The Tribune

• Eyes 2023 record with arrivals to beat 4m

• Passenger fee to over $9 via inflation tweak

• Downtown Nassau back to 80% pre-COVID

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Nassau Cruise Port will generate up to $40m in annual operating revenues from 2023 onwards, it has been revealed, with next year’s passenger volumes forecast to hit a record high by breaching the four million mark.

Michael Maura, its chief executive, yesterday voiced optimism to Tribune Business that the financial forecast by controlling shareholder, Global Ports Holding, will be met with help from a 6.8 percent increase to the present $8.50 passenger and port facility fee charged to every Prince George Wharf user.

The increase to $9.08 per passenger, which will take effect from January 1 next year, results from this fee being tied directly to inflation as measured by the US consumer price index (CPI). Mr Maura revealed that projections of 4.3m total cruise visitors for 2023, a 12 percent increase upon 2019’s pre-COVID record of 3.85m, place Nassau Cruise Port’s likely annual revenues from the passenger charge alone at just over $39m - at the top end of the target $35m-$40m range.

“As per the concession agreement, we have a combined port facility charge and passenger facility charge of $8.50 that increases by the US CPI each year,” the Nassau Cruise Port chief explained to this newspaper. “The US CPI feature not only increases the combination of the port facility charge and passenger facility charge, but also increases the concession lease fees that the cruise port will be paying to the Government.”

Mr Maura did not disclose the likely lease payment increase, but added in relation to the passenger user fee: “The Ministry of Finance have reviewed the US CPI. This goes back to late December/early January of this year, and based off their review they identified the US CPI number at 6.8 percent. As of January 1, 2023, the $8.50 number will be increased by 6.8 percent.

“Taking that, and considering our passenger forecasts are good for 2023, being in excess of 4m passengers, I would say it’s [$35m-$40m] an accurate estimate. We anticipate, and I think we could even exceed that 4m number based on the number of ships and occupancy levels. We’re already at 105 percent occupancy today for those ships coming in, and if you look at Nassau for 2019, the average occupancy for the year was 112 percent. We’re quite confident.”

Mr Maura revealed that Nassau Cruise Port is currently projecting that it will handle 1,285 vessel calls in 2023, a 6.6 percent increase compared to the 1,206 ships received in the last pre-COVID year of 2019. More significantly, it is forecasting a near-500,000 increase in total passengers to 4.3m compared to 3.85m in 2019, which amounts to an almost-12 percent increase over that present annual record.

“We’ve already seen better ship bookings for 2023 than we had in 2019,” he affirmed. “A lot of that has been facilitated by the investment we’ve made in the piers to accommodate larger ships as well as the upland construction of the food and beverage, entertainment and retail components that will drive passenger flows.

“And that $39m does not include ancillary revenues, which would be the rents. We’ll have retail, we’ll have food and beverage, and entertainment. That will be the icing on top of the cake. That’s not only driving cruise passengers. It’s expected to be pulling Atlantis and Baha Mar guests, and Bahamians, downtown.

“We hope the retail and food and beverage tenants will be doing well. There’s a revenue sharing component in that, so the better they do, the better we do.” Nassau Cruise Port’s annual operating revenue targets were disclosed in the recently-released annual results announcement by its 49 percent controlling shareholder, Global Ports Holding.

“The first phase of the construction has started in November 2020 and is expected to be completed in the second half of 2022,” Global Ports said in relation to Nassau Cruise Port. “The second phase of the construction is expected to be completed by the end of the upcoming reporting period [March 2023]. Once construction has been completed total revenues are expected to be in the range of $35-$40m per annum.”

The cruise port operator affirmed it is currently paying the Government a $2m “minimum fixed fee” annually until construction work finishes next year. This fee then increases to a minimum annual USD $2.5m for the 25-year duration of Global Ports Holding’s concession agreement.

Cruise passengers are effectively The Bahamas’ volume tourism business, with land-based stopover visitors representing the higher-yield variety by virtue of their per capita spending. Many observers will be doubtless be watching keenly to see how many cruise visitors disembark their vessels while in Nassau once construction on the new port is completed, and if this translates into greater passenger spending and benefits for Bahamian entrepreneurs and their staff alike.

While describing Nassau as “the busiest cruise port” in the Caribbean region, Mr Maura said the post-COVID recovery on Bay Street and in surrounding areas of downtown Nassau has yet to complete. “We still have some room to go,” he acknowledged. “From a retail perspective, those I spoke to felt they were at about 80 percent of pre-pandemic levels.

“On the labour front, and I didn’t speak to everyone, but everyone I talked to said they do not have employment at the same level as 2019. Because business was not back to 2019, labour was not either. In conversations with hotel properties, they see their group business as very strong. The hotel sector is quite bullish, and Lynden Pindling International Airport has also been doing well. Obviously the air side of our tourism has recovered faster than cruise.”

Nassau Cruise Port’s importance to Global Ports Holding was highlighted by the latter’s annual results for the year to end-March 2022. Nassau accounted for 38.5 percent, or $12.2m, of the total $31.7m in adjusted cruise revenue produced by the group’s 14 ports. And it also generated 1.29m, or 53.5 percent, of the total 2.41m passengers catered to by Global Ports Holding over that 12-month period.

Mehmet Kutman, Global Ports’ chairman and chief executive, told shareholders that almost $90m had been invested in Nassau Cruise Port’s transformation during that time. Some $110m was raised from US-based investors in three tranches between June and November 2021 to help complete the construction financing.

“The work scheduled to be carried out over the next 12 months will bring to life the vision we had for the transformation of this cruise port,” he added. “Once we complete this exciting project, I believe it will showcase to global cruise industry stakeholders our capabilities to transform an important cruise port into an iconic cruise port destination.

“In the fourth quarter of the reporting period, Nassau welcomed 333 cruise ship calls, a 5 percent increase from the 316 calls in the same period of 2019.” Global Ports itself added: “Nassau Cruise Port was particularly strong, benefiting from its close proximity to the world’s largest sourcing market and the key Florida homeports in the US, reporting adjusted revenue of $12.2m.

“On a number of days, the port hosted six cruise ships simultaneously during the main winter season 2021-2022, utilising the new berthing capacity that has been recently added as part of our significant investment into this port. Our significant investment plans for our Nassau Cruise Port continued in the reporting period, with $89.6m invested in the port infrastructure.”

This continued through the three months to end-June, with Global Ports hailing the “strong volumes at Nassau” for driving its group-wide cruise ship call volumes to 114 percent of 2019’s pre-pandemic levels, meaning that berthings now exceed those experienced before COVID.

“By the end of the 2023 reporting period, our $250m investment into Nassau Cruise Port will be near completion. As our vision for this port becomes a reality, we believe it will stand as a blueprint for future cruise port investment and will position the group well for further cruise port expansion,” Global Ports added.