By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government was yesterday urged to “get tough” with Freeport’s largest investor, amid fears that Memories’ pull-out “will be the death knell” for the island’s tourism sector and wider economy.

Terence Gape, the Dupuch & Turnquest law firm’s managing partner, told Tribune Business the Government should even consider reversing the 20-year package of tax breaks granted to Hutchison Whampoa last year should it fail to co-operate in resolving the “crisis”.

Mr Gape, a long-time Freeport resident, warned that Memories’ closure would have wider ramifications than just 300-500 job losses among hotel workers.

In particular, he argued that it threatened the continued existence of the Port Lucaya Marketplace, whose retail and restaurant tenants rely heavily on tourists from Memories and the Grand Lucayan.

The Hurricane Matthew-enforced closure of both properties, apart from 200 rooms at the Hutchison Whampoa-owned Grand Lucayan, has taken 1,500 hotel rooms out of Grand Bahama’s product inventory.

And the relationship between Memories’ parent, Sunwing, and Hutchison as the resort’s landlord appears to have completely broken down over allegations that the Hong Kong-based conglomerate was obstructing its Canadian-headquartered tenant’s efforts to re-open.

Fearing that Grand Bahama’s economy will “die with” Memories and the flagging tourism product, Mr Gape urged the Christie administration to put pressure on Hutchison Whampoa and force it to act.

“We have a terrible problem here,” he told Tribune Business. There’s nothing going on. Tourism is dead, and the island is going to die with it. I am very concerned.

“The island is in crisis. We either need Hutchison to re-open the hotel together with Memories very quickly, or they have to find a buyer to revitalise the hotel and bring it back.

“We’ve already lost the tourism market completely, and are on the verge of Port Lucaya closing, which will be devastating to the potential of ever bringing back the tourists.”

Mr Gape recalled that when the Royal Oasis closed in September 2004, a development that has placed the International Bazaar on a downward spiral ever since, Freeport “at least had Port Lucaya to fall back on”.

“If Port Lucaya closes now it will be the death knell,” he told Tribune Business, adding that the seriousness of Freeport’s plight required an immediate, strong response from the Christie administration.

In particular, Mr Gape suggested that it look at the millions of dollars in tax concessions pocketed by Hutchison Whampoa just last year.

The Government, as part of efforts to restructure its relationship with the Grand Bahama Port Authority (GBPA), granted the Hong Kong-based conglomerate and all its Bahamian subsidiaries a ‘blanket’ 20-year extension of their real property tax, income and capital gains tax exemptions.

In contrast, all Bahamian and other foreign investors in Freeport have to apply to receive the same incentives, and these are reviewable every five years as the Government seeks to tie tax breaks to ‘performance’.

Hutchison Whampoa, though, has so far demonstrated its gratitude by foot-dragging over post-hurricane repairs to both the Grand Lucayan and Memories, while blaming the wait on delays in receiving the proceeds from its insurance claim.

“I am flabbergasted,” Mr Gape told Tribune Business, “that Hutchison, which just received a 20-year extension to their real property tax exemption, do not seem to be at all concerned with causing the hotel to fully re-open, and cause the survival of tourism on the island, along with its economy and people.

“They [Hutchison] don’t seem to have a heart in my opinion. I think the Government needs to take a very stern position with them to either cause them to re-open or sell immediately, even reimposing the tax.

“They are not good corporate citizens. We’re looking at losing this whole economy, and Freeport might disappear. No one wants to hear that, but it might happen.”

Memories, in announcing its pull-out from Sunday, January 29, blamed the move on its landlord, slamming Hutchison Whampoa for seeking to attach “exorbitant conditions that were totally unacceptable to Sunwing, and... any other potential tenant” when it attempted to effect hurricane repairs itself.

Sunwing did not detail these conditions, but its pull-out came just after Prime Minister Perry Christie and minister of tourism, Obie Wilchcombe, revealed that $2.5 million in taxpayer monies had been released to advance repairs and get Memories open by May.

Many observers, and members of Freeport’s private sector, have privately confided to Tribune Business their belief that the Government gave up all its leverage over Hutchison Whampoa in return for the cruise port waiver (to facilitate Carnival’s project) and the $300 million Phase V container port expansion.

There was a widespread feeling that the imposition of real property tax would have forced the Grand Bahama Development Company (DevCo), 50 per cent owned and managed by Hutchison Whampoa, to become proactive and start developing its 70,000-80,000 acres in order to offset the new ‘carrying cost’.

Fred Smith, QC the Callenders & Co attorney and partner, told Tribune Business that the Memories’ pull-out was reminiscent of the Royal Oasis closure in 2004, from which Grand Bahama’s economy and society has yet to recover.

He added that the impact was far wider than the estimated 400 job losses, suggesting that Memories’ staff had been responsible for supporting some 2,000-3,000 Grand Bahama residents.

“The collapse of the tourism industry in Freeport, resulting from the closure of Memories, is similar to the devastating effects of the closure of the Princess [Royal Oasis] hotel and casino downtown,” Mr Smith said.

“To speak of 400 job losses is only the tip of the iceberg. Four hundred good-paying jobs in Freeport support 2,000-3,000 family members through mortgages, utility bills, groceries, entertainment, schooling, medical, pensions, NIB.

“It is a catastrophe in a community that is holding on by its fingernails, on the precipice of financial collapse. The knock-on effect in terms of 400 people is catastrophic.”

Mr Smith said Memories’ closure would impact revenues, profits and employment at third party vendors that supplied it with products and services.

And he warned that it would also hurt the taxi drivers and tour operators, not to mention the Port Lucaya Marketplace’s retail and restaurant tenants.