After many stumbles during its decade-plus gestation, the Bahamas’ largest hospitality project is due to open next month. US$3.5 billion Baha Mar emerges as a Caribbean resort with Chinese characteristics and proof of Beijing’s influence in the island nation within 100 kilometers (60 miles) offshore from the U.S. Hong Kong’s Chow Tai Fook Enterprises, the private vehicle of late multi-billionaire Cheng Yu-ung’s family, owns the integrated resort, while China’s state-owned Export-Import Bank and China State Construction Engineering hold the mortgage. Original owner Sarkis Izmirlian gambled and lost his dream project, putative partners including Harrah’s (now Caesars) Entertainment, former Las Vegas Sands President and COO William Weidner’s Global Gaming Asset Management and Starwood Hotels, plus the $850 million Izmirlian invested in Baha Mar. Interviews with project participants and hospitality experts indicate miscalculations on all sides led to the delays and disappointments that have plagued Baha Mar.
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Originally conceived to open in one phase, Baha Mar will debut with its casino and a fraction of its 2,200 rooms, managed by Hyatt, SLS and Chow Tai Fook’s Rosewood brand. The project was reportedly 97% complete when work stopped after three missed openings in six months, the last in May 2015. In a bankruptcy filing that June, Izmirlian’s group contended that poor work by China Construction America, China State Construction Engineering’s U.S. affiliate, was behind the delay. Baha Mar was assigned the Chinese builder as its designated general contractor (with the right to bring in thousands of Chinese construction workers) as part of its $2.6 billion financing deal with ExIm Bank, saving the project after global credit markets dried up in the recession that began with the September 2008 collapse of Lehman Brothers.
Chinese government support here is in sharp contrast to the lack of help for Imperial Pacific International casino resort project on U.S. soil in Saipan, that currently needs a fraction of the money that’s been lent for Baha Mar. It indicates changing times and priorities for Beijing.
ExImp Bank’s loan finally got the project underway after five years of false starts. But experts says the apparent lack of a suitable dispute resolution mechanism between the owner and the contractor set the stage of problems. The Bahamas government, which backed the project from the outset as vital to the national interest and forecasts it will add more than 10% to its GDP and provide 7,000 jobs, intervened to help resolve issues. But Izmirlian’s surprise bankruptcy forced Bahamas Prime Minister Perry Christie to choose between the Swiss-born heir to a commodities fortune and China. The government chose China, given the level of Chinese investment in the Bahamas, including a redevelopment initiative for capital city Nassau, and the potential for more.
After the project lay idle for a year, PM Christie brokered a deal for China Construction to resume work that observers say gave Chinese interests de facto control over the project that Beijing saw as a showpiece for its business and geopolitical interests in the region. Chow Tai Fook came to the project as a white knight, likely got a discount on the price and won’t close the deal until construction is complete, expected by the end of the year. A long time investor in Stanley Ho’s Macau gaming empire among its eponymous jewelry business and New World conglomerate, Chow Tai Fook is taking its first stab at operating a casino resort. The opening next month comes just ahead of national elections due in May and is expected to give the ruling party a boost, if all goes well.
Controversy and delays have overshadowed Baha Mar’s potential as a tourism game changer for the Bahamas. Conceived in the era of mega-resorts a decade ago as “Las Vegas on the beach,” according to its founding President Robert Heller, Baha Mar faces serious competition on its Nassau flank from family oriented integrated resort Atlantis and from expanded gaming opportunities up and down the US east coast and across Florida, its primary feeder markets. Expect Chow Tai Fook and its mainland allies to tempt Chinese travelers to sample the Caribbean beat.