Report: Cruise piers will boost economy

Project estimated to create 1,000 jobs

cruise ships in cayman

 

Tourism chiefs will move ahead with plans to build two new cruise piers in George Town harbor after a consultant’s report estimated the project would create nearly 1,000 jobs and inject $250 million into the economy over a 20-year-period. 

The consultants recommended the design and build of the berthing facilities be entirely financed by a private partner, most likely a cruise line or consortium of cruise lines. 

An outline business case, produced by PwC, examined various options, including leaving the port as it is, and recommended government proceed with the construction of two new piers, financed through a partnership with the cruise industry.  

The production of the report was required under strict new accountability regulations for major infrastructure projects.  

The next step of that process involves public consultation, beginning with the presentation of the business case at Mary Miller Hall in Red Bay on Nov. 5. An environmental impact assessment will follow before an open bidding process in2014, with construction likely to begin in 2015. 

The public private partnership, identified in the report as the preferred financing option, would involve government ceding direct control of the cruise port for a lease period of at least 20 years. The government would also give up a share of the per-passenger “head tax” in return for a private sector partner providing the cash to build the port – estimated at up to $100 million by the consultants. 

Analysis by PwC concluded that despite the loss of a share of the passenger taxes, a vast increase in arrivals would mean a net gain for government coffers. When the wider economic impact was considered, including tourist spending at businesses around the island, the consultants predicted an overall economic gain of $250 million. 

That estimate was based on an anticipated decline in arrivals of 1 percent per year, bottoming out at 1 million if no action was taken, compared with a 1 percent annual increase up to a maximum of 2.3 million passengers if the new piers are built. When the consultants considered an “upside” scenario using a 3 percent growth and decline rate, they predicted an economic benfit of $1,196 million over 20 years from the piers. 

The consultants acknowledged that it was almost “impossible to predict” the level and rate of decline of cruise numbers if no piers were built. 

But they concluded, based partly on feedback from cruise lines and an industry shift toward mega ships that require shore-side docking, that destinations without proper berthing facilities would become less attractive over time. 

The report also suggested that aligning Cayman’s financial interests with those of the cruise industry, through a public private partnership, would be the best way to ensure the long-term future of cruise tourism. 

It states: “In broad terms there could be expected to be a continuation of the recent trend of cruise lines removing the Cayman Islands from itineraries as newer, larger, ships are deployed on their Caribbean routes and older, smaller, vessels are redeployed to other regions.  

“This trend may not be consistent, for example a rebound in visitors is expected in 2014-2017 due to geopolitical issues, but over the long term the Cayman Islands may be expected to lose market share without cruise berthing and without the equally important financial incentives for cruise lines from a partnering arrangement.” 

From a list of eight potential options, the consultants narrowed the scope downto three possibilities – two piers, a single pier or an enhanced version of the status quo. 

The option of building one pier, with a view to building a second pier in the future, was dismissed because consultants concluded it would actually harm the industry. They felt cruise lines that couldn’t use the pier would pull out of the Cayman Islands because they would be at a competitive disadvantage. Ultimately the choice came down to making minor upgrades to the current terminal and continuing to use tender boats to bring passengers ashore or building the two new piers.  

Though the consultants concluded building two new piers made the most economic sense, they highlighted potential pitfalls, including the impact on George Town of a surge in visitor numbers. 

The report reveals that government is considering making pedestrian areas of all or part of the waterfront and building a network of bypasses around the city center at an additional cost of around $15 million to $20 million to address the issue. 

It adds that the two piers could become “uneconomical and a significant financial burden for the Cayman Islands Government should cruise tourist levels, and related revenue, be significantly below forecast.” The report recommends an open, competitive bidding process to identify a private sector partner. It suggests an independent “fairness auditor” be appointed to oversee the bid. 

According to the report, the winning bidder would:  

Have exclusive rights to the use of the piers during the public private partnership period; 

Design and build the piers according to specifications to be agreed with government and the Port Authority; 

Pay for all design, construction, maintenance and operating costs for the piers; 

Operate and maintain the pier themselves or hire the Port Authority to operate and maintain them; 

Use the pier for berthing their own cruise ships and, at their discretion, ships from other cruise lines in return for berthage fees; 

Keep all berthage fees paid by cruise lines for use of the piers; 

Hand back the piers to the Cayman Islands government at the end of the PPP period in a condition to be specified in the agreement 

The preferred option leaves the door open for relocating the cargo dock in the future but not as part of the current project. 

Tourism Minister Moses Kirkconnell said, “The process being followed did not start out with the presumption that cruise berthing is required. Rather, each option was carefully examined and consideration was given to factors such as whether the facility could be provided without increasing government’s debt, whether it would be technically feasible and could any detrimental environmental effects be mitigated.” 

cruise ship cayman islands

The consultants recommended the design and build of the berthing facilities be entirely financed by a private partner, most likely a cruise line or consortium of cruise lines. – Photo: Chris Court
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5 COMMENTS

  1. Everything sounds good so far except its taking so long. Oh well we are closer. As I am reaching 60 at the end of the year and I start thinking as an older person. I would love to see more outside cafes . Maybe some of those trees that are unusual to Fla. How about lots of seating like the ones you placed on the dock ? You can see the difference that seating and shade has made on the dock for the elderly and mothers of children .
    It would be nice to have some of Camana Bay landscaping ideas where children can have a little sprinkler system to keep them cool and close to where parents and grandparents can seat in comfort with a coffee or soda. After closing the road we should allow golf carts as a means of transport in and around town on the harbor. no more vehicles in the area. Thank you for allowing me a suggestion.

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  2. I’m just curious about one point here.

    Considering that the cruise lines have shown little or no interest in this project to date could the Hon Minister please tell us all what he thinks will change their minds and get them to back it now?

    About the only thing I can see that would prompt them to stump up the cash is the kind of deal that created the Grand Turk Cruise Center and Mahogany Bay on Roatan. Is that what is being proposed?

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  3. Let’s keep discussing, analyzing, much more consulting, more consulting on both the airport and cruise piers. By the time, if and when, these government officials come to a decision, a single man fishing in a dingy will be the only boat in Georgetown waters and planes going to Little Cayman and Cayman Brac will be the only planes using the runways. Tourism will be totally non existent Thank you very much

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  4. Don’t bother with the airport upgrade. After the cruise ship docks are done there wont be enough people using the airport to make the upgrades financially rewarding. People come to Grand Cayman for a week or weeks at a time for holiday because of the safety of the island and because it is not that hard to avoid the cruise ship passengers if you really want to. This will no be able to be done with that many cruise ships coming to the island and we all know how safe Grand Cayman has become from where it was 10-15 or even 20 years ago.

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  5. I wonder if deep thoughts have been in place in regards to the short term rewards for the Islands and its people, versus the longer term environmental impact. Also I question the quality of our visitors with so much development planned. Do the visitors come to experience more jewelery stores, coffee shops, T- Shirt shops, caged dolphins and crowded beaches like many other islands or are they seeking interaction with nature, pristine reefs,abundance of fish, clear waters and clean environment?
    When it comes to nature an innocent until proven guilty approach is plain dangerous.
    We may possible end up with big docks, airport and many hotels but no natural attractions to give tourists a reason to visit us anymore.
    Of course, many foreign business owners my have the option to go back where they came from or seek fortune elsewhere. But, what about those of us that have only these islands to stay? I am not sure what the right answer is. However for starters to make the island more attractive to tourism, I would like to see it cleaner, no crime and residents obeying all the littering and traffic laws. We do not need development to start that. Just a 180 degree turn in manners and ethics will do.

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