‘COVID-19 threw a wrench in Grand Lucayan plan’

Royal Caribbean International (RCI) and Mexico-based ITM Group are still on track to have operational control of the Grand Lucayan resort by 2021, Minister of Tourism Dionisio D’Aguilar said while expressing frustration with the impact that the COVID-19 pandemic has had on the sale.

He noted that the resort will not automatically reopen once this is done.

“There are two elements to this project,” D’Aguilar said.

“The first element is the hotel and the next element, of course, is the development of a cruise port, a substantial cruise port in Grand Bahama. And so, both of those projects have timelines and obviously, you want them to happen at the same time. So with the hotel, they’re dealing with us and with the port, they’re dealing with Hutchison.

“First of all, you have to bring all four parties together at the same time in order to make the project go and that’s obviously somewhat complex. But, it isn’t as if on January 1 they take control of the property, let’s say, and the hotel starts to fill up.

“There’s substantial work that needs to be done to that property and a redevelopment and, of course, they have their redevelopment plans for that property. Sadly, it’s going to take some time.

“Even if you hand over operational control, there’s going to be the need to do investment to develop the product that you wish to have.”

The government purchased the Grand Lucayan for $65 million in August 2018, and began negotiations for the sale last year before announcing that Holistica  — a joint company of RCI and ITM — will redevelop the property and construct a new cruise port.

The government continues to carry the financial burden of the resort despite the pending sale, having provided $10.3 million during the last fiscal year to assist with debt servicing obligations for the Grand Lucayan hotel properties, according to the Ministry of Finance’s Fourth Quarter Fiscal Snap Shot.

During the first phase of reconstruction, developers have said approximately $300 million would be spent refurbishing, renovating and reconstructing the 500 rooms currently on the property, with another 500 rooms expected to be built during phase two.

The developers also plan to build a casino, a water park, a restaurant and retail center, in addition to the construction of a cruise port at Freeport Harbour that would accommodate three ships in phase one and up to seven ships in subsequent phases.

D’Aguilar said there’s a “doubt that the speed at which they (Holistica) were going to do the investment has changed”.

He attributed that change to its cash flow situation.

“So certainly, Royal Caribbean has indicated that they can only spend money on certain things because they borrowed money… and the condition of the loan is you can only do certain things with it,” the minister said.

He added, “What is really frustrating about this project is the fact that the world has changed so significantly. Back in March, we had a deal. It was clear cut, very optimistic. The hotel was going to be sold. There were grand plans and, of course, the main investor was the Royal Caribbean.

“So, everybody knows what happened to Royal Caribbean’s core business, it got destroyed and it still isn’t clear when it’s going to resume.”

D’Aguilar said it is “very unfortunate that”  Grand Bahama was on the cusp of launching “this wonderful project” only to “then run into this crisis of epic proportions, which has once again thrown a wrench in our well-intended plans”.

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source https://thenassauguardian.com/covid-19-threw-a-wrench-in-grand-lucayan-plan/