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.