Two-year timeframe for Lucayan resort redevelopment
FREEPORT, Grand Bahama – A 90-day closing period is expected for the sale of the Grand Lucayan and upon closing, the resort’s current staff complement will be terminated by Lucayan Renewal Holdings (LRH), which will give Holistica Destinations a “clean slate” to hire as many employees as they would need during the property’s re-development phase.
The former Memories Resort, and later the Lighthouse Pointe property, are slated for demolition as part of the Grand Lucayan redevelopment which will take approximately two years to complete, with construction slated to begin in approximately four to five months.
Details on what is to happen to the resort property and its current staff complement were provided by LRH Chairman Michael Scott, Royal Caribbean International (RCL) President and CEO Michael Bayley and RCL Vice President of Destination Development Joshua Carroll in interviews with The Nassau Guardian.
Holistica, a joint venture between RCL and the ITM Group, signed a heads of agreement and sales purchase agreement with the government of The Bahamas Monday for a $300 million redevelopment of the Grand Lucayan and the enhancement and expansion of the Freeport Harbour.
Scott advised of the Grand Lucayan deal that, “On closing, [Holistica] will take on responsibility for the property.
“Because Hutchison [Whampoa] stuck us with the employees when we bought the hotel,” he continued, “you really should not do that so we are going to terminate the employees, we’re going to pay them their severance or benefits under the Employment Act, and that will give the Holistica Group a clean slate [so] they start fresh, and they hire those that they feel they can conceptually and synergistically re-engage into their process, and others may not.”
Scott maintained, “At the end of the day, the number to really focus on is the 3,000 people that are going to be employed initially in construction, and then there are going to be entrepreneurial and commercial opportunities both at the new cruise port village and here in the theme park that is going to be built.”
Late last year, Scott advised that 216 full-time employees were engaged at the Grand Lucayan assigned to the Lighthouse Pointe, spa and laundry and the Grand Lucayan golf course.
For Grand Bahamians, hospitality industry workers and merchants at the adjacent Port Lucaya Marketplace who believed a sale of the Grand Lucayan would result in a not-too-distant reopening of its three hotels, it is important to understand that what is expected to occur for the next two years is major reconstruction and re-development to create a new product on the Lucaya strip.
Holistica’s plans in its first phase include a 526-room hotel, shopping village, water and adventure theme park and a 40,000-square foot convention center.
The Memories property will be demolished to accommodate the construction of the theme park, according to Bayley.
Regarding what some Grand Bahamians expected to be an imminent reopening of the current Grand Lucayan properties, Bayley explained, “We’re not going to be able to sell the product the way it is obviously, this really does require a complete re-concepting.
“And I think this is the exciting part of the project,” he offered, “[which] is that we’re literally re-creating a destination experience that will be remarkably different from how people see this today and that takes time and money and investment and a little bit of patience to bring it alive.”
He further revealed, “The timeline is about two years from when the construction starts, and the construction would start in about four to five months, and then it would take about two years to rebuild and create this experience.”
When questioned on when the sale of the Grand Lucayan is expected to close, Bayley said, “There’s a series of permitting, completion of environmental studies et cetera, there is a process of, I think, about 90 days.
“As soon as all of the paperwork is completed, then we would become effectively the managers, owners and operators of the hotel [and] our intention then is to continue operating the hotel as best we can while we are rebuilding it,” he stated.
When the government, through its special purpose vehicle LRH, acquired the Grand Lucayan in 2018, two of its three properties – Breakers Cay and Memories – sat shuttered for two years following Hurricane Matthew in 2016, with the previous owners Hutchison Whampoa opting to continue operations at Lighthouse Pointe.
As to what would happen to Lighthouse Pointe once redevelopment at the property begins, Carroll responded, “There’s a series of steps that are going on now to finalize the transaction.
“It will remain open through that time, then what’s going to happen is there is going to be hundreds upon hundreds of workers that are going to be coming here, so we are going to utilize a lot of the hotel inventory to house that group so that we can get the property up and built as fast as possible.”
On the question of the agreed labor component for construction at the property, Scott said the agreed labor component as stated in the HOA is a ratio of 80/20 Bahamian to foreign workers.
“It is [80/20] during the construction and operational phases for the life of the project, both harbor and hotel,” he disclosed.
Given Carroll’s statement about the use of hotel inventory during the redevelopment phase, The Guardianquestioned him on whether the hotel will be taken off the market to tourists during this period.
He replied, “That’s not 100 percent decided yet, we are still figuring [that] out.
“The goal is to get the property built as fast as possible,” Carroll conveyed, “so, we are still working out the final details on how we optimize the schedule to get that done.”
Scott, meanwhile, pointed out, “We have an undertaking from [Holistica] that the last property to get knocked down will be the Lighthouse Pointe because that’s the one that’s currently operational, so people will be employed here because they are going to keep those open so that people can stay.”
During Monday’s signing ceremony, Bayley told excited attendees that RCL expects to bring as much as 2.5 million guests to Grand Bahama each year.
Bayley also spoke to The Guardian about how that figure would factor into the total number of day passengers versus the critically needed stopover visitors to bring business and economic opportunities to the island’s tourism plant and to businesses that are not a part of the Holistica product at the harbor and Lucaya property.
He explained that the 2.5 million guests will be RCL cruise guests who will be coming to the Lucaya property’s water park and on-site facilities, and that a partnership is being forged to bring essential airlift to the island.
“Not only do we have massive distribution in the United States [as] RCL sells seven million vacations a year,” Bayley explained, “but we’re working with a partnership with one fairly significant vertically-integrated tour operator based in the U.S. who has a large business bringing basically Americans into the Caribbean for all-inclusive and for stayover vacations, so it will be a combination of the two.”
There is also the question of the island’s airport which suffered catastrophic storm surge damage during Hurricane Dorian, and which was a sticking point in the final stages of sale negotiations as the new developers wanted a commitment from government on the redevelopment of the facility in order to reach a sales agreement.
According to Scott, the government gave Holistica “a commitment that they will deal with it quickly”, but said he could not speak to the details of ongoing negotiations in that regard.
While Bayley pointed out that there is no current plan by Holistica to fund, in-part, the airport’s redevelopment, the group “was very open to finding solutions” that will help to grow the business.
“Like all of these processes and negotiations, a lot has to be worked out before the runway is clear to take off, so to speak,” he asserted.
“There are teams working on the airport solution and our hope and expectation is that the airport will undergo a significant revitalization with investment to be part of this overall solution,” Bayley added.
Prime Minister Dr. Hubert Minnis briefly mentioned the island’s airport during his remarks at the ceremony, but gave no information on the progress of acquisition talks and would not take questions from the press – leaving numerous questions unanswered on provisions of the yet-to-be published HOA and sales agreement including concession granted under both agreements.
A $50 million sale agreement
Scott advised that the Grand Lucayan would be sold for $50 million, claiming that the government expects insurance payouts from damage caused by Dorian to cover “on the back end” the $15 million difference in its purchase price of $65 million.
Bayley was unwilling to provide the figure for the Grand Lucayan sales purchase and recommended The Guardian obtain the same from government officials.
The property was appraised at $40 million prior to the government’s $65 million acquisition in 2018.
As part of the resort’s redevelopment a casino is planned that Bayley said will be managed by Holistica’s trading company – Bahamas Port Investments Ltd. – which “will make the best business decisions for all of these elements, and they are reporting to a board consisting of RCL and ITM”.
Approximately 150 Bahamians lost their jobs when the Treasure Bay Casino at Our Lucaya closed over three years ago, and since that time, hospitality stakeholders have insisted that a casino would be a necessary component for the Lucayan strip and the island’s tourism product.
By: Sharon Turner