GOVERNMENT’S PURCHASE OF THE GRAND LUCAYAN WAS A GREAT DECISION
WASHINGTON, D.C. — To fully understand why Prime Minister Hubert Minnis and the Free National Movement (FNM) Government’s purchase of the Grand Lucayan Resort in Freeport, Grand Bahama, was a significant and indispensable decision, it is first necessary to reflect on some of the reasons why a once booming city awash with prosperity is today an economic graveyard.
Some background information on the early years and the growth and development of Freeport is necessary to put the current moribund state of what was once known as “The Magic City” in perspective.
What we know today as Freeport was part of a pine forest when Sir Stafford Sands, then head of the Bahamas Development Board, arranged for American financier Wallace Groves, a client of his law firm, to purchase 50,000 acres of Crown Land in Grand Bahama for one pound sterling (the equivalent of $2.80) per acre, resulting in the signing of the Hawksbill Creek Agreement on August 5, 1955. Over the years, additional acreages were acquired by the Grand Bahama Port Authority as Freeport mushroomed into the second most populous city in The Bahamas.
Groves’s idea for his new land acquisition was to develop an industrial area. As noted in this excerpt from Wikipedia: “…House of Assembly member Stafford Sands served as Wallace Groves’s lawyer and helped pave the way for his business interests. In 1955, Groves secured the seminal Hawksbill Creek Agreement with the colonial government, ceding to him 211 square miles of Grand Bahama Island upon which to develop a free-trade industrial and resort zone. (Groves obtained supplemental agreements in 1960 and 1966.) The agreement freed the Grand Bahama Port Authority from paying taxes, tolls, and excises for 25 years (since extended to 2054), and exempted it from other Bahamian laws, notably immigration laws. By 1965, 416 companies operated under license to the main exempted company. The zone gradually became the most modern, well-run, and prosperous part of the colony, although it was described as only nominally Bahamian.”
After internal self-government was granted to The Bahamas in 1963, Wikipedia notes that Groves “further secured the right to operate gambling establishments at Freeport, using the services of Stafford Sands. At the same time, Sands and other high government officials received payments exceeding $1,000,000 from the Grand Bahamas Port Authority. The complex system of continuing payoffs to almost the entire Bahamian elite (known universally as the “Bay Street Boys”) was detailed by the Royal Commission of Inquiry of 1967…”
Freeport was really an exciting place to visit in the early 1960s. After the opening of the Monte Carlo Casino adjacent to the Lucayan Beach Hotel in 1964, Freeport was a boomtown with nightclubs jammed to capacity nightly and some restaurants remaining open all night. There are differing opinions as to what precipitated the end the “glory years.” There is a body of opinion, however, that a hard-hitting “bend-or-break” speech at the opening of the Bahamas Oil Refinery in Freeport in August of 1969 by Prime Minister Sir Lynden Pindling, in which he alluded to the open racism that existed in Freeport at the time, may have been the reason why some investors had second thoughts about their investment projects and some actually left Grand Bahama.
Be that as it may, Freeport continued to flourish for the ensuing decades, thanks in no small measure to the genius of the late Edward St. George during his tenure as Chairman of the Grand Bahama Port Authority (GBPA).
Mr. St. George, who died in December 2004, and Sir Jack Hayward — whose late father, Sir Charles Hayward, was an early co-investor with Groves in Freeport – purchased the outstanding shares held by Groves in the GBPA in 1979. Along with Sir Albert Miller, whom they hired as President of the GBPA, Freeport’s growth and development continued at a phenomenal pace.
A decision had been made earlier to focus on tourism simultaneously with Freeport’s industrial development goals to bolster the city’s economy. The availability of casino gambling, which at the time was not as widespread in the United States as it is today, proved to be a magnet for tourists who were habitual gamblers as well as fun-lovers who enjoyed the excitement generated by games of chance.
Flights by Laker Airways, a no frills low-cost airline founded by British entrepreneur Sir Freddie Laker, and a variety of chartered flights from destinations in the United States used to be filled to capacity with Grand Bahama-bound tourists coming to the island to gamble. Of course, they also enjoyed first-rate entertainment in venues where the casino was located as well as the various nightclubs around the island.
Aside from the fact that there has been a proliferation of casino gambling in the United States over the years, resulting in several failed attempts to successfully operate a casino in Freeport in recent years, Freeport’s lure as a tourist destination declined tremendously in the aftermath of two monster hurricanes, Francis and Jeanne, that devasted Grand Bahama in 2004, resulting in the closure of the Royal Oasis Resort and Casino.
Approximately 1,300 workers became unemployed because of the closure of the Royal Oasis Resort and Casino, and although the Grand Lucayan Resort – owned by Hutchison Whampoa, a Chinese conglomerate with huge investments in Freeport – remained open, my understanding is that it was only able to so because its operations were heavily subsidized by Hutchison Whampoa.
There are reports that Hutchison Whampoa planned to close the Grand Lucayan after plans by The Wynn Group, a Canadian company, to purchase it were abandoned. Faced with the prospect of hundreds of Bahamians adding to the high level of unemployment in Grand Bahama, it would have been almost criminal if Government did not intervene and purchase the hotel. However, there seems to be a consensus among Bahamians with operational knowledge of hotels that Government should not be in the hotel business, so an aggressive campaign should be launched to find a buyer to operate it.
In the meantime, an all-out campaign should also be launched to find an operator for the now closed near-by casino, and restoring the excitement once generated at Port Lucaya Marketplace nightly should be a top priority. Of course, since the closure of the Royal Oasis, the downtown area of Freeport has been allowed to deteriorate considerably and a determined effort should be made to reverse this trend.
The bottom line, however, is the Government did the right thing in purchasing the Our Lucayan Resort and the focus should now be on encouraging more “stop over” visitors to fill its rooms and those of the other hotels in Grand Bahama.
