Carnival: Pier development without retail ‘very rare’

carnival-pier-development-cayman-islands-sml.jpg

Government may struggle to find a cruise line interested in splashing out up to $200 million to build new piers in George Town without any retail development attached, comments from the biggest player in the industry suggest. 

A spokesman for Carnival Cruise Lines could not think of a single example where the company had built piers that did not include a retail element.  

Roger Frizzell, senior vice president and chief communications officer for Carnival Corporation told the Caymanian Compass it was “very rare,” describing the concept of a “pier only” development as “difficult” though he agreed a share of the passenger head tax might make it a more acceptable proposition. 

The preferred formula for building the new dock, outlined in a business case produced by PwC for the government, is for a private sector partner – likely a cruise line or consortium of cruise lines – to pay to build the piers.  

With Carnival and Royal Caribbean currently responsible for around 80 percent of Cayman’s cruise passenger numbers, it is likely that one or both of those companies would have to be involved. 

The proposed payoff is the chance to collect berthing fees and passenger head tax from other cruise ships that use the piers.  

Mr. Frizzell did not rule out the prospect of the company getting involved in the Cayman project. 

But he said onshore retail was the favored structure to make piers, like the ones proposed in Cayman, financially viable. 

He added that the payment of head tax could possibly get round that concern, saying, “there could be ways to make an attractive agreement.” 

However, he admitted, “It is very rare not to have some retail aspect. Traditionally, most ports around the world have a retail element to help make it financially viable.” 

Tourism Minister Moses Kirkconnell has been clear from day one that there will be no upland development with the new piers, which are being built to help stimulate business growth in George Town. 

That approach was endorsed by PwC, with consultant Simon Conway explaining at a public meeting earlier this month that it did not make sense to have a shore-side retail development, owned by the cruise company, competing with the local traders the pier was designed to help. 

The question that remains is whether the alternative incentives will be enough to entice Carnival or Royal Caribbean to get involved when the project goes out to bid next year. Without their involvement, the proposed formula would likely have to be rethought. 

Mr. Frizzell said Carnival was not against the concept of working with another cruise line and had done so in the past in Marce and St. Maarten. He said in other ports Carnival did not seek to block other cruise lines from using facilities. 

“We don’t control the berthing rights, but in return for our investment, we acquire preferential berthing that the port provides us through our agreement.” 

He said Cayman was currently the only major port without berthing facilities and agreed that Carnival would like to see something done. 

“Many port cities have at least two berths at a minimum. It ultimately benefits the passengers, crews and the economic vitality of the port city.” 

He said the development could lead to longer stays by cruise lines, including overnight. He added that changing Cayman’s gambling laws might assist the ships in staying longer. 

“There are some advantages by doing so which would allow us to open up our casino to our guests, but this certainly is not a pre-condition to an agreement. It is worth mentioning, however, that Bermuda just recently changed its anti-gambling laws to allow for this.” 

In 2012, Carnival brought nearly 900,000 passengers to Cayman – 58 percent of the overall total. Royal Caribbean and its affiliates brought over 300,000 – 20 percent of the total. 

Royal Caribbean did not respond to requests for someone to be interviewed for this article. 

carnival-pier-development-cayman-islands.jpg

Carnival and Royal Caribbean bring around 80 percent of Cayman’s cruise passengers to the island. – PHOTO: CHRIS COURT
0
0

6 COMMENTS

  1. No shopping/retail close by is like being all dressed up and no place to go. Whatever is unique to Cayman needs to be on that pier or very, very close by.

    0

    0
  2. That’s what happens when too much politics get in the way of commerce. Let the downtown traders compete like everybody else. If their product is solid, they will be left standing. Sheltering them from competition only breeds mediocre service we are offered left, right and centre.

    0

    0
  3. Without being in the position to pay for this on their own Cayman will not get everything they are asking for. Had the money that was spent on the schools and new admin building been used to build a pier the bucks would be rolling in now and that profit could have been used to build schools and upgrade the infrastructure without begging for outside help. Smart investors put their money into things that make money first before spending on things that don’t. Cayman needs people in charge that know how to manage money not just spend it.

    0

    0
  4. What is very rare is a pier without retail businesses managed/owned partially or totally by the cruise lines.
    The loan will not come cheap and very few locals (if any) will benefit in the long run. In many instances pier shop’s are franchises with the bulk of the profit going elsewhere to foreign entities.
    The times where the cruise lines business was made by selling the cruise trip itself is long gone. Nowadays their deal is to sell cheap cruises and make the most in commissions from the local providers who invest the most in equipment, take most of the risks and get the least amount of percentage.
    Any pier retail space will come to a great dent in the profits of the tenants. Not even a 50/50 deal is entertained here. The role of the players has changed with time. There was a time where they were looking for the best islands that offered something for their customers to do so they could sell the cruise itself. Now they have the captive audience and seem to be the islands that are trying to attract the cruises with the floating customer pool. Logically they decide where to go for the most profitable bid. We lost the negotiating power long time ago and we are set to loose more by hearing the Mermaids singing in the short run.

    0

    0
  5. Interesting article to read Sergio. 1 question I have about it is the article seems to say they built the terminal for 20 Million dollars can that be right? With a 200 Million Dollar estimate for Cayman’s.

    0

    0

Comments are closed.