The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Some “99 per cent” of Bahamian businesses are being excluded from cruise tourism’s benefits by the exclusive arrangements the lines reach with favoured onshore providers, a well-known QC is arguing.

Fred Smith, who owns a Grand Bahama-based tour provider, urged the Government to enact antitrust legislation to prevent the cruise lines striking “monopolistic” deals with select retailers, attractions and excursion providers.

Arguing that this long-standing practice was “achieving the opposite” effect of what cruise tourism was meant to do for Caribbean economies, Mr Smith said it was “socially and economically destructive” for many Bahamian entrepreneurs and employees.

Speaking as the owner of Bahamas Outdoor Adventure Tours, the Callender’s & Co partner told Tribune Business: “The incestuous arrangements that our government allows cruise ship operators to enter into with select, exclusive Bahamian businesses are monopolistic and antitrust.

“I call on the Government of the Bahamas to pass antitrust, anti-monopoly laws as exist in the US to prevent contracts which effectively are restraint of trade, excluding 99 per cent of the local businesses and operators from cruise ship passengers.

“The very objective of bringing cruise ship passengers to our Family Islands and New Providence is to disperse them and filter them through all of the businesses in the local economy,” Mr Smith added.

“It is not intended to give cruise ships, and cruise ship directors, the opportunity to come to exclusive, antitrust and monopolistic agreements with 1 per cent of the local businesses, which excludes the rest of the local economy.”

The issues highlighted by Mr Smith came to the fore in Grand Bahama last week, amid protests that saw the arrest of well-known community activist, Troy Garvey. He was leading a group opposed to a new excursion/attraction, said to be foreign-owned, that has grabbed a significant share of the island’s cruise passenger business within weeks of opening.

Erika Gates, of Kayak Nature Tours, expressed concern to Tribune Business that foreign-owned businesses were coming in to “take opportunities away from Bahamians just as things are looking up”.

Under the National Investment Policy, the tour, attraction and excursion provider industry is supposed to be reserved for 100 per cent Bahamian ownership only, but this appears to have been waived for Bahamas Adventures - the business targeted by the Garvey-led protests.

“It was always my understanding that tour operations and attractions had been reserved for Bahamians,” Ms Gates told this newspaper via e-mail.

“During the economic downturn, we at Grand Bahama Nature Tours developed many new tours for the cruise lines and hotel guests. We resurrected Garden of the Groves and Junkanoo Beach Club to provide a new venue for taxi operators and visitors alike.

“Every penny we earn goes back into the Bahamian economy. Now that things are looking up we seem to have foreign operators coming in to take opportunities away from Bahamians.”

Tribune Business sources suggested that Bahamas Adventures appeared to have an exclusive arrangement with at least one cruise line to take all its passengers disembarking in Freeport, via a $50 ‘all you can eat and drink for the day’ offer.

This newspaper was unable to substantiate such claims, but Tribune Business was told Bahamas Adventures is the beach break/getaway experience for visiting cruise passengers that was much touted by former Grand Bahama Port Authority (GBPA) chairman Ian Fair.

Sources familiar with the situation informed this newspaper that the Mexican group had leased five acres from a company controlled by the late Arne Pedersen’s son. They have received all the necessary licences and approvals from the GBPA and the Government.

“They’re Mexicans with some Bahamian participation,” one contact told Tribune Business. “This is the much-touted beach experience. This group have some similar facilities in two-three other locations in the Caribbean, and I think they do have direct links with the cruise lines.”

Tribune Business sources, though, suggested the current attraction fell somewhat short of what had been promised, as it has yet to feature a water park. This newspaper was told the facility primarily consists of a patio bar, barbecue and retail shopping facilities.

“It’s on a beautiful piece of land, but it’s a shame Bahamians haven’t stepped up to do this,” one source said. “A Bahamian could have done it, and why they haven’t, I have no idea. But it absolutely fills a vacuum.”

The exclusive contracts struck between some cruise lines and select Bahamian businesses have long been a concern, as they are seen as preventing the widest possible distribution - and maximisation - of the industry’s economic impact.

Tribune Business has reported for years how much of the money stays ‘offshore’, with tours and excursions booked on-ship via passenger swipe cards and credit cards.

While the ‘favoured’ businesses and their employees receive their share of the spoils, it has long been argued that the lion’s share of the profits are retained by the cruise lines, which dictate the price points and mark-ups offered by the onshore excursion.

Calling for an end to ‘onshore referrals’ by the cruise lines, Mr Smith told Tribune Business: “What is happening is that the cruise ship directors get a huge commission percentage, and the cruise ships themselves make a profit, while always giving a small benefit to the local preferred business that is the flavour of the month, friend of the cruise ship.

“This ultimately enures to the great detriment and disadvantage of the rest of the businesses in the local community. It is, in fact, achieving the opposite of growing local economies by growing cruise ship passengers.”

Speaking to his own tour business, Mr Smith added: “Unless I pay commissions to the cruise lines, I don’t get any business. I don’t pay them, because I don’t promote monopolistic and exclusionary business practices. It’s just plain bad for local business......

“I urge my Bahamian government to protect local businesses by passing laws stopping cruise ship referrals onshore, the port director’s tie-up arrangement with local businesses.”

Emphasising that he had ‘first hand’ experience of how the system worked, Mr Smith said: “I have taken a number of Caribbean cruises, and I know perfectly what they [the cruise lines] do.

“Before they dock, they offer package advice to the passengers, and strike the fear of God into them to avoid ‘shady’ local businesses. They encourage them to buy at what they call the ‘legitimate local businesses’.

“I demand as a Bahamian businessman that my government pass laws to end this anti-competitive practice,” he added. “This issue that challenges the Bahamas also faces the rest of the Caribbean, and it is a situation I call on the Prime Ministers of the rest of the Caribbean to address.

“This practice is abusive, incestuous and socially and economically destructive, and is the exact opposite of what bringing cruise passengers to the Bahamas was meant to achieve.”