By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
A former tourism minister yesterday asserted “everyone is praying this is a home run” ahead of tomorrow’s Heads of Agreement signing for the Government’s third attempt to exit the Grand Lucayan.
Dionisio D’Aguilar, who was in the Minnis Cabinet that agreed the ill-fated Royal Caribbean/ITM Group deal that was ultimately scuppered by the COVID-19 pandemic, told Tribune Business that “the devil is in the details” while voicing concerns about the Grand Lucayan buyer’s seeming lack of development experience outside mainland US.
Suggesting that an investment “at least north of $200m” is needed to revive a resort long regarded as Freeport’s ‘anchor’ property, he added that it is vital to understand Concord Wilshire’s “vision” and targeted timeline for when construction will be completed and the project fully operational.
Mr D’Aguilar told this newspaper that the cost and scale of any transformation has been “severely and negatively impacted by the passage of time”, and “the virtual abandonment of large parts of the property” with the former Memories hotel and Breaker’s Cay section closed for more than eight-and-a-half years since Hurricane Matthew struck in October 2016.
And he also argued that Prime Minister Philip Davis KC “cannot” discuss the Grand Lucayan deal without giving a progress update on Grand Bahama International Airport’s long-touted $200m overhaul which has yet to take-off. Mr D’Aguilar said it was “quite worrying” that so little had been heard about the Manchester Airport Group consortium, the winning bidder, and its deal appears to have “fizzled”.
Tribune Business sources, speaking on condition of anonymity, suggested that Concord Wilshire’s actual purchase of the Grand Lucayan, and all its real estate and physical assets, is due to close today (Wednesday) ahead of tomorrow’s Heads of Agreement signing.
This, they argued, meant a signing ceremony heavily promoted by the Government will be more than just the typical agreement of terms and conditions with a private investor. Instead, they said it will represent an actual transaction involving the purchase of a resort acquired by the Government for $65m in September 2018 to prevent its closure by Hutchison Whampoa’s property arm.
“It’s premature to attack something without having all the details, and Lord knows the people of Grand Bahama need something,” Mr D’Aguilar told Tribune Business. “Everybody is praying this is a home run. I’m sure it’s going to be touted. We all hope that it’s that.
“I’m quite interested to see what type of deal is about to be made or about to be signed. Obviously I’m interested to see what is the vision for the project, what is the amount of investment and when is it expected to be transformed. Then, what is the projected economic impact on the island of Grand Bahama?
“Time has moved on, costs have gone up, but certainly at least north of $200m,” Mr D’Aguilar added of the capital investment required under the new owners, “because the property has been severely and negatively impacted by the passage of time and virtual abandonment of large portions of the property.
“The vision is important, and the amount of investment. What are they going to do? This is the third time this project has been presented to the people of Grand Bahama. We had one [Royal Caribbean and ITM] that fell by the wayside, primarily due to COVID. The second one had a change of heart. We’ll see what this project entails.”
That “second one” was Electra America Hospitality Group which, despite being unveiled with much fanfare by the Davis administration, never reached the stage of a firm offer or signed sales agreement. Concord Wilshire is a $10bn Miami-based real estate developer, with a project portfolio that extends across ten US states and includes several Florida resort destinations.
“It’s a fairly substantial US company in the field of property; the property space,” Mr D’Aguilar added. “They do have some hotels; not an enormous amount. They have no properties in the Caribbean right now, which is a little troubling because it’s different to do business here than on the mainland US, where most of their properties are located.
“I think if you look at the projects that have been successful in the past in The Bahamas, the large projects such as Atlantis and Baha Mar, they usually have a visionary leader of those entities, Sir Sol Kerzner and Sarkis Izmirlian. When you go with these corporate entities, it’s not the same as having a visionary coming in there and putting in billions of dollars to transform the property.”
Tribune Business sources last year suggested that Concord Wilshire plans to demolish most, if not all, of the existing Grand Lucayan property and invest up to $2bn – ten times’ the amount suggested by Mr D’Aguilar – in developing six new hotels targeted at different markets such as golf, gaming, marina, timeshare and fractional ownership.
The former tourism minister, though, argued that the Heads of Agreement signing cannot escape an update on Grand Bahama International Airport as its revamp “goes hand in hand” with the Grand Lucayan whose revival depends on vastly expanding airlift. An improved airport will be needed to handle the passenger increase.
“Grand Bahama does need something,” Mr D’Aguilar agreed. “I’m excited and optimistic from the perspective the Government feels comfortable enough to bring something forward. The devil is in the details, and hopefully the details will be revealed on Thursday.
“The Grand Lucayan, for better or worse, has been an anchor property in Grand Bahama. It’s substantial, and if it can be fully upgraded, renovated, revived and re-energised, it could be as significantly impactful as it once was.
“Some people will say it must go hand-in-hand with the renovation and upgrade of the airport. You’re not going to build a ton of rooms unless you pay specific attention to that airport,” Mr D’Aguilar added. “We will wait and see how they tie the airport into that project.
“Quite worryingly, we haven’t heard any more of the Manchester Airport Group consortium. It seems to have fizzled. I haven’t heard anything. Maybe they are still in the due diligence stage. I’m sure the Prime Minister cannot mention this project without an update on the progress being made at Grand Bahama International Airport.
“We will wait and see what the details are, and then everyone can opine on whether they think it’s going to be as impactful as the Government claims it to be, or another one of those projects that’s going to have a difficult journey. We’ll see.”
However, Michael Scott KC, ex-Hotel Corporation and Lucayan Renewal Holdings chairman under the Minnis administration, yesterday largely dismissed the imminent Concord Wilshire agreement signing as “pre-election hype”. He reiterated that any deal for the resort will be unable to proceed without an upgraded Grand Bahama International Airport.
“From what I understand, the proposed suitor, Concord Wilshire, are – from my own contacts – a reluctant suitor, and the Government seems to be more interested in them than they are in the Government,” Mr Scott said. “Second, one of the major impediments to the Royal Caribbean deal going through was not just COVID or the pandemic but any remedial works at the airport.
“Without an airport, without pre-clearance, without a revenue stream to offset the serious capital costs that will be necessitated by redevelopment of that deteriorating property, it’s not going to happen… You have to have facilities to bring in visitors in substantial numbers, and the lack of infrastructure is a serious impediment to this. How are Concord going to get people there?”
Pointing to the lack of airlift from American Airlines and other major carriers, Mr Scott added: “Marine traffic or sea traffic is not enough to sustain an operation like that. And not just sustain an operation, meaning to fill rooms, but producing the necessary returns on investment. I think it’s pre-election hype and a typical manoevere on the part of a government which is gearing up for an election.”
Mr Scott also challenged the Government’s failure to produce the annual accounts for Lucayan Renewal Holdings, the special purpose vehicle (SPV) that owns and holds the resort on its behalf, in the House of Assembly. Some $17.882m in subsidies supported the hotel’s operations in the 2022-2023 fiscal year, and of the $17m allocation for 2023-2024 virtually all – some $16.633m – was spent in nine months.
