Grand Cayman’s hotel market has been experiencing significant activity over the past year, most notably at The Ritz-Carlton, Grand Cayman but also up-and-down the Seven Mile Beach corridor and across the island.
While the overall development sector continues to be relatively unremarkable, lately it seems that hotels throughout Grand Cayman are making contruction-related news.
The 31 October acquisition of the Ritz by a US private equity firm was a definitive moment in the ongoing legal struggle involving Five Mile Capital Partners (and its Cayman affiliate RC Cayman Holdings), Ritz developer Michael Ryan and a network of companies he formerly controlled.
Farther south, demolition activity at the former Hyatt has drawn the attention of motorists commuting up and down the Esterley Tibbetts Highway. To the north, the former Courtyard by Marriott awaits redevelopment by the Dart Group into a new resort.
A familiar brand is returning to the Island, as the Grand Caymanian Resort is becoming a Holiday Inn.
New stakeholders in the Grand Cayman Marriott Beach Resort provided capital for significant updates to the property, which had been at risk of closing. Meanwhile, Comfort Suites and Westin Grand Cayman have been undergoing renovations of their own.
To the east, Morritt Properties has announced major projects to add on to its Colliers resort.
Five Mile’s takeover of the Ritz property hasn’t been completely amicable, and disputes over debts have occurred in the courts and the media.
Nevertheless, The Ritz-Carlton management company maintains control over the resort’s operations, and the new owners say they plan on investing in improvements to the property over the next several years, possibly including new hard court tennis courts and creating an 18-hole golf course.
Representatives from the US private equity firm tossed out figures in the range of US$7 million to US$10 million in the near term, and US$20 million to US$30 million during the next few years.
At a 31 October auction, the company purchased the property for US$177.5 million.
RC Cayman was the secured creditor of some US$250 million for receivership companies formerly controlled by Mr. Ryan, the Ritz developer.
A Five Mile representative has said the firm’s plan is to hold the asset for five to 10 years – in line with all of its acquisitions.
Recent renovations to the Ritz include updates to Seven steakhouse, Silver Palm Lounge and Tycoon sushi restaurant. Jaime Moench, director of sales and marketing for The Ritz-Carlton, Grand Cayman, said Blue by Eric Ripert is undergoing renovations and is set to open in early December. She said guest rooms renovations will begin early summer 2013, in conjunction with ongoing improvements to the pool and beach area.
All of those projects are part of the resort’s long-term management strategy, which is planned and executed over the long term, and not necessarily contingent on the recent change in ownership.
In addition to those more routine updates, the Five Mile representatives mentioned the possible addition of hard court tennis courts, building out the Deckhouses and turning the nine-hole Blue Tip golf course into an 18-hole course with the cooperation of the “neighbouring landowner”.
To the north of Blue Tip is the 18-hole North Sound Club, which was also developed by Mr. Ryan and in which the Dart Group invested earlier this year. To the south of Blue Tip is vacant land.
Previously, Mr. Ryan had intentions to combine the North Sound Club with Blue Tip and make it a private course. However, Dart Realty CEO Mark VanDevelde has said his company is insistent on keeping the North Sound Club as a public course.
Five Mile and Premier McKeeva Bush disagree on a couple of points related to the acquisition of the Ritz, namely its US$177.5 million valuation and whether the company should pay some $6 million in deferred duty payments the government has alleged it was owed by the receivership companies.
On the former point, the premier has said he doesn’t believe that the fair value of the hotel could have dropped from US$468 million (according to a valuation in 2007) to US$177.5 million in 2012. The company says the lower more recent figure was calculated by a local firm and OK’d in writing by the government’s Valuation and Estates Office.
On the latter point, the premier has said the company should pay the $6 million in deferred duty, while Five Mile says it has no legal obligation to do so. There has been some back-and-forth in the local media about how responsive the government has been to the company’s overtures on resolving the duty debt, with Mr. Bush saying the company’s proposals for concessions were simply unacceptable, and the company saying Mr. Bush simply did not negotiate after receiving the initial offer.
In the meantime, the Cayman Islands Grand Court is considering claims and counterclaims involving cash and assets, in a case pitting the receivership companies against Mr. Ryan and companies he still controls.
This fall, workers began a partial demolition of the former Hyatt property on Esterley Tibbetts Highway. While owners Embassy Investments have refrained from speaking to the press about details of the project, sources say the owners intend to redevelop the site into a new business hotel.
In November, the premier told an audience at an International Scuba Diving Hall of Fame banquet that the old Hyatt is set to become a Hilton. Later a representative of the old Hyatt owners said no contracts have been signed.
Sources in the property industry have said the owners intend to redevelop the property into a four-star, 168-room business hotel and spa, making use of the existing buildings and perhaps constructing two new buildings.
In a column that ran in the Caymanian Compass in October, RE/MAX broker/owner James Bovell wrote: “Owners have revealed that construction of a new four-star business hotel with conference facilities is in the works. The brand of this new hotel has not yet been revealed; however, the owners have indicated that there may also be new residential offerings, as well as investment in the golf course. This is a good sign of investors’ confidence in the Cayman Islands.”
At the same scuba event in November where the premier mentioned the Hyatt becoming a Hilton, Mr. Bush also linked the Dart’s former Courtyard by Marriott property to US-based boutique hotel brand Kimpton Hotels & Restaurants.
Last fall, workers carried out an interior demolition of the former Courtyard by Marriott property – which was originally branded as a Holiday Inn. The redevelopment of the hotel is part of the For Cayman Investment Alliance between Dart and government.
Holiday Inn Resort Grand Cayman returns
The resort, which fronts the North Sound at 278 Crighton Drive, Crystal Harbour, Cayman Islands, will undergo a variety of modifications in order to meet standards set by the franchise’s parent company Intercontinental Hotels Group and the Holiday Inn Resort Collection.
The enhancements include free wireless Internet access in all rooms, public areas and meeting spaces; expanded food and beverage options; children’s activity programmes; water features on the main pool deck; upgraded bath amenities; upgraded meeting space; and Holiday Inn Resort’s bedding packages.
The Grand Caymanian Ltd. purchased the resort in 2010. US resort management company Crestline Hotels & Resorts will be the hotel operator.
When it opened on Seven Mile Beach in August 1972, the Holiday Inn was the first internationally branded hotel in the Cayman Islands. The original Holiday Inn was demolished in 1998 to make way for The Ritz-Carlton, Grand Cayman. A new Holiday Inn was built and opened in 2000. It later became the Courtyard by Marriott, which was ruined by Hurricane Paloma in 2008 and is being redeveloped by Dart.
Last November, it was announced that a group of investors had bought a piece of the Grand Cayman Marriott Beach Resort. Local businessmen Gene Thompson and Harry Chandi helped facilitate the recapitalisation of the resort by Private Equity Group, a private equity firm based in Fort Myers, Florida.
Mr. Chandi’s involvement in the project may have helped him gain Caymanian status via grant by Cabinet this November. During the Legislative Assembly debate over Cabinet’s proposal to grant Mr. Chandi status, Mr. Bush named the Marriott project among Mr. Chandi’s achievements, saying the hotel was bound to close in a matter of weeks before the Indian-born businessman stepped in to help.
The capital injection was to help fund renovations beginning this summer.
This fall, Comfort Suites Seven Mile Beach finished a yearlong renovation project that cost some US$2 million. Improvements included remodelling all of the hotel’s rooms, improving the breakfast room, and adding a gym and private business centre.
The Westin Grand Cayman Seven Mile Beach Resort and Spa is set to wrap up its own $8 million renovation project in January, and now has a new name, formerly being called the Westin Casuarina. The renovation project includes improvements to all of the guest rooms, suites, public spaces, meeting spaces, the fitness centre and swimming pool.
In April, David Morritt welcomed guests and officials to the ground-breaking ceremony for the first phase of a planned $58 million investment into Morritt Properties’ East End development. The first phase of the project is “The Londoner”, a five-storey seaside apartment building with 35 units.
Over five to 10 years, Mr. Morritt also plans to build another seven buildings and replace the main reception building with a 7-storey building.