Telling the government the purchase of Grand Lucayan hotel in Freeport for $65 million is a bad move, opposition leader Philip Brave Davis said the government ought to have continued paying the owners of the resort for operational losses to keep the Lighthouse Pointe open while it facilitated a sale of the resort to another private entity.
The government will pay Hutchison Lucaya Limited (HLL) and Bahama Reef Limited $1.5 million to cover its operational losses for keeping the hotel open during the purchase process, which began on August 1, 2018, according to the resolution to complete the purchase of the hotel.
“That’s the alternative I would have recommended to you,” said Davis during debate on the resolution to borrow $35 million from HLL and Bahama Reef Limited to facilitate the purchase.
The government has paid $30 million up front for the hotel.
Once approved, the government will repay the government guaranteed loan in seven tranches of $5 million every six months for three-and-a-half-years, with an interest rate of four percent per year paid quarterly: $4.9 million to be paid in $350,000 installments every three months.
The government hopes to sell the resort within three to six months.
On that basis, Davis said the government would have paid HLL and Bahama Reef Limited up to $9 million for operational losses during that period, a more reasonable alternative to taking on the burden of the full purchase of the resort, of which the full costs to open, operate and renovate remain unknown.
“Buying a hotel without a strategy of having heads in beds, what will be the consequence of that?” he asked.
He continued, “It is the considered view of this side that the acquisition of these properties is a desperate, ill-advised and inadequate Band-Aid approach to addressing the critical condition of the economy of Grand Bahama.
“Simply put, it is a bad deal.”
Davis said the government should consider why Hutchison Whampoa with its multi-million dollar resources and the subsidies the Christie administration provided, was unable to successfully and profitably operate the resort.
He said former Prime Minister Hubert Ingraham made a good arrangement with the former owners of the resort to ensure its sustainability.
As the government indicated its preparedness to buy the resort last month, Ingraham said the government should instead seek to purchase the Grand Bahama Port Authority as part of a more substantive plan to turn Grand Bahama’s economy around and place it on stable footing.
Yesterday, Davis said, “Ya’ll better listen to Papa.”
Leading debate on the resolution, Prime Minister Dr. Hubert Minnis said the government was faced with the choice: idly sit by and watch the property sink into a state of disrepair; enter an untenable agreement with a private entity (Wynn Group) seeking endless concessions which would not serve the national interest, or intervene in the way that it has.
He also stressed that to allow the Lighthouse Pointe, one of three brands at the hotel, to close would have led to the “economic collapse of much of Freeport, with even higher unemployment, greater despair and a loss of hope for many Grand Bahamians for many more years”.
Additionally, Minnis said he is convinced the government has done the right thing and believes “a new day is truly beginning in Grand Bahama”.
“In my heart and soul, I believe that it is the right thing to do,” he said.
However, Davis questioned how the government could implement austerity measures and increases taxes on one hand, and claim it has great fiscal constraints, but still expend $65 million.
He asked whether the government took into consideration the concessions it has provided over the years when it was negotiating the purchase.
He said Hutchison must be “smiling to the bank”.
Davis also said Minnis should have flown to Honk Kong and met with the principals of Hutchinson face to face to say “this is what you have done to me”.
The opposition leader noted that there are still critical questions lingering surrounding the purchase.
He wrote to the prime minister on September 18, and requested the condition and value of the properties, the potential municipal liens and other liabilities on the hotel and the cost to operate the resort moving forward, among other details.
He also requested a quantity surveyor’s report on the estimate to repair and renovate the hurricane-damaged properties, as well as an inventories list that would make the resort operational.
These questions remain unanswered.
The purchase price does not include the inventory of the hotel, according to the resolution.