A long shot
If Bahamians were looking for a reason to have confidence in their government over its decision to purchase the Grand Lucayan in Freeport, they would not have gotten that in reading the most recent comments on the matter from Minister of Tourism Dionisio D’Aguilar.
D’Aguilar in- formed the public that the government expects to incur losses as a result of the sale, and public money won’t be used to renovate the Grand Lucayan, although the government has said it is buying the property to preserve hundreds of jobs.
The government appears confident that it will be able to sell the Grand Lucayan quickly. Maybe it has some things lined up it is not telling us about, but so far, not much of this is making any sense.
“The government wants to buy it, hold it, continue to actively look for a seller to stabilize it and to sell it on,” D’Aguilar said.
Seems simple enough, right?
It’s actually a terrifying proposition that the government intends to pay $65 million of public money for the property then hope it is able to attract a buyer, something the current owner, Hutchison Whampoa, was unable to do.
From D’Aguilar’s comments, the government for now isn’t really concerned with reopening two of the three hotels that make up the property. It is concerned with ensuring Lighthouse Pointe stays open.
D’Aguilar has ad- vised that Hutchison has threatened to close that hotel.
He said renovating the Grand Lucayan, which was damaged by a hurricane almost two years ago, is not the “policy” of the government.
So, it appears the government will buy the asset and hold onto it, God knows for how long.
It intends to take the property off Hutchison’s hands. It will have to handle operational costs as it relates to the hotel that is currently open. This will allow the people still employed at the property to have some work and it will allow the small business people who benefit from business at the Grand Lucayan to continue to get the crumbs.
Perhaps the government feels it is appeasing the public by saying it will not spend money on renovations. But if the government is unable to flip the property over the next several months, the nightmare of hotel ownership will only grow.
Why is the government so confident that it will be able to quickly sell the property?
Back in December when it happily announced that the Wynn Group had signed a letter of intent with Hutchison to purchase the resort, it was also confident that a sale would close within weeks.
The government said at the time it expected the final process for the purchase to be completed between January and February 2018.
The reopening of the resort was expected to revive inventory of 1,000 hotel rooms and provide jobs to nearly 1,000 people.
“The government is very hopeful that this important formal step will lead to the full renovation, opening and redevelopment of the entire strip in the early part of 2018, helping to bring much-needed economic growth and jobs to Grand Bahama, which will also help to boost the national economy,” the Minnis administration said.
Likewise, it is hopeful today that it will be able to find a buyer quickly.
We should not gamble with the country’s finances based on what the government of The Bahamas hopes to happen. We have already seen that hoping for something is just not good enough.
D’Aguilar, in a recent interview with Peace FM’s Steve McKinney, suggested that Hutchison has the upper hand as it regards the Grand Lucayan.
“I’ve heard a lot of noise in the marketplace that we should not buy it, that we should just negotiate a harder deal with Hutchison Whampoa,” he said.
“We have been back and forth with Hutchison Whampoa time and time again trying to drive a better deal. It’s nothing to them to say, “Look, we are going to stick to $65 [million] and if it has to close, it [has] to close.”
What the government plans to do, D’Aguilar said, is move Hutchison out the picture altogether.
“We are a much more motivated seller than them,” he said. “They can afford to let it sit and do nothing.”
While he said the government is prepared to take a loss on the Grand Lucayan, the minister did not provide any specifics on the government’s expectations in this regard. He said the government does not want the Grand Lucayan to become a “lifelong agony”.
This highly risky purchase could become just that, unless the government is prepared to offer the property at a fire sale price.
What the Minnis administration seems to be saying to Bahamians is that it is prepared to purchase the resort for $65 million, keep the majority portion of it closed, sell it for much less than $65 million and swallow the costs just to get the resort fully open. What kind of plan is that?
It is a long-shot plan from a government feeling pressured to do something for Grand Bahama.
It is a more motivated seller, the suggestion being that it will be more willing than Hutchison to bend over backward to accommodate whatever buyer it can find.
After the government buys the resort, the assumption is the status quo will remain. Those who are working now presumably will continue to work, but those who have no jobs or reduced hours will not see an improvement in their situation.
They will have to wait until the government sells the resort and for the new buyer to fix it up enough for it to be acceptable once again to receive guests.
As is, the property is not an at- tractive proposition. There is no real attraction that would draw guests in large numbers. There is also still a problem with airlift. There will need to be serious dollars pumped into a marketing campaign, in addition to improving the airlift situation to the island.
This is a sticky situation indeed. It is showing all the signs of becoming a lifelong agony.