In recent weeks the administration has initiated a flurry of activity, above and below deck, on subjects as varied as immigration policy, wiretapping, pension reform and liquor licensing. Additionally, the government has approved an outline business case on George Town cruise berthing facilities. Consulting firm PwC recommends partnering with a cruise industry investor to build two piers in Hog Sty Bay. At the same time, the Cayman Islands Airports Authority published a strategic outline case for developing the country’s three airports.
Changes of this magnitude, when taken in the aggregate, suggest a fundamentally different course for these islands going forward.
While PwC, we have no reason to doubt, has produced a competent report, its terms of reference did not include fundamental issues such as whether the tourism sector going forward in Cayman should be cruise-ship based or focused on a higher-demographic visitor, namely the more wealthy guests who fly on our national airline, stay in our hotels and spend more in our retail outlets, restaurants and water sports attractions. The premise has always been that we can cater to both, but it is not clear that in the long term the two are compatible. In effect, we’ve chosen not to choose.
We are not suggesting that the government should further delay the on-again, off-again cruise berthing procurement process of prior years. The forum for this basic conversation is the public consultation period that begins Tuesday. Government leaders should be recognized for initiating a proper procurement process aimed at providing “value for money,” requiring expert advice and incorporating public input.
According to the PwC business case, consultants weighed eight scenarios ranging from maintaining the status quo to building three cruise piers while relocating cargo operations. They concluded that the best two options are to build two cruise piers for $75 million to $100 million or to pursue the comparably low-cost alternative of enhancing the existing tendering-oriented facilities.
The price doesn’t include some $15 million to $20 million needed to make the waterfront pedestrian friendly, nor untold private sector investments to prepare the district for an influx of cruise business. Consultants say it is absolutely necessary to solve downtown Cayman’s problems with traffic, congestion and pedestrian safety – regardless of the cruise project. The price also doesn’t include the unknown cost of relocating cargo operations, the need for which consultants also say is not contingent on cruise facilities.
Without moving the cargo operations, not a single one of the scenarios considered by PwC was deemed a “long-term solution.”
Still, the report states that over 20 years, building two piers will generate $250 million of economic benefits to Cayman, $69 million of which depends on whether an extra hour on Grand Cayman will entice cruise visitors to take more tours. The estimated gains are based on the consultant’s major assumptions that cruise arrivals will increase by 1 percent per year with berthing and fall by 1 percent per year without.
It is by no means clear, regardless of the PwC report and the government’s intentions, that we will be able to entice the cruise ship industry to fund these piers on terms favorable to these islands. Negotiating from a position of weakness (meaning empty government coffers) is always a risky proposition.
We’ve heard from the consultants; we’ve heard from the government; now it’s time to hear from the people.