Friday, November 20, 2020
* Nassau port developer: February 2021 earliest return
* $45.5m invested in Prince George Wharf year to-date
* Global Ports hopes construction spend under $250m
By NEIL HARTNELL
Tribune Business Editor
Nassau Cruise Port's controlling owner has warned industry stakeholders that full recovery may be two years away with 2019 passenger numbers not returning until the 2022 second half.
Mehmet Kutman, Global Ports Holding's chairman, told analysts during a conference call to unveil the company's 2020 third quarter results that February 2021 will likely be the earliest date when cruise ships return to The Bahamas and Nassau.
Suggesting that it will take several months for the cruise industry to understand and implement the health regulations demanded by the US-based Centres for Disease Control and Prevention (CDC), Mr Kutman estimated that April-May 2021 will be the latest date for a resumption of sailing - albeit with less frequent vessel calls and lower passenger occupancies initially.
Global Ports executives also revealed that some $45.5m to-date has been invested in Nassau Cruise Port's transformation, with the company also hoping to bring in redevelopment costs below the initially-projected $250m construction budget.
The figures were revealed as the cruise port operator admitted that the outlook for 2021 and year-end 2020 will be "more challenging than we had hoped for a few months ago", due to the surge in COVID-19 cases in both the US and Europe plus the longer-than-anticipated wait for the industry to put to sea yet again.
"I do believe the US-based cruise operators will start as early as February, and as late as probably April or May," Mr Kutman said, "which will give the cruise lines time to implement, including the trial runs, all the framework of the CDC...
"The day they start sailing again is the day we go back to business like 2019. My personal estimate is that we will see 2019 numbers as early as the second half of 2022."
Mr Kutman's forecast is unlikely to deliver much Christmas cheer to Bay Street merchants, straw vendors, taxi drivers, restaurants, hair braiders, tour operators, excursion providers and others reliant on the cruise ship industry for their livelihoods, as it means the wait for the sector's return will drag on for several months into 2021.
And the rebound to normal business levels may take even longer if the Global Ports Holding chief is correct. While cruise ship passengers are the Bahamian tourism industry's volume business, providing around 75 percent of visitor numbers but just 11 percent of the spend, studies - albeit from the industry itself - nevertheless show it injected $322.57m into Nassau and Freeport in 2022.
The industry's absence since the COVID-19 pandemic began in March has resulted in much of downtown Nassau closing down, with retailers such as The Linen Shop citing the predicted long wait for cruise passenger volumes to return to normal as a key factor in their decision to shutter permanently.
Emre Sayin, Global Ports' chief executive, explaining what had further dampened the company's outlook, said: "I think it would have been very reasonable to assume that cruising would first start in the US. It's the biggest market, and we all expected activity to have started by now.
"It took much longer for the cruise lines to reach a common understanding with the CDC, and it's hard to say that understanding is clear as to when they they will resume. We were expecting some business in the fourth quarter, particularly the Caribbean, especially in Nassau, which is very important to our numbers. If that [had happened] we would be looking at the first quarter of 2021 with a very different lense."
Nassau saw 3.81m passengers, or more than half The Bahamas' total 7.2m visitor arrivals, pass through Prince George Wharf during 2019. Global Ports Holding's forecasts now mean that it could miss much of the 2021 first half, which is traditionally the peak period for the Caribbean cruise industry.
The Bahamian capital generated some $5.5m in revenues for Global Ports Holding during the 2020 first quarter, with the port operator now seeking to increase the forward speed on construction work designed to transform its facilities into a destination product that will generate higher per capita spending yields.
Jan Fomferra, Global Ports Holding's chief financial officer, told analysts: "We are still discussing the continued spending in Nassau. We are finalising the numbers there. We have spent to-date, in the first nine months of 2020, $45m/$45.5m.
"The investment commitment could be to $250m. We'll likely end up lower than that but it's still subject to further discussions with our construction partners."
Mr Kutman, meanwhile, implied that Nassau was well-positioned to benefit from whenever the cruise industry resumes sailing as a result of its ongoing cruise port upgrades. "I'm confident the industry will recover," he added, "and as it does we expect the demand for governments and port authorities to improve management of their cruise ports will only rise as a result of this crisis.
"Keep in mind that most of these cruise ports, especially in the Caribbean, their countries are very heavily dependent on tourism. Their fiscal balances are very, very bad. They have not received a single tourist for the last nine months and are entering the peak season for the region."
While acknowledging that Caribbean governments have multiple other priorities amid the COVID-19 pandemic, Mr Kutman said investments in cruise port facilities were essential if countries were to "maintain reasonable cruise passenger volumes never mind the growth problems."
He added that Global Ports was well-positioned to "withstand an extended shutdown" by the cruise industry well into 2021 if that was required, adding that its various ports have a "survivability" of close to 20 months without a single cent of revenue coming in.