The inauguration of St. Kitts’ second cruise pier and first-ever four-ship day (see Tuesday paper) should serve as a wakeup call. Other destinations in the vicinity are most definitely not sitting still.
The news comes as St. Maarten is expecting a decline in cruise calls by 10.6 per cent and in number of passengers by 15.4 per cent during the current high season between November 1 and April 30, compared to the same period a year ago. For all of 2020 the Florida-Caribbean Cruise Association (FCCA) even foresees 25-30 per cent fewer calls.
That is a serious drop, mostly caused by a switch to private cruise line islands and other destinations in the area like Tortola coming back online after recovering from the hurricanes of September 2017.
Mind you, itineraries with St. Kitts as stop usually include St. Maarten too and there are five ships in port today, so there is certainly no reason for panic. However, the Harbour Group of Companies will need investments to maintain its competitive edge.
With an estimated debt of US $180-$200 million, more financing may not be easy to obtain, so the process to submit a request for proposals (RFP) regarding a 20- to 25-year operating concession has started. Stakeholders such as taxi driver associations and tour operators are generally against the idea of a third party running the harbour, while FCCA members don’t seem to favour bringing in an “outsider” and may make a bid themselves.
The most interested candidate appears to be Global Port Holdings (GPH), which is not only willing to take over the debt but also invest $65-$85 million in repairing the damaged pier and extending the other one to add two berths, plus $25 million for new cranes to improve the cargo section. In total it regards more than US $250 million, which – no matter how you look at it – is a lot of money.
Of course, there are big risks involved, like potential increases of passenger head taxes and mooring fees for cruise lines but also freight handling charges, with all possible consequences. But all these things can be contractually stipulated, while people should realise that GPH is obviously wanting to do this because it sees more, not less business and earnings.
Fear of “declaring war” on FCCA is probably unjustified, also in view of a recent agreement signed between GPH and Royal Caribbean Cruise Lines (RCCL) to complete the new pier in Antigua. Don’t forget either that allegedly having been defrauded of $10 million as again claimed in court this week and losing a similar amount on the “botched” Zebec deal didn’t exactly help the financial situation of the government-owned company.
Perhaps under the circumstances a strategic partnership with the necessary safeguards is worth considering.
