By NEIL HARTNELL
Tribune Business Editor
The Bahamas may have "underestimated" cruise passenger spend in Nassau and Freeport, a Cabinet Minister admitted yesterday, following reports of a 59 percent increase since 2015.
Dionisio D'Aguilar, pictured, minister of tourism, told Tribune Business that an economic impact study commissioned by the Florida-Caribbean Cruise Association (FCCA) had reinforced his ministry's belief that visitors were "spending a bit more" than they are letting on in "exit surveys".
"We typically allow between $70-$80 for destination spend by cruise passengers, and they're at $132," he said of the FCCA study. "We are of the belief, and yet to confirm it, but maybe this report takes us down the journey of confirming that they are spending a bit more."
While the Ministry of Tourism had calculated its $70-$80 per capita cruise passenger spend from surveying visitors as they returned to their ships, Mr D'Aguilar said it was likely that many "are not minded to disclose the nature of substantial purchases such as watches and other luxury goods.
The FCCA survey said the 59 percent jump in per capita cruise passenger spending between 2015 and 2018 was "heavily driven" by watches and jewellery, with the period also coinciding with the introduction of Value-Added Tax (VAT) and the associated tax refund programme for visiting tourists.
That initiative, operated by Global Blue, may have captured data showing that cruise passenger spending in Nassau and Freeport is much higher than previously allowed for and helped to produce the FCCA study's figures.
"Global Blue, the company the Ministry of Finance has contracted with to perform VAT refund, has been providing us with a lot more data on what people are spending," Mr D'Aguilar said. "For them to give a refund they have to receive a receipt, and Global Blue has data on which company they're spending it with and how much they're spending.
"We are minded to think they're spending a little more than the exit surveys reveal, but whether it's $132 I don't know. We were underestimating the numbers, and its encouraging that they're spending more than we thought.
"The numbers we were working with since I came to office was $70 per cruise passenger, which was the estimated spend. We felt that that number was kind of low just based on the VAT refunds people were claiming through Global Blue. We were seeing a lot of high-end items being purchased in the jurisdiction. We felt that people were not revealing their actual spend in the Ministry of Tourism exit surveys so we could determine what their spend was.
"Along comes the Florida Caribbean Cruise Association (FCCA) and they say its $132. I don't know what they based that on; maybe they spoke to their passengers. Obviously it's not a precise science. You're asking people to indicate what they spent and use that as a basis to formulate the number you would attach to every cruise passenger."
Mr D'Aguilar said the Ministry of Tourism planned to "reach out" to the FCCA to understand the methodology behind its survey, and how it came to its findings.
Tribune Business revealed on Tuesday that the FCCA's study showed cruise passenger spending in Nassau and Freeport soared by 59 percent over the past three years, making The Bahamas the third highest-yielding destination in the Caribbean.
Comparing 2015 results with those for this year, the report said: "The change in the average per passenger spend ranged from an increase of 59 percent in The Bahamas - heavily driven by watches and jewellery purchases - to a decrease of 26 percent in St Maarten."
The FCCA report - produced by Business Research and Economic Advisors (BREA) - showed per capita spending rising from $82.83, a low to average sum in comparison to the rest of the Caribbean, to $131.95 just three years later - an almost $50 increase.
Only the Dominican Republic's 32.9 percent spending growth rate over the same period came close to matching the runaway Bahamas, which now only lags St Maarten and the US Virgin Islands when it comes to per capita cruise passenger outlay in the Caribbean.
The increased per capita yield also resulted in a near one-third increase in total cruise passenger spending in Nassau and Freeport, with this sum said by the FCCA report to have grown from $243.5m in 2015 to $322.57m this year - a rise of almost $80m.
"The Bahamas was second of all Caribbean destinations with just nearly 2.9m onshore passenger and crew visits," the report said. "With an average per passenger spend of $131.95, The Bahamas had the second highest total of passenger spending, $322.6m.
"The Bahamas also had the second highest level of total crew spending, $28.9m, and the highest level of cruise line spending ($54.2m). Combining all direct expenditures, the cruise sector generated $405.8m in expenditures. These expenditures, in turn, generated an estimated 5,256 direct jobs paying $91.3 million in direct wage income during the 2017-2018 cruise year."
The FCCA report added that the cruise industry was estimated to support 9,004 direct and indirect jobs in The Bahamas, "paying wage income of $155.7m, with total wages being the highest among the 36 destinations.
"Thus, in The Bahamas, every $1m in direct cruise tourism expenditures generated 22 jobs throughout the island's economy which paid an average annual wage of about US$17,300."