Wednesday, September 11, 2019
By NEIL HARTNELL
Tribune Business Editor
The Grand Lucayan’s chairman yesterday said he is aiming to “ratchet up” talks for the resort’s sale given that Freeport needs an “economic booster” more than ever after Hurricane Dorian.
Michael Scott, who heads the government-owned vehicle that controls the hotel, told Tribune Business he had already reached out to Royal Caribbean executives in a bid to “expedite” negotiations and was hoping to “schedule a meeting” by this Friday.
He revealed that the damage inflicted on the resort by the category five storm was “not as bad as feared”, with the Grand Lucayan faring much better than its experience with Hurricane Matthew in October 2016 - an event that triggered Memories’ departure and, ultimately, government intervention that purchased the resort from a Hutchison Whampoa affiliate.
While unable to provide a dollar figure for Dorian’s damage, Mr Scott said the Grand Lucayan had been “fully insured” through RoyalStar Assurance and was now awaiting the arrival of loss adjusters so it could kickstart the claims process.
He added that Lucayan Renewal Holdings is now focusing on preparing the closed hotel to accommodate Dorian rescue and recovery teams, as Freeport was presently “not open for business”.
With government negotiators “supposed to convene soon” with the Grand Lucayan’s prospective purchasers, Royal Caribbean Cruise Lines and its ITM Group joint venture partner, Mr Scott said Dorian’s destructive effects on Grand Bahama’s economy had motivated him to try and accelerate the sales process.
“What I’d like to do is ratchet up the process and expedite it,” he told Tribune Business, “because Freeport is going to need that economic booster. It needed it before, and we’re going to start.
“I’ve already had a preliminary chat, discussion with Royal Caribbean’s people, and I am going to be touching base and scheduling a meeting. I’m going to try and do that by Friday.”
There were fears that Hurricane Dorian’s impact would - at the very least - disrupt and delay the Grand Lucayan’s sale, and plans to transform the resort and nearby Freeport Harbour into a true destination product.
However, Royal Caribbean and ITM, and their Holistica joint venture, quickly reaffirmed their commitment to the resort’s $65m purchase and subsequent $130m first phase investment once the storm had passed.
Tribune Business reported earlier this year how the Government was aiming to close the deal by September/October 2019, or before year-end in a worst case scenario. Dorian’s appearance, coupled with all the economic and social dislocation that has resulted, means that Freeport and wider Grand Bahama now need such a development more than ever.
The ITM/Royal Caribbean project was branded “a game changer” for Freeport’s economy when revealed by this newspaper earlier this year, as it promises a revival of the tourism industry that could - together with Carnival’s $100m cruise port - help drag the city out of a 15-year slump.
The Mexican port developer and cruise line have said the $130m first phase investment will cover a 24-month period, meaning that a revived Grand Lucayan - complete with water-based theme park and associated retail, gaming and restaurant amenities - may only be ready to receive its first guests come winter 2021 if the current timeline holds.
The joint venture, if the deal closes, will pay $65m to acquire the Grand Lucayan as part of a development aiming to create 2,000 new jobs in its first phase. This will bring in an extra two million cruise passengers to Grand Bahama every year, transforming the area into “a world class destination”.
As previously detailed by Tribune Business, the proposal focuses on developing water-based adventure theme parks at both Freeport Harbour and around the resort. The Grand Lucayan will be upgraded to “five-star hotel accommodation”, and feature multiple gaming, entertainment and restaurant experiences.
Although few specifics have been released, the joint venture envisions combining Port Lucaya and Freeport Harbour into a “unique destination” that will set Grand Bahama apart from its competitors, not just Florida and other Caribbean nations, but Nassau/Paradise Island and the Family Islands.
Mr Scott, meanwhile, said the existing Grand Lucayan property had withstood Hurricane Dorian’s winds and storm surge much better than expected despite the storm pounding Grand Bahama for almost two full days after it stalled out over the island.
“There was some damage but it was not as bad as feared,” he told Tribune Business. “It was mostly shrubbery, foliage and some of the utility infrastructure got waterlogged and will have to be cleaned.
“We’re doing a damage inquest, and have got a preliminary report, but need to sit down and look at the details. We’re fully covered by insurance. It’s just a question of making sure we’ve got it all and have submitted all the damage issues with the landscape and building itself, and get adjusters in to look at the values and the rest of it.
“Our adjusters and advisers, and adjusters for the insurance company, which is RoyalStar, is a process,” Mr Scott continued. “The good news is it’s not as bad as Hurricane Matthew treated the property in 2016. It’s not as bad as that.
“One has to look at it in the context of the Government buying the hotel. What the Government bought from Hutchison in August 2017 was a salvage. They had pocketed the Matthew insurance proceeds and absconded with them.”
Mr Scott added that he “couldn’t begin to give you a dollar estimate for what it will cost for repairs and remediation work” in Hurricane Dorian’s wake, as the insurance claims process had yet to begin in earnest.
He confirmed that the Grand Lucayan remains closed, with power to the resort restored on Monday night. Water supply is currently being provided by the Freeport fire department, the Lucayan Renewal Holdings chairman revealed, as the Grand Bahama Utility Company’s network had been “compromised” by salt intrusion into its system due to Dorian’s storm surge.
With Freeport in no condition to currently receive tourists, Mr Scott said: “We will be equipping and preparing ourselves to do the restoration work to ensure, in the short-term, that the resort will be able to accommodate rescue and recovery people.
“The airport is only open for emergency and relief flights. There’s no terminal at the airport; it was all busted and, even if you get into Freeport, everywhere else is closed. One has to put this thing in perspective: Freeport is not at the moment, but will hopefully soon be, open for business. Right now we’re still in the thickets of the recovery process.”