By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Hoteliers yesterday hailed the Prime Minister’s renewed optimism over the Grand Lucayan’s potential sale as “fantastic” given that this is key to lowering $1,500 one-way air fares to the US.

Magnus Alnebeck, the Pelican Bay resort’s general manager, told Tribune Business that selling Grand Bahama’s one-time ‘anchor’ property “to a company that knows what it’s doing” and can rapidly re-open its full 1,200-strong room inventory remains the only solution to driving increased airlift supply.

He spoke out after Prime Minister Philip Davis KC, leading-off the 2024-2025 Budget debate in the House of Assembly, disclosed that the latest talks over the Grand Lucayan had reached “an extremely promising stage” although he provided no details.

“The latest round of negotiations for the sale of the Grand Lucayan hotel are at an extremely promising stage. We hope that a positive announcement is imminent,” Mr Davis said. “The House will recall that the hotel was bought by the previous administration against all advice and for an amount higher than the valuation. It remains a drain on the public finances.”

The Grand Lucayan was acquired from Cheung Kong (CK) Property Holdings, the real estate arm of Hutchison Whampoa, by the Minnis administration in September 2018 for $65m to head-off the resort’s threatened closure by its former owner.

Efforts to find a private buyer for the resort, including the Royal Caribbean/ITM Group deal submitted to the former administration and the bid by Electra America Hospitality Group, have thus far failed to secure a purchaser. And, in the meantime, the Bahamian taxpayer has been forced to subsidise the Grand Lucayan’s annual losses to sustain its operations.

The 2024-2025 Budget provides a $17m subsidy for the resort and its immediate holding company, Lucayan Renewal Holdings, which matches the current fiscal year’s allocation. However, the $17m provided for the 2023-2024 Budget year was virtually exhausted at end-March 2024, with some $16.632m having been spent, meaning that Bahamian taxpayers will almost certainly incur cost overruns.

And, given that the Government provided Lucayan Renewal Holdings with $17.882m in the 2022-2023 fiscal year, the resort is set to cost taxpayers close to $54m by the time the upcoming fiscal year closes at end-June 2025. Given this subsidy run rate, taxpayer exposure to the Grand Lucayan now likely exceeds $200m with much of this sum unlikely to be recovered via a sale.

However, Tribune Business sources, speaking on condition of anonymity because they were not authorised to talk publicly, yesterday confirmed that the Prime Minister’s optimism may not be without foundation. They disclosed that the Government is on the verge of signing a sales agreement for the Grand Lucayan with a new prospective buyer whose identity they declined to disclose.

A sales agreement does not mean the purchase has been concluded. This will likely take several months, and probably at least 90 days, to achieve provided no deal-breakers arise. However, it would be an indication of the buyer’s seriousness and they will likely have to place a refundable deposit, normally 10 percent of the purchase price, into an escrow account.

The buyer will then be able to conduct enhanced due diligence on the Grand Lucayan, and negotiate binding terms and conditions with the Government, prior to any sale closing and the payment of a full purchase price.

“I think it would be fantastic,” Mr Alnebeck said of the Prime Minister’s renewed hope for the Grand Lucayan’s sale. “It’s the only chance we really have to get a substantial amount of rooms in use quickly so that we can start attracting some new airlift.”

While Weller Development’s $250m Six Senses resort project will provide a further boost to Grand Bahama’s tourism product, the Pelican Bay chief said this project’s construction completion is still some two years away in 2026 and its size does not compare to the Grand Lucayan.

“It doesn’t have that volume,” Mr Alnebeck added. “The Grand Lucayan is really the only possibility of adding a substantial amount of room inventory in the foreseeable future. It’s absolutely fundamental for that. Our airlift at the minute, we are back down to one American Airlines flight per day from Miami, and the fares on that are horrendous when you have a crew change at the Shipyard or anything like that.

“I was looking for a ticket for myself in June and, four weeks out, you’re talking about $1,500 one-way to Miami for three days, which is devastating to the destination not having the constant demand that an operating Grand Lucayan would give us.

“Our demand for flights at the moment is dependent very much on what is going on at the Shipyard and, if there is a crew change, there are just no seats available for anyone else. Grand Bahama has become, when it comes to airlift and travel, an Out Island. A number of us who live here travel through Nassau these days, but that’s not a viable thing for tourism.”

Mr Alnebeck, reiterating that “we need an operating hotel with a substantial number of rooms to get more airlift, said the “only traffic we had is Sunwing this winter” as well as WestJet operating from its feeder markets. The frequency of American Airlines flights from Miami have been cut from twice per day to once per day.

“The Grand Lucayan has always been a first step to trying to get Grand Bahama back on track,” the Pelican Bay chief added. “We need to get it sold to a company that know what it’s doing and get it open so that it attracts some more airlift.”

The Prime Minister, meanwhile, reiterated that “the Government is purchasing the Princess Towers hotel, the West Sunrise Road and the site of the International Bazaar for under $4m”. The Princess Towers is part of the former Royal Oasis resort, which closed in 2004, but checks by Tribune Business suggested that no deal has been reached yet to acquire either that property or the Bazaar.

“A higher loan facility has been arranged with the African Export-Import Bank for an exciting new development of that site. Again, details will be announced very shortly,” Mr Davis added. The International Bazaar has been viewed as a potential location for the Government’s proposed African-Caribbean products marketplace.

Ginger Moxey, minister for Grand Bahama, told the House of Assembly in June that the African-Caribbean Marketplace was among the projects she discussed when heading the trade and investment mission to Nigeria and Ghana. The visit also resulted in the signing of a Memorandum of Understanding (MoU) between the Government and Africa Export-Import Bank, which could potentially provide the project financing.

No specific location was identified for the Marketplace, but the International Bazaar site would provide a central spot in Freeport and offer a history compatible with the Government’s objectives. “The purpose of the MoU is to provide a broad framework for collaboration to harmonise efforts in Africa and The Bahamas, but specifically in Grand Bahama,” Mrs Moxey said.

She added that the MoU partnership will begin with the African-Caribbean Marketplace, or ‘International Marketplace’, to be located on Grand Bahama. “Not only will the marketplace promote and distribute African and Caribbean products, but it will also offer a taste of Africa and the Caribbean, making it an appealing tourist attraction,” Mrs Moxey added.

“In the marketplace, we envision seamless connectivity for trade between Africa and the Caribbean through the African Continental Free Trade Area (AfCFTA), with the Caribbean as the sixth region, and the added advantage of a 230-square-mile free-trade zone offering tax concessions on Grand Bahama.”

Using Grand Bahama’s proximity to the US, the marketplace is expected to provide strategic opportunities for value-added manufacturing, transshipment, distribution and logistics. “This vision, however, goes beyond mere trade,” Mrs Moxey said.

“It represents the culmination of a world-class experience, showcasing the rich cultures of Africa and the Caribbean. The African-Caribbean Marketplace will become the home of ‘All things African and Caribbean’. It will feature a ‘Bahamas Bazaar’ representing each inhabited island of The Bahamas.

“With its conceptual design, including an amphitheatre, featuring a performance arts theatre, African and Caribbean-flavoured concessions and unique architecture reflecting the authenticity of our cultures, we aim to create a space that resonates with the spirit of Africa and the Caribbean.”