While the government expects to recoup the $65 million it spent to purchase the Grand Lucayan property, Minister of Tourism Dionisio D’Aguilar said yesterday that the government has suffered losses in operating the hotel over the past 18 months.
“Obviously, while we operated the hotel, there were some operating losses for the 18 months that we held it, or for the period that we would have managed the hotel,” he said outside the House of Assembly.
“But, we thought it was much more important to keep that hotel open and we were prepared to incur those losses, those operating losses, to keep the hotel open.
“Once a hotel closes, it becomes very difficult to sell it. The value of it diminished significantly. And it is harder to get it sold and reopened. The Royal Oasis is a classic example of what happens when you close a hotel. So, we were determined not to let that happen. And we were right and it worked.
“We found a reputable, well-funded buyer that has enormous experience in the tourism industry.”
D’Aguilar said those operating losses included several million dollars paid out in voluntary separation packages to line staff and managers. He said more costs will be incurred by the government when they let go of the remaining employees at the property.
Lucayan Renewal Holdings Chairman Michael Scott said the current Grand Lucayan employees will be terminated and paid their severance or benefits so that there will be a “clean slate” for the new owners.
Late last year, Scott advised that 216 full-time employees were engaged at the Grand Lucayan assigned to the Lighthouse Pointe, spa and laundry and the Grand Lucayan golf course.
“The cost to pay the employees will be part of the operating losses, yes,” D’Aguilar said yesterday.
D’Aguilar said that while the government is giving the investors concessions, they are not extraordinary, and it will be worth it in the long run.
“You’ve got to think of the years of revenues and employment opportunities and entrepreneurial opportunities that’s going to create for Grand Bahamians,” he said.
He added, “When the document is revealed [you] will also notice that we had to give some concessions, but in every heads of agreement, you have to give concessions.”
D’Aguilar continued, “It far outweighs the couple million dollars or so you’re going to be spending in operating losses you would have incurred and the concessions you will be giving. It just far outweighs.”
The government signed a heads of agreement (HOA) on Monday with Bahamas Port Investments Limited – a joint company of Royal Caribbean International (RCI) and ITM Group – for the sale of the Grand Lucayan resort and the development of a cruise port on Grand Bahama.
The property closed following Hurricane Matthew in 2016, and only one of its hotels, Lighthouse Pointe, was opened at the time the government controversially purchased the property for $65 million in 2018.
Its highly anticipated reopening is expected to bring an economic boost to the island, which has been struggling economically for several years.
The plans for the first phase of the redevelopment of the property include a 526-room hotel, shopping village, water and adventure theme park and a 40,000-square foot convention center.
The Memories property will be demolished to accommodate the construction of the theme park.
Officials said the project is expected to be underway in five or six months.