The Heads of Agreement between Kerzner International and The Bahamas Government that launches Phase III of Atlantis, stands to benefit Bahamians significantly as it will pump an estimated $1.2 billion into the economy over the next five years.
Minister of Financial Services and Investment Allyson Gibson told the House of Assembly Monday that negotiations of the Heads of Agreement sends a very strong signal to the world about investor confidence in The Bahamas.
This new investment by Kerzner, she said, will contribute about 3- 4 per cent to the nations GDP, and over the first 15 years, the total economic benefits would be $4.4 billion.
It is proposed that construction commence no later than the end of 2003, and it is estimated for completion by 2006.
Additional tax revenue to the Government is calculated at approximately $20 million per year and a total of $420 million over a 15 year period she said.
The Heads of Agreement, which was signed on May 26, she said, will create some 1,200 direct jobs, and upon opening, Phase III will employ more than 2,200 people directly, and will ultimately spur 3,000 new jobs in the work force.
Apart from Kerzner's payroll increasing from $140 million to $200 million, current purchases from Bahamian suppliers will increase from $74 million to $110 million, Minister Gibson said.
She said that this Agreement is a much better deal for The Bahamas than those in 1993, 1995 and 1997, in that the percentage of casino tax concessions as provided under the Hotel Encouragement Act in relation to the 1997 agreement, has been reduced some 50 per cent.
In this 2003 Agreement, Phase III investment totals $600 million with concessions of $93 million, or 15 per cent of the investment compared to the $460 million in 1997, with concessions of $151 million or 33 per cent of the investment she said.
She noted that Kerzner's $460 million included the cost to replace 765 rooms, which were demolished at the former Pirates Cove and Paradise Paradise hotel sites, but these rooms were never built, and the only penalty Kerzner suffered was a reduction of 5 per cent in gross winnings on the casino in excess of $20 million.
"Unlike the previous 1997 agreement, the 2003 agreement makes provision for the peeling back of concessions should Kerzner fail to meet any of its development obligations under the agreement. I therefore leave it to the Bahamian people to decide if it was worth $117,500,500 in Government concessions in order to ensure a minimum of 2,000 well paying jobs for Bahamians and a world class resort that is second to none," Minister Gibson said.
Under the 2003 Agreement, provision is made for the construction of a 1,200 room hotel, a 120-room time-share complex, three new luxury villas at the Ocean Club, a 20,000 square foot of additional restaurant and retail facilities.
It will also include an extension of the water themed attractions which will make this type of theme park, the largest and second to none anywhere in the world she said.
A 50,000 square foot of additional convention facilities will also be added, as well as an 18 hole golf course to be joint ventured with the Government at Athol Island, and the improvement in both the environment and ecology on that island she continued.
A fire and ambulance station will also be constructed, built and equipped by Kerzner at Paradise Island she said.
The Bahamian society will directly benefit from this 2003 Agreement as Kerzner will contribute $2 million to benefit the Bahamian community programmes, and it will also make available some 500,000 shares for subscription by Bahamians.
In addition, there is an increased obligation by Kerzner towards training by its support to the School of Hospitality at the College of the Bahamas, as well as vocational training at BTVI or other institute designated by the Government continued Minister Gibson.
Kerzner also agrees to maximize the use of Bahamian entertainers and Bahamian art she said.
The 2003 agreement she said, "comes at a time when the travel and tourism industry is in the doldrums, with tourism into the Caribbean down by over 10 per cent, but Atlantis and The Bahamas continue its strong performance."
It will also keep the destination "fresh, new and exciting. Atlantis will become a 3,600-room hotel, the largest single resort hotel, the largest single resort hotel anywhere in the world outside of Las Vegas. It comes at a time when despite the industry trend, travel to The Bahamas is strong and this investment will keep The Bahamas as a leading destination," Minister Gibson said.
Kerzner's $600 million investment also brings its total investment in The Bahamas to $1.7 billion οΎ— the largest investment ever committed to in the Caribbean hotel industry acknowledged the Minister.
"The manner in which it was negotiated sends a signal also about the approach of this administration to the negotiation of Heads of Agreement. While many speculated in the press about the fate of the Agreement, the parties involved focused on the negotiations. At every stage of the negotiation, focus was had on mutuality of benefit," Minister Gibson said.
By Vanessa C. Rolle, The Nassau Guardian
