PHILIPSBURG–Port St. Maarten on Sunday said the country’s cruise numbers will increase again to more than two million cruise passengers within several years based on its strategic planning and pro-activeness in promoting cruise tourism and the destination.
The Port was at the time responding to discussions about the country’s cruise numbers and the industry during last week’s meeting of the Central Committee of Parliament on the draft 2017 budget.
“The Port always looks ahead and plans in a strategic manner,” the Port said in a press release. “All stakeholders have a role to play in order to keep the destination ahead of its competitors. This means that timely investments have to be made in order for Port St. Maarten and the destination to maintain their number one status in the Region and remain competitive.”
The Port said clarity was needed on the discussions in the meeting of the Central Committee regarding some of the statements made on its financial results and the state of the cruise industry.
The Port said continued investments in new areas by destinations and cruise lines such as in the Bahamas where MSC Cruises is purchasing private island Ocean Cay for US $200 million; new ports coming online such as Amber Cove in the Dominican Republic, an investment of US $85 million; new cruise piers in St. Kitts and Antigua; and emerging cruise markets in Asia has had its impact on the Caribbean thereby limiting further growth. “North-eastern Caribbean yields where we are located are softer as the focus is now on growing the Cuba region which we also call the western Caribbean.”
The Port said even though it is confronted with these issues, as a destination, St. Maarten has seen growth by growing for the first time in 2014 to more than two million cruise passengers (2,001,996). In 2015, St. Maarten received 1,901,617 cruise passengers and for 2016 we anticipate approximately 1.7 million cruise passengers.
“Despite the challenges, our cruise numbers will grow once again based on discussions that we have had with our cruise partners to secure business for the upcoming cruise seasons. Cruise seasons go through a business cycle. It has happened in the past and this time it won’t be the last. Cruise lines adjust their itineraries annually, but you have to be cognizant and plan ahead and look for the opportunities which we have been doing,” the Port said.
MSC Cruises, Swiss-based world’s largest privately-owned cruise line, will become the third largest cruise company surpassing Disney and Norwegian Cruise Lines (NCL) in 2017.
MSC Cruises has committed to increasing cruise tourism passenger numbers to the destination for the 2017/2018 winter season. MSC Cruises will surpass 100,000 cruise passengers some time in 2017 to the destination.
MSC Cruises made 24 port calls in 2015 bringing in 71,167 passengers. The forecast for 2016 is 26 port calls and 91,734 passengers and the outlook for 2017 is 33 port calls with approximately 127,674 passengers.
NCL and Disney Cruise Lines reduced their number of calls to the destination – they did not cease calling to St. Maarten and increased calls to other destinations. In 2015 NCL made 42 port calls bringing in 139,419 cruise passengers; forecast for 2016 is 29 port calls with 82,316 passengers; outlook for 2017 is 39 port calls with 101,007 passengers.
In 2015 Disney Cruise Line made 25 port calls bringing 93,579 cruise passengers; forecast for 2016 is nine port calls with 22,700 passengers; and outlook for 2017 is 11 calls with 27,400 passengers.
“The financial challenges that Port St. Maarten has been confronted with is that we are not able to increase any fees or estimate increases in our planning forecast models due to market conditions. We are cognizant of industry trends and developments and what our competitors are doing. If we would proceed by raising fees, this would have a major negative impact as we have been told by our cruise partners. As a port we cannot cut cost overnight. Our port facility is over 15 years old. Upgrading and maintenance cost increase over time which has been the case,” the Port said.
According to the Port’s financial model, its losses in revenues amounts to about US $12 million due to delays in implementing harbour operational concessions or facility fees.
“Even though we loss US $12 million on income over the years, we still had to maintain focus on the cost of sales and marketing of the Port and the destination. The reality is that there is no entity which promotes cruise nor is there any destination marketing authority. These are the realities of the day that we live in, but the Port has been doing its share and taking the lead where it concerns cruise and destination marketing. We will be attending for the second time the “Vakantie Beurs Utrecht” in The Netherlands in January 2017 to promote cruise and the destination.”
In 2014, Port St. Maarten Group of Companies incurred a consolidated loss of US $9 million. “It should be noted that 2014 included two very specific one off items such as the Florida Caribbean Cruise Association (FCCA) Conference and Exhibition hosted by St Maarten which incurred expenses to the Port of US $6.5 million and secondly, the settlement of the litigation case of US $4 million net. Those two items are chiefly responsible for the significant losses in 2014 and results from normal operations would have shown a modest profit over 2014.”
“Overall the cleaning and maintenance cost line items are going up due to the ageing of the facilities. With part of the facilities now being over 15 years old, this is reflected in higher cleaning/maintenance costs. Port St. Maarten has to also maintain properties outside the main facility in Pointe Blanche which is related to the safety and security of cruise passengers,” the Port said.
Port St. Maarten has also acquired other properties over the years. “The Port’s footprint has more than doubled. Investments have been made in additional buildings on the properties of Cargo and Cruise facilities (Cement Bagging Facility and Area, Cargo Facilities, Homeporting Facility, among many more investments); facilities have been upgraded and expanded, RO-RO ramps and main pavements, access roads, cruise passenger restrooms, tour bus area, car rental and road area, Cruise Terminal Building and surrounding area for amenities, taxi area and parking ramp and roundabouts.”
The Port also listed several investments made, noting “if you don’t expand, modernise and continue to be innovative, it results in stagnation and not being able to meet the demands of the industry resulting in your competitors taking the business away.”
The Port said also that it will be executing as a follow-up priority in 2017 a detailed Enterprise Risk Assessment (ERA) with Ernst and Young which prepares its strategic development for 2017 and beyond. The ERA is the process of planning, organising, leading, and controlling the activities of an organisation in order to minimise the effects of risk on an organisation’s capital and earnings.
“Enterprise risk management expands the process to include not just risks associated with accidental losses, but also financial, strategic, operational, and other risks. Delays in strategic investments are also part of this process. Please note that if the Port was not number one certain comments made in the Central Committee meeting of Parliament might have some merit, but as part of the audit umbrella, our strategic plan clearly dictates what needs to be done and we work diligently on executing our plans of action and approaches in order to ensure our place within the region,” the Port said.
“As port, we agree with the comments that government-owned companies should communicate more with the shareholder, but this also goes both ways and it is a two-way street. With Government changing five times in five years, the Port has faced this challenge which has delayed a list of pending matters that have still not been executed by the shareholder as written in audit statements from PricewaterhouseCoopers that includes a huge amount of formal requests and actions.”
The Port said it hopes to address these pending matters in the next shareholders meeting.