Once described as going to become the best, most exciting resort destination in the world, the Baha Mar project to revitalise Cable Beach in the Bahamas is likely to be a casualty of the credit crunch. The planned joint venture between the Baha Mar Development Company, Harrah’s Entertainment and Starwood Hotels & Resorts Worldwide, agreed in November 2005, seems about to unravel. Baha Mar has reported that Harrah’s Entertainment wants to pull out of the deal.

Last week the National Assembly voted unanimously to approve the transfer of land to Baha Mar but Prime Minister Hubert Ingraham commented that he was not satisfied that Baham Mar has the necessary finance to complete the development, and that although Harrah’s would have the funds its agreement was with Baha Mar and not with The Bahamas government. He added that Baha Mar had until March 2009 to finalise the deal or the sale of the land would not go through.

Harrah’s issued a statement yesterday saying that circumstances have changed and that Baha Mar had taken longer than anticipated to organise the project. The company added that it did not rule out the possibility of entering the Bahamian market some time in the future, but that it had no confidence that the proposed joint venture could successfully complete the development. Since Harrah’s announced its 43% minority holding in the Baha Mar scheme the company has been taken over by private equity firms.

Baha Mar is said to have informed Harrah’s that it disputes the ability of the American company to unilaterally terminate agreements, particularly as on 31 January this year Harrah’s signed the latest heads of agreement with the government. The Cable Beach redevelopment was due to be completed in 2011 and employ around 10,000 people. For some time it appears that Harrah’s and Baha Mar have had differences of opinion and that this may have triggered the remarks of the Prime Minister.

The government previously agreed to pay for the cost of a 1,000-room hotel, money the government says will not be forthcoming until Baha Mar has constructed the first 100 feet off the ground. Somewhat ominously Ingraham said, "There is high expectation by the Bahamian public and by members here about the Baha Mar project and it is our hope that it would come about. But I do not want to oversell hope. We will do all we can to facilitate it, but I do not want to oversell it." (E-03.10.08)

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