Espionage! Intrigue! I give you, Baha Mar
 
Espionage! Intrigue! I give you, Baha Mar
17 JULY 2015 6:51 AM
The twisting, turning tale of Baha Mar got even weirder this week with allegations that China Construction America was stealing important project documents. 
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Corporate espionage! Intrigue! Damning documents stolen by a state-backed multi-national!
 
The makings of Hollywood’s next white-collar white-knuckler? Nope. Just the latest turn in the twisting, turning tale of Baha Mar, the multibillion-dollar megaresort that’s found its way into Delaware bankruptcy courts.
 
For those not in the know (or living under a rock), Baha Mar was supposed to be a boon for the Bahamas. Set on 1,000 acres along Cable Beach in Nassau, the $3.5-billion project was to comprise a 1,000-room casino hotel, a 700-room Grand Hyatt, a 200-room Rosewood and a 300-room SLS Lux. 
 
But delay after delay after delay set the resort reeling past the scheduled open date. Months later, the fingers are pointing in all directions.
 
Baha Mar Limited, the developer of the project, says China Construction America, the general contractor, is at fault and liable in respect to guarantee and performance obligations related to construction of the project. Baha Mar Limited, as a result, thinks it’s entitled to financial remedies. 
 
CCA, for its part, has packed up and left the mess behind—but not before allegedly filching some souvenirs along the way. 
 
In a (fascinating) motion for assistance in the District Court of Delaware, Baha Mar alleges numerous CCA personnel attempted to sneak allegedly damning project documents past on-site security officers. Some examples: 
 
  • On Tuesday, 30 June, a female CCA employee was observed by Baha Mar security personnel in Tower J9 without authorization trying to remove documents by placing them under her clothing.
  • On Wednesday, 1 July, two CCA subcontractors were observed by Baha security attempting to leave the Crystal Palace (an existing casino converted into temporary office space) loading dock with a large black travel roller bag. Upon inspection, the bag contained a black Dell computer, a printer and miscellaneous computer accessories.
  • On Tuesday, 7 July, a CCA subcontractor was observed trying to leave the Crystal Palace premises with a suitcase. Upon inspection, the suitcase was revealed to contain a computer.
 
The examples go on. 
 
The debtors include their own hypotheses for such illicit behavior in the 97-page motion for assistance: 
 
“One possible explanation for at least some of these infiltrations is that CCA may have been utilizing false accounting practices to illegitimately enlarge its costs and expenses at the expense of Baha Mar and the project. In fact, a preliminary review of accounting records kept in CCA's offices on site appear to consist of large amounts of reimbursement applications by CCA's and subcontractors' employees, but the underlying records suggest these expenses appear to have been incurred for personal expenditures such as cosmetics and groceries.” 
 
Officials from both sides are in China this week trying to reach resolution. (To be a fly on those walls.) They’re not talking—to us or other media outlets, for that matter. 
 
I believe Baha Mar will open in some form at some point. Sarkis Izmirlian, chairman and CEO of Baha Mar Limited, was adamant that would be the outcome when the company filed for Chapter 11 bankruptcy protection.
 
“I am committed to doing all I realistically can to move Baha Mar forward to be completed and opened successfully,” he said in a news release. 
 
There’s too much at stake for Izmirlian, for the Bahamian government and for the many, many, many stakeholders for it not to open. 
 
Just expect a few more twists and turns along the way. 
 
Now on to the usual stuff … 
 
What’s making me happy this week?
J.D. Power’s “2015 North America hotel guest satisfaction index study.” I’m a sucker for rankings of any sort. Throw together the hotel brands I report on every day? I’m in.
 
Stat of the week
$140 billion: Amount in outbound travel receipts spent by Muslim tourists during 2013. That accounted for 11.6% of all global travel receipts, according to the “State of the global Islamic economy” report from Thomson Reuters in collaboration with DinarStandard.  
 
Looking for the next millennial? Look no further than the Muslim tourist.
 
Quote of the week
“When you buy a hotel room and are paying $80, you know what you’re getting for that $80. No more blind buying.”
Rick Garlick, global travel and hospitality practice lead at J.D. Power, which released its “2015 North America hotel guest satisfaction index study” on Wednesday. 
 
I always love my annual chats with Rick when the updated J.D. Power rankings come out. The guy cuts through the clutter and gets to the core of the data. 
 
In this case, it’s what really drove satisfaction this year: transparency. A result of online platforms such as TripAdvisor, this one-two “transparency” punch held owners accountability for the quality of their products and services rendered as well as allowed travelers to more effectively choose the hotel that fit their specific needs. Rick was hitting on the latter in his quote above.
 
Reader comment of the week
“I agree with Bashar Wali’ss sentiment that EB-5 is ‘stupid money,’ and that ‘it makes projects happen that shouldn’t probably happen.’ I also feel that the goal of the developers may often not be one of development but the hotel is merely the necessary evil in creating an immigration scenerio where the EB-5 Regional Center gets its cut for each investor. Then building the hotel is merely the inconvenient truth. The development may even be built significantly different and to a lower quality than promised and no one really cares.”
Reader “Sam Agarwal” in response to “The evolution of EB-5 hotel financing.” 
 
Email Patrick Mayock or find him on Twitter.
 
The opinions expressed in this column do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Bloggers published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to comment or contact an editor with any questions or concerns.
 

3 Comments

  • JohnBuchanan July 17, 2015 5:51 AM

    It's pretty amusing that you missed the big twist last night -- the announcement by the Bahamian Prime minister that the government will take control of the bankruptcy proceedings and the project, in cooperation with China -- just as I predicted since March 24. Maybe you should stock to press releases from PR firms for "news," since you killed the messenger (me) on Baha Mar.

  • BobSonn July 27, 2015 6:43 AM

    Izmerlian has The Chinese right where he wants them. In spite of a recent mis-step by the Bahamian Government, he knows the Chinese would have a PR DISASTER on their hands if this project really stops. They just can't let that happen, and the Chinese will have to pony up more cash...and fast. Watch him squeeze them over the next month!

  • Anonymous July 30, 2015 5:26 AM

    Bob Sonn: You must be joking. Tomorrow is D-day for Izmirlian in the Bahamas Supreme Court. Izamirlian will be out and PricewaterhouseCoopers in as liquidators (reorganizers) on behalf of the Bahamian government. Izmirlian has totally blown it.

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