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.
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.