Davis asks Minnis Government to provide full disclosure on information with Purchase of Grand Lucayan Resort!

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1758

Minnis Government must be transparent and UNSEAL ITS DEAL on purchase of Grand Lucayan!

Opposition Leader Philip Brave Davis Q.C.

PHILIP BRAVE DAVIS QC, MP
MEMBER FOR CAT ISLAND, RUM CAY AND SAN SALVADOR

HOUSE CONTRIBUTION
RESOLUTION TO PURCHASE THE
GRAND LUCAYAN RESORT

BY THE

GOVERNMENT OF THE BAHAMAS
HOUSE OF ASSEMBLY
20TH SEPTEMBER 2018

Thank you for recognizing me Mr. Speaker

Mr. Speaker

The City of Freeport is Grand Bahama’s key commercial, industrial, touristic, communication, transportation and financial hub, not to mention a major population center. As a result, this island’s economy contributes significant sums of money to the public treasury.

Additionally, Freeport is dear to me.  

In 1974, I moved there as a younger practitioner of the law and formed enduring business and personal relationships.

Mr. Speaker

In those days, Grand Bahama seemed to be on the cusp of success.  

The cusp of success was celebrated even in song, with Eddie Minnis’ declaration, “When ya can’t find ya friends in Nassau dey in Freeport or dey in jail!”

Mr. Speaker

Grand Bahama represents the burgeoning potential of The Bahamas, generally. But its potential has always been compromised or undermined by bad deals after bad deals—and I wish for us today to commit to no more bad deals  

Too often, we tend to diminish our essence – we are many beautiful and diverse islands, many beautiful and diverse peoples, but all one nation – one people.

So when Grand Bahama hurts, we all hurt.  

While hope and rebounding prosperity lie ahead for Grand Bahama, it requires policymakers to be cognizant of the real and present struggles and continual challenges of our people.  

…..Particularly in this Place.

We must take conscientious decisions that will induce tangible turnarounds for each island – in this case, Grand Bahama.

And I mean the whole of Grand Bahama [East and West].

When we assumed office in May 2012, the economy of Grand Bahama was depressed with high unemployment and severe economic hardship.  

Tourism was in severe decline with low stopover arrivals and hotel occupancies.  

A number of hotels had closed and there was inadequate airlift.

In 2016, therefore, with the expiration of the Hawksbill Creek Agreement, we took the fundamental decision to revise relevant concessions based on the bipartisan considerations and recommendations of the six-member Review Committee.  

That committee was led by Dr. Marcus Bethel and its membership comprised Sir Baltron Bethel, Mr. James Smith, Mr. Kevin Seymour, Mr. Maurice Moore, and Ms. Cassietta McIntosh.

The intent of our efforts was to cause for Grand Bahama’s return to its “glory days” through generous and special tax concessions under the Hawksbill Creek Agreement and other enabling legislation – with monitoring mechanisms and a right to claw back the special concessions.

Our focus was to return the ‘Magic’ back to the community.

Mr. Speaker

The realistic, holistic approach of the review committee evolved an evidence-based plan of action following wide consultation with relevant stakeholders.  

The plan addresses the measures which must be taken to ensure both the short and long term sustainability of the Grand Bahama economy, particularly Freeport.   

We left in place and laid on the Table of the House the comprehensive Report complete with recommendations on the way forward.  

We also left in place a Memorandum of Understanding (MOU) between the Government, The Grand Bahamas Port Authority Ltd., and certain Hutchinson Whampoa owned companies with vital interests in hotels, properties, harbour, shipping and airport etc.   

Sadly, after some sixteen months in office, we see very little, if anything which the FNM administration is doing to implement these comprehensive measures, which are essential to Grand Bahama’s economic revival, survival and to offer relief from the hardships being endured by far too many Grand Bahamians.

We left in place a Cruise Port Development for East Grand Bahama ($200M) – Carnival.

These measures of change included strategies for the reorganization and recapitalization of The Grand Bahama Port Authority (GBPA) such that it would meet its developmental and civic obligations while facilitating an easier environment for doing business in Freeport.

Extending some of the same duty-free concessions to start-up and existing businesses located east and west of the city of Freeport that businesses within the port area enjoyed for decades was also a tax policy change necessary to facilitate this economic turnaround.

There is a sage saying Mr. Speaker that the definition of insanity is doing the same thing over and over again but expecting different results – See History.

This FNM government proposes to reverse the Investment Incentive Act, effectively returning Freeport’s business operations to the status quo – a structure and function that has significantly contributed to the protracted economic malaise on that island.
 

THERE SIMPLY HAS TO BE A CHANGE IN STRATEGY MR. SPEAKER IF WE AS POLICYMAKERS ARE SERIOUS ABOUT MAKING A CHANGE IN THE ECONOMY OF GRAND BAHAMA.  

The multilateral undertakings on the part of the Port Authority, the Government, major stakeholders and civil society including the local Chamber of Commerce would have rigorously promoted and expanded the economy of Grand Bahama.

In spite of the longstanding broad and generous concessions that apply to the Port Area, Freeport’s economy has been stagnant for an extended period of time, with Government expenditure consistently exceeding revenues.  

I wonder if the Rt. Hon. Prime Minister is aware of these business realities?

It is important for me to provide this overview because acquiring these properties without first addressing all of the other associated issues impacting Grand Bahama and Freeport specifically – the fundamentals of it’s economy and the tourism product in particular – is a recipe for failure.

Mr. Speaker

Given the sound, bipartisan advice of the Review Committee, it is the considered view of this side that the decision of Government to Purchase the Grand Lucayan properties is a desperate, ill-advised, and inadequate Band-Aid approach to addressing the critical condition of the economy of Grand Bahama.

Simply put, it is a bad deal.

In our view it is another bad deal like the ill-advised and scandalous OBAN affair. That deal is still shrouded in secrecy compounded by the fact that the Parliament was misled by no less a person than the Prime Minister.

And, Mr. Speaker, that scandalous Oban Deal is a matter on which this government is yet to come clean to the Bahamian People.

And here again this deal is being shrouded in secrecy and we demand that the side opposite comes clean on this deal to the Bahamian people.

Last Tuesday, the Government’s intention to have this debate was made known. Our consent was required and we readily gave it on the understanding that the government provide us with sufficient material on this deal.  

At the very least, we expected the agreement of sale – to enable us to intelligently contribute to the debate – but alas nothing.

They who claim good governance, accountability, and transparency are proving to be abysmal failures when it comes to critical, yet these fundamentally simple matters.

We received a resolution that spoke to the Sale Purchase Agreement (SPA) being annexed. It was not.  What was annexed was the guarantee noted as Annex IV.

This caused me to write to the Prime Minister requesting the same along with additional information. His failure to respond as requested prompted me to make the letter public.

Mr. Speaker

I called for the Prime Minister to provide details of the normal due diligence, which the Government carried out before concluding the agreement to purchase these properties.  

Additionally, it is essential to discuss whether the Government considered the reason or reasons why Hutchinson Whampoa, with its multibillion-dollar resources and generous concessions and subsidies, failed to successfully and profitably operate these resort properties over many years.  

I am afraid that we are making another big mistake in failing to learn from past “missteps”.

Hutchinson has invested huge amounts of capital into its hotel properties in Grand Bahama.  

They have offered extremely good terms of employment including health insurance for its employees.  

The Grand Lucayan was kept open in the face of heavy operational losses.

Hutchinson Whampoa, even when they were under internationally branded management with all of their marketing clout and vast client base, has not operated this property successfully.

All of this causes me to wonder – with all these available facts and outstanding questions – why the PM himself has not included as part of his due diligence, a visit to Hong Kong to sit down with the Hutchinson principals/owners.

This Government has no expertise or track record of success in the hotel industry.  Further and by its own admission, the government is also struggling to make certain payments – and in many instances is ignoring contractors, lunch vendors and school bus drivers, nurses, doctors in addition to severing staff in the interest of fiscal austerity.

Speaking of health professionals Mr. Speaker, the nurses and doctors within the Public Hospital Authority are at their wits end and are striking to bring attention to their plight.

There are claims of poor working conditions in public health facilities; no air conditioning in operating theaters, the ceiling are reportedly collapsing and promised confirmations with connected payments not materializing.

I am reliably informed that at least nine medical students studying in Barbados recently found out that their subventions have been discontinued, leaving them stranded. This government clearly suffers from mixed priorities.

 

This an administration that has drastically slashed its social benefits to the most vulnerable among us.

A government who has struggled to provide beds, meds and ventilators for babies at the hospital, has taken the bold decision and find at least $65 million to become involved in the acquisition, operations and management of a hotel.  

Is the entity used by government to acquire these properties sufficiently staffed to take on the required management and will be sufficiently resourced?

Do they possess the capacity to pursue qualified prospective purchasers and negotiate terms, which will benefit both the purchaser and the Bahamian economy?

These factors together with the current hurricane-damaged state of the properties, and the vastly depreciated value of Memories and Lighthouse Point (the oldest hotels in Freeport), have greatly reduced the value of these assets.

Mr. Speaker

In determining a realistic purchase price and interest, it should be noted that for a long time, one of the leading international brokers have had these properties on the market without success, as potential purchasers were not willing to meet the demanded price and concerns are expressed with the touristic plant/infrastructure of Grand Bahama.

Furthermore, the seller, having collected a substantial hurricane insurance and loss of income claim, apart from minimal repairs to Lighthouse Point, opted to retain the balance and not to repair and reopen the other two larger hotels (Breakers Cay and Memories).

Mr. Speaker

It is against the foregoing background that I must call into question the purchase price of $65 million.  

On top of the $65 million, I call for the Prime Minister to provide and lay on the Table of this Honourable House all other additional costs and liabilities inclusive of staff benefits and severance payments, closing costs, insurance, professional fees and projected operating losses for at least the next twelve (12) months.

I would be remiss not to point out that the proposed guarantee attached to the resolution that was provided reveals that Hutchinson covenanted to keep the Lighthouse Pointe open until completion of the sale provided that the government paid a subsidy to cover the operational losses of the resort.

Mr. Speaker

I find it quite remarkable that the dollar value of the hotel’s operating losses was somehow predetermined at the time of execution of the sales agreement.

I also find it remarkable that an undisclosed amount was paid at that time leaving a balance of approximately $1Million to be paid in 7 instalments.

What is equally as remarkable is that losses – of more than $1 Million – were for an unspecified period. The Agreement was signed on 15th August and sale completed on 12thSeptember.  

Pray tell, did the amount paid and to be paid cover the losses for 28 days – or a longer period? And moreover, how were they able to predetermine the losses?

Perhaps the Prime Minister or his Finance Minister can clarify these anomalies for the benefit of House members.

I go further Mr. Speaker: If the stated objective of the government is to save jobs in the immediate term, eventual sale of the property and to facilitate the rebound of the Grand Bahama, then why would the government not just fund the operating losses through a subsidy for a period of six months for example or until such time that a buyer can be identified and the sale closed?

This is certainly a more cost effective and fiscally prudent strategic approach. This approach certainly serves the public interest better than the government’s proposed route.

Public pronouncements by a government representative indicate that the government is entertaining potential purchasers and their proposals are under active review and consideration. If this is correct, then why flush $65 million down this blackhole, incurring redundant financial losses?

What is the government’s rationale for refusing to simply put buyer and seller together without having to acquire the hotel only to flip it in the short term at a great financial loss to the tax payer?

Further, I note that the government has flown in the hotel union executives for this occasion and I expect that they will play a little politics with this whole purchase by grandstanding to portray us as uncaring and insensitive.

We do care Mr. Speaker and understand the plight of the hotel workers. The fact is, there is an alternative solution that will not imperil other badly needed services in Grand Bahama.

Our strategy in refurbishing the former Reef property and the opening of Memories in partnership with Sunwings out of Canada provide tangible evidence that we care. This experience is not unchartered territory for us as we have been there and done that.

I explained our over-arching business strategy for Grand Bahama earlier in my contribution and I will explain and clarify our hotel-specific business strategy momentarily; it requires at least three principal ingredients for success.

This exercise cannot be just a PR exercise driven by desperation.

GRAND BAHAMA DOES NOT NEED ANOTHER BAD DEAL!

Mr. Speaker

    It is imperative that the Government fully discloses how much this deal is costing the Bahamian people and how the purchase and operation of these hotels are to be funded.

THIS IS NOT OBAN! Though, it is equally a bad deal.

 I also ask the Government to provide a business plan to support this massive financial undertaking.  

Parliament needs to know and the Bahamian people need to know the likely impact of the purchase and operation of these hotels on the national debt and ratings of international agencies.

Mr. Speaker

It is essential to know how the Government arrived at a purchase price of $65 million.  

Was this based on a current market value appraisal, together with a current quantity surveyors report on the estimated costs of hurricane damage repairs?

In negotiating the purchase price, the Government should have required the seller to take into consideration the proceeds from their hurricane insurance claim, the concessions which they had enjoyed over the years under the Hotels Encouragement Act and Hawksbill Creek Agreement, as well as the significant subsidies received from the Government in the form of marketing support and other subventions.

Any deal with Hutchinson on the purchase of their hotels should have included an undertaking on their part to improve both the international and domestic airport terminals at Freeport airport – which they own.

Any deal should have included bringing down the cost of fuel, handling and other airport charges to competitive levels to improve the chances of success.  

These measures are essential to attracting much-needed airlift.  

Without them, the travel, hotel and tourism sector in Grand Bahama will not succeed.

Mr. Speaker

The three vital ingredients of the tourist product are the hotel brand, sufficient airlift and a major tour operator whose constant supply of guests to fill hotel rooms are pivotal to a successful resort operation and realizing spinoff revenues.  

This sound strategic approach was proven by the last PLP administration. I hasten to say that had it not been for the unfortunate hurricane and the damage to the hotel plant, the properties in question would be fully operational today. 

As I previously mentioned, when we come to power in 2012, the tourism industry in Freeport was in the doldrums.  

Both the Memories hotel and Lighthouse Point were closed.  

The FNM Administration had been pouring some $29 million a year in supporting the industry including subsidies to Hutchinson with respect to its Breaker’s Cay Hotel.  

Our administration negotiated agreements for much less than $29 million with Hutchinson and Sunwing, a well known hotel operator, tour operator and airline operator.  

This resulted in the renovation and re-opening of both Memories and Lighthouse Point.  

Sunwing operated direct flights to Freeport with its modern fleet of aircraft from a dozen Canadian and US cities.  

This innovative three-pronged arrangement was a success until it was aborted subsequent to damages caused by Hurricane Matthew.

So Mr. Speaker, the ingredients that form the business model that I speak of is tried and proven. I implore this government to follow a business model that has worked in the past.

Mr. Speaker

We need to know what is the current status of negotiations with interested parties for the proposed onward purchase of these properties from the Government.

And, we demand to know the parameters by which we will achieve this to develop and accomplish the same.  

We need to know who are the professional advisors engaged by the Government in this matter.

And we need to know this in order to get some level of assurance that the Government’s intentions of a quick resale to suitably qualified interested parties can be accomplished.

Mr. Speaker

Grand Bahama needs the Grand Lucayan.  

We have no difficulty admitting that.  

This side, however, contends that Government ownership is a bad idea.  This is a bad deal – and Grand Bahama cannot bear yet another bad deal.

NO MORE BAD DEALS!

The issues I have raised are among the essential matters, which must be addressed in considering the feasibility of the Purchase and any Resolution relating to funding.

I want to add that Grand Bahama needs vision from this government.

It needs direction!

It needs Leadership!

It needs a bold focus to move ahead with the plan of action already outlined and left in place by one Administration Government.

Therefore, Mr. Speaker

I invite the government to share answers to all those important questions I have outlined today in this House.

Mr. Speaker

Thank you for your indulgence.PHILIP BRAVE DAVIS QC, MP
MEMBER FOR CAT ISLAND, RUM CAY AND SAN SALVADOR

HOUSE CONTRIBUTION
RESOLUTION TO PURCHASE THE
GRAND LUCAYAN RESORT

BY THE

GOVERNMENT OF THE BAHAMAS
HOUSE OF ASSEMBLY
20TH SEPTEMBER 2018

Thank you for recognizing me Mr. Speaker

Mr. Speaker

The City of Freeport is Grand Bahama’s key commercial, industrial, touristic, communication, transportation and financial hub, not to mention a major population center. As a result, this island’s economy contributes significant sums of money to the public treasury.

Additionally, Freeport is dear to me.  

In 1974, I moved there as a younger practitioner of the law and formed enduring business and personal relationships.

Mr. Speaker

In those days, Grand Bahama seemed to be on the cusp of success.  

The cusp of success was celebrated even in song, with Eddie Minnis’ declaration, “When ya can’t find ya friends in Nassau dey in Freeport or dey in jail!”

Mr. Speaker

Grand Bahama represents the burgeoning potential of The Bahamas, generally. But its potential has always been compromised or undermined by bad deals after bad deals—and I wish for us today to commit to no more bad deals  

Too often, we tend to diminish our essence – we are many beautiful and diverse islands, many beautiful and diverse peoples, but all one nation – one people.

So when Grand Bahama hurts, we all hurt.  

While hope and rebounding prosperity lie ahead for Grand Bahama, it requires policymakers to be cognizant of the real and present struggles and continual challenges of our people.  

…..Particularly in this Place.

We must take conscientious decisions that will induce tangible turnarounds for each island – in this case, Grand Bahama.

And I mean the whole of Grand Bahama [East and West].

When we assumed office in May 2012, the economy of Grand Bahama was depressed with high unemployment and severe economic hardship.  

Tourism was in severe decline with low stopover arrivals and hotel occupancies.  

A number of hotels had closed and there was inadequate airlift.

In 2016, therefore, with the expiration of the Hawksbill Creek Agreement, we took the fundamental decision to revise relevant concessions based on the bipartisan considerations and recommendations of the six-member Review Committee.  

That committee was led by Dr. Marcus Bethel and its membership comprised Sir Baltron Bethel, Mr. James Smith, Mr. Kevin Seymour, Mr. Maurice Moore, and Ms. Cassietta McIntosh.

The intent of our efforts was to cause for Grand Bahama’s return to its “glory days” through generous and special tax concessions under the Hawksbill Creek Agreement and other enabling legislation – with monitoring mechanisms and a right to claw back the special concessions.

Our focus was to return the ‘Magic’ back to the community.

Mr. Speaker

The realistic, holistic approach of the review committee evolved an evidence-based plan of action following wide consultation with relevant stakeholders.  

The plan addresses the measures which must be taken to ensure both the short and long term sustainability of the Grand Bahama economy, particularly Freeport.   

We left in place and laid on the Table of the House the comprehensive Report complete with recommendations on the way forward.  

We also left in place a Memorandum of Understanding (MOU) between the Government, The Grand Bahamas Port Authority Ltd., and certain Hutchinson Whampoa owned companies with vital interests in hotels, properties, harbour, shipping and airport etc.   

Sadly, after some sixteen months in office, we see very little, if anything which the FNM administration is doing to implement these comprehensive measures, which are essential to Grand Bahama’s economic revival, survival and to offer relief from the hardships being endured by far too many Grand Bahamians.

We left in place a Cruise Port Development for East Grand Bahama ($200M) – Carnival.

These measures of change included strategies for the reorganization and recapitalization of The Grand Bahama Port Authority (GBPA) such that it would meet its developmental and civic obligations while facilitating an easier environment for doing business in Freeport.

Extending some of the same duty-free concessions to start-up and existing businesses located east and west of the city of Freeport that businesses within the port area enjoyed for decades was also a tax policy change necessary to facilitate this economic turnaround.

There is a sage saying Mr. Speaker that the definition of insanity is doing the same thing over and over again but expecting different results – See History.

This FNM government proposes to reverse the Investment Incentive Act, effectively returning Freeport’s business operations to the status quo – a structure and function that has significantly contributed to the protracted economic malaise on that island.
 

THERE SIMPLY HAS TO BE A CHANGE IN STRATEGY MR. SPEAKER IF WE AS POLICYMAKERS ARE SERIOUS ABOUT MAKING A CHANGE IN THE ECONOMY OF GRAND BAHAMA.  

The multilateral undertakings on the part of the Port Authority, the Government, major stakeholders and civil society including the local Chamber of Commerce would have rigorously promoted and expanded the economy of Grand Bahama.

In spite of the longstanding broad and generous concessions that apply to the Port Area, Freeport’s economy has been stagnant for an extended period of time, with Government expenditure consistently exceeding revenues.  

I wonder if the Rt. Hon. Prime Minister is aware of these business realities?

It is important for me to provide this overview because acquiring these properties without first addressing all of the other associated issues impacting Grand Bahama and Freeport specifically – the fundamentals of it’s economy and the tourism product in particular – is a recipe for failure.

Mr. Speaker

Given the sound, bipartisan advice of the Review Committee, it is the considered view of this side that the decision of Government to Purchase the Grand Lucayan properties is a desperate, ill-advised, and inadequate Band-Aid approach to addressing the critical condition of the economy of Grand Bahama.

Simply put, it is a bad deal.

In our view it is another bad deal like the ill-advised and scandalous OBAN affair. That deal is still shrouded in secrecy compounded by the fact that the Parliament was misled by no less a person than the Prime Minister.

And, Mr. Speaker, that scandalous Oban Deal is a matter on which this government is yet to come clean to the Bahamian People.

And here again this deal is being shrouded in secrecy and we demand that the side opposite comes clean on this deal to the Bahamian people.

Last Tuesday, the Government’s intention to have this debate was made known. Our consent was required and we readily gave it on the understanding that the government provide us with sufficient material on this deal.  

At the very least, we expected the agreement of sale – to enable us to intelligently contribute to the debate – but alas nothing.

They who claim good governance, accountability, and transparency are proving to be abysmal failures when it comes to critical, yet these fundamentally simple matters.

We received a resolution that spoke to the Sale Purchase Agreement (SPA) being annexed. It was not.  What was annexed was the guarantee noted as Annex IV.

This caused me to write to the Prime Minister requesting the same along with additional information. His failure to respond as requested prompted me to make the letter public.

Mr. Speaker

I called for the Prime Minister to provide details of the normal due diligence, which the Government carried out before concluding the agreement to purchase these properties.  

Additionally, it is essential to discuss whether the Government considered the reason or reasons why Hutchinson Whampoa, with its multibillion-dollar resources and generous concessions and subsidies, failed to successfully and profitably operate these resort properties over many years.  

I am afraid that we are making another big mistake in failing to learn from past “missteps”.

Hutchinson has invested huge amounts of capital into its hotel properties in Grand Bahama.  

They have offered extremely good terms of employment including health insurance for its employees.  

The Grand Lucayan was kept open in the face of heavy operational losses.

Hutchinson Whampoa, even when they were under internationally branded management with all of their marketing clout and vast client base, has not operated this property successfully.

All of this causes me to wonder – with all these available facts and outstanding questions – why the PM himself has not included as part of his due diligence, a visit to Hong Kong to sit down with the Hutchinson principals/owners.

This Government has no expertise or track record of success in the hotel industry.  Further and by its own admission, the government is also struggling to make certain payments – and in many instances is ignoring contractors, lunch vendors and school bus drivers, nurses, doctors in addition to severing staff in the interest of fiscal austerity.

Speaking of health professionals Mr. Speaker, the nurses and doctors within the Public Hospital Authority are at their wits end and are striking to bring attention to their plight.

There are claims of poor working conditions in public health facilities; no air conditioning in operating theaters, the ceiling are reportedly collapsing and promised confirmations with connected payments not materializing.

I am reliably informed that at least nine medical students studying in Barbados recently found out that their subventions have been discontinued, leaving them stranded. This government clearly suffers from mixed priorities.

 

This an administration that has drastically slashed its social benefits to the most vulnerable among us.

A government who has struggled to provide beds, meds and ventilators for babies at the hospital, has taken the bold decision and find at least $65 million to become involved in the acquisition, operations and management of a hotel.  

Is the entity used by government to acquire these properties sufficiently staffed to take on the required management and will be sufficiently resourced?

Do they possess the capacity to pursue qualified prospective purchasers and negotiate terms, which will benefit both the purchaser and the Bahamian economy?

These factors together with the current hurricane-damaged state of the properties, and the vastly depreciated value of Memories and Lighthouse Point (the oldest hotels in Freeport), have greatly reduced the value of these assets.

Mr. Speaker

In determining a realistic purchase price and interest, it should be noted that for a long time, one of the leading international brokers have had these properties on the market without success, as potential purchasers were not willing to meet the demanded price and concerns are expressed with the touristic plant/infrastructure of Grand Bahama.

Furthermore, the seller, having collected a substantial hurricane insurance and loss of income claim, apart from minimal repairs to Lighthouse Point, opted to retain the balance and not to repair and reopen the other two larger hotels (Breakers Cay and Memories).

Mr. Speaker

It is against the foregoing background that I must call into question the purchase price of $65 million.  

On top of the $65 million, I call for the Prime Minister to provide and lay on the Table of this Honourable House all other additional costs and liabilities inclusive of staff benefits and severance payments, closing costs, insurance, professional fees and projected operating losses for at least the next twelve (12) months.

I would be remiss not to point out that the proposed guarantee attached to the resolution that was provided reveals that Hutchinson covenanted to keep the Lighthouse Pointe open until completion of the sale provided that the government paid a subsidy to cover the operational losses of the resort.

Mr. Speaker

I find it quite remarkable that the dollar value of the hotel’s operating losses was somehow predetermined at the time of execution of the sales agreement.

I also find it remarkable that an undisclosed amount was paid at that time leaving a balance of approximately $1Million to be paid in 7 instalments.

What is equally as remarkable is that losses – of more than $1 Million – were for an unspecified period. The Agreement was signed on 15th August and sale completed on 12thSeptember.  

Pray tell, did the amount paid and to be paid cover the losses for 28 days – or a longer period? And moreover, how were they able to predetermine the losses?

Perhaps the Prime Minister or his Finance Minister can clarify these anomalies for the benefit of House members.

I go further Mr. Speaker: If the stated objective of the government is to save jobs in the immediate term, eventual sale of the property and to facilitate the rebound of the Grand Bahama, then why would the government not just fund the operating losses through a subsidy for a period of six months for example or until such time that a buyer can be identified and the sale closed?

This is certainly a more cost effective and fiscally prudent strategic approach. This approach certainly serves the public interest better than the government’s proposed route.

Public pronouncements by a government representative indicate that the government is entertaining potential purchasers and their proposals are under active review and consideration. If this is correct, then why flush $65 million down this blackhole, incurring redundant financial losses?

What is the government’s rationale for refusing to simply put buyer and seller together without having to acquire the hotel only to flip it in the short term at a great financial loss to the tax payer?

Further, I note that the government has flown in the hotel union executives for this occasion and I expect that they will play a little politics with this whole purchase by grandstanding to portray us as uncaring and insensitive.

We do care Mr. Speaker and understand the plight of the hotel workers. The fact is, there is an alternative solution that will not imperil other badly needed services in Grand Bahama.

Our strategy in refurbishing the former Reef property and the opening of Memories in partnership with Sunwings out of Canada provide tangible evidence that we care. This experience is not unchartered territory for us as we have been there and done that.

I explained our over-arching business strategy for Grand Bahama earlier in my contribution and I will explain and clarify our hotel-specific business strategy momentarily; it requires at least three principal ingredients for success.

This exercise cannot be just a PR exercise driven by desperation.

GRAND BAHAMA DOES NOT NEED ANOTHER BAD DEAL!

Mr. Speaker

    It is imperative that the Government fully discloses how much this deal is costing the Bahamian people and how the purchase and operation of these hotels are to be funded.

THIS IS NOT OBAN! Though, it is equally a bad deal.

 I also ask the Government to provide a business plan to support this massive financial undertaking.  

Parliament needs to know and the Bahamian people need to know the likely impact of the purchase and operation of these hotels on the national debt and ratings of international agencies.

Mr. Speaker

It is essential to know how the Government arrived at a purchase price of $65 million.  

Was this based on a current market value appraisal, together with a current quantity surveyors report on the estimated costs of hurricane damage repairs?

In negotiating the purchase price, the Government should have required the seller to take into consideration the proceeds from their hurricane insurance claim, the concessions which they had enjoyed over the years under the Hotels Encouragement Act and Hawksbill Creek Agreement, as well as the significant subsidies received from the Government in the form of marketing support and other subventions.

Any deal with Hutchinson on the purchase of their hotels should have included an undertaking on their part to improve both the international and domestic airport terminals at Freeport airport – which they own.

Any deal should have included bringing down the cost of fuel, handling and other airport charges to competitive levels to improve the chances of success.  

These measures are essential to attracting much-needed airlift.  

Without them, the travel, hotel and tourism sector in Grand Bahama will not succeed.

Mr. Speaker

The three vital ingredients of the tourist product are the hotel brand, sufficient airlift and a major tour operator whose constant supply of guests to fill hotel rooms are pivotal to a successful resort operation and realizing spinoff revenues.  

This sound strategic approach was proven by the last PLP administration. I hasten to say that had it not been for the unfortunate hurricane and the damage to the hotel plant, the properties in question would be fully operational today. 

As I previously mentioned, when we come to power in 2012, the tourism industry in Freeport was in the doldrums.  

Both the Memories hotel and Lighthouse Point were closed.  

The FNM Administration had been pouring some $29 million a year in supporting the industry including subsidies to Hutchinson with respect to its Breaker’s Cay Hotel.  

Our administration negotiated agreements for much less than $29 million with Hutchinson and Sunwing, a well known hotel operator, tour operator and airline operator.  

This resulted in the renovation and re-opening of both Memories and Lighthouse Point.  

Sunwing operated direct flights to Freeport with its modern fleet of aircraft from a dozen Canadian and US cities.  

This innovative three-pronged arrangement was a success until it was aborted subsequent to damages caused by Hurricane Matthew.

So Mr. Speaker, the ingredients that form the business model that I speak of is tried and proven. I implore this government to follow a business model that has worked in the past.

Mr. Speaker

We need to know what is the current status of negotiations with interested parties for the proposed onward purchase of these properties from the Government.

And, we demand to know the parameters by which we will achieve this to develop and accomplish the same.  

We need to know who are the professional advisors engaged by the Government in this matter.

And we need to know this in order to get some level of assurance that the Government’s intentions of a quick resale to suitably qualified interested parties can be accomplished.

Mr. Speaker

Grand Bahama needs the Grand Lucayan.  

We have no difficulty admitting that.  

This side, however, contends that Government ownership is a bad idea.  This is a bad deal – and Grand Bahama cannot bear yet another bad deal.

NO MORE BAD DEALS!

The issues I have raised are among the essential matters, which must be addressed in considering the feasibility of the Purchase and any Resolution relating to funding.

I want to add that Grand Bahama needs vision from this government.

It needs direction!

It needs Leadership!

It needs a bold focus to move ahead with the plan of action already outlined and left in place by one Administration Government.

Therefore, Mr. Speaker

I invite the government to share answers to all those important questions I have outlined today in this House.

Mr. Speaker

Thank you for your indulgence.