Priority berthing rights and a long-term waiver on docking surcharges would be the likely pay off for any cruise line that agrees to build new pier facilities in Grand Cayman.
A competitive bidding process for the project, set to begin shortly, could involve as many as four separate cruise lines. The bid will be open to any interested parties, but the cruise lines have an “inherent advantage” because of their ability to guarantee passengers, Cabinet Minister Cline Glidden said last week.
Mr. Glidden, whose ministry has responsibility for tourism, dismissed suggestions that the formula could create a virtual monopoly for a single cruise line, causing competitors to take their ships elsewhere.
The outline plan still involves two piers, each capable of accommodating two ships in George Town harbour. But the new formula for the bidding process opens up the possibility of two separate cruise lines building the individual piers.
Regardless of whether one or more cruise lines get the contract there will be plenty of capacity to accommodate the others, Mr. Glidden said.
Laying out for the first time how a deal with the cruise lines could work, he told the Compass the piers would still be controlled by the Port Authority of the Cayman Islands, but the quid-pro-quo for the cruise line in return for its investment would come from preferential berthing rights.
That means they would get first chance to reserve space on the dock as long as they book their slots 18 months in advance. Once the 18-month deadline passes, other cruise lines would have the option to book up the remaining space.
The cruise line that builds the facility would also be likely to get a long-term exemption from the docking fees charged on a per-passenger basis to use the pier.
A deal along those lines would see the new dock built without any significant investment or borrowing required of the Cayman Islands government.
Once both piers are built, Mr. Glidden said he believes there are unlikely to be any capacity issues.
At the moment, Grand Cayman receives about 1.5 million cruise passengers annually. If the two piers, which will be able to accommodate a total of four ships, were full for 200 days of the year that would mean 3.2 million cruise visitors.
“We would have more than double the current capacity,” Mr. Glidden said. “On the days we have more than four ships in harbour then the other cruise lines can reschedule or they can tender as they do now.”
The tourism minister told reporters during a media briefing last week that there would be an open bidding process for both piers.
“When we had discussions with cruise lines all of them have been willing to participate in a competitive tender process,” he said. “While they are active and interested participants, it was very clear from the very beginning it would have to be of a competitive nature.
“There are multiple cruise lines,” Mr. Glidden said. “There are four that have expressed interest. It could end up being a bid with just the lines or with other parties that feel they can be competitive.”
He said splitting the project into two phases at the tendering stage made it a less costly and potentially more attractive proposition.
Mr. Glidden said a deal with a cruise line has an advantage over an independent developer because it ties the fortunes of the cruise company to the Cayman Islands for a significant period of time.
“They are not going to walk away from a $100 million investment,” he told the Compass. “That is why I say they have an inherent advantage. The only people that can guarantee me a Royal Caribbean passenger or a Norwegian passenger are these guys.”
He did not say which cruise lines were interested in building the piers. Carnival, which brings around 900,000 tourists a year to Grand Cayman, and Royal Caribbean, which brings 250,000, are the two with the biggest interest in the island, accounting for almost 75 per cent of passenger arrivals last year.
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Has any one looked at off season ship schedule for 2013. almost 50% less than last year. only the cheapest of the carnival ships are scheduled to come to cayman. I fear a lot of people will lose jobs and more stores will close. If the government had any idea how hards things are getting for comman people the port would have been biult 15 years ago.
atleast talks are one this is a positive sign, hope things materialise this time.
The government will lose the passenger fees for the cruise line until the dock deal is paid off. Can the government afford this? Maybe there will be so many more visits it won’t matter. Most places do a little economic analysis for things like this.
Catch nailed it, right on the head.
There is MILLIONS of dollars yearly at stake here.
It’s not enough to pay off a dock for 10 to 30 years.
But it’s enough money that the government does not want to give it up.
So the government is stuck between a rock and a hard place. No one wants to build the dock without concessions. In other words. Anyone that is willing to build the dock for the government, wants all that money for themselves, for 30 to 50 years or more. Depending on the agreement. And the government stands to loose to much. But the government does not have the 100 million to build it themselves.