NASSAU, BAHAMAS — The former lead negotiator of the committee to sell the Grand Lucayan Hotel yesterday suggested the negotiation to finalize the sale of the resort are dragging on because the buyer requires substantial commitments from the government on the development and reconstruction of the Grand Bahama International Airport.
Michael Scott said: “What is critical in finalizing any agreement are government guarantees on the construction and refurbishment of the airport in Freeport.
“Any investor with any degree of skill or ability is not going to invest mega millions in a project and there is no proper staffed, modern constructed airport facility which will accommodate pre-clearance and enable the normal trafficking that occurs with visitors in and out without having to transit via Nassau and being, if my information is correct, restricted to possibly one flight a day or just several per week. That’s not the way to feed a hotel.“
Scott’s comment to Eyewitness News comes after his successor Julian Russell, the current chairman of the Lucayan Renewal Holdings Limited, said in a statement yesterday that the sale of the resort is steadily progressing toward completion but that the parties have agreed to a 45-day extension to complete necessary legal documentation.
Russell said renovations are anticipated to begin during January 2023.
The government announced in May that Lucayan Renewal Holdings LTD made an agreement with Electra American Hospitality Group to buy the Grand Lucayan Hotel for $100m.
Minister of Tourism, Aviation, and Investments Chester Cooper said the agreement was subject to a 60-day due diligence period, with closing no later than 120 days.
Cooper also said in June that three credible investors expressed interest in redeveloping the Grand Bahama airport. He said a world-class facility, when completed, will increase airlift to the island.
Scott nonetheless believes that without guarantees on the airport, the initial announcement about the deal with Electra may have been premature.
“I think that government in its anxiety to announce good news may have been a bit premature, that’s my hunch,” he said.
“Everything depends on a specific commitment to reconstructing the airport and modernizing that facility within the next couple of years. Minus that these negotiations could very well stumble and fail as happened to my committee when we were negotiating the sale of the hotel to the RCl/ITM syndicate. I can’t think of any other rational reason for the delays.”
Scott continued: “One has to assume that regardless of the politics involved that governments act rationally and they must know If you don’t make ironclad commitments or you don’t make the effort or do as the government did with the Vancouver company to create the current model and structure of LPIA, they would be at the end of their five-year term in no better position than we were in terms of any sort of economic and financial renaissance of Grand Bahama.
“My view is very much to wait and see and I think that the media and concerned stakeholders, people in the resort and touristic sphere in the Grand Bahama economy should just give the government a bit more time.”
“My sources tell me that doing the sort of job that would turn the airport into a state-of-the-art airport, taking into account that some of the buildings may have to be removed because they are too low, I think in terms of the budget for a proper redeveloped airport facility’s you’re looking at about $80m.
Scott said: “Given what’s happening in the markets and the world economy and the prospect of particularly the North American world being on the cusp of a recession, the only way in my view that could be logically progressed is to either do it as a joint venture or get some international funding from the IDB or world bank or something like that.
“I suspect the investor is not getting the sort of guarantees they need and require in order to put their own funding in place and go ahead with the project. Those guarantees would have to come from the government and the logical way that would be advanced is through a heads of agreement.”
