St Lucia teams up with cruise giants

Saint Lucia has joined forces with two of the world’s biggest cruise companies in a move that government hopes will further boost the already thriving tourism sector, create scores of new jobs and lay the groundwork for bigger and more innovative ships to dock at the island as the global cruise market expands. The prime minister signed an “historic” Memorandum of Understanding with Carnival Corporation and Royal Caribbean Cruises on the sidelines of last week’s Florida-Caribbean Cruise Association conference in Puerto Rico. The agreement consists of a joint venture between all parties to manage the current cruise facilities in Castries and design, construct and manage a new port in Vieux Fort.

Accommodating growth

Overhauling Saint Lucia’s cruise product is not just a matter of aesthetics. Given the country’s soaring cruise numbers, it is only a matter of time before the current facilities become overwhelmed and insufficient. This year Saint Lucia welcomed a record-breaking number of visitors with over 36,000 stay-over arrivals in August alone. The cruise sector fared even better, recording over 140,000 cruise visitors in March.

Saint Lucia’s tourism boom is in line with overall growth in the cruise sector as a whole. Both Carnival and Royal Caribbean have enjoyed healthy profits in recent years which is good news for Saint Lucia as 75 per cent of its cruise business comes from those two companies.

According to Royal Caribbean, cruise tourism is the fastest growing segment in the market and Caribbean cruises in particular are expected to grow by 50 per cent in the coming decade. 

Around 30 million passengers are expected to take to the seas in 2019, with more than a third of that number destined for the Caribbean. The market is now worth around US$ 60bn globally, according to Cruise Industry News’ 2019 Report which comments: “The industry was launched on Caribbean cruises and the foreseeable trend is that the region will continue to dominate.”

Accommodating this year-round and steadily expanding industry, many Caribbean islands are in the process of extensively upgrading their ports. The Bahamas, which recently welcomed Royal Caribbean’s CocoCay private island, will partner with Carnival to develop a new port in Grand Bahama; 

St Maarten is building a new terminal and renovating its current facilities to help pick up more business in 2020 and St Kitts is nearing completion of its second cruise pier.

Montserrat has chosen to avail itself of development financing, rather than the standard privatisation model, to address issues at its port. The government of Montserrat is partnering with the Caribbean Development Bank and the UK Caribbean Infrastructure Fund to finance its US$ 19.5mn port development. The first phase is expected to be completed in 2020 and the new port open for business in 2022. Additional funding will be provided by the European Union. While admittedly a smaller-scale project than the total overhaul of ports seen around the region in recent years, the work will allow bigger cruise ships to dock more securely at Montserrat’s difficult-to-navigate harbour.

Privatising ports

Cruise infrastructure is a costly business. Out of reach for island governments with budgets in the red, it is hardly surprising that the terminal transformations around the Caribbean are largely bankrolled by the cruise industry behemoths. These giants of the seas have staggering profits and a vested interest in ensuring their passengers are greeted by well-equipped and inviting ports.

The relationship between Caribbean nations and their cruise company benefactors is depicted as a win-win for island tourism, but is this really the case? While much of the financial burden is transferred to private sector partners, this is typically balanced by concessions from government in terms of taxes and regulatory requirements. Private partners run ports as commercial enterprises, protecting them from the political whims of governments yet they also have a history of squeezing local businesses – charging high rents on port properties and/or demanding fees for promoting local operators to passengers. The cruise business is no stranger to controversy thanks to its predatory practices in destinations throughout the region and the accompanying problems such as pollution and over-tourism. Despite this, the fact remains that companies such as Carnival and Royal Caribbean have the spending power, the experience and the expertise to deliver modern, efficient cruise terminals in destinations that haven’t upgraded their infrastructure to keep pace with market demand. 

The exact terms of the joint venture between Saint Lucia, Royal Caribbean and Carnival have not been released so the details of how it will be financed and operated are not in the public sphere. Given the uneasy relationship between island governments and cruise ship firms, and the unequal bargaining power around the negotiating table, transparency and communication will be key as the project progresses.

Ensuring gains

Another challenge, going forward, will be luring those passengers off the ships. The government is hoping that creating a new port in Vieux Fort will help disburse some of the predicted tourism revenue into the deprived communities of the south – creating employment, supporting small operators and encouraging new, long-term business. 

The average cruise ship visitor spends US$ 116-158 a day, compared to the US$ 200-250 a day from air arrivals, according to the Caribbean Council.

If Saint Lucia is to reap the rewards of a privatised port, that spend must be maximised onshore. In this, the government is hoping its efforts to transform and grow the already-established cruise sector will neatly align with its recent push towards so-called “village tourism”. Offering something uniquely Saint Lucian to tourists – showcasing the island’s culture, history and heritage – is particularly vital for cruisers who are accustomed to seeing the Caribbean from the rail of a ship. Those who sail from island port to island port need to see something truly unique if they are to be enticed into the communities where their dollars are most needed.