The Tribune

By FAY SIMMONS

Tribune Business Reporter

jsimmons@tribunemedia.net

The Prime Minister yesterday confirmed “intense discussions” have been held with a potential buyer for the Grand Lucayan resort and he expects a deal to be finalised over the next two weeks.

Speaking at his office’s weekly press briefing, Philip Davis KC said he did not want to sell the hotel just to “tick a box” and expects to have a “world class” brand attached to the property.

“With respect to the Grand Lucayan, we had intense discussions with an intended buyer. The issue for us, of course, is to ensure that we just don’t sell for selling’s sake or to tick a box,” said Mr Davis.

“We’ll make sure that when we sell, we’ve indicated that we want a world-class brand name to be associated with re-opening. And I’m hopeful, and I’m encouraged, that we will have that. Within the next two weeks or so, we should be closing an arrangement. Until then, just stay tuned and we will let you know.”

Tribune Business previously revealed that 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. “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.

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 Grand Lucayan was acquired from Cheung Kong (CK) Property Holdings, Hutchison Whampoa’s real estate arm, 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.

Meanwhile, Mr Davis yesterday said plans for Grand Bahama International Airport’s revival are “moving along” and he intends to have a meeting with all stakeholders in the redevelopment next week. “In respect to the airport that is moving along. I anticipated by now we should have had shovels in the ground,” said Mr Davis.

“I’m to have a meeting now with all the stakeholders and those who have indicated that they wish to participate in that renovation. That meeting should be held either tomorrow early, or early next week, as soon as I’m back from the [United Nations] General Assembly, but we are moving seriously to ensure that that is happening.”