The government of The Bahamas officially signed a heads of agreement (HOA) yesterday 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 final buying price of the Grand Lucayan was $50 million, according to Lucayan Renewal Holdings Chairman Michael Scott.
However, both he and Minister of Tourism Dionisio D’Aguilar said that after concessions and insurance proceeds, the deal ends up being even to the $65 million government paid to purchase the resort in 2018.
Speaking during a well-attended signing ceremony on the grounds of the Grand Lucayan in Freeport, Grand Bahama yesterday, D’Aguilar said: “Today, I am, along with the prime minister, delighted to announce the sale of the Grand Lucayan hotel to a joint venture between Royal Caribbean, one of the largest cruise lines in the world, and the ITM Group, developers of many cruise ports around the world.”
The audience cheered and applauded in response to the announcement as D’Aguilar continued, “As minister of tourism and as minister with responsibility for this property, I am extremely excited that the intended purchasers of this hotel are Royal Caribbean and the ITM group. Between them, they are well-funded, bring to the table a great deal of experience in the tourism sector and have a proven track record of successful projects.”
Approximately $300 million will be invested into the hotel property to “refurbish, renovate and reconstruct 500 rooms in phase one; and another 500 rooms along with 500 villas in phase two”.
The plan is also to include a casino; a water park; a restaurant and retail center, and Holistica – another joint venture between RCI and ITM Group – will be involved in the development.
Additionally, a “cruise port that is to be built in the Freeport harbor to accommodate three ships in phase one and up to seven ships in subsequent phases”.
RCI President and CEO Michael Bayley, who also delivered remarks during the ceremony, said one of the primary goals of Bahamas Port Investments Limited is to increase the yearly number of cruise visitors to Grand Bahama from its current approximately 600,000 to 2.5 million.
Also bringing remarks during the event were Prime Minister Dr. Hubert Minnis and Minister of State for Grand Bahama Kwasi Thompson, who both touted the potential of the HOA being signed.
Minnis hailed it as “a wonderful day” for Grand Bahamians, especially, while Thompson called it another “significant step” toward a new 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 purchased the property amid nationwide debate on the question of whether the government ought to have done so.
Its highly anticipated reopening is expected to bring an economic boost to the island, which has been struggling economically for several years.
Officials said the project is expected to be underway in five or six months.
But Bayley urged patience on the part of the public with this project.
“We know that we have to be measured with our expectations, and not assume that this project will be the solution to every issue residents face on Grand Bahama,” he said.
“It will be important to pace ourselves and we request that we are provided the time to work with everybody in the community.”
Scott insisted that the “effective purchase price” was $65 million despite the lower amount of $50 million that he cautioned would appear on the document.
“On the documents that you will eventually see when they are made public, the purchase price is expressed as $50 million,” he told reporters on the sidelines of the signing.
“The reason for that is that they are getting credit for, as a result of the damage done to the property by Hurricane Dorian.
“However, we are making up that difference because we have filed an insurance claim – we were very well-insured for the hurricane – and the estimated recovery will be something in the mid-20s, $20-plus million, and that will be used to reimburse the government.
“So, at the end of the day, the effective purchase price is still $65 million, and then on top of that, there will be certain concessions, benefits and incentives wrapped into the heads of agreement package but those are subject to timelines and milestones of development in the project.”
He said these could be, for instance, subsidies in relation to the cruise port.
D’Aguilar added that government could be said to have broken even on the deal.
“Without getting into the details and the minutiae, it’s a comprehensive deal,” D’Aguilar told The Nassau Guardian.
“There are concessions, there are insurance proceeds, there’s a lot of money flowing back and forth, but let’s say it settles at $65 million.
“So, when you first read it, it’s important that you speak to someone about the big picture because some of it is included in the agreement and some of it is not.
“Obviously, we had a hurricane that hit this place so, there are a number of transactions that make up the totality of the deal.”
He added, “[B]ut it will end up at $65 million, which is what we paid for it. So, we are excited that we were able to get back what we invested in it.”