while tendering their resignations, to give the current government time to appoint replacements if it wishes.

Another source, meanwhile, said Mr Cooper’s suggestion that the Grand Lucayan has cost taxpayers some $200m to-date was somewhat high, pegging the actual cost at closer to $150m - still a substantial sum.

They added that the former government acquired the Grand Lucayan to prevent its closure by Hutchison Whampoa’s real estate arm in 2018, thereby stopping the possibility of a second Royal Oasis-type situation occurring in Freeport.

“It was a decision taken to prevent the bottom falling out of Freeport’s tourism market, and was dealt with purely on business terms,” the source said. “It had nothing to do with politics.”

Mr Cooper, after meeting with the Lucayan Renewal Holdings Board in late September, described the ITM/Royala Caribbean deal as “egregiously bad” although he provided no details and gave no specifics on what course of action the new government may take.

“We have looked at the details extensively. I can tell you it is costing the Bahamian people,” Mr Cooper said. “And I can tell you that sometime during the last several years we would have made certain public comments to the deal itself.

“I specifically recall saying that it was an egregiously bad deal. I am disheartened to say I did not hear anything to change my view.”

Dionisio D’Aguilar, the former minister of tourism and aviation, had blamed the ITM/Royal Caribbean joint venture’s failure to reach agreement on a separate deal with the Hutchison Whampoa-owned Freeport Harbour Company for delaying the Grand Lucayan’s sale.

He revealed that concluding negotiations over Freeport Harbour’s redevelopment - including the addition of new cruise berths - was a “condition precedent” that must be satisfied before the joint venture will acquire the resort from the Government - a situation that prevailed through the general election.