The Tribune

• Three new hotels, two casinos planned
• Said to be US group with gaming links
• Resort’s sale ‘key thing’ in tourist revival  

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Grand Lucayan’s potential buyer plans to demolish all its existing properties to make way for three new hotel towers and two casinos as part of an investment that could hit $2bn.

Multiple sources, speaking on condition of anonymity, have told Tribune Business the prospective purchaser is a US-based investor/developer with strong and already-existing casino industry links. While none have been willing to identify the group, it is understood that the deal may be announced imminently and possibly as early as this week.

“It’s a little vague, but it’s a US-based company with casino connections,” one contact said. “They’re apparently going to knock all the hotels down and put up three towers and two casinos. If it’s true, it’s encouraging.

“It’s this big company, and they have big plans with the three towers. I don’t know why they would knock down the big hotel in the middle, which is the only one that has value.” Another source said of the buyer: “These aren’t people looking to try and find a demand. They have that demand. They are building a supply for that demand. These are real investors, real developers and people who have real money.”

Only one of the Grand Lucayan’s three resort properties, Lighthouse Point, is presently open to guests. Both Breaker’s Cay and the former Memories property have been closed for numerous years - the latter ever since Hurricane Matthew struck the island in October 2016.

Subsequent checks by this newspaper confirmed that its contacts have not been misinformed, with other well-placed sources also confirming the purchaser’s plans. It is also understood that Australian golfer, Greg Norman’s, companies will be hired to design and manage the new resort complex’s golf courses which are likely to number more than one as part of ambitions to again make Freeport a tourism destination.

Prime Minister Philip Davis recently said the Government is “on the cusp” of securing a sale that has been long-promised by both his administration and its Minnis predecessor, and he is understood to have taken personal charge of the negotiations to ensure both the right buyer is found and a deal is secured after several misses.

Many Grand Bahama residents and other observers, sceptical after both the Royal Caribbean/ITM Group and Electra America purchase offers foundered, will likely only believe a Grand Lucayan deal has been achieved when they see it. However, Tribune Business understands a sales agreement has been signed and, most important in any real estate-based transaction, a deposit has been paid.

The buyer and the Government, as the seller, are now involved in the due diligence process and more detailed negotiations necessary to close a sale and Heads of Agreement. The purchaser is represented by Thomas Dean, of the Dupuch & Turnquest law firm, who declined to comment when approached by Tribune Business yesterday.

Attorney Donna Harding-Lee is acting for Lucayan Renewal Holdings, the Government-owned special purpose vehicle (SPV) that was used to acquire the resort in September 2018 from Cheung Kong Property Holdings, the real estate arm of Hong Kong conglomerate, Hutchison Whampoa.

Resolving the Grand Lucayan’s fate, and securing a buyer who could do for Freeport what the late Sir Sol Kerzner achieved for Nassau and the wider Bahamian tourism product, is viewed as vital to reviving both the second city and wider Grand Bahama economy through providing the necessary room inventory to attract greater airlift to the island.

Magnus Alnebeck, Pelican Bay’s general manager, told Tribune Business yesterday that the Grand Lucayan’s sale remains “the key thing” to achieving the quickest possible tourism rebound in Grand Bahama although it is possible these hopes could be disappointed if the prospective purchaser goes through with the demolition proposal.

“It’s the only chance we have to put a substantial amount of rooms in inventory in the immediate future,” he said. “Any new construction is going to take a long time. We need the rooms to generate a demand that can get us more airlift.

“In my view, the only thing that can get us a substantial amount of rooms in inventory is the Grand Lucayan getting sold and taken over by someone who quickly creates an attractive product that drives demand. Let us hope it happens. There are all sorts of rumours flying around. We’ll see what happens.”

Another contact said the Grand Lucayan’s sale would act as a catalyst to spur Grand Bahama International Airport’s long-awaited redevelopment as one will not be able to succeed without the other. “Freeport definitely needs this,” they added of the resort’s sale. “Confidence is at an all-time low right now.

“The airport has to be done with the hotel. The hotel needs the airport, and the airport definitely needs the hotel. One cannot happen without the other. That’s an important thing. The airport needs to be done.” 

The Grand Lucayan was acquired from Cheung Kong (CK) Property Holdings by the Minnis administration for $65m to head-off the resort’s threatened closure by its former owner.

Efforts to find a private buyer for the resort, including the Royal Caribbean/ITM Group deal submitted to the former administration and the bid by Electra America Hospitality Group, have thus far failed to secure a purchaser. And, in the meantime, the Bahamian taxpayer has been forced to subsidise the Grand Lucayan’s annual losses to sustain its operations.

The 2024-2025 Budget provides a $17m subsidy for the resort and its immediate holding company, Lucayan Renewal Holdings, which matches the current fiscal year’s allocation. However, the $17m provided for the 2023-2024 Budget year was virtually exhausted at end-March 2024, with some $16.632m having been spent, meaning that Bahamian taxpayers will almost certainly incur cost overruns.

And, given that the Government provided Lucayan Renewal Holdings with $17.882m in the 2022-2023 fiscal year, the resort is set to cost taxpayers close to $54m by the time the upcoming fiscal year closes at end-June 2025. Given this subsidy run rate, taxpayer exposure to the Grand Lucayan now likely exceeds $200m with much of this sum unlikely to be recovered via a sale.