VI Killing the Golden Goose

101

This editorial will address two important and valid concerns raised in response to my February 28, 2017 Op Ed advocating for the building of the Long Bay Dock.

My critics did not challenge the economic benefits derived from the cruise industry. They focused on two specific areas; firstly, if we already have WICO and Crown Bay facilities why the need for a third dock. Secondly, a dock adjacent to Yacht Haven Grande would destroy the beauty of our iconic world class harbor.

Before commenting on these two points, let me first briefly restate the economic benefits of the cruise ship industry. There seems to be universal agreement that every time a ship docks in St. Thomas the government receives millions in various taxes that include a passenger head tax, landing fees, wharf fees, tonnage fee, water usage fees. Every dollar spent by visitors generates an additional 5 percent gross receipts tax for the government. Every 100 new ship calls to the territory translates into hundreds of millions of dollars of new revenue for the government. Every dollar flowing into the government coffers benefits all Virgin Islanders and funds government jobs. The private sector including taxis, tour operators, retail stores, restaurants, local arts and crafts vendors all benefit when a ship calls on St. Thomas and passengers spend in our economy.

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In this environment, there is fierce and unprecedented competition amongst regional destinations to lure and capture the cruise ships, the landing fees, taxes, and spending power of the cruise clientele that go with a cruise call. St. Thomas the once undisputed king of destinations has lost its number one position.

St. Maarten has captured a great deal of our market share. In December 31, 2014, they surpassed St. Thomas and reached a pinnacle of 2,001,996 cruise visitors. At the height of the economic downturn they opened a second Dock capable of berthing two mega class ships the size of the oasis, allure, and harmony. These ships have a capacity of 6000 passengers and crew. St. Maarten can dock 7 ships on any day. 3 or 4 of those ships can be mega class in size. By contrast St. Thomas can now only berth one mega class ship at Crown Bay and none at the West Indian company dock.

St. Thomas remains at a significant disadvantage with its lack of berthing capacity for the larger ships. The following chart illustrates clearly the trends between the St. Thomas versus St. Maarten ship visits with Royal Caribbean and Celebrity Cruise lines:

Royal Caribbean and Celebrity Cruise Calls

Year/St. Martin Ship Calls/St. Thomas Ship Calls/Percent Difference

2014-2015 — 234         169   – 27.8%

2015-2016 — 233         160   – 31.3%

2016-2017 — 231         130   – 43.7%

2017-2018 — 207         118   – 43.0%

TOTAL:           905          577  – 36.2%

* source Royal Media Partners ship call sheets

This negative trend is devastating news for the Virgin Islands government which will lose millions in tax revenue, and for the many locals whose livelihood is dependent on the Cruise ship business. Please note, the decline in ships calls to St. Thomas and the shift of those calls to our competitor began after St. Maarten opened its new cruise pier to accommodate multiple Mega class ships.

St. Maarten will experience no such drop in calls from RCI/ Celebrity Cruises. St. Maarten listened to the cruise industry and expanded their dock capacity to accommodate the larger ships which is the future of the cruise industry. According to the published schedule of the Port of St. Maarten, it will have 207 ship visits between October 2017 to September 2018, almost double the calls of St. Thomas. Royal Media Partners published port calls indicate that St. Thomas will only have 118 ships visits for the same fiscal period with RCI and Celebrity cruise lines.

There are 31 large new ships now under construction from major cruise lines that visit our region. Most of them are mega class in size, and set to be built by 2025 less than 8 years from now. Many of the new ships will enter the Caribbean region in the next several years. If St. Thomas does not have additional berthing capacity in place the mega ships will simply bypass our island for St. Maarten as they are currently now doing. The decline in ship calls has already seriously damaged our economy, and led to store closings, loss of employment and tax revenue for the government.

The following is a quote taken from the St. Maarten Port Authority web site. Port manager and CEO Mark T. Mingo,

“St. Maarten is a successful cruise destination because we listened to the cruise industry and we understood business…our Port facilities have been a catalyst for improvement and development of different areas of the island”

St. Maarten in addition to its berthing capacity for mega class ships has water transportation, beautiful pedestrian walkways, and is now developing a $40 million-dollar Dutch village to enhance the cruise visitors’ cultural experience and generate more revenue as passengers disembark they will walk through the village.

St. Maarten has invested heavily in expanding its port infrastructure to accommodate the new larger ships being made. They are reaping huge dividends for their foresight and planning. According to the St. Maarten Port Authority, 87 percent of the islands revenues come from the cruise industry. They know how to nurture the golden goose not kill it.

The cruise lines have made it clear they don’t want a third dock at crown bay. It is my understanding that a feasibility/ engineering study has revealed that crown bay is not viable because of the narrow turning radius. It also has dredging and environmental issues that do not exist with the long bay dock where any dredge would be used for the upland fill.

When the West Indian Company ltd. originally presented the vision for the dock at Long Bay there was tremendous enthusiasm shown by the cruise industry and specifically Disney and Norwegian cruise lines. They were ready to sign long term operating agreements. A financing mechanism was developed to pay for the dock. Although no additional retail was contemplated an important element of the design provided public space for the community events and concerts.

Subsequent to my first editorial, I met with Senate President Myron Jackson who has always been a supporter of the Long Bay Festival Park and Dock. In our discussions, he articulated a vision shared by the original planners, including the West Indian Company, of a project that goes far beyond Long Bay simply being a dock for mega class ships. The vision includes a permanent festival park featuring local arts and crafts and Caribbean cuisine. A permanent concert venue to host major concerts.  The park would be a beautiful green space and garden designed as a center for locals and visitors to engage in culture, history and commerce in a beautiful setting overlooking the Charlotte Amalie harbor. You need the dock in order to finance the festival park.

At a time when the Virgin Islands government is on the brink of financial collapse we should reopen discussions again with our partners in the cruise industry. It is my understanding that major cruise lines continue to have a high degree of interest in this project. Royal Caribbean with its mega ships is an obvious partner with one or two other major players. The Long Bay Dock has tremendous potential to revive our troubled economy and particularly the devastating declines in ship arrivals.

There was opposition to the Yacht Haven Grande project. The opponents of the mega yacht marina said it would destroy the beauty of our Harbor. Today YHG is a vital part of our economy. The Long Bay Dock and cultural village is a natural extension of this marina. Docks and ships in the harbor are the reason why the town of Charlotte Amalie exists today. It is our maritime history.

At the recent Sea Trade conference executive chairman Pierfrancesco Vargo of MSC cruises (the fourth largest in the industry), said the following about the industry; “with some 82 ships on order destinations must prepare for more and bigger ships…never in our history of cruise shipping have we had an order book going out 10 years”

I would encourage Governor Mapp, members of the senate, and officials from the West Indian Company Ltd, the Port Authority, and their respective board members to log onto WWW.PORTSTMAARTEN.COM

Under the cruise tab section the header is: WE’RE PREPARED FOR THE FUTURE IN CRUISES. There is an accompanying photo of 6 ships docked and two that appear to be mega class in size.

Our government leadership, respective officials from VIPA and WICO along with their board members need to realize that we are up against formidable competition. To say, ST. Thomas does not need increased berthing capacity for Mega/Genesis class ships currently in use, and the ships being built is ignoring reality and putting our head in the sand.

What will our leadership do now to reverse the declines we are experiencing year over year in cruise calls? Raise taxes again? No, the answer is bringing back ship calls, one sure way to revitalize the Virgin Islands economy and to return economic prosperity to the community.

Editor’s note: Filippo Cassinelli runs A.H. Riise Mall on St. Thomas, which has been in his family since 1928.

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