Baha Mar Drama – (Part 2)

by Simon


To understand the potentially colossal mistake the PLP made in handing over the redevelopment of Cable Beach to Baha Mar, some historical background is necessary.

Before Baha Mar there was Cable Beach. The area derived its name after a telegraph cable line connecting The Bahamas with the rest of the world came ashore at Goodman’s Bay in 1892. One of the first people to receive a cable was the proprietor of the Royal Victoria Hotel.

Fast-forward some half a century and the area with its miles of pristine beach would surpass downtown Nassau as a major site for the expansion of the hotel sector. There was the Balmoral and the Bahamas Country Club.

In 1954, the Emerald Beach became the first fully air-conditioned hotel. Boasting 300 rooms and New Providence’s first convention centre, the ultramodern hotel came in at a price tag of $3.5 million. With the opening of the Nassau Beach Hotel on the strip in 1959 -- along with a Howard Johnson restaurant -- Cable Beach was helping to set the pace for the tourism industry and hotel sector.

In many ways, Cable Beach became the gold standard, even receiving the moniker, “the Bahamian Riviera”. Then, through the 1970s to the 1990s, the PLP made a series of fateful decisions that would prove disastrous for Cable Beach and end up costing the Pubic Treasury hundreds of millions if not more.

UNAPPEALING
This included construction of the monstrously unappealing, aesthetic nightmare that became the Crystal Palace Hotel, as well as the environmental damage that may have been caused through the erection of one of the hotel’s towers.

Re-elected in 2002, a new PLP Government would make another fateful and potentially disastrous decision about Cable Beach, reinforcing its record of economic incompetence and mismanagement. Much of the same PLP culture which proved disastrous for Cable Beach under Sir Lynden has resurfaced under Perry Christie.

But back to the 1970s. The then PLP Government purchased three major hotels on Cable Beach: the Sonesta Beach Hotel, the Balmoral and the Hyatt Emerald Beach. The Pindling administration also set up the Hotel Corporation, with Sir Lynden predicting that once the Corporation was doing well financially, shares would be offered to Bahamians.

His prediction was way off the mark. Indeed, the Hotel Corporation would come to have a checkered history, with Sir Lynden serving as Chairman at various junctures. In 1991, Carnival Cruise Lines, the owner-operator of the Crystal Palace Resort experienced considerable losses and threatened to either pull out of the development or declare bankruptcy.

In volume two of her major history of The Bahamas, Dr. Gail Saunders details how the Hotel Corporation responded to this threat:

“The Hotel Corporation, already accused of making an initial ‘sweetheart deal’ with Carnival and using the Crystal Palace to ‘featherbed’ PLP supporters, agreed to yet another bailout. Adding to massive debts, incurred through an unbusinesslike combination of takeovers and extravagant new building, the Hotel Corporation took a 40 percent stake in the Crystal Palace for $70 million.

“Though the government cited the drastic decline in tourist stopovers resulting from the worldwide recession as the cause of the Hotel Corporation’s woes, the opposition charged the corporation with gross irresponsibility as well as corruption and accused the government of virtually printing money to disguise its failures.”

UNTENABLE
State ownership of a large chunk of the hotel sector was rife with internal contradictions, with the Government being in the untenable position of having to act as the regulator and the regulated. In “Pindling: The Life and Times of the First Prime Minister of The Bahamas”, Michael Craton captures how irreconcilable were the contradictions:

“The Hotel Corporation had to weigh and juggle the cost to the Treasury against the benefits of import duty concessions, the advantages against the disadvantages of levying a government tax on rooms, the problem of keeping the owners and managers happy with the level of the wages bill while keeping the workers contented with pay and working conditions, the acceptable balance between Bahamian expatriate employment.”

This defied even the political skills and charm of Sir Lynden. It was akin to asking Moses to keep both the Egyptians and the Israelites happy at the same time. Shockingly, despite this failed history, one of their own making, the PLP condemned the Bahamas to repeating some of this history in the deal with the I-Group in Mayaguana.

By taking a 50 per cent stake in the Mayaguana Development Company, the Government once again placed itself in the role of the regulator and the regulated, an inherent conflict of interest.

But this is indicative of a PLP that refuses to learn the lessons of history, including its own massive failures and endless conflicts of interest. The “All for me baby” mentality in the PLP is alive and well, waiting for the next opportunity for nepotism and deal-making in a hidebound culture of self-entitlement.

After coming to office in 1992, the FNM privatized a number of hotels owned by the Hotel Corporation, including Cable Beach properties now owned by the successful Sandals and Breezes chains. This helped to revive an ailing and ageing Cable Beach.

With its return to office, the Christie administration had an opportunity to demonstrate that it was a new PLP with new ideas for tourism in general and for Cable Beach in particular. Sadly, the re-elected PLP was as clueless about market economics as when it was turned out of office a decade earlier.

This included Mr. Christie, a former Minister of Tourism whose understanding of tourism seems not to have evolved since he held that office. It also includes the former Minister of Financial Services and Investments, who was also involved in the Baha Mar deal.

Senator Allyson Gibson Maynard’s breathless defence of the ill-conceived Mayaguana Project -- with its near give-away of many miles of pristine coastal property to a single foreign developer -- is suggestive of a disturbing mindset in the PLP in terms of national development. It is an essentially neo-colonial mindset for a party still pretending to be progressive and liberal.

RHETORIC
Absent any real ideas to realize its rhetoric of empowerment and Bahamianization, the PLP seized upon all manner of schemes proposed by all manner of developers. Many of those developers had more ideas -- not necessarily good ones -- than they had dollars or good sense.

But no matter, a desperate PLP was prepared to essentially give away Bahamian treasure in the form of land, excessive concessions and cash to lure many of these developers. This was a part of an unreconstructed mindset in the PLP which talks Bahamianization while trashing the best interests of Bahamians in the service of narrower interests.

Cable Beach was in need of redevelopment, but not just by any developer at just about any cost. One of the PLP Government’s lead negotiators on this project, a consummate uber-consultant, continues to defend the original Baha Mar deal in both the print and broadcast media.

The uber-consultant is defending The Bahamas alienating some of our more valuable Crown and government land so that the developer could secure a loan. If this level of extraordinary state beneficence was necessary in order for the developer to receive the loan, we chose the wrong developer, especially for one of our premier touristic sites.

That the developer has laboured to pay back and renegotiate the terms of its major loan is suggestive of many things. All of which should have been taken into consideration before the Christie administration handed over the vision and patrimony of Cable Beach to selective interests.

As egregious, the developer was a middleman with no real track record in such a megaproject. And, the original deal that is being defended was rife with concessions the country never should have granted, a number of which have been clawed back by the Ingraham administration.

To see some of the blunders made at Baha Mar - readers may wish to read Baha Mar: Anatomy of a Big Blunder.

While Baha Mar may bring some short- and medium-term gains, its longer term prospects may be problematic on numerous fronts. The country continues to pay for the mistakes an earlier PLP made at Cable Beach. It may now have to endure the problems of a potentially colossal error that the Christie administration made with Baha Mar.

Baha Mar Drama – (Part 1)

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