Baha Mar has moved to reassure staff that it is "working towards a resolution" with hotel management company Morgans Hotel Group after the latter company disclosed in court filings that it had moved to terminate its hotel management agreement with the mega-resort.
In an email sent to staff at the resort last week, Tom Dunlap, president of Baha Mar, noted that the resort is still on track for a December 2014 opening, as initially planned.
His comments indicating that all may not be lost in the almost three-year-long relationship between the resort and the management group have come as speculation has grown concerning the apparent termination of the hotel management agreement (HMA) between Morgans and Baha Mar.
The possible cessation indicates that the resort project is at the very least facing greater headwinds in its plans to achieve its intended opening date, and sources suggested that while the situation may be sensitive, it would be incumbent upon Baha Mar to bring more clarity to the situation via public comments in short order, given the magnitude of the project and its anticipated impact on the local economy.
Neither Baha Mar nor Morgans Hotel Group have been willing to comment publicly on the disagreement between the two parties since its disclosure in this newspaper last week.
In his memo to staff, Dunlap said: "I wanted to touch base regarding the last couple of days' news articles regarding Mondrian and Baha Mar. To overly simplify the subject, Baha Mar and Mondrian's ownership, Morgans Hotel Group, have a commercial, business disagreement.
"The Baha Mar project is a significant undertaking with many, many moving parts. Disagreements can and will happen in the normal course of business. That said, both of the groups are in daily communication and working towards a resolution. Cate (Farmer, general manager of the Mondrian at Baha Mar) and the Mondrian team are here and manning their stations as usual."
Guardian Business revealed last week that court filings in the New York State Supreme Court in April describe an ongoing legal dispute between Morgans Hotel Group and Baha Mar after the latter was unable to obtain a non-disturbance agreement (NDA) with its lender, the Export Import Bank of China (EXIMBank). Baha Mar's 2011 HMA with Morgans Hotel Group called for a non-disturbance agreement to be obtained by Baha Mar with its lender within six months of its signing.
This agreement would have protected Morgans Hotel Group from interference in the operation of the hotel in the case of a default or foreclosure on the $2.6 billion loan provided by EXIMBank.
Baha Mar informed Morgans Hotel Group of its inability to obtain the NDA in March 2014.
Within days of notifying Morgans, the company sent Baha Mar a notice informing the company that their hotel management agreement would terminate effective April 25.
After this, Morgans Hotel Group sought a restraining order in the New York State Supreme Court stopping Baha Mar from drawing down on a letter of credit that had been put up in the name of Baha Mar by Morgans with Deutsche Bank Trust Company Americas. The restraining order claimed that Baha Mar was not entitled to the funds.
The disclosure of an apparent rupturing of the two side's business relationship came as news to many, including resort staff and government officials.
In his email to staff, Dunlap described the progress the resort is making.
"Construction continues daily (and nightly as you will note from time to time!) on our Mondrian Hotel. The steel frame of the signature wave roof is almost complete...Baha Mar is shaping up in such a beautiful way; the metal roof and paint on the Grand Hyatt, hand railings are being installed on the guest room balconies, swimming pools are being formed and shaped, the parking and roadway asphalt are complete around the convention center, landscape along new WBS is being installed between the straw market and the new Mondrian and convention center entry.
"Inside the buildings, CCA (China Construction America, Baha Mar's general contractor) and teams have just completed and turned over the first mechanical and electrical rooms, and they look wonderful as well. BEC turned on the permanent power today - we are on the grid!"
He thanked staff for their efforts
"The collective horsepower of the Baha Mar team has never been stronger and is picking up speed each day. Hang on for a wonderful, memorable ride! Thanks for being here to take the journey with us," said Dunlap.
Morgans Hotel Group was one of three hotel brand partners who signed on with Baha Mar in 2011 to manage hotels on the property on Cable Beach. Others include Hyatt Hotels Corporation and Rosewood Hotels and Resorts.

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