The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Royal Caribbean yesterday confirmed it is “right at the cusp” and aiming to begin site clearance for its $100m Paradise Island beach club this week with a Heads of Agreement signing “very close”.

Philip Simon, the Royal Beach Club’s president and general manager for the cruise line’s Bahamas operations, told Tribune Business that demolition of “dilapidated and old” buildings in the Colonial Beach area is poised to start after this newspaper obtained photos showing heavy equipment moving into the area.

Acknowledging that the Royal Beach Club’s construction start was slightly later than the 2024 first quarter target, due to unspecified “challenges” and “delays”, he nevertheless said the cruise giant is sticking to its summer 2025 goal of opening to passengers and guests.

“We had promised that we wanted to commence the site preparation and demolition phase in the first quarter,” Mr Simon told this newspaper. “We’re a little bit outside the first quarter, but that’s exactly what we’re preparing to do - clean-up the site, prepare the site for the commencement of construction, and the demolition of dilapidated and old structures on Paradise Island..

“It’s just about at that point of starting that phase of the project. We’re a little behind. We’re preparing to do that work. I’m not sure all the equipment has moved on site just yet. We’re hoping to begin that process this week. We’re also preparing one of the dock facilities there because they’re quite old.

“We still believe very strongly in the project...because this will be an excellent project for the country, for The Bahamas, and we believe in the partnership we have between the Royal Caribbean group and the people of The Bahamas.”

Michael Maura, Nassau Cruise Port’s chief executive, last week told Tribune Business he understood that the ground-breaking ceremony for the Royal Beach Club will take place in seven days’ time on Monday, April 22. Mr Simon, while not giving any dates yesterday, signalled that a formal ground-breaking is imminent.

“We’re hopeful of a ground-breaking in the next several weeks or so,” he confirmed. “Plans are being made. We’re very hopeful to get to that very shortly. We’ll definitely be at the site preparing and demolishing. We’re right at the cusp of beginning that. We’ve dotted those ‘i’s’ and crossed those ‘t’s’ some time ago. It’s a matter of getting that done.”

Royal Caribbean’s Bahamas chief yesterday confirmed that the cruise giant is still targeting summer 2025 for opening to its passengers, and the start of operations, despite the delayed start. “That is the goal: Summer 2025,” he reaffirmed.

“We’re a couple of weeks behind. We don’t want to change that even though there’s been some challenges and some delays, but we are fixed on meeting that timeline. Those are our targets, and we will be able to stick to them and accomplish them. If there are no other major delays over the next 18 months or so then we should be able to meet that summer 2025 opening.”

The 17-acre Royal Beach club project has been structured such that the Government and Bahamian investors will hold a collective 49 percent equity ownership in the development, with Royal Caribbean holding the majority 51 percent interest. The size and value of the Government’s stake will be determined by the value of the four-acre Crown Land parcel it is contributing.

When asked whether this valuation/appraisal had been completed, and the Government’s interest determined, Mr Simon replied: “Those things are contingent on execution of the Heads of Agreement. We’re getting very close to getting there, so stand by.”

Once the value of the Government’s equity stake is determined, the balance of the collective 49 percent Bahamian interest in the Royal Beach Club that will be held by private investors can be calculated. That will then set the stage for the equity capital raise from Bahamian investors.

The Royal Beach Club’s local equity raise will be structured similar to that of the Nassau Cruise Port. In the latter, Bahamian investors acquired shares in an investment fund, the Bahamas Investment Fund, which hold the collective 49 percent equity interest in the Nassau Cruise Port on their behalf. This will likely be the model employed for the Royal Caribbean project.

Mr Simon, though, said the selection of financial advisers and investment managers to oversee this process also remains tied to completion of a Heads of Agreement with the Davis administration because until that happens “that process cannot commence. We have been working diligently to finalise the process for that”.

This, he added, also applies to Royal Caribbean’s talks with the Government to obtain a revised Crown Land lease that covers the now four-acre parcel as opposed to the original seven acres sought. The cruise line reduced its requirements to extricate itself from the legal battle launched against the Government by Bahamian entrepreneur, Toby Smith, who was seeking three of the same seven acres for his project.

“All of that is tied to the same process,” Mr Simon said of the lease. “Yes, we have committed to that from a very long time ago, the revision to the lease agreement. All of that is tied to the Heads of Agreement. Stand by.”

As for the Royal Beach Club’s economic impact, Mr Simon previously said the cruise line’s ambition is to increase the number of passengers it brings to Nassau by 150 percent compared to pre-COVID levels - from one million per year to 2.5m by 2027. This, he added, will “no doubt” generate sufficient customers to ensure all businesses - as well as the Paradise Island destination - benefit.

“By 2027, we expect between 900,000 and one million guests will visit the Royal Beach Club each year. As a result, we would expect an annualised maximum daily capacity of [around] 2,750 guests per day. This translates to 171 guests per acre (assuming one acre is removed for back of house needs),” the cruise line said in a response to questions submitted as part of the EIA consultation.

That means 40 percent of the 2.5m passengers it plans to bring to Nassau in 2027 will go its its Paradise Island destination.