GLOBAL REPORT—The development and construction of the Baha Mar resort complex in Nassau, Bahamas, has had a complicated road as the project’s Chinese financier and construction crews, the Bahamian government, the original developer and a new ownership group have wrestled over control of the resorts future.
|Sarkis Izmirlian: CEO and chairman of Baha Mar Limited. He purchased the property that would eventually become Baha Mar in 2005. Izmirlian is the son of billionaire Dikran Izmirlian.|
|Baha Mar Limited: The development company behind the 1,000-acre, $3.5-billion Baha Mar megaresort.|
|China State Construction Engineering Corporation: A Chinese state-owned construction company. Its subsidiaries China Construction America and CCA Bahamas serve as contractor for Baha Mar.|
|The Export-Import Bank of China: The Chinese institutional bank that has loaned the developers more than $2 billion for the project.|
“Completion of the megaresort Baha Mar and post-hurricane reconstruction activity provided a boost in job creation, with the unemployment rate declining to 9.9% in May 2017,” the IMF wrote.
But continued construction of the resort is expected to widen the country’s trade deficit.
Two weeks earlier, Moody’s lowered its projections for gross-domestic-product growth in the country to below 1%, saying the resort will “likely provide a short-term boost to economic activity in 2018.”
12 September 2017 – Baha Mar officials announce the resort is reopening following the emergency closure related to Hurricane Irma. Reports indicate the island nation has “rebounded quickly” from the hurricane.
7 September 2017 – With Hurricane Irma bearing down on the Bahamas and several other Caribbean locations, Baha Mar officials inform guests they must vacate the property and seek shelter elsewhere. The move draws some scorn, as competing resort Atlantis announces plans to shelter guests and locals.
While some experts say Baha Mar’s reaction might be the right one because the two resorts are in different locations that faced different conditions, Bahamian tourism minister Dionisio D’Aguilar said Baha Mar officials need to put thought into how they handle hurricanes in the future and how the hotel’s design affects emergency procedures.
“When they build Baha Mar, they didn’t consider getting people from the hotel to the convention center without going outside,” he said, according to Tribune 242. “So the only way to get from the hotel to the convention center is to go outside, and that is dangerous in a storm, and that creates liability issues for them.”
Baha Mar officials respond to the Bahama Journal, saying their only concern in making their decision was guests’ safety.
31 August 2017 – SBE’s SLS property at the resort still hasn’t opened, but the company announces the opening of their Katsuya restaurant in the Baha Mar complex.
21 August 2017 – Officials with the Bahamas Institute of Chartered Accountants raise concerns about new regulations in China restricting the amounts and types of investment Chinese companies can make outside their country. They pointed out that the new policy, which could affect several large projects in the country, including Chow Tai Fook Enterprises’ investment in Baha Mar and China Construction America’s ownership of the $200 million The Pointe development in downtown Nassau, “highlights the critical need for the Bahamas to strengthen its own economic planning unit.
The change in Chinese policy apparently prompted CCA to ask the Bahamian government for quick approvals for their work at The Pointe.
10 August 2017 – Baha Mar officials say their resort is now running at 50% occupancy with more than 2,000 Bahamians employed at the complex.
Baha Mar officials claim they are “leading the way in driving the most significant expansion of the Bahamian hospitality market.”
Soon after in early August, the Bahamian Minister of Tourism Dionisio D’Aguilar says the country might have to give airlines financial incentives to generate the new airlift required.
19 July 2017 – New Bahamian Prime Minister Hubert Minnis now says his top concern with Baha Mar is meeting the deadline to fully open in late October. CCA is told by a Florida judge that the contractor is unlikely to get an injunction requiring a vendor to turn over 1,420 lounge chairs, which is viewed as vital for the project’s completion on the current timeline, while others say this explanation insults “the intelligence of the Bahamian people.” But Baha Mar President Graeme Davis said the project is “on target” to get a certificate of occupancy.
28 June 2017 – Government officials vow to complete the resort complex due to its massive economic implications for the country despite misgivings about its development and recent sale. CTFE announces they’ve received support to complete and run Baha Mar. Minnis pushes back on criticism that he has softened on his stance on the CTFE deal. His administration recently said there was nothing unusual in released documents.
26 June 2017 – Izmirlian asks the Minnis administration to put a moratorium on the sale to CTFE, criticizing the deal as “toxic” and “one-sided.”
14 June 2017 – The project receives criticism for its treatment of former foreign employees.
8 June 2017 – Following the opening of the resort to paying guests, occupancy at the resort complex hits roughly 25%, and its employment levels approach 2,000 staff members.
30 May 2017 – Members of Minnis’ cabinet say they’re “still reviewing” the deal with CTFE.
11 May 2017 – Hubert Minnis is sworn in as new prime minister of the Bahamas, presenting a new governmental administration for Baha Mar to deal with. The use of Chinese labor at Baha Mar and criticism of the deal to sell to CTFE are two of the issues that propelled Minnis’ election, so many think the new government will likely have a different approach to the megaresort than that of former Bahamian Prime Minister Perry Christie. In a twist that many interested in the project found curious was original developer, Sarkis Izmirlian, attended Minnis’ swearing in.
4 May 2017 – A retired Supreme Court judge announces court records dealing with the sale of the resort are public and not sealed.
1 May 2017 – Details of the sale to Chow Tai Fook Enterprises are made public, including the fact that the company wouldn’t be required to pay $10.8 million in casino taxes from the liquidation, an agreement to prevent new casino licenses in the area for 20 years, 300 work permits for non-Bahamians in senior management and the general structure of fees and taxes for the resort.
Critics of the deal say it means the Bahamian people are getting the worst of it. Some say it adds as much as $1 billion in costs compared to the original deal.
Bahamian Prime Minster Perry Christie tells those present at the ribbon-cutting ceremony that the opening is not a “mirage” or an “ostentatious effort of misleading or misrepresenting.”
31 March 2017 – After some critics claim a phased opening of the Baha Mar resort complex is smoke and mirrors, Graeme Davis, Bahamas president of Chow Tai Fook Enterprises, responds that the company knows what it’s doing.
“There’s been speculation and talk in the papers—I don’t try to play politics, I can tell you that,” Davis said. “But I can tell you that I’m a lodging executive for 30 years. And I do know how to open a hotel. And when some people say that there are no reservations and how can we be opening, they’re not in the lodging business—we are.”
Davis also disputes political advertisements which claim CTFE is linked to organized crime.
21 March 2017 – China Construction America makes significant progress in getting the resort up to Bahamian code in the lead-up to the soft opening, with sources telling the Bahamas Tribune that the company has “moved mountains” to make sure it hits the 21 April opening.
Bahamian Prime Minster Perry Christie says the resort complex will be fully handed over to CTFE “sooner than planned.”
13 March 2017 – Bahamian politicians argue that the announced sale to Chow Tai Fook Enterprises is illegitimate and pledge to sell the resort “to a qualified and respectable purchaser who believes in Bahamians.”
10 March 2017 – Bahamian Deputy Prime Minister Philip Davis announces the resort has hired more than 650 people from the country.
7 March 2017 – In an announcement naming a GM for the SLS Baha Mar, SBE states the property is aiming for a fourth-quarter 2017 opening.
5 March 2017 – Sarkis Izmirlian’s group blasts the Bahamian government and CTFE in a news release, claiming “the continued delays for Baha Mar’s completion, missed opening dates and now supposed staggered opening of the entire Baha Mar into late 2018 only highlight why BMD’s offer is superior and Bahamian workers and contractors should have been used.”
28 February 2017 – Rosewood Hotels & Resorts, which is owned by Baha Mar buyer Chow Tai Fook Enterprises, announces plans for the Rosewood Baha Mar to open in the resort complex in spring 2018 instead of 2017. Rosewood was tied to the resort in the earlier days of its development but had dropped out of the project. Hyatt confirms plans for the Grand Hyatt Baha Mar to open in late April 2017.
22 February 2017 – Comments by Graeme Davis, who leads CTFE’s Bahamian subsidiary, prompt a back-and-forth on the nearby New Providence landfill. After Davis expresses concerns about the landfill’s pollution, opposition party leaders in the Bahamian government claim that’s a sign CTFE didn’t do due diligence in their deal to buy the resort.
16 February 2017 – Baha Mar officials state they’ve received more than 11,000 applications to work at the resort complex since mid-January.
27 January 2017 – Graeme Davis, who leads CTFE’s Bahamian subsidiary, announces plans for the resort complex to open in phases, beginning with the 1,800-room Grand Hyatt Baha Mar on 21 April. Davis expects the SLS Baha Mar to open between September and November 2017 and the Rosewood Baha Mar to open in December 2017.
16 January 2017 – Baha Mar officials formally begin recruitment efforts to hire for the resort complex and receive more than 1,000 resumes on the first day.
6 January 2017 – Bahamian media report that the resort will pay no value-added tax, which means the government will forgo as much as $60 million in tax revenue.
27 October 2016 – Chow Tai Fook Enterprises, which owns Rosewood Hotel Group, announces it is in negotiations to buy Baha Mar. The company also has applied for approval from the Bahamian government.
Critics of the potential sale claim CTFE was denied casino licenses in the U.S. due to alleged connections to organized crime in Asia, which company officials flatly deny saying the company never applied for licenses in the U.S. and have been approved in countries like Australia.
25 October 2016 – Izmirlian’s group claims they have made a “superior offer” to repurchase the property but has not received a response from the Export-Import Bank of China or Perfect Luck Holdings Limited.
17 October 2016 – A statement from the Prime Minister’s office confirms the resort has been purchased by Perfect Luck Holding Limited. The government then states it will not intervene in the process to aid Izmirlian.
Perfect Luck is expected to resell the resort after its completion and is described in media reports as an affiliate of the Export Import Bank of China, the project’s primary lender.
3 October 2016 – Seven companies tied to Izmirlian are put into full liquidation, meaning he faces “the total loss” of their $800-million to $900-million equity investment in the Baha Mar project, according to Tribune 242.
27 September 2016 – Prime Minister Perry Christie says the still-unnamed Chinese buyer meets the government’s requirements. At the same time, a Bahamian Supreme Court ruling clears the way for the resort to be taken out of receivership and placed under the control of a special purpose vehicle owned by the Export-Import Bank of China in anticipation of the final sale.
The ruling provides some new information about the sale process, including that 17 groups expressed interest in the resort but just five put in bids, all of which were ultimately rejected before the buyer stepped up from “outside the bidding process.”
23 September 2016 – Deputy Prime Minister Philip Davis said construction would resume on the resort within two weeks.
20 September 2016 – Receivers at Deloitte & Touche deny reports that Fosun Group is the Chinese interest buying the resort.
16 September 2016 – Employees are told they are offered end-of-September payouts on a “take it or leave it basis.” The money for the payout is deposited by the Export Import Bank of China around 19 September.
14 September 2016 – Bahamian tourism officials said Hyatt Hotels Corporation and SBE Entertainment Group have “recommitted” to Baha Mar, promising to keep plans for a Grand Hyatt and SLS, even though Rosewood Hotels & Resorts backed out in 2015.
That agreement includes plans to at least partially pay unpaid contractors, which had been a sticking point for many.
16 August 2016 – A report on the economic impacts of the stalled project claims that the Bahamas missed out on $2 billion in gross domestic product over 18 months due to the construction halt. This includes $1 billion in direct revenue, and $315 million in taxes and $451.3 million in salaries and wages.
An estimated $35 billion could be lost through 2034 if the resort remains closed.
23 July 2016 – Without naming who they are, government officials say two groups are identified as “preferred bidders” for the Baha Mar property. The groups were selected by receivers at Deloitte & Touche.
21 July 2016 – Izmirlian files a summons in the Supreme Court of the Bahamas seeking to move the Baha Mar project from provisional liquidation to full liquidation, which a government official claimed was a move meant to complicate a possible sale.
15 July 2016 –Prime Minister Perry Christie’s administration is criticized for being secretive about Baha Mar-related negotiations.
10 July 2016 – Receivers with Deloitte & Touche publicly deny claims that the Baha Mar development is uninsurable and will cost and additional $1.8 billion to get up and running.
29 June 2016 – A petition filed by Izmirlian’s Granite Ventures seeking control over a $192-million claim against China State Construction Engineering Corporation is dismissed by the Bahamian Supreme Court. The decision was appealed on 13 July 2016, with Izmirlian’s group claiming the court improperly based the decision on “unfiled evidence.”
25 May 2016 – Government officials say court-appointed receivers put together the framework of a deal with The Export Import Bank of China and China State Construction Engineering Corporation to complete the project. Later reports reveal that the groups assured government officials they would complete the project if Chapter 11 bankruptcy proceedings were halted.
12 April 2016 – Original developer Sarkis Izmirlian takes another swing at gaining control of the resort property, reaching out to the China Exim Bank to say he could get the property opened successfully.
But Izmirlian says he can’t join a formal bidding process due to litigation issues. Court-appointed receivers say they can’t negotiate a deal with Izmirlian.
7 April 2016 – The Bahamian Prime Minister Perry Christie holds bilateral meetings with “high-ranking” Chinese officials in an effort to expedite the opening of the resort complex.
30 March 2016 – Receivers Deloitte & Touche say Izmirlian is barred from speaking with bidders for the property.
23 March 2016 – Colliers International of Toronto is hired to line up potential buyers for Baha Mar. The company did not list the resort but is charging a $50,000 deposit to interested parties.
15 March 2016 – Christie says there are few signs of progress in Baha Mar’s “extremely complicated” plan.
He said the failure of the development has negatively affected growth rate projections for the Bahamas.
25 February 2016 – Bahamian officials say they’re losing faith that 2,000 laid-off workers will be brought back in the near future to finish work on Baha Mar.
23 February 2016 – Possible buyer Andrew Farkas, of Island Capital Group, says the earliest potential opening for Baha Mar is now Thanksgiving 2017.
Meanwhile, former Baha Mar board member Dionisio D’Aguilar says the Bahamian government should force Chinese interests to auction off the resort.
2 February 2016 – Both Bloomberg and The New York Times examine how Baha Mar developers and financiers found themselves in their current position, and how it is affecting the 2,000 laid-off workers displaced by the standstill.
1 February 2016 – A Bahamian judge admits the two-month window for stakeholder negotiations are not enough to move the project forward.
24 January 2016 – Bahamas Tourism Director General Joy Jibrilu says that there are multiple entities “who have expressed an interest in purchasing Baha Mar” during the Caribbean Travel Marketplace.
Government officials say they are aware of “five or six” possible buyers.
29 December 2015 – Christie says he foresees an early 2016 completion for the resort.
Meanwhile, D’Aguilar says the China Exim bank-controlled receivership was slowing development after the Exim bank says it has preliminary plans in place to move the project forward.
26 November 2015 – The Bahamian Supreme Court delays ruling on a winding-up petition until 2016 to see if the receivership process can spur developments for the resort project.
30 October 2015 – The Bahamian Supreme Court appoints Deloitte and Touche as receivers of the troubled property at the request of the China Export-Import Bank. The move effectively takes Izmirlian out of the decision-making process on the resort. He responds by saying the move “continues the unfortunate pattern of disastrous actions taken by other stakeholders” in the resort. (Click here to read his statement.)
|A look at construction on Baha Mar as of March 2013 (Photo: Baha Mar)|
2011-2014 – With construction underway, resentment grows among Bahamians as roughly 4,000 Chinese workers are flown in to serve as construction crews on the resort. The project was sold as an economic driver for the Bahamas, so many in the country are unhappy to see a 70% foreign workforce building the resort complex while the Bahamas struggles with a unemployment rate of roughly 15%.
|At the groundbreaking of Baha Mar with senior officials of the Bahamian government and Chinese government, dignitaries, delegates of the Export-Import Bank of China, China State Construction Engineering Corporation and the design and construction teams. (Photo: China Construction America)|
March 2009 – Baha Mar Resorts signs a formal agreement with the China State Construction Engineering Corporation to build the resort complex through its American subsidiary, China Construction America. The developers also sign a memorandum of understanding with the Export-Import Bank of China to potentially fund the project.
Compiled by Sean McCracken.