Rebuilding Tourism, Fairmont Southampton & Reimagining Morgan’s Point Is Top Priority In 2023 Budget

Premier David Burt spoke of rebuilding  Bermuda Tourism Product.

Mr Speaker, after two challenging years in the world of tourism, 2022 became a pivotal year for the sector. Following the wide-scale deployment of COVID-19 vaccines and boosters, visitors began to take advantage of the resurgence of both domestic and international travel.

Mr Speaker, while Bermuda has not yet returned to 2019 visitor volumes, the island saw significant year over-year-growth in 2022 across key tourism measures, including air capacity,
leisure air visitors, and cruise travel.

When comparing 2022 to 2021, the total number of leisure air visitors was up 80%, total air capacity increased by 50%, and total cruise arrivals were 2,735% higher. Though significant increases were seen in 2022, year-end statistics
underscore that more work remains to be done before reaching the baseline numbers of 2019.

Mr Speaker, in 2023, the island can expect a historic increase in cruise arrivals, which will positively impact tax revenue and generate more visitor traffic to businesses at each port. This record cruise season will provide more funds to the Bermuda Tourism Authority’s
budget to execute the National Tourism Plan.

Mr Speaker, the island’s hotel inventory has been a limiting factor contributing to the challenge of securing a full return to 2019 air capacity levels. American Airlines’ service from Charlotte and British Airways’ London Heathrow gateway were bright spots in 2022,
allowing visitors additional connections throughout the United States and Europe. The Bermuda Tourism Authority will continue to support the Ministry of Transport through the Air Service Development Committee to identify needs, engage new and familiar partners
and create demand in order to make the case for expanded airlift as more hotel properties come online.

Mr Speaker, there is the continuing work to open the Bermudiana Beach Hotel; the
completion of phase 2 for the reopening of the St. George’s Club; and the progress of the Ariels Sands property. It is clear that there is significant potential for increases in employment in the hospitality sector in the coming years.

Mr Speaker, as indicated in November’s Throne Speech, to support additional investment in Bermuda’s tourism economy, the Government will make amendments to the Tourism
Investment Act to permit the Government greater discretion in the granting of relief under the Act to developers and those investing in attractions, restaurants and hotels. The aim of these amendments is to provide incentives for establishments to invest in upgrades and refurbishments for their properties and, in turn, create jobs while enhancing the overall product available to visitors. The mission of this Government is to create sustainable growth in Bermuda’s economy, and to do that we must be competitive with other jurisdictions competing with Bermuda for tourism investment. Right now, Bermuda is not competitive, and these changes will ensure that we attract investment to grow jobs and provide a brighter future for Bermuda’s tourism sector.

Fairmont Southampton

Mr Speaker, the redevelopment of the Fairmont Southampton hotel is eagerly awaited. In the months since this Honourable House considered the legislation to support the project,
lawyers, development consultants, bankers and technical officers have been heavily engaged in the preparation of the various agreements that will provide the framework for financing and development. Honourable Members will no doubt be aware that the process for the consideration of a revised Special Development Order has begun, with the first public consultation meeting
with the neighbouring residents set for early next week.

Further, Mr Speaker, Honourable Members will be invited to consider amendments to the Public Treasury (Administration and Payments) Act 1969 to strengthen the protections for
the Government of Bermuda in the provision of the $75m guarantee of local lending to support the redevelopment project. The unique arrangement for the repayment of that loan requires our legislation to be modified to facilitate the structure of the loan agreement.

The proposed changes will add necessary certainty and security as the Government is determined to apply best practice and fulfil all necessary due diligence as it is the people of Bermuda who are supporting this critical redevelopment project.

Mr Speaker, confidence remains high that construction will begin in the 2nd quarter of this year, and in preparation for this commencement, the developers have been repairing construction costs. The volatility in capital markets delayed the confirmation of financing, but it is a testament to the developers and their investors’ confidence in Bermuda, that the capital for the project’s completion has been secured.

Mr Speaker, 2024 completion remains the target, and I can assure the people of Bermuda that all parties have demonstrably committed to advancing this project. Its economic importance has been magnified in recent years, as we struggle to maintain key airlift and
grow Bermuda’s market share in the meeting and large group business.

Reimagining Morgan’s Point

Mr Speaker, late last year in this Honourable House we passed the Morgan’s Point Company Bill to enable the people of Bermuda to take control of the property. Today, as part of this
budget statement, I’m pleased to share with the public the re-imagined vision led by the Bermuda Progressive Labour Party Government, which has been approved by the Cabinet.

Mr Speaker, in light of what was previously proposed at the site, we should begin with what the project will not be. Phase one of the redevelopment plan will not involve the construction
of a hotel. We are also not proposing at this stage that there will be condominiums for sale.

Both concepts have been thoroughly vetted by our advisors and, as a government, we have determined that neither represents the best use of the site at this time. Instead, Mr Speaker, we have targeted this mixed-use site for the development of a range of residential rental apartments including a component for seniors’ housing, with an active and engaging Amenities District filled with commercial retail and restaurant opportunities at its centre. To be clear, Mr Speaker, the newly proposed Morgan’s Point Project will not be operated as a gated community, and the Amenities District will be open to all Bermuda residents. The new enterprise will not only put the site into productive use but will also address several long-standing key goals of this Government regarding economic stimulus
and increasing housing supply. At the centre of the redevelopment plan is the concept of Live, Work, Play – all onsite.

Goals & Plan

Mr Speaker, the goals moving forward are simple: we want to put the site into productive use and generate cash returns that more than cover the costs of construction so that Bermuda can recoup the funds that were paid out for the $165 million guarantee agreed by the former government. The vision for operating the site is to provide opportunities in the hospitality, retail and services sectors while also offering a concentrated residential community for the taxi, minibus and, in due course, water taxi and ferry industry to target. So, Mr Speaker, how do we get there?

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