The fact that Boatswain’s Beach gets only $7.75 for every admission booked through a cruise line is a large reason revenue levels have not reached what was projected in the original business plan.
‘This is presently one of the biggest obstacles we have,’ said Boatswain’s Beach General Manager Ken Hydes in Finance Committee on Thursday.
Between 71 per cent and 72 per cent of all visitors to Boatswain’s Beach are booked through the cruise lines, Mr. Hydes said.
The information came out during debate on a supplemental appropriation loan in the amount of $3,740,000 to Cayman Turtle Farm (1983) Limited, the owner of Boatswain’s Beach. That amount brought the total cost to government for loans concerning the Boatswain’s Beach project during the 2006/07 financial year to CI$6,862,284.
Cayman Turtle Farm Ltd. Chairman of the Board Joel Walton broke down what the loan was needed for: $427,000 was for operation capital; $186,000 was for debt service of its bond; $953,000 for debt service to the bank; $830,000 for accounts payable to contractors; $124,000 for retention to contractors; and $602,000 for accounts payable to trade suppliers.
Leader of the Opposition McKeeva Bush led the questioning of why Boatswain’s Beach needs the loan. He asked when the contract was signed with the cruise lines for the $7.75 rate. Mr. Hydes said in September 2005.
Cruise lines were notified last October that the contracted rate will expire in October this year, Mr. Hydes said.
Minister of Tourism Charles Clifford said the original Boatswain’s Beach business plan accurately predicted the number of people that were expected to visit the facility, but that other assumptions in that plan were incorrect.
‘It wasn’t an issue of getting the numbers on the business plan, because those numbers are there,’ he said. ‘Numbers is not the issue and the failure to put the cruise tendering facility in West Bay is not the issue.’
Mr. Clifford said the admission fees on the business plan proved not to be realistic and had to be adjusted, which affected revenue.
Opposition MLA Cline Glidden Jr. asked why a two-year contract was signed in September 2005 at an amount that was less per person than the business plan called for.
Mr. Walton said that at the time, the facility was not complete and there were still issues concerning Hurricane Ivan to deal with. Boatswain’s Beach had to accept the lower rate because if its inability to get a higher rate due to the circumstances at the time, he said.
Mr. Clifford added that consideration for the local tour operators also was part of the decision.
‘Given that the facility wasn’t done, if we had forced the issue of the higher price, the cruise lines would have passed that on to local operators [by paying them less] and we weren’t prepared to do that,’ he said.
Mr. Glidden said it appeared then that a flawed business plan was not the reason that Boatswain’s Beach’s revenues were lower than expected, as Mr. Clifford had contended.
‘It wasn’t a faulty business plan that caused the problem,’ he said. ‘It was the [Turtle] Farm not being in a position to justify the price.’
When the contract expires at the end of October, a new price to the cruise lines will take effect. So far, only two cruise lines have signed a new contract.
Although he would not divulge the admission price under the new contracts because negotiations with other cruise lines are on going, Mr. Clifford said the rates would be significantly higher than they are now, but still not as high as the business plan projected.
Mr. Bush maintained the problem also dealt with having not enough people going to Boatswain’s Beach. More people, even at a lesser rate, could still give the facility the revenue it needed.
Mr. Bush contended the facility could be getting those additional people if the government had gone ahead with building the West Bay Cruise Tendering Facility, which the Florida Caribbean Cruise Association had already agreed to finance for $8 million.
Mr. Clifford said the cruise dock would not have helped because the cruise lines had said that passengers could not go directly from the boats to the West Bay dock and would instead have to land in George Town first and then go to the West Bay dock. The time involved in that would have been too long and would have cut down the length of the cruise passengers’ stay too much.
In the end, the supplemental appropriation for the facility was approved unanimously.