Pier project hinges on cruise line cooperation

Tourism chiefs keen to avoid a monopoly

A project to bring two new cruise piers to George Town will require the direct involvement or support of both Carnival and Royal Caribbean cruise lines, collectively responsible for the bulk of Cayman’s cruise passenger numbers.

Tourism bosses insist they will not allow a single cruise line exclusive control of the dock in order to avoid a monopoly that could cause rival cruise lines to leave Cayman. 

They accept that any partnership with the private sector will have to be halted if it risks putting one of the major cruise lines at a competitive disadvantage. A consortium involving several cruise lines appears the preferred option. 

Consultants have identified a public-private partnership as the best model for financing the project, which they now say could cost up to US$200 million. PwC recommended that government’s partner on the project should either be a cruise line or have the “ability to control cruise volumes.” 

Tourism Minister Moses Kirkconnell, chief officer Stran Bodden and PwC’s Simon Conway addressed public questions and concerns on a host of issues connected to the project at a meeting in Red Bay on Tuesday. 

 

They revealed:  

The total cost of the project could be as much as US$200 million. 

A major facelift for George Town, including pedestrian areas on the waterfront, is considered a “pre-requisite” of cruise berthing. 

If an environmental study identifies substantial risks, such as significant erosion of Seven Mile Beach, the berthing project will not go ahead. 

Private entities that want to be involved in the project will have to demonstrate they can “control cruise volumes.”  

The piers will likely allow large mega-ships, such as Royal Caribbean’s Oasis line, to come to Cayman. 

Piers expected to last for at least 50 years. 

Boosting cruise tourism considered the best option for creating entrepreneurial opportunities for locals. 

Mr. Conway said the “commercial risk” of allowing one cruise line control of the piers would be factored into the process of selecting a private partner. 

“The fundamental question is, could this process end up with one cruise line controlling the piers and potentially squeezing out others? The answer is no. If we are concerned that it is going that route, then it simply wouldn’t happen or we would find a way to avoid it.” 

He said Cayman needs to retain all of its existing cruise volume for the piers to be financially viable. With roughly 80 percent of the cruise volume coming from two cruise lines, Carnival and Royal Caribbean, their involvement is critical. 

Mr. Conway added: “Where we get to there is that the private proponent would have to be supported by the two major two lines.” 

The outline business case, produced by PwC, recommends that government proceed with two piers in George Town harbor, predicting this will inject between US$250 million and US$1.2 billion into the local economy and create up to 1,000 jobs within a 20 year period.  

Mr. Conway said it had not been a “no brainer” for PwC to recommend cruise berthing. And he added that developing George Town’s infrastructure to cope with the increased passengers would be necessary. 

Tourism Minister Moses Kirkconnell said the project was one part of a grand plan for George Town that will also involve the renovation of the Owen Roberts International Airport in an effort to boost more lucrative air arrivals. He said the redevelopment of the capital, including bringing in pedestrian only areas along the waterfront, was being discussed. 

And he hinted that the debate on Sunday trading and altering legislation to allow cruise ships to open in port could follow in an effort to persuade cruise lines to make longer stays in Grand Cayman. 

Mr. Kirkconnell insisted government was not focusing on cruise arrivals at the expense of bigger spending tourists arriving by air. 

“We want both, and we want to balance both and we believe we have the opportunity to do it.” 

He added: “What we do recognize about the cruise industry is the barrier for local entrepreneurs to get involved is lower. 

“There are not too many Caymanians that are going to be able to build a Ritz or be involved in that type of bricks and mortar, but more can get involved in ancillary businesses with cruise passengers.” 

Mr. Conway said the cruise industry tended to be resilient to economic downturns and spending from cruise tourists was “well dispersed within the economy.” 

Environmental concerns, including potential beach erosion caused by dredging the harbor to make way for the piers, will be addressed in detail at a second meeting on Nov. 20, which will help refine the scope of the environmental impact assessment. 

An appendix to the outline business case identified the design/build cost of the project as US$75 to $100 million. However, Mr. Conway indicated at Tuesday’s meeting that the total cost could be anywhere between $100 million and $200 million. 

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4 COMMENTS

  1. I don’t know about anyone else’s opinion but isn’t this just like reinventing the wheel. Why did PWC need to tell the CIG that Cruise piers where needed, I thought everyone knew this for years. And is it really rocket science to know that it will require a Private Public partnership to build it when everyone already knows that Cayman can’t afford it themselves nor can they borrow the money to do it. So this basically means that they need someone else to pay for it which by the way means that they will not be able to completely dictate the terms. I can only imagine how much PWC made from providing information to the CIG that is already commonly known.

    May small opinion is that they shouldn’t only be focused on GT for the piers, if it risks hurting SMB is the idea just going to be dropped or will they look at alternative locations such as the Red Bay idea that came up a little while back. And as far who’s to pay for it, why not make a public offering to sale shares to private investors so everyone rich or not could invest into it. Treat it as a startup business and raise the capital thru stock sales then build the damn thing when there’s enough capital to do it. This would give everyone a chance to own a piece of it as well as get a turnaround on their investment when the share prices go up which they will when it’s up and running.

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  2. Unfortunately the blasting in the harbor for the piers will hurt the scuba diving in Grand Cayman for many years as the work progresses much like it did after the blasting for the cruise lines initially which also destroyed the Balboa. Diving is a key attraction for Grand Cayman and divers. It would also hurt the industry that shuttles the patrons on and off the cruise lines currently. I’m sure everything will be measured and the right decision made accordingly. I have been on cruises that were shuttled and docked at the pier. The pier option is definitely more attractive to the cruise patrons as I was. Thanks for letting me voice my opinion.

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  3. Quote – A consortium involving several cruise lines appears the preferred option.

    I wonder how that might work when there seem to be only really two main players in the game who might be interested in funding the dock.

    Carnival Corporation plc, who own 11 different cruise brand names along with the Mahogany Bay resort in Roatan and the Grand Turk Cruise Center, and Royal Caribbean International.

    Be interesting to see how this pans out but it all looks a bit like wishful thinking to me. If the cruise dock was such a good business prospect why has DART not got involved? After all they already own a good chunk of Grand Cayman.

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  4. David, Many people may not remember this but Dart’s company Decco placed a bid to put up the money and build the Port. It was accepted by the CTC and CIG during the last administration but they backed out of it do to a public outcry and anti Dart demonstrations initiated by opposing politicians. Had Cayman went that route it would have most likely been completed by now and in good taste. I’m sure Dart wouldn’t touch it now with a 10 Foot poll and I find it hard to believe anyone else will after the way the CIG has demonstrated its lack of integrity when involved in a business partnership. They’ve proven time and again that they will back out of signed contracts, manipulate records and circumvent the law to sweeten deals to favor their side when it’s time to put up. Not to mention a deal made with one administration isn’t worth the paper it’s written on when the next administration hits office, so it’s not really good business to make a deal with the CIG that will go past the next election.

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