The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Royal Caribbean Cruise Lines is eyeing the potential acquisition of Freeport's long-closed Xanadu Beach Hotel as part of plans to develop a resort and water park destination, it can be revealed.

Multiple well-placed sources, speaking to Tribune Business on condition of anonymity, also disclosed that the cruise giant's ambitions extend to "all the tracts of land down to Princess Isle" that are presently controlled by Irish-headquartered Harcourt Developments, the Royal Oasis owner.

This newspaper's contacts, while stressing that no deal has yet been concluded with either Harcourt or Xanadu's owner, Italian/Bahamian businessman, Mario Donato, said talks between representatives of both property owners and Royal Caribbean are ongoing and seem to be progressing towards a formal purchase offer being made shortly by the cruise line.

They added that Royal Caribbean's interest in what one estimated is a 40-50 acre site, should it acquire all the targeted land parcels, is a signal that it must have reached - or be close to sealing - a deal for Freeport Harbour's transformation. It has been locked in negotiations with Freeport Harbour Company, which is 50/50 owned by Hutchison Whampoa and the GBPA’s Port Group Ltd affiliate, for several years.

"They want all the tracts down to Princess Isle," one source said of Royal Caribbean. "It's probably 40-50 acres. If you look at the map you will see Xanadu at one end and four more ten-acre pieces going down to the west to Princess Isle. Harcourt Developments owns the next two."

Tribune Business was subsequently informed that the Royal Oasis owner controls all the property between Xanadu and Princess Isle. This newspaper can also reveal that Colliers, the Canadian-headquartered international real estate firm that was selected by the Government to market the Grand Lucayan to potential buyers, has also been called in to fulfill the same role with all Harcourt's Bahamian properties.

Besides the land parcels attracting Royal Caribbean's attention, Colliers' assignment is also understood to include marketing the Royal Oasis to prospective purchases. The lead Colliers executive dealing with the Harcourt properties was said to be Gerhard Beukes, its Caribbean managing director and former head of Renew Bahamas, the ex-New Providence landfill operator under the last Christie administration.

Mr Beukes last night responded to Tribune Business calls via What's App, apologising and saying he "can't speak now". However, one source familiar with Colliers' task said: "They are marketing all the Harcourt properties. The lender has instructed Colliers to market everything to see if they can extricate Harcourt from its debt. Harcourt has exited from every other jurisdiction and this will be the last one."

Neither Michael Bayley, Royal Caribbean's president and chief executive, nor Jay Schneider, the cruise line's chief product innovation officer, responded to Tribune Business messages sent to their mobile phones seeking comment before press time last night. Philip Simon, the cruise line's Nassau-based Bahamas chief, said he was unaware of its Freeport interest.

One source, though, said Royal Caribbean's Xanadu interest also involved its high-end affiliate, Celebrity Cruises. "Celebrity is Royal Caribbean's premier cruise line, the best of the best, which is very good news for Freeport, because we usually get the worst of the worst," they added. "They'll [the two cruise lines] probably use it together and share it.

"It's a wonderful plan. It looks too big to me to just be a water-based adventure or theme park. That would be a major first step for Freeport. We'd have the Shipyard investment, the new harbour docks for the mega cruise ships, be it Royal Caribbean, Mediterranean Shipping Company (MSC) or whoever else, and then the 50 acres on the beach. This could also be the impetus for the airport to get done."

Tribune Business had previously been told that Royal Caribbean was seeking a more tourist-friendly location for the water park it had initially planned to locate at Freeport Harbour, which has a more industrial feel, hence its interest in the Xanadu.

Should the cruise line's plans come to fruition, this newspaper was told that ITM Group, its Mexican partner on the aborted Grand Lucayan venture, and their Holistica joint venture will ultimately operate the proposed amenities and attractions.

Another source familiar with the Xanadu, which has been closed for 12 years and is falling further into disrepair, said: "I've heard the same about Royal Caribbean and the Xanadu, and Royal Caribbean and Harcourt.

"There's a lot of sniffing going on. The scenario is that Royal Caribbean is after the Xanadu, and after the land to the west of the Xanadu that is all owned by Harcourt. That would be perfect for them as they would have their own marina there and have a place of their own.

"They would have access to a built-in canal system coming from Princess Isle to the back of their property and it would be perfect for them. They would be able to do similar to what Carnival is trying to do up at Barbary Beach. All these cruise lines want their own little beach area for people to have fun and play, and the money stays on the ship."

Another source, also aware of developments, said they understood that the Xanadu and Harcourt tracts are just one of multiple Grand Bahama locations that Royal Caribbean is exploring to see if they meet its needs and an appropriate deal can be worked out.

"It would augment the cruise offering of Bahamas Ports Investments in the harbour," they added referring to the Royal Caribbean group's name. "It would combine a world-class cruise port with a world-class beach resort." The source added that they were also familiar with Colliers' involvement in marketing the Harcourt properties.

Built in 1968 by US shipping tycoon, D. K. Ludwig, the Xanadu established itself as a venue for the so-called "Rat Pack" - the likes of Frank Sinatra, Sammy Davis Jnr, Cary Grant and Dean Martin - as well as accommodating reclusive billionaire Howard Hughes, who once lived in its 13th storey penthouse.

The 184-room property was acquired by Mr Donato in 1987, but it ultimately closed in 2011. The Xanadu is listed for a $25m asking price on Bahama Islands Properties' website, which says: "The 184 rooms has it all.

"Set on a world class beach, it also boasts a 75-slip marina with incredible potential, and in addition more than 20-plus acres strategically located near downtown and the airport. It is perfect for aggressive rooms and amenities expansion or adding condominiums." Another realtor, James Sarles Realty, has the resort listed for $35m.

Ian Rolle, the Grand Bahama Port Authority’s (GBPA) president, told a Bahamas Hotel and Tourism Association (BHTA) meeting in late April that October 2023 was being targeted for completion of the $70m Freeport Harbour deal in which Mediterranean Shipping Company (MSC) had teamed with Royal Caribbean and ITM Group.

“They are looking to redevelop the existing harbour,” he confirmed. “At first, ITM and Royal Caribbean were the only ones involved in this process. MSC has now come along and joined them in this partnership and we intend for this deal to be closed by October this year.”

Michael Bayley, Royal Caribbean’s president and chief executive, previously told this newspaper that Royal Caribbean was “increasingly optimistic” that its joint venture with ITM Group will finally come to fruition as negotiations - which have already taken several years - continue with Freeport Harbour Company.

“That’s still going through its process,” he told Tribune Business then. “I would say we are increasingly optimistic about the timing of that. In the coming months hopefully we will be in a position to make some positive announcement on Freeport. Our intent is to bring more capacity into Freeport. The first step, which will be in conjunction with others, is investing in improving the port.”

The cruise chief said that investment would involve other parties, especially fellow lines that will use Freeport Harbour’s revived cruise port. Mr Bayley also confirmed that Royal Caribbean/ITM’s plans still call for an expansion in the number of cruise ship berths, and development of a water-based adventure theme park for passengers in close proximity to the harbour.

Mr Rolle had told March’s Grand Bahama Business Outlook conference that both Carnival and Royal Caribbean’s Grand Bahama investments are projected to each bring one million cruise visitors per annum to the island once fully operational.