“First of all,” noted Baha Mar Vice President of Administration and External Affairs Robert Sands, “the value of any going commercial entity is based on its profitability times a certain multiple, and if we went on strictly commercial terms, we overpaid for the Cable Beach hotels.”
The company’s president, Don Robinson, quickly added, “Our partners are agreeing with that also, by the way.”
Both executives were guests on the Love 97 programme, “Jones and Company”, which aired on Sunday.
The show’s host, Wendall Jones, noted that following the signing of a heads of agreement between Baha Mar and the government last year, former Prime Minister Hubert Ingraham claimed that while in office, he turned down an offer for purchase of the Radisson Cable Beach Resort, which was equivalent to what the Christie Administration sold the hotel, as well as Crown Land in the area to Baha Mar for.
Mr. Sands said there was a “significant difference” between the deal Mr. Ingraham reportedly turned down and the one the present government agreed to.
He noted that the sale of the Radisson under the previous administration would not have been a part of a $2.3 billion single-phase development, as is presently the case.
Mr. Sands said what Baha Mar is doing will impact GDP in its first year by six percent.
“So you cannot look at it in isolation,” he said. “You have to look at the sale of that individual property holistically [in terms of the] entire economic impact of what this transaction will do.”
He insisted that the value of the property was based on commercial terms.
“The fact of the matter is that the Cable Beach business arrangement was a losing venture,” Mr. Sands said. “It was being highly subsidised by the Government of The Bahamas and what is happening today will cause it to have a positive impact on the economy of The Bahamas.”
Repeating a point that has often been made by Prime Minister Perry Christie, Mr. Sands said, “What is happening on Cable Beach will cause for a renaissances in tourism in The Bahamas that will have a fundamental, positive impact on the economy that will secure the future of generations of Bahamians to come.”
Minister of Financial Services and Investments Vincent Peet recently announced in the House of Assembly that Baha Mar had upped its original investment projection from around $1.2 billion to over $2 billion in the first phase.
The minister said the new plan calls for an increase in the number of hotel rooms from 2,700 to 3,550 and the employment of over 5,000 employees during the project’s construction phase.
A similar number of permanent employees is expected to be employed upon completion of the project by 2010.
“In 2005/2006, some $30 million is being spent on Casino Tower room reservations and new gaming technology,” reported Minister Peet, while contributing to debate on the 2006/2007 budget in the House of Assembly last month.
While on “Jones and Company”, Mr. Robinson explained the reason for the substantial increase in the planned investment.
After further defining the scope of the project, he explained, the developers decided to do certain things differently.
“As our partners are evaluating the business opportunities, they’ve asked for additional scope,” Mr. Robinson said. “They’ll like to have more condominiums versus hotel rooms, which tend to be bigger. They think there’s better value there for them. The amount of pools, water space and landscaping has gotten larger because we want to make sure that every guest has a great experience around the ocean.”
He said the plans now also include additional retail space and more entertainment venues.
“So, not only has it been adjusted because the scope is more defined,” Mr. Robinson said. “It has been adjusted because we’re adding more content so it becomes a better and better destination, and as we get closer and closer to construction more of this will be defined.”
Mr. Sands further explained that when the plan was originally conceived existing hotels were going to be imploded, and rebuilt.
He said existing hotels will remain, but the company will add additional capacity, which will contribute to increased costs.
“That was also done predominantly to protect the current associate base [so] there would be no redundancy during this whole process of renovation and construction,” Mr. Sands said.
The major redevelopment and construction of the properties is scheduled to being in 2007. Mr. Sands said Bahamian contractors have already been awarded millions of dollars in contracts.
Work on the $80 million Radisson to Sheraton branded hotel conversion is expected to start within the next month.
Baha Mar officials have said the overall project will create a world-class resort and gaming destination incorporating globally recognized hotel and casino brands with their enormous marketing power and high service standards.
Last November, the company announced that it was partnering with Harrah’s Entertainment, Inc. and Starwood Hotels & Resorts Worldwide, Inc. for the mega Cable Beach project.
During the heads of agreement signing in April 2005, the prime minister said Baha Mar “will completely revitalize the entire Cable Beach resort area in accordance with my government’s bold economic vision and plans for world class touristic development.”
By: Candia Dames, The Bahama Journal
