The Tribune

By NEIL HARTNELL

TRIBUNE Business Editor

nhartnell@tribunemedia.net

A FORMER tourism minister yesterday voiced surprise that Royal Caribbean has “lurched” outside its core business by acquiring 50 percent of the Sandals resort chain for $3bn, as “history demonstrates cruise companies don’t run hotels well”.

Dionisio D’Aguilar, who held that Cabinet post in the Minnis administration, told Tribune Business it is for that reason “it is very, very important” that Adam Stewart is staying on as executive chairman of the Sandals and Beaches resort chains following yesterday’s confirmation of the Caribbean group’s “marriage” with the global cruise giant.

The tie-up, which was signed yesterday and is due to close in early 2027, will likely cover all Sandals’ assets in The Bahamas including the Royal Bahamian resort in New Providence; its Emerald Bay property in the Exumas that is presently being converted into a Beaches brand; and the Fowl Cay private island also located in the Exumas. Even accounting for Emerald Bay’s temporary closure, the remaining assets still operational employ several hundred Bahamians.

“My view is it’s very, very important to keep, and I’m glad and delighted to hear, that Adam Stewart still has effective control of the hotel branch of the marriage,” Mr D’Aguilar told this newspaper. “Particularly since history demonstrates that cruise companies are really not good at running hotels. The Stewart family, from Butch to Adam, is exceptionally bright and extremely well-suited to run the hotel branch of this union.”

Mr D’Aguilar was likely thinking of Carnival’s ill-fated purchase of the former Cable Beach Resort in 1988 in his reference to cruise lines not operating hotels well. It transformed the property into Carnival’s Crystal Palace Resort & Casino with a $130m investment but, just four years later, it put the asset up for sale after suffering a $135m and eventually sold it to hospitality mogul, Phil Ruffin, in 1994. It was later demolished to make way for the current Baha Mar development.

A Royal Caribbean Group spokesperson yesterday said the deal will have no impact on its own Bahamas operations, which include the Royal Beach Club on Paradise Island, no Sandals’ resort assets. They delivered a “business as usual” message, with both parties now focused on closing the transaction with the necessary debt financing bring provided by the investment bank, Morgan Stanley.

“The partnership does not include any announced changes to Royal Caribbean group's cruise operations or Sandals' resort operations, and both companies will continue operating as usual while they focus on closing the transaction,” the spokesperson said in an e-mailed reply to Tribune Business inquiries.

“The agreement brings together two complementary vacation companies with deep roots in the Caribbean, combining Royal Caribbean group's cruise vacation expertise with Sandals' leadership in all-inclusive resorts. The companies believe this creates an opportunity to expand the vacation experiences they can offer and accelerate growth for both businesses over time.”

Mr D’Aguilar, despite his surprise at the move to combine a resort chain with a cruise line, said: “Both Sandals and Royal Caribbean are huge players in our local tourism economy and it’s good to see they are getting together and believe in each other’s product, and getting together to make it happen.

“I’m a little surprised with that. Cruise companies tend to stay in the cruise silo and are always looking for every opportunity for expansion in the cruise industry. It’s rather an interesting lurch off from their core business…. Obviously they continue to believe in the Caribbean, and the Caribbean continues to deliver a substantial portion of Royal Caribbean’s revenues, and that’s probably why they made the investment.

“I’m a little surprised they’ve lurched out of their core business. Hotel companies usually stay in the hotel silo and cruise companies stay in the cruise silo.” Mr D’Aguilar said the $3bn purchase price values Sandals’ entire business at $6bn, and Royal Caribbean’s disclosure that this represents “a forward EBITDA multiple” of ten times’ signals that the resort chain’s group operating income is around $600m annually.

The former tourism minister reiterated that the cruise industry’s poor track record with hotels is why it remain so critical for Adam Stewart and his management team to remain in control at Sandals once the deal is completed. “I am glad he is remaining seemingly in day-to-day control of that part of the marriage,” Mr D’Aguilar added.

“That is obviously the most important component of our tourism product because that’s the stopover component, and the stopover component is the most important to us in terms of tourism spend.” Mr D’Aguilar also voiced hope that Royal Caribbean’s investment, and involvement, will allow Mr Stewart and Sandals “to pursue other expansion projects in The Bahamas if the union produces more cash flow”.

Chester Cooper, deputy prime minister, and who succeeded Mr D’Aguilar as tourism minister before being shifted to education, yesterday expressed optimism that the partnership could accelerate, and further expand and improve, the Emerald Bay’s conversion from Sandals to a Beaches property. Tribune Business understands that 50-60 construction workers are active at the site, for which a $100m Heads of Agreement was signed in November 2025.

“It’s a well-run company and hopefully that provides Sandals with additional headroom to continue to expand their very successful product in the Caribbean,” Mr D’Aguilar said. “Adam is extremely bright. In my interactions with him, he was extremely bright, and I was always impressed with his knowledge of the industry and running of the company.

“The key for Royal Caribbean is to keep him engaged, keep him in charge. If they are making $600m in EBITDA then he obviously is doing a bloody good job.” Royal Caribbean and Sandals will almost certainly explore the synergies created by combining the two largest elements of Bahamian and Caribbean tourism - stopover and cruise vacations.

The deal will likely focus on two-way conversions, with both gaining access to each other’s customer databases and Sandals marketing all-inclusive land-based vacations to Royal Caribbean’s passengers and the latter doing likewise in the opposite direction. There will also probably be packaging of land-based and cruise vacations, and the opportunity to offer customers discounts.

The two companies said as much in the release confirming the deal, asserting they “will explore opportunities to broaden distribution, deepen guest engagement, and make it easier for travellers to discover vacation experiences offered across both portfolios”.

Mr D’Aguilar, though, said Royal Caribbean’s partnership with Sandals is unlikely to reduce opportunities for Bahamian tour operators, excursion and attraction providers, merchants and others to access and market to the cruise line’s customers. Pointing to the fact that Royal Bahamian typically “runs in excess of 90 percent occupancy”, has no suitable site nearby for cruise lines to dock (Balmoral Island is close by), he argued that there enough cruise guests to go around.

“I continue to tell everyone in excess of 25,000 people come into the port of Nassau every single day of the year,” the former tourism minister said. “And there are not enough excursions or opportunities for them those persons to come off the boat and spend their money. Anything that encourages that is welcome. Everything is at peak capacity. Junkanoo Beach is at capacity; downtown is at capacity; and some people have visited so many times they don’t get off the boat.”

Tribune Business reported last year that Sandals had hired Bank of America “to explore strategic options” for the resort chain, so yesterday’s deal signing represents the culmination of that process.

The Royal Caribbean deal was also signed just months after the battle over the estate of the late Sandals’ founder, Gordon ‘Butch’ Stewart, was settled out-of-court prior to being heard before Chief Justice Sir Ian Winder in the Bahamian Supreme Court. This had pitted Cheryl Hammersmith-Stewart, his third wife, and her children (the US side of the family) against Adam Stewart, together with his sister, Jaime McConnell, and brother, Brian Jardim (the Jamaican family).

The settlement is likely to have been a key step in enabling the Royal Caribbean deal to proceed, and the funds are likely to be used - at least in part - to compensate the different factions in the Stewart family.

“My father, Gordon ‘Butch’ Stewart, founded Sandals resorts with the belief that a company built in the Caribbean could stand on the world stage alongside the most respected names in hospitality. Today is proof of how far that vision can go,” said Adam Stewart. “This partnership is the natural next step in building on that conviction.

“It gives us the ability to grow faster with a partner that shares our values of exceptional hospitality, long-term investment and the power of enduring brands. Together, we will introduce more guests to Sandals and Beaches resorts while creating even more extraordinary experiences for those who have made our resorts part of their lives for decades.

“As we continue to grow, we will remain true to what has always defined us: Delivering authentic vacations that exceed expectations while creating opportunities for our team members, travel advisor partners and the communities we call home. The future has never been brighter, and I know this moment would make my father incredibly proud.”

Jason Liberty, chairman and chief executive of Royal Caribbean, added: “For nearly 60 years we've reimagined what a vacation can be, constantly expanding the ways we inspire our guests to explore, connect and create lifelong memories. We have been building a vacation platform that brings joy to millions of people around the world, and creates meaningful relationships that last with our guests.

“Our partnership with Sandals and Beaches Resorts is an important next step on that journey - bringing together two iconic leading vacation companies to further strengthen and grow one of the most admired resort portfolios in the world.

“The Stewart family has created powerful and beloved brands, and we are honoured to build on that legacy. Together, we see tremendous opportunity to expand the reach of Sandals and Beaches resorts and continue turning the vacation of a lifetime into a lifetime of vacations."