Work to start at Bermudiana Beach Resort
The Bermudiana Beach Resort in Warwick will convert the 78-condo Grand Atlantic development into a mid-market boutique hotel.
Robert MacLellan, the developer, described the condos, priced between $400,000 and up to $1 million, as “an investment as well as a vacation home”.
Kitchens and bathrooms are being redone for holiday accommodations — and elevators are being added to each block.
Mr MacLellan envisaged a hotel price level similar to the Coco Reef Resort or the Grotto Bay Beach Resort.
“Flexibility of accommodation” was key to the design, he said.
One-bedroom condos will become, as hotel inventory, one-bedroom suites with a sofa bed in the sitting room and a king sized bed in the bedroom.
Two-bedroom units come with an additional wall bed, allowing the suite to accommodate three — potentially catering to sports events such as the World Rugby Classic.
Three-bedroom units are divisible into two four-person units, or can sleep eight if combined.
The ground floor of block F, at the west, will hold a reception area plus a meeting room, bar, restaurant and kitchen.
For the C block by the road, the ground floor will hold a spa as well as housekeeping space.
Beach access is to be delivered by a “Hill Hiker” outdoor elevator, with a second as back-up.
A bar-restaurant will be added at beach level. There will be generators on site.
The resort’s target market is gateway cities in the American northeast, with direct flights to Bermuda.
The developer behind the new resort at the defunct Grand Atlantic site has said the project could woo investors for other properties sitting idle around Bermuda.
Contractors will start work this month at the Warwick housing complex, with a view to having 70 hotel rooms ready at the Bermudiana Beach Resort for the summer of 2020, according to Robert MacLellan, developer for the site.
“Bermudiana is bigger than the one project,” Mr MacLellan said on Friday.
“If this can work, there are other shuttered properties in Bermuda which could follow a similar business model.”
Mr MacLellan, who is the managing director of MacLellan & Associates, a leading Caribbean tourism firm, added: “We have had approaches from other people saying they’re watching closely and we hope this works, because we’re considering similar things.”
The developer, who was relocating from the hurricane- damaged Grand Bahama when he spoke to The Royal Gazette, declined to reveal specific firms contemplating following suit.
He said: “That’s up to individual developers. I think they’re all going to watch and see what happens.”
More than five years after his firm signed an agreement with the Bermuda Government, Mr MacLellan said the project was moving ahead under a “co-developer approach, where the property is retained in the ownership of a Bermuda Housing Corporation subsidiary and the benefits primarily go to BHC”.
Mr MacLellan described a swapping of risk and reward to ensure the conversion of a white-elephant development.
Grand Atlantic was acclaimed as affordable housing when it opened in 2011 under the Progressive Labour Party government. Only two out of its 78 condos were sold.
The project became fodder for recriminations between the PLP and One Bermuda Alliance administrations, especially over claims when the OBA was in opposition that the adjacent cliffs were unstable.
Lieutenant-Colonel David Burch, the Minister of Public Works, said at a Bermudiana ribbon-cutting ceremony in July that the project had been a victim of “sabotage”.
Mr MacLellan said the top headache had been securing viable financing for a resort along what he called “the golden mile” for hotel development on the South Shore.
Under the present arrangement, BHC, which committed $7.4 million to get the project under way, is to reap 82 per cent of the profits in condo sales.
Mr MacLellan said the arrangement would assign “the marketing, the design and the operations expertise” to codevelopers, comprising MacLellan & Associates and architects OBMI Bermuda with Coldwell Banker, until “all of the condos are sold and operating as hotel inventory”.
He added: “Once the hotel is completely up and running, and all of the condos are sold and operating as hotel inventory, then the co-developers take over the ownership of the ongoing company so that BHC, through its subsidiary, has no ongoing liabilities. They are not in the hotel business. That’s how we have balanced the risk and rewards.
“That’s the long term. In the short term, while you’re selling condos, then the profit from any hotel operation goes to BHC as well. That covers it both ways: money coming in from the hotel, money coming in from condo sales. That we see as a 3½ year period, so we will be in this scenario where the company is both a developer and a hotel operator, until they are all sold. Those that are not sold will be used as hotel inventory, until they are sold.”
Condos sold as vacation homes would have a maximum of 90 nights per year owner occupancy, but owners derive a portion of income from their hotel use.
Mr MacLellan was optimistic that the agreement would bring swift results.
He said: “I’ve been in the islands 22 years doing resort development. A lot of it has been this condo-hotel model, which is easier to finance.”
Asked if the arrangement would cover the build cost of the original property, Mr MacLellan conceded: “We’d be lucky.
“But it certainly goes a long way to recovering all of that. Plus, Bermuda is the beneficiary of the mid-market hotel that would be very difficult to achieve in any way.”
Mr MacLellan said the project had been “value engineered to death”. He added: “The big thing that anybody’s made a mistake with in Bermuda is not knowing the cost of what they were doing and then running over on their budget.”
The developer said he also took comfort in having “the big Hilton machine behind us” of the global hotel chain.
“The Hilton franchise gives us access to the global sales reservations, and the loyalty programme,” he said.
“Hotel loyalty programmes are very important, because people tend to spend their air miles and their hotel points in the quieter parts of the year, when they can fly farther and stay longer, using their points. That’s of great benefit to us.”
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