By NEIL HARTNELL
Tribune Business Editor
The Minnis Cabinet will decide “very shortly” whether to act on the Grand Lucayan Board’s plan to re-open the resort on February 1, a Cabinet minister revealed yesterday.
Dionisio D’Aguilar, minister of tourism and aviation, told Tribune Business that the government was “still analysing” the costs associated with opening Freeport’s so-called ‘anchor property’ and disclosed that yesterday’s US move to impose a quarantine requirement on all incoming travellers (see other article on Page 1B) may factor into the decision.
Speaking after this newspaper was informed that the government will have the final say on the resort’s proposed re-opening, given that millions of taxpayer dollars will be at stake, Mr D’Aguilar confirmed that the final decision has been taken out of the Board’s hands.
“It’s Cabinet and we’ll be making a decision on that very shortly,” he told this newspaper. “We’re still analysing what the costs are to re-open before we come to a conclusion.”
Conceding that the Biden administration’s new COVID-19 travel and health policies may influence any decision, Mr D’Aguilar said: “We’re still digesting all this information, so we will put that in the pot and see what comes out. We’ll have to evaluate this move in light of what decisions we have to make.”
His comments came as the government still assesses the findings of a report by the KPMG accounting firm into whether the current terms of the ITM Group/Royal Caribbean deal to acquire the Grand Lucayan are sufficiently beneficial to the Bahamian economy and people. Informed sources, speaking on condition of anonymity, suggested the findings are “not favourable”.
Bahamian taxpayers, via the Public Treasury, have already injected over $100m into the Grand Lucayan - including the $65m purchase price - since the government acquired the property from Hutchison Whampoa’s real estate arm in 2018. And there are fears that simply re-opening the resort, in the absence of airlift, a marketing plan and operator, will simply inflict more losses.
The Minnis administration is likely becoming desperate to get the loss-making resort off its and the taxpayer’s books, given the staff termination package, subsidies to cover operating losses and other expenses it has incurred over the past two years. Philip Davis, the opposition’s leader, recently argued that the total cost to taxpayers was likely to be around $150m.
The government believed it had found the correct buyer to revive the Grand Lucayan, and Freeport’s wider tourism industry and economy, in the shape of Royal Caribbean/ITM Group’s joint venture partnership, Holistica. However, those hopes quickly foundered on the COVID-19 rock, with the joint venture subsequently using the pandemic to water down the deal’s terms to their advantage.
Other observers, though, have argued that the Government has little choice but to stay the course with RoyalCaribbean/ITM as the pool of alternative buyers willing to offer a reasonable price and terms will have shrunk considerably due to COVID-19.
While acknowledging that it was better for Freeport’s ‘anchor resort’ to be open than closed, Magnus Alnebeck, the nearby Pelican Bay resort’s general manager, voiced fears in late December that its Lighthouse Point property will “just stand there because no one is coming” and cause “a big expense” for taxpayers.
“By itself it’s not going to bring any guests,” Mr Alnebeck said of the planned re-opening. “Grand Bahama has really been closed to the tourist market for almost four years since Hurricane Matthew. It’s a bit better that the hotel is open than closed, but opening by itself is not going to solve the problem. Having an open hotel with no guests is not the solution.
“It needs to open with the right operator and right product so there’s demand for it, there needs to be a marketing programme in place and, what is really important, is that full airlift is in place. It’s good that they’re going to open, but they need to open it right as opposed to saying let’s open it and see, especially if people are going to a destination that’s been closed down for four years more or less.
“It’s really three legs that are needed to open the hotel. The first is having an attractive product consumers like, and second, they need to market so people understand it’s open. Then you need to have the airlift and boat lift so people can get to Grand Bahama otherwise it’s just going to end up costing you money.”
Mr Alnebeck said that if an operator, marketing initiative and air/sea lift for the Grand Lucayan were in place “they haven’t been announced yet”. He added: “What would have made sense to me would be to get an operator like Sunwing or someone who knows what they’re doing, come in with airlift and a marketing plan, and get the numbers to work.
“Otherwise the danger is that the hotel opens at a big expense but it just stands there because no one is coming. It needs to be combined with a serious airlift programme and serious marketing plan. All the airlift we have for Grand Bahama at the moment is one American Airlines flight per day from Miami, Silver from Fort Lauderdale five days a week, and whatever Bahamasair flies.
The Pelican Bay chief estimated that Grand Bahama is presently averaging around 100 daily air arrivals on five days per week - a figure that is far below the numbers necessary to sustain the Grand Lucayan and other properties that are more reliant on leisure guests than his hotel.