Aerial view of Freeport overlooking Xanadu Hotel on the Southern Shore. Photo: Mackey Media Ltd
The premise for this article is
that given the economic crisis now affecting Freeport and Grand Bahama,
an Action Task Force Committee be formed under the direction and
auspices of Government, the GBPA and Licensees to determine and effect
both a Short Term Solution and a Long Term Solution, which will include
the formation, for the long term, of a professional marketing
organization to be formed and paid for by the GBPA/GBDevco in accordance
with their covenants made to Government and the people of The Bahamas
in the Hawksbill Creek Agreements of 1955 and of 1960 and in the
Freeport, Grand Bahama Act, 1993 to promote Freeport and Grand Bahama
for the benefit of the Country.
Present State of the Economy
am alarmed at the present state of the economy of Freeport due mainly
to its Tourism base (hotel room visitors) being reduced to less than 25
per cent of what it would have been prior to 2004, when two major
hurricanes forced the closure of what had been the Royal Oasis and El
Casino, leaving the Grand Lucayan (formerly Our Lucaya) as the only
beachfront four-star hotel with its mini-casino already struggling these
past five years and continuing to do so.
Most people would say our stop-over, quality tourism business was near zero and falling.
it was apparent before the 2004 hurricanes that the Casino Model, on
which the Freeport tourist economy was built, was being challenged and
would by now have been severely challenged by the popular granting of
Casino Licenses in Florida and in almost every major metropolitan area
of the United States, I would submit that no serious initiatives have
been made, either by Government or The Grand Bahama Port Authority,
Limited (the GBPA) these past 10 years to diversify the tourism product
on Grand Bahama, which had always been a poor cousin of its Nassau
am sure there are many, many reasons why Tourism has failed in Grand
Bahama, and failed it has despite significant increases in cruise ship
visitations. The question is: What is going to be done about it?
believe the dismal condition of the Tourism market in Grand Bahama is
widely acknowledged – even The Grand Lucayan doors would not be open
without monthly injections of cash from its owners, Hutchison Whampoa
(Hutchison), nor would its Casino be in operation without being
subsidized by Government. In addition, the Government has in the past 18
months subsidized jet flights to five United States cities and
continues to do so. All of these efforts, while laudable, are merely
Aerial view of Freeport overlooking Pelican Bay Hotel, Harbour House Towers and Grand Lucayan Hotel. Photo: Mackey Media Ltd
do not see any planned, concerted action being taken, either by the
Port Authority or the Ministry of Tourism, Government, Hutchison or any
of the other few key players to begin to turn this around.
if a Tourism turnaround can be done, it would probably take three to
five years to accomplish and would require new hotel product, massive
training and further subsidization of operators, airlift and the like.
the Industrial sector on the island continues to do its part, the lack
of tourism revenue means that there is no money in the pockets of the
thousands of Bahamians who need to be employed: no tips: no money on the
street. Whatever else, the “yankee dollar” is still critical to a
result of all of this is that there are very few businesses in Freeport
that are presently, or have in the past four years made money: at least
five of our high-end restaurants have closed and dozens more shops and
restaurants are close to closure.
the lack of quality stopover tourism means there is no chance for the
Investor Real Estate Market to rebound as seems to be happening in
Nassau, Abaco, Exuma and Eleuthera. This Freeport market remains
Aerial view of Freeport overlooking Grand Lucayan Hotel. Photo: Mackey Media Ltd
Grand Lucayan Hotel:
is a recurring rumour that if the occupancy numbers do not improve for
the Grand Lucayan by Christmas, the decision will be taken by Hutchison
to close the Hotel. Given the unhappy history of its operation by
Hutchison, this may have an ultimately good result if the hotel is
marketed by open bid for sale and is sold to a vibrant hotel group (a la
Emerald Bay, Sandals) then the process of tourism rejuvenation can
begin. If, however, Hutchison intends to shutter the hotel (I understand
there is no third party debt) this would have a continuing calamitous
affect on Freeport tourism and jobs.
There has been a press release that the subsidized flights have now been cancelled.
Industrial Sector at the Lucayan Harbour is apparently doing well,
though I am certain these players, particularly Polymers and PharmaChem,
are suffering under the crippling power costs affecting Grand Bahama.
Polymers has advised that its Freeport plant suffers four times the
power costs of a similar U.S. counterpart, so that with Bahamian labour
costs being almost equal to U.S. costs, it is unlikely that we will be
able to attract any new players to the Port area or The Bahamas if such
are labour intensive and/or heavy electrical users.
Aerial view of Freeport overlooking Pelican Bay Hotel, Grand Bahama Yacht Club. Photo: Mackey Media Ltd
should be noted that while most of the industrial sector jobs are
skilled and well paid, they are not in the thousands of numbers that
would be sustained by a vibrant Tourism Industry.
We have not had a new player in this sector since 2003.
there another Borco, Shipyard or Pharmaceutical/Polymers Company out
there? I am sure there are probably dozens of smaller plant operators
in Europe or South America that export product to the U.S. and Canada
that could be attracted to the Port Area but they would have to be
educated about Freeport’s existence and its benefits of establishing
where is the sustained, concerted effort to market/attract such
players? Despite the covenants by the GBPA in the Hawksbill Creek
Agreement, 1955 and 1960 to use their best endeavours to promote and
encourage factories and industries, there has never been a professional,
established and sustained effort in this regard.
envisaged by and covenanted for in each of the Hawksbill Creek
Agreements (see below), a new sustained multi-year effort needs to be
made, hopefully by a joint effort of the public/private sectors (GBPA,
Hutchison, Licensees, Government) to market/expose Grand Bahama to the
light industries of the outside world that can benefit from a Bahamas
tax free base (but obviously not heavily dependent on electrical usage).
Covenants by the GBPA and GBDevco to Promote
Hawksbill Creek, Grand Bahama (Deep Water Harbour and Industrial Area) Act , 1955
the Hawksbill Creek Agreement 1955 and in consideration of the
Government’s granting to it of 50,000 acres, the creation of the Port
Area and the exclusive administration, licensing and Duty Free
exemptions and the myriad
benefits granted to the GBPA over the Port Area for a period of 99 years, the GBPA covenanted inter alia:
Use their best endeavours to promote and encourage the establishment of
factories and other industrial undertakings, and in particular
factories, industrial undertakings, and industries which will make use
of the natural resources and products available at Hawksbill Creek such
as limestone rock and pine, timber......”
Hawksbill Creek, Grand Bahama (Deep Water Harbour and Industrial Area) (Amendment to Agreement) Act, 1960
the 1960 Hawksbill Creek Agreement Act, the intent to change the
emphasis of Freeport from an Industrial Centre to a Touristic and Real
Estate Investment area, was specifically provided for in the provision
and covenant to build the Lucayan Beach Hotel.
Aerial view of Freeport overlooking Bell Channel and Harbour House Towers. Photo: Mackey Media Ltd
the 1960 Amendment, the GBPA’s 1955 covenant to promote the Port Area
was reiterated and expanded to include a covenant by the GBPA “to
promote and encourage the establishment of other lawful enterprises
which shall appear likely to be of economic benefit to the Colony.”
In my opinion “benefit to the colony” was always envisaged that Freeport would be of major benefit to the country as a whole.
Freeport, Grand Bahama Act, 1993
this Act, in consideration of certain covenants made by the GBPA and
GBDevco therein, an Agreement was entered into by Government with the
GBPA and GBDevco to provide for the extension of the Real Property Tax
Exemption to any land within the Port Area for a further 22 years from
August 4, 1993.
By the following covenant, the GBPA and GBDevco covenanted in 1993 to:
“18. Establish an organization to promote Grand Bahama internationally.”
far as I am aware, such an organization has not been established or
certainly not established within the meaning and intent of the covenant.
Thus the need, I believe, to establish such an organization now and to
link the establishment of such to a public/private enterprise with
Government and the Licensees to be financed by the GBPA and GBDevco to a
in the 1960’s, such an organization did exist as during this period
Freeport became one of the largest most successful land developments in
is interesting to note that Government would have recognised the need
to market and promote Grand Bahama in a professional manner in 1955,
1960 and again in 1993 and such need was recognized by the Government
and the GBPA to the extent that such was statutorily covenanted for.
GBDevco, as the largest single property owner of land in Grand Bahama
if not The Bahamas, was made a direct party to the Act by the Government
and, of course, is the major benefactor of that Statute;
What if this organization had been in place for the five years
before the economic boom of 2002 - 2007: we would not have been the
should the Government care to be proactive in Freeport when most of its
duties and privileges are vested in the Grand Bahama Port Authority
Limited (the GBPA)?
1) Freeport remains the second City of The Bahamas and Grand Bahama is the second largest populated island;
2) A vibrant Freeport can attract Bahamians to live and work and can be a major tax source, even as a “free port”.
3) Freeport is no longer a foreign enclave: over 90 per cent of its Licensees are now Bahamian.
For the last six years in particular, we have lost population (some say
by as much as 20 per cent) because of dwindling tourism and investment:
this puts more strain on Nassau and Government;
The GBPA and its ownership families have consistently, over these past
20 years, divested themselves of their role as owner/operator of the
Port Area: they have sold all or part of the Power Company, Sanitation
Services, GBDevco, the Harbour and the Airport, so that by itself, the
GBPA is no longer an economic force but remains a source of political
and administrative power to the ownership families. Its role is only now
that of a regulator/licensor, whose only real source of income is the
collection of license fees.
ownership interests of the families are held mostly in entities and
the families remain the owners of 50 per cent of GBDevco, the Harbour,
the Airport, etc. GBDevco, the Harbour Company and the Airport Company
are all under management control of Hutchison, the owner of the other 50
per cent of these companies.
families also own the Water Company outright and considerable,
(separate from GBDevco) real estate interests in Grand Bahama).
With its vast development-ready property potential and modern
infrastructure already in place, once the “development engine” were
started it would take 50 to 100 years to build out Grand Bahama
providing generations of future Bahamian job growth.
Particularly since the death of Edward St. George, there seems to be
evidence of bad blood between the ownership families and Hutchison to
the extent that some say that Hutchison, as the managing partner, will
take no action that may benefit their co-shareholders. Hutchison does
not need a successful Grand Bahama – we do. The big question: What
would cause Hutchison to become proactive in Grand Bahama?
8) It appears the GBPA and GBDevco have not lived up to their statutory covenants to promote Freeport.
9) It can be argued that the GBPA is in the nature of a Public Corporation that has not lived up to its mandate.
10) The citizenry and future of Freeport are at risk.
Grand Bahama Development Company Limited (GBDevco), the successor
land-holding Company of the Port Authority, is the holder of some 70,000
acres of land in the Port Area, much of which is developed, fully
serviced, vacant and subdivided and/or waterfront property in and around
the Grand Lucayan Waterway and includes Barbary Beach to Old Freetown
Beach of some 4,000 - 6,000 acres alone. This is prime beachfront
As noted, the ownership families own GBDevco with Hutchison (50/50), and Hutchison have had management.