Baha Mar Debate Speaking Notes of Prime Minister Hubert Ingraham

PRIME MINISTER: Purpose for Tabling this Resolution

I have been disappointed but not surprised by the failure of Members Opposite to recognize that my Government has made considerable and measurable progress in making lemonade from the lemons which they left on the table when they were put out of office in 2007.

Similarly, I am not surprised by their baseless allegation that I or my Government mistreats international investors.  The record does not support this.

As regards the matter at hand, the Resolution before us seeks the approval of Honourable Members for (1) the approval of the project, and (2) the issuance of up to 8,150 work permits for non-Bahamians to be engaged on the project but with no more that 5,000 being engaged at any given time.

Since this request for such a large number of work permits for a single project is without precedent, my Government thought it prudent to bring this matter to this place.  It is regretted that Members Opposite, who maintain their commitment to participatory, open and transparent democracy, do not share our effort and commitment to govern in the sunshine.  I and my Government do not believe that this debate to be a waste of time; we believe it to be a necessary part of open, transparent and accountable Government.

Summary of Original HOA and Current Proposed Development

The original agreement in 2005 called for a $1 billion hotel development, inclusive of new hotels an upgraded existing 3 hotels and with amenities to include casino, convention centre, expanded golf course, possible marina, beach and pool amenities.

As Members are aware the present proposed development was expanded to a $2.6 Billion Investment and is to comprise 6 hotels (including existing Sheraton and Wyndham with 2200 new and additional rooms plus the 1250 existing rooms now open at the Sheraton and the Wyndham hotels;  a 100,000 sq. ft. casino; a 150,000 sq. ft. stand alone Convention Centre, a 20 acre beach and pool experience, an 18 hole golf course (joint venture with the Government) and additional residential products including time share.

Baha Mar has advised the Government and the press of agreements reached between themselves and three hotel operators for the operation of three of the new hotels – that is Rosewood, Morgan and Hyatt.

Sale of Government owned Land

There has been much discussion over the past two days about the sale of government-owned land to this project.  And there has been an attempt to equate the sale of two government-owned hotels during the first FNM Administration in the mid-1990s by the Hotel Corporation to the sale of leased Crown Land agreed by the Christie Administration in 2005.

I had occasion during an earlier debate in this place dealing with Crown Lands to explain the difference between Crown Lands and Government-owned land.

During that debate we also spoke extensively about the conditions under which land is leased.

It is important that the Bahamian people be informed that firstly, the hotels sold by the Hotel Corporation were free-hold properties purchased by the Government of The Bahamas and later sold by a Government of The Bahamas.

The land underlying the Wyndham Crystal Palace Hotel and Casino, the Sheraton Cable Beach Hotel, and the Nassau Beach Hotel was Crown Land which has from time immemorial been long leased for development, but never sold, to the private sector by each Government of The Bahamas – whether prior to Independence or after – that is not until 2005 when it was sold by the former Administration.

The Hobby Hall Parcel and the Cable Beach Golf Course was private land conveyed to the Government of The Bahamas for the perpetual benefit of the Bahamian people.  It’s ownership in trust for the Bahamian people has been respected by successive Bahamian Government whether UBP, PLP or FNM – up to 2005.

The 2005 Agreement signed between the Government led by Members Opposite and Baha Mar, set terms determining conditions under which the Government must transfer certain parcels in fee simple to Baha Mar.

These are facts Mr. Speaker.  They do not require debate.

One of my early actions on coming to office was to table in this Place the original agreement concluded with Baha Mar in 2005 and the supplemental Agreement concluded in 2007 when approval was also received from this House for the transfer of the Government-owned land as provided for in the 2005 Agreement.

For the information of Honourable Members I refer to a schematic prepared by Baha Mar which sets out land included in its proposed project.  See Land Transfer Summary Sheet

Foreign State Owning Crown Land

Mr. Speaker,

It is the view of my Government that it is an untenable position to permit any foreign State to own land in The Bahamas. Under the law, any financial institution providing funding for a development in The Bahamas has a number of alternatives to protect their interest should that project fail.  One of these protections is foreclosure.  As I said at my Press Conference on Sunday past, should this project not succeed, and I have no reason to believe that it will not, and should I be in the position that I now hold, my Government would not agree to foreclosure on these properties (previously Crown Land) to any foreign State or any entity which is owned by a foreign State.

Conclusion of New Deal with China State Construction & Baha Mar

Mr. Speaker, I believe it may be useful for me to repeat for the record of this Honourable House information already in the public domain, having been presented to the Bahamian press and through them to the Bahamian people during my press conference last Sunday afternoon.

At that time I advised that as a result of candid discussions with the Chinese Export Import Bank, the China State Construction Engineering Company, and following upon discussions between those companies and their partner, Baha Mar, a consensus was reached on a number of significant issues related to the proposed Baha Mar Cable Beach Redevelopment.

Increased Subcontracts

First, the construction value of works to be subcontracted to Bahamian contractors and subcontractors has been doubled from $200 million to $400 million. Bahamians will also work on elements of the Core Project.  The significance of this is that a considerable portion of the new subcontracts will include work on the Core Project.

This increase in works to be put to bid to Bahamian contractors will result in the largest award of contracts to Bahamian contractors on a single project.  Contracts will be awarded to large, medium, small scale and individual contractors.  This is in keeping with my Government’s commitment to deepening and broadening economic opportunities for all Bahamians.

China State Construction and Baha Mar has provided information on specific and increased works to be put to bid to Bahamian General Contractors and Sub-contractors.  These examples include trade packages for the Core project not previously considered for contract to Bahamian companies.

Generally, bid packages will cover the full spectrum of builders trades including masonry; drywall and finishes; carpentry, painting and tiling, landscaping, electrical and mechanical; plumbing; finish trades; and so on.

Specifically, prime Core Project packages (not previously contemplated by Baha Mar and its principal contractor) to now be made available for Bahamian Contractors’ bidding will include, but not necessarily be limited to:

Ø      Core Project site work (demolition of existing buildings;  underground utilities; earth works; parking lots; lighting; for example)

Ø      The Baha Mar Convention Centre (structure; masonry; mechanical and electrical; drywall; tile and finishes for example)

Ø      The Hyatt Timeshare Villas (structure; masonry; mechanical and electrical; drywall and finishes, etc.)

Ø      Core Project – there are  24 individual free standing buildings within the Core Project site including restaurants; retails shops; bars; and pool restrooms, for example, that will be bid to Bahamian General and Sub Contractors for full scopes including structural, masonry or envelopes; full interior fit out; mechanical, electrical, and plumbing.

Ø      Landscape and Irrigation scope – is substantial and will be bid to Bahamian Contractors.

Ø      Site wide concrete, pavers, specialty walks and pool decks will be bid to Bahamian Contractors.

• • Within the towers, there are numerous restaurants and retail shops that will be bid to Bahamian General and Sub Contractors for fit out including mechanical, electrical, plumbing, kitchens, and full finishes.

Increased Employment of Bahamians

On the issue of the employment of Bahamians and the transfer of skills to our Bahamian people, Baha Mar has indicated to the Government that as a result of the substantial increase in the volume of subcontracts to be awarded to Bahamian subcontractors, the numbers of Bahamians to be employed during the construction phase will increase.

This figure, which is dependent upon the availability of the quantities of Bahamian construction workers required, may be revised upward to 4,500 I am told.  Regardless the exact figure to be attained, significantly more Bahamians will be employed during construction.

Moreover, given that subcontracts will include work in the Core Project, the opportunity would exist for the transfer of skills to Bahamians.

Extensive Training Programmes

Additionally China State Construction Engineering Company and Baha Mar have agreed to an extensive and comprehensive $8 million training and retraining programme for Bahamian workers.  Baha Mar and CSCEC will collaborate with the BTVI and The Bahamas Contractors’ Association for the training of construction workers.

Baha Mar has also agreed to establish a Training and Service Academy which will provide extensive training prior to the opening of the various hotels and other amenities for persons who will be employed during the operation of the resort.  The Academy will be permanent, offering ongoing training opportunities for employees and prospective employees.

I outlined the timing of training to be offered for permanent employment in the Baha Mar Resort on Sunday.  I repeat them now:

The Government is informed that the Baha Mar Training Academy in conjunction with its Human Resources Departments and Baha Mar’s hotel/casino brand partners will put in place a training programme thru the Academy:

Pre opening (12-24 months before opening): The hotel and casino brands will begin to select high performance individuals that will be placed within their hotel system throughout the world. These individuals will be placed in job shadowing programs, on the job training programs, and hotel specific systems training programs. Baha Mar will also be hiring executive staff and training individuals who will staff the anticipated job fairs and will be conducting employment interviews.

Pre opening (12 months before opening): The Hiring and Job Fairs will begin with specific employment targets required to enable the project to meet its training and operational ramp up needs. Baha Mar anticipates hiring and training approx 7000 employees during this period. It is also expected that a number of the Bahamian construction workers in a variety of trades will be interested in filling ongoing maintenance positions since they will be very familiar with the projects mechanical, electrical and plumbing infrastructure.

Post Opening and Stabilized Operation: Baha Mar will continue to provide training for new employees and for continuing training for existing employees.

Such training will help to empower the Bahamian people by advancing wealth-creation, providing extensive opportunities for professionals and securing jobs and livelihoods.  Such broad agreement will pave the way for this large-scale project which will assist our economic recovery.

Table Letter from Baha Mar/China State Construction Engineering Corporation and Email Exchange between OPM and Baha Mar

Government to Monitor Technical Issues

Mr. Speaker,

I should like to note that it has been Government policy for some time now to not only require the completion of EIA and MPA’s for major developments in our country but to also require that the Ministry of Public Works engage appropriate technical personnel – typically civil engineers – to monitor and ensure that required standards are maintained throughout the construction phase of a development.  Suffice it to say that the Ministry of Works will be charged with ensuring that our policy is observed and enforced throughout the construction of the Baha Mar Resort.

Concern Re Phasing-In of New Rooms

Mr. Speaker:

The worst economic recession since the Great Depression is dramatically altering the world travel and tourism industry.  Reduced occupancy, depressed room rates, reduced airlift for leisure destinations and hence reduced tourism derived revenues are realities being faced by tourism based economies around the world.

Amidst this reality is also a reality that non-traditional tourism markets are growing – in Latin America and in Asia (China and India).  We must not miss opportunities that are presenting themselves in these markets.

That notwithstanding, I have already commented upon my concerns with regard to the opening of the full Baha Mar Resort immediately upon its completion, releasing more than 2,000 new and additional rooms on the Nassau/Paradise Island hotel market at one time.

I continue to pursue with Baha Mar and its partners a system of phased introduction of the new and additional rooms onto our market so as to protect existing business and further and importantly, to prevent room rate competition downward to detriment of our tourism product.

Honourable Members are aware that Baha Mar currently owns some 2,000 hotel rooms, only 1,250 of which are now open.  New construction will add 2,200 new rooms, of which approximately 300 may be condominiums.  [This will result in an additional 2,650 hotel rooms to be brought on-line in a relatively short period.]

My Government remains in discussion with Baha Mar about the timing of the opening of some of the hotels and or more particularly with the closure of the Wyndham Hotel for refurbishment and upgrade in a phased programme permitting the transfer and absorption of that hotel’s staff into the new hotels during that refurbishment period projected to last for between 14 to 18 months.

Kerzner’s Concern Re MFN

Honourable members will be aware of the expressed concerns of Kerzner International with regard to the opening of more than 1,000 new hotel rooms at one time.

I alluded to this on Sunday past.  Kerzner International spoke to this in a press release issued last evening.  That press release also set out its concern that Baha Bar may be benefitting from terms more favourable than those extended to Kerzner under its various agreements with the Government in relation to the development of Atlantis and other Kerzner properties on Paradise Island.

The entry of Kerzner in The Bahamas has been good, indeed very good for The Bahamas. Kerzner has created as many as 2,000 more new and additional jobs to that required under the terms of the various Agreements concluded with the Government.  Kerzner’s impact on training – whether of workers involved in the construction of his various resort properties, or for workers engaged in the operation and maintenance of Kerzner’s properties is clearly evident.  The impact of Kerzner International – of Atlantis, the Ocean Club and the Cove, with their themed park, marina etc is also evident.

Yes, Kerzner is good for The Bahamas.  It is also true that The Bahamas has been good to Mr. Kerzner.  It has not been a one way street.  The relationship has been mutually beneficial.

I note that Kerzner International is late in expressing its concern with the Baha Mar project; having not voiced those concerns in 2005 when the dimensions of this project would have been very widely covered in the Bahamian press, nor in 2007 when my Government made the details of the various Agreements concluded with Baha Mar public in this place.  On behalf of the Government, I do not concede that we have breached our agreements with Kerzner.  I await receipt of the particulars of Kerzner’s claim which we will review and determine.  We always honour our deals.  And the arrangement with Kerzner is no exception.

I believe, Mr. Speaker, that the horse has left the barn.  I am fully confident that this Honourable House will signal its approval for this project to proceed.

I am also aware that its opening will provide special challenges to our tourism sector.  I have expressed my concerns and reservations to Baha Mar and its partners.

The relevant Government agencies and departments, most particularly the Ministry of Tourism, is fully informed of their duties and responsibilities as regards ensuring that Baha Mar and its partner hotel operators take necessary and appropriate action early so that critical marketing, public relations and advertising is put in place to ensure the successful opening of these Resorts and perhaps as importantly, that such action not be responsible for damage to the business base of existing hotel properties in The Bahamas.

The Bahamas is a premier warm weather vacation destination.  We had our origin in the tourism field in being a luxury vacation destination.  After a period of decline during the latter part of the 1980s, the glamour associated with Bahamian tourism in the 1950s and 1960s returned very much as the result of the magnificent developments undertaken by Kerzner International on Paradise Island.

Kerzner’s hotels brought back to The Bahamas in unprecedented numbers, upscale visitors in pursuit of good service in modern well maintained hotels.  Kerzner’s lead was taken up and significant developments followed – in Cable Beach, in Grand Bahama, in Exuma, in Andros, in Abaco, etc.

We must be keenly aware that we, because of our size, will always be a vacation destination for discerning visitors – hence our interest in promoting and supporting the development of smaller, boutique hotels.  We cannot compete with the large vacation destinations – in Mexico, Cuba, Dominican Republic etc- whose strength in the market place comes from their large, skilled and cheap labour force.  And so we do not wish to act in a manner that precipitates a race to the bottom in hotel room rates for example.

In this regard, I record my satisfaction that among two of the three hotel operators who are to partner with Baha mar are two top luxury operators of small hotels – Rosewood and Morgan’s.

And I am happy that Baha Mar will, after an absence of many, many years, bring Hyatt back to The Bahamas. Ironically, Hyatt will be returning to Cable Beach where it once operated the Emerald Beach Hotel on the site of the present Wyndham Hotel and Crystal Palace Casino.

I believe that if property managed, this project will bring great benefit to the Bahamian economy and to our people.  I and my government are committed to working with Baha Mar to ensure that this project succeeds and that our entire tourism sector continues to grow from strength to strength.

Mr. Speaker:

I await the expression of support for the Resolution by Honourable members.