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Making Waves

March 11, 2010

MIAMI – Cruise ships making ports of call around the Caribbean Basin have grown from the size of floating hotels to floating villages in recent decades, requiring deeper harbors and longer berths in exchange for more and more passengers ready to spend money in these sunny destinations.

Scrambling to lure the new mega cruise ships that bring as many as 6,000 people at a time to spend the day, Caribbean countries have spent in the past three years or plan to spend almost $500 million. The port authorities have worked with the three big cruise lines that developed the giant ships, from Royal Caribbean’s Oasis of the Seas to the Disney Dream and the Carnival Dream.

The capital spending in Caribbean ports mirrors in many ways the investments being carried out in big cargo and container ports in South America to prepare for more trade and larger container vessels set to arrive after the Panama Canal expansion is completed in 2014.

Financial analysts say the money spent to attract the cruise vessels offers a boost to the small countries.

“The investments pay off immediately in income and employment and other social benefits,” said Michael Greve, a cruise industry analyst at Global Destinations Development LLC in Miami.

A City on a Ship

The largest of the mega-ships is the16-deck Royal Caribbean Oasis, which made its maiden voyage in early December from Port Everglades in Fort Lauderdale. With 2,700 staterooms, 5,400 passengers and half as many crewmembers, the Oasis offers plenty of diversions even if it is stormy outside: 24 restaurants, nightclubs and seven distinct “neighborhoods” under glass, from Central Park and Boardwalk to the Pool and Sports Zone and the Youth Zone. For one of its stops on the Western Caribbean itinerary, Royal Caribbean built a 260-acre private fun park on the secluded, mountainous western coast of Haiti.

Disney’s newest giant will entertain 4,000 passengers beginning in 2011, sailing from Port Canaveral to the Bahamas, including Disney’s private adventure island, Castaway Cay, near Great Abaco Island, a short sail from Nassau.

The Carnival Dream, completed in 2009, at 130,000 tons and with typical capacity of 3,600 passengers, sails from Port Canaveral on alternating weeklong voyages to the eastern and western Caribbean.

Upgrading services may be expensive, but it is necessary. At the December launch of the Oasis, Royal Caribbean International President and CEO Adam Goldstein told reporters safety, medical services and public health were crucial to the visiting passengers.

“Those are areas where we have to be really state-of-the-art and where we expect, through our partnerships with the destination, that our guests will be always very well looked after,” Goldstein said.

Big Ships, Big Bucks

Jamaica’s Tourism Ministry has set aside $87 million just to upgrade its crafts markets for the cruise visitors.

Authorities in the Bahamas spent $42 million on dredging to widen and deepen the channel to the Nassau harbor for the world’s largest class of vessels. Port authorities still plan to move the cargo terminal away from downtown Nassau and convert the old docks and straw market into an upgraded tourist zone.

Dredging to accommodate the Oasis at Charlotte Amalie in St. Thomas will cost more than a $500,000. The Ports of Charlotte Amalie Economic Development Group – a public private partnership – is working with the Virgin Islands Port Authority and West Indian Company Ltd., to ensure the port is ready for new jumbo cruise liners.

In Philipsburg, St. Maarten, A.C. Wathey Pier & Port Facility has completed a new pier and cruise terminal for the Oasis as part of a $50 million improvement project that includes a new trolley system.

On the Cayman Islands, plans are on the drawing board for a $180 million redevelopment of the port in downtown George Town that would separate the cargo and cruise facilities.

Port Everglades has spent $75 million to expand its cruise terminal to lure the world’s largest cruise ships. Port Everglades’ spokeswoman Ellen Kennedy said the Oasis is expected to generate an extra $6.2 million in revenue in the coming year. As part of the agreement, Royal Caribbean Cruises pledged to reimburse Port Everglades for 89 percent for the cost of the terminal expansion, and it is also guaranteeing passengers will increase five-fold within the first five years, Kennedy said. The South Florida port expects to pay for its investment through fees from the increased number of passengers sailing to and from the port on Royal Caribbean Cruises vessels.

A Boost for Local Economies

Spending by cruise passengers has become a mainstay for some Caribbean economies and the bigger the ship, the greater the revenue stream. In St. Thomas, the population of some 51,000 people increases by around 10 percent when the Oasis is in port of this U.S. Virgin Island. A recent study commissioned by the Florida-Caribbean Cruise Association reported passengers and crewmembers spent $2.3 billion during shore visits in the 29 principal Caribbean cruise ports from May 2008 through April 2009. The study placed the average cruise passenger spending at $97 a day at each Caribbean port of call, while a crewmember spends $75 per visit on an average.

On top of what the Caribbean countries invested and the money spent by tourists, the cruise lines paid out $280 million in the same period for services, supplies and local taxes. All of this spending comes on top of the investments made to upgrade berths, terminals and entertainment by islands that are part of the sweepstakes to attract the super cruise liners.

The Ship Building Boom

At the start of the century, when the global economic boom seemed endless, the cruise industry ordered 36 new ships costing $22 billion. Delivery started in 2008 and the last of the mega-vessels is expected in 2012 in what seems like a riskier strategy now because of the changing economy.

Still, Greve believes the recent investments in cruise ships and in cruise port facilities will pay off. “The industry will tell you that cruising is expected to continue to expand because it is a wonderful experience that generates a lot of return customers,” Greve said. “And only about 18 or 19 percent of Americans have been on a cruise, so there is room to grow.”

But the cruise business is known for occasionally sailing into the unexpected.

In December 2009, as the massive new Carnival Dream approached the port of San Juan, Puerto Rico, it gently collided with a huge adornment extending from the cruise terminal and spent the day at sea.

The Port of Jacksonville has been unable to become a homeport for the mega-vessels. Only ships measuring 170 feet (to the tip of their stacks) can cruise under the 175-foot high Dames Point suspension bridge over the St. John’s River leading to the existing berths. The port has been thwarted in its goal of building a cruise terminal east of the bridge because it cannot close a deal to acquire the land.

Author, Rick Eyerdam

Latin Trade Online, February 1, 2010


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