By NEIL HARTNELL
Tribune Business Editor
THE Minister of Tourism has pledged to “keep a very close eye” on the cruise lines to prevent their multi-million dollar private island investments sucking economic benefits away from Nassau.
Dionisio D’Aguilar admitted to Tribune Business that the $200 million spend unveiled by Royal Caribbean for Coco Cay was “a concern”, given the potential impact on cruise passenger spending when its vessels call on the Bahamian capital and Freeport.
Acknowledging that this was where Bahamian-owned businesses and employees felt the cruise ship industry’s impact the most, Mr D’Aguilar said he would “incentivise” the lines to “reverse course” if they became too attached to their private islands.
Declining to reveal how he will accomplish this, on the grounds he did not want “to reveal all my cards”, the Minister said Royal Caribbean’s plans for its Berry Island location had “re-energised” the Government’s plan to upgrade Prince George Wharf and the entire Nassau cruise passenger experience.
He also promised “to insist” that Bahamian attraction, tour and excursion providers operate the various activities and rides planned for Coco Cay - an issue that has long been a ‘sore point’ for locally-owned businesses.
“You raise a very valid point. I thought exactly the same thing,” Mr D’Aguilar said of Royal Caribbean’s plans. “We have to be very careful the cruise lines don’t direct all the economic spending power of their passengers to their private islands.
“This lends credence to the efforts of this government to improve the whole port experience in Nassau, and the need for us to execute our plans to improve the overall experience of Prince George Wharf and to make sure our offerings remain competitive.”
Royal Caribbean’s proposed Coco Cay investment is currently before the Government and its various agencies for approval, with notice of its submission for planning permission having been published in the newspapers earlier this year.
The cruise line, in a release last week, provided more details of its intention to make the island part of its ‘Perfect Day Island Collection’, with new attractions set to include more than 10 waterslides; a wave pool; helium balloon ride; zip line; and freshwater pool.
Mr D’Aguilar said the cruise industry was “growing gangbusters”, both in terms of ships and number of passengers it was catering to, which means the Bahamas “has to be competitive and watch world trends”.
With Royal Caribbean now prepared to invest hundreds of millions of dollars in its Bahamian private island, he reiterated: “We have to watch how this impacts visits to the port of Nassau, which is where the greatest impact from foreign visitors - the cruise passengers - to our country is felt.
“We’ve got to monitor that. Visits to private islands where the experience is controlled by them [the cruise lines] ranks very highly in customer satisfaction surveys. But we have to ensure this new attraction doesn’t diminish the economic impact cruise passengers have on our major population centres.
“We’re absolutely going to have to monitor this; what they’re spending and the effect this is going to have. It is a concern and I’ll keep a very close eye on that; the passenger count in Nassau and the mechanisms we use to monitor the spending of those passengers when they get here.”
Many observers, especially the remaining Bahamian-owned tour operators and excursion providers that rely on cruise passengers for a significant portion of their business, will likely feel that ‘the ship has long sailed’ on government efforts to rein in the cruise lines.
Data published by the Central Bank shows that despite a 23.7 per cent increase in cruise passenger arrivals from 2010 to 2016, rising from 3.8 million to 4.7 million per annum, total spending has remained stubbornly at $300 million. This is because per passenger spending yields have fallen from $78 to $64 over the same period, a drop of 18 per cent.
Operators typically call at their Bahamian private islands first, prior to visiting Nassau and/or Freeport, so that they receive ‘first call’ on their passengers’ spending, which leaves relatively little for local businesses in the major cities.
The cruise lines also offer similar tours and excursions, and replicate the experiences, offered by Bahamian-owned companies on their private islands. It has long been alleged that the lines themselves control these activities, together with water sports, although they have denied this, with Mr D’Aguilar also saying such claims are “not true”.
However, the Bahamas Association of Shore Excursion Providers (BASE) has effectively ceased to exist, amid allegations that the cruise lines effectively control their mark-ups and profit margins. This has all led to a ‘vicious circle’, where the cruise lines complain there is nothing new and exciting for their passengers to do in Nassau and Freeport, while Bahamian-owned companies quietly complain they are unable to earn sufficient returns to invest in such attractions.
Successive administrations have also failed to use the cruise lines’ Bahamian private islands, and their need for a destination in close proximity to the US, as leverage to extract more favourable terms for locals and their businesses.
Under the US Jones Act, foreign-flagged vessels such as the cruise ships have to first call at a foreign port before they can return home to the US. This made the Bahamas a natural stop on the three, four and even five-night cruises, but Cuba’s opening up has whittled away this advantage and strategy.
Still, Mr D’Aguilar told Tribune Business of Coco Cay’s attractions and excursions: “We will insist they use Bahamian companies to provide these services.
“They’re allowed to have these islands, but not to the exclusion of Bahamian providers of these activities. We’ll be there to make sure whatever they do they’re using Bahamian providers and vendors of these services.
“We must not forget the economic impact of them coming to Nassau and Freeport, our major population centres, is too important to us. If they go too far in one direction, we’ll have to incentivise them to reverse.
Mr D’Aguilar declined to detail his ‘incentive’ strategy, but added of Royal Caribbean’s plans: “It re-energises the belief that a substantial investment is required in the Port of Nassau to bring it to a standard that is similar to what the cruise companies are putting on these islands.”
The Minister, during his mid-year Budget presentation last week, said he and Frankie Campbell, minister of transport and local government, were looking at creating an entity similar to the Nassau Airport Development Company (NAD) to manage Prince George Wharf.
This suggests the cruise port’s management may be outsourced to the private sector, with Mr D’Aguilar saying: “The current set-up of tourism managing the customer experience silo, and Transport managing the maritime infrastructure silo, is woefully inefficient and leads to an operating scenario that is lacking in cohesiveness and effectiveness.
“Also, neither Tourism nor Transport is aware of what the other is spending on its operations at the Port, and so there is no clue what to charge the cruise passenger who uses both Tourism and Transport’s services. As a consequence, Government is unaware whether it is making money or losing money on its very valuable asset.
“With 4.8 million cruise passenger visits last year, the Bahamas dominates this market, and although we continue to uphold our competitive position we must improve the visitor experience of the Port of Nassau if we wish to grow or even just maintain our market share.”