Updating MPs on the current state of the Morgan’s Point development at Caroline Bay in Southampton, Finance Minister Curtis Dickinson said to date, the Bermuda Government has borrowed $182.4 million “to make good on its guarantee”.
That guarantee, signed by the former One Bermuda Alliance government “to purchase claims owed to contractors and subcontractors associated with this project, and to fund other expenses relating to professional services”.
Recapping the time line in the House on Friday, the Minister said: “In 2016 the former Bermuda Government entered into an agreement with the developers of the Caroline Bay project at Morgan’s Point and their lenders, providing $165.0 million in guarantees with respect to project debt.
“In February 2018, work partially stopped on the development and has since been fully suspended. Following receipt of letters containing Notices of Default from various project lenders in June 2019 and August 2019, the Bermuda Government entered into a loan agreement for $200.0 million with the Bank of NT Butterﬁeld & Son Limited and HSBC Bank Bermuda Limited to facilitate the purchase of the interests of those lenders.
“The Bermuda Government also purchased the claims from project contractors and supervised the payment of Bermudian subcontractors, who had until that point remained unpaid for goods and services they had provided at Morgan’s Point.
“While discussions with the developers of Caroline Bay continue, it is the intention of this Government to protect at all times the interests of the people of Bermuda,” he added.
Looking ahead to the 2020 tourism season, he said: “Tourism continues to lay claim as one of Bermuda’s economic pillars and for at least a decade the industry has been in recovery.
“Now there is cause for guarded optimism that we can grow the industry into one that delivers the value demanded by Bermuda’s price point. Plans for the Fairmont Southampton Hotel should signiﬁcantly upgrade Bermuda’s hospitality product, joining new sites like The Loren, St Regis and Azura.
“In 2018, Bermuda saw 771,000 visitors on our shores, of which 68.2 percent were cruise arrivals,” he said.
“Like so many of our economic drivers, Mr. Speaker, we must act now to prevent Bermuda from becoming primarily a cruise destination to the exclusion of the longer-stay air visitor.
“BTA data for 2018 versus 2019 indicate that cruise visitors are up 14% while air arrivals are down 6 percent. This trend, uninterrupted, will minimise the economic impact Bermuda needs from its tourism industry. The appropriate balance must be struck.
“Bermuda tourism works best for Bermudians and Bermudian businesses when air arrivals are up and hotels are full.
“Travellers of all incomes have increasingly more destinations at their disposal. Mr. Speaker, our tourism product is no longer unique enough to stand out from the noise of an increasingly crowded marketplace.
“We must “up our game” and improve it. Even the best marketing will struggle long-term to overcome these competitive headwinds. To continue charging these prices we must evolve beyond a singular narrative of the island paradise.
As part of the work to be done in this ﬁscal year,” he said, we must:
(i) Restructure the BTA to focus more directly on its sales and marketing role
(ii) Devise and introduce a slate of annual events that drives visitors to Bermuda and better reﬂects our claim to be a luxury destination; and
(iii) Renew the efforts of air service development to expand airlift capacity from key markets
We’ll have more on the latest Budget Statement in subsequent reports.