THE Hotel Corporation of the Bahamas has recommended a buyer for its last hotel property, the Lighthouse Yacht Club and Marina in Fresh Creek, Andros, the Deputy Prime Minister telling The Tribune that he would take the proposal to Cabinet.
Brent Symonette said the recommended application by an investor group he did not name was considered by the Hotel Corporation and its Board as the most suitable one to date.

He confirmed to Tribune Business late last week that the Government was in the process of selling the Lighthouse yacht Club and Marina, having so far looked at several applications to purchase the club. It had now settled on one that the Hotel Corporation and its Board considered to be the most suitable, and Mr Symonette said he expected they will he making an announcement shortly.Mr Symonette said the application was on his desk, and he will be taking it to his Cabinet colleagues.

The Lighthouse Yacht Club and Marina sits amid 4,400 acres of land in Andros that is also owned by the Hotel Corporation, making the resort a potentially valuable real estate development site. The property includes a 20-slip marina,beach frontage. a 20-room hotel, employs 25 persons and occupies some 12 acres of land.

Its average occupancy is usually around 35 per cent, and the Lighthouse Yacht Club and Marina has been an acknowledged loss maker for the Hotel Corporation for years. A tour by the Corporation's Board last year noted that the resort's roofs needed replacing, there were leaks in water lines and air conditioning malfunctions, and electrical failures at the marina. As at December 31, 2004, the appraised value of the Lighthouse Yacht Club and Marina's buildings was pegged at $2.314 million, with the land valued at $400,000 and furniture, fixtures and equipment valued at $528,173. Yet allowing for depreciation, the net book value of the resort's buildings was reduced to $1.547 million.

Two offers previously made to acquire the Lighthouse Yacht Club and Marina included one from the Caribbean Golf and Hotel Development, a company backed by US businessman Joseph Simmons, and another by the Great Andros Land Company.

The Caribbean Golf and Hotel Development group was proposing a $450 million investment, including hotels, a marina and several golf courses.

The Great Andros Land Company was a joint venture between Case Financial, a Californian firm, and a Bahamian entity called Management One, a property management firm.

They had proposed developing "world class resort facilities and residential communities". It is not known if either of these investors remain in the running.

It was the first Ingraham administration that begun the successful process of divesting itself of all government-owned hotel properties, and the Lighthouse Yacht Club and Marina's sale would finally bring that process to a close.

The wisdom of the Government existing the hotel business is confirmed by the Hotel Corporation's annual accounts,the most recent available being for 2004, which were tabled in the House of Assembly last week by Mr Symonette.

A welcome and long overdue exercise in transparency, the accounts revealed that in its then-30-year history, the Hotel Corporation through its sustained annual losses had cost the Government and Bahamian taxpayer some $286 million.

Combined with Bahamasair, the two state-owned enterprises have cost the Bahamian public getting on for almost $700 million. It takes little imagination to think about what that money could have been spent on — infrastructure, such as roads, ports and airports, health clinics and hospitals, schools and education, ending the practice of outside toilets.....

Although the accounts, audited by Pannell Kerr Foster (PKF), noted that the Hotel Corporation was not a revenue-generating entity, they showed that the Government had over the years pumped in $289.46 million in equity funding to keep it operational.

For the year to December 31, 2004, the Hotel Corporation fell to an $11.821 million net loss, which still represented an improvement on the previous year's $16.776 million loss. For 2004, the operating loss improved to $968,582, compared to the previous year's $6.575 million.

The accounts tabled by Mr Symonette revealed that for the financial years 2002, 2001, and 2000, the Hotel Corporation had produced net losses of $12.08 million, $7.889 million and $2.259 million.

This is likely to prompt many Bahamians to wonder what useful purpose is served by the Hotel Corporation's continued existence, especially once the Lighthouse Yacht Club and Marina is sold, since then it will no longer own any resorts. It still, though, owns some 3,000 acres of land in Eleuthera that continues to interest developers, and both the former PLP administration and the current one have talked about converting it into a Tourism Development Corporation.

Back to the 2004 accounts, and PKF noted that the Hotel Corporation's current liabilities exceeded current assets by some $60.75 million. Yet it was still classified as a 'going concern' due largely to the taxpayer funds pumped into it by Parliament.

The Hotel Corporation's accounts will have taken on a different context since then, largely due to it realizing some $39 million from the sale of the Radisson Cable Beach Resort and associated land holdings as part of the 2005 Baha Mar deal.

While the Radisson sale will reduce the Hotel Corporation's revenues, its expenses will also be significantly less. This is because it no longer employs the 900-plus staff at the hotel, virtually wiping out its general and administrative expenses, while depreciation of the real estate assets at Cable Beach will no longer figure either.

Baha Mar paid $30 million for the Radisson itself, and paid $3.175 million for its golf course and associated properties; $3.425 million for the former Hobby Horse race track land; $2.25 million for the Hotel Corporation land upon which the Wyndham sits; and $150,000 for the land where Fidelity Bank (Bahamas) Cable Beach branch is currently situated.

Yet out of that $39 million, some $23.851 million was spent by Baha Mar on settling the Hotel Corporation's liabilities, including a $4.344 BEC bill and $18.115 million Scotiabank (Bahamas) loan.

And once attorneys fees, the management contract and other payments were taken care of, just $5.898 million was left available to finance the Hotel Corporation's future operational requirements.

Source: The Tribune