The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Nassau has “nothing to be afraid of” from Freeport’s two mega cruise ports, the Minister of Tourism is arguing, while admitting both projects have added “fresh” urgency to the capital’s revival.

Dionisio D’Aguilar, rejecting fears that the major cruise lines will have little reason to call on Nassau if their Freeport projects come to fruition, told Tribune Business that the industry’s rapid growth meant The Bahamas needed to make “more of our country available to them”.

With 90 cruise ships under construction, and worldwide demand for cruise vacations growing rapidly, he said The Bahamas needed to maintain its competitiveness by providing new destinations that exploit this nation’s proximity to the industry’s largest home ports.

Warning that The Bahamas cannot afford to “remain static” in an important element of its tourism product, Mr D’Aguilar nevertheless conceded that the proposed Freeport ports had further exposed why it was “so critical” to upgrade Nassau - both the port and downtown area - as a destination.

He also rejected suggestions that the Freeport cruise port proposals, and respective involvement of Carnival and Royal Caribbean in them, would have any influence on the government’s decision over who is chosen to manage/operate Nassau’s cruise port.

Both cruise lines and the Mexican port developer, ITM Group, which is partnering with Royal Caribbean to acquire the Grand Lucayan and develop a proposed water-based, adventure-type theme park at both the resort and Freeport Harbour, are involved in the same bid to take over Prince George Wharf.

Several tourism industry sources are arguing that the Freeport plans give their Nassau offer extra leverage, since they will have sufficient options to bypass the Bahamian capital completely should they so choose. Selecting their bid as the winner may be the only way to ensure the cruise lines keep calling at Prince George Wharf with the current frequency and passenger volumes, it has been suggested.

Mr D’Aguilar, though, dismissed such fears and asserted that the Nassau cruise port decision will “be made in the best interests of the country”. He also downplayed the “bypass” concerns, stating: “Nassau will always stand on its own.”

He told Tribune Business: “I disagree with the view that, because Royal Caribbean and Carnival are building ports in Freeport, that will have a negative impact on Nassau. There are 90 ships in construction, and demand is growing significantly for cruise vacations.

“It’s wise to allow for additional options for the cruise lines as they are growing the number of ships every year and, as passengers demand more cruise vacations, it behooves us to make more of our country available to them.

“We are wonderfully positioned next to the three largest cruise ports in the world: Miami, Fort Lauderdale and Canaveral. We’re a natural stopping off point for anyone in the cruise business. I don’t think there is anything for anyone to be afraid of. Nassau will continue to be in demand, which is why it is so critical and important that we upgrade that port.”

Besides Carnival’s $100m port, which is billed as its largest wholly-owned facility in the world, Tribune Business this week exclusively revealed that the Mexican cruise port developer, ITM Group, is proposing a second Freeport-based destination that will also include the acquisition of the Grand Lucayan resort.

ITM Group is understood to have partnered with Royal Caribbean to develop four new cruise berths in Freeport Harbour, doubling its current capacity, and both proposals have sparked tourism industry concern over whether the cruise lines will continue using Nassau as a “port of call” - especially since they rank it as one of their least attractive Caribbean destinations.

While refuting such fears, Mr D’Aguilar conceded: “This adds additional reasons to upgrade Nassau, the fact all these new ports are being developed - not only in The Bahamas but the Caribbean. There are five cruise ports under construction, being renewed and refreshed.

“To remain competitive we must invest in Nassau - reinvigorate, refresh and upgrade that port - just because of what the competition is doing with Freeport and the private islands. What’s happening in Freeport gives fresh and added impetus to this.

“You’ve got 90 boats under construction, every vessel is leaving port 100 percent full. We can’t remain static. We have to increase our competitiveness, not only in Freeport but Nassau.”

Mr D’Aguilar said ITM Group was proposing two additional cruise ship berths for Freeport, suggesting that the expansion of available docking space in Grand Bahama was not as significant as initially thought.

He also downplayed suggestions that the cruise lines’ Freeport interests would give them an advantage in the bidding for the Nassau cruise port management contract, in which they face competition from Global Ports Holding, the Turkish-headquartered port operator, and the consortium headed by Providence Advisors, the Bahamian investment houses headed by Kenwood Kerr.

“The fact they’re opening up these ports all over the place won’t affect our decision on who runs that port,” Mr D’Aguilar told Tribune Business. “They’re all in that mix, but we’re not minded to make that decision based on what’s happening in Freeport. We’ll make that decision in the best interests of the country.”

Several tourism industry sources suggested their respective Freeport plans could give ITM and the cruise lines’ Nassau bid, in which they have partnered with the Bahamian group, Cruise Ports International, extra leverage given the possibility that they may avoid - or at least downgrade - the Bahamian capital as a port of call unless they are selected as the winner.

ITM Group, which began life as a construction and development group, is the “independent operator” for Nassau’s cruise port in the Port of Nassau Partnership bid. This is an alliance between Cruise Ports International, a Bahamian investor group headed by former Family Guardian president, Gerald Strachan, and the Cruise Lines Group.

The latter’s membership features Carnival, Royal Caribbean, Disney and Norwegian Cruise Line. Tribune Business understands that ITM Group has no equity stake in the consortium’s bid, and will merely have a management role in Nassau if the group is successful.

One source, familiar with developments, agreed that the Freeport proposals had strengthened the Port of Nassau Partnership’s hand in the bidding process since its selection as the winner was the only way to guarantee the cruise lines continued to call in Nassau at the same volume.

“The implications for Nassau are quite simple,” they said. “If the other guys win the Nassau port, Carnival and Royal Caribbean have elsewhere to go. They have enough interests elsewhere in The Bahamas. Carnival and Royal Caribbean have to come to The Bahamas; they don’t have to come to Nassau.

“We think Nassau is the port, Nassau is The Bahamas. The cruise ships have developed these other destinations in The Bahamas. They’re still selling The Bahamas, the Government will continue to get what it gets. The losers will be the established businesses downtown that are set up for that industry.”

If ITM Group’s Freeport proposal is given the go-ahead by the Government, together with Carnival’s facility it will likely result in a redistribution of cruise passengers and their spending from Nassau to Grand Bahama.

There is little doubt that Freeport’s economy needs such a boost, but the two mega ports may well effect a wealth transfer from Nassau merchants reliant on the cruise industry to their Grand Bahama counterparts. And that, in turn, would have consequences for the long-running efforts to revive Bay Street and downtown Nassau.