Posted on May 11, 2017
By Filippo Cassenelli, St. John Source
GERS and WICO are undertaking a multi million dollar Havensight Mall enhancement project. It includes a very impressive stone gate entrance and huge marquee Havensight sign in gold, blue bit stone walls and a black cast iron gates throughout the property for security and to direct the flow of traffic, enhanced landscaping, painting of all buildings, and improved store signage. The Jaredian designed enhancement project looks great, and once completed the Mall will be a vastly improved destination for visitors and locals.
WICO and Havensight have historically ranked highly as a Cruiseship Dock and Mall destination. This renovation will secure its position as a premier dock and shopping facility as far as appearances go, although its future financial success depends on other substantive factors relative to ship calls, the size of those ships, and berthing contracts with the cruise lines.
Last month a change of leadership was announced. Clifford F. Graham assumed the position of CEO. In an April 12, 2017 Source article WICO acting chair Joyce Dore Griffin said, “a major goal for the new CEO will be to maintain the long standing relationships with the cruise lines as we explore ways to grow the market share of the destination”
How will Mr. Graham protect the existing business and insure increased market share as the cruise lines increasingly build Oasis class vessels and search for docking facilities in our region capable of docking them?
Currently Only VIPA at Crown Bay can berth an Oasis size vessel and WICO cannot at Havensight. I have previously documented St. Maarten’s port project expansion and ability to dock multiple mega ships to our competitive disadvantage.
St. Maarten is not the only Port in high drive to to compete with our destination. In a May 3rd press release St. Kitts Observer Announces Royal Caribbean’s Harmony of the Seas, an Oasis class vessel made its inaugural call to St. Kitts the first of 7 visits from May to August. The minister of tourism Honorable Lindsay Grant spoke at length on the benefits of Oasis class calls and the cruise industry.
He states “I must say also that very shortly we are going to give you a new berthing facility, which again will take the largest ships in the world, Oasis class, side by side. That is a testament to the vision of this government going forward.” The stated goal: to be able to dock 3 Oasis class vessels in a single day in the port of St. Kitt’s.
Clearly, Mr. Graham will not need to do much investigation or due diligence with respect to our competitors’ strategy. They are announcing very loudly their strategic goals and plans which are a serious threat to WICO, VIPA and the Port of Charlotte Amalie’s long term stability and profitability from the cruise trade.
The damage and loss of market share is already occurring with respect to Oasis class ship calls. Royal Caribbean’s Harmony inexplicably cancelled several planned visits to St. Thomas this year, a devastating loss of millions to our economy.
St. Maarten received the full spending power of these ship calls undiluted by a prior stop in our port. Royal Caribbean and Celebrity calls to St. Thomas will drop from 130 calls to 118 in the 2017-18 season. In an earlier op ed “VI Killing the Golden Goose”, I provided a 2014-2018 graph illustrating a four-year -36.4 percent decline of Oasis class ships as we lose calls to St. Maarten and the millions in revenues that accompany a ship call because that port has the berthing capacity.
The reality is St. Maarten is crushing us, and now St. Kitt’s has announced they are going to be a major player providing docking facilities for up to three Mega class ships.
WICO and VIPA are interdependent when it comes to the collection of port fees. When a cruise ship enters the Port of Charlotte Amalie, a $13.40 passenger service fee or “head tax” is assessed. When the ship docks at Crown Bay VIPA collects $13.40. When the ship is berthed at WICO, VIPA collects $5.60 and WICO collects $7.80.
Assume over a ten year period a historical average of 1.2 million passengers to WICO and 450,000 to Crown Bay. (The passenger arrivals fluctuate and have been higher in prior years, and the fee has been lower but incrementally increased over the years). I would conservatively estimate that $90 million dollars has been collected by the two entities in the past ten years. It’s a tremendous revenue stream with the potential for more growth based on increased passenger arrivals. This of course does not reflect what passengers spend ashore and the gross receipts tax generated with each sale, all extensively covered in my prior editorials on the economic benefits of ship calls and passenger spending to our economy. Have any of these monies been set aside for infrastructure projects like dredging?
During Mr. Joseph B Boschulte’s management tenure a $25 million dock infrastructure upgrade was completed. WICO’s Dock can now handle the weight and size of two Oasis class Vessels, subject to the Channel and turning basin being opened up at the mouth of the harbor.
It is crucial therefore to dredge, in order to allow for the safe entry of Oasis size ships through the channel to the WICO dock. Until this project occurs we will continue to lose ground regionally to other ports who are moving heaven and earth to dredge their harbors and build out multiple dock facilities to accommodate the industry trends in ship size.
I would suggest to Mr Graham and the WICO board that their focus and first order of business should be to create a plan to dredge the harbor. 50 new Oasis class ships calls at the West Indian Company Dock could generate $250 million dollars for our economy. While 100 Oasis ship calls docking at WICO represents $500 million dollars in potential income.
Additional revenue will start flowing the day we can dock these Oasis class ships at our premier dock facility. It will stop the shift of calls away from St. Thomas to our regional competition, and bring new vessels to the port of Charlotte Amalie, as new ships debut each year from the competing cruise lines.
Failure to spend $12 million to dredge the harbor will cost the Virgin Islands hundreds of millions of dollars over the next decade and will lead to diminishing returns.
The Florida Caribbean Cruise Association annually publishes on its web site an economic benefit analysis measuring the GDP spending benefit to each island from the cruise trade. Billions are generated by the Cruiseship industry and that revenue stream is up for grabs by the island and ports that are the smartest, and willing to build berthing capacity for the big vessels.
This estimated $12-million-dollar project would require close cooperation with VIPA since they oversee the waterway and will need to be the entity applying for the permit to dredge With the Army Corps of Engineers. The application process itself is lengthy and complex, and may take as long as a year maybe more to complete. The actual work could take 8 months or longer.
The Long Bay Dock and festival park project developed in 2014 by former CEO Mr Joseph B. Boschulte and the cruise lines, originally would have taken all the harbor dredge for the upland fill for the festival park site. However, absent this project going forward, permission will be required from the Army Corps for a deep water off shore disposal site for the silt and mud. Given the lengthy steps required planning should be undertaken this summer and cannot be delayed if we want to remain in the game.
I was appointed to the Governor’s newly minted Ports of the Virgin Islands Charlotte Amalie Task force. During that meeting I raised, amongst other issues the importance of dredging the harbor so WICO can receive Oasis class vessels. Financing was clearly a problem. I understand WICO has maxed out its borrowing capacity and VIPA is in no position to come up with the $12 million required for the dredging project. Doing nothing will be a recipe for economic disaster, so a financing plan must be developed.
It is troubling that GERS the owner of Havensight Recently loaned $11 million to a west end grocery store that has not yet opened, and yet financing cannot be found for the dredging initiative which will bring hundreds of millions in revenue to the territory, and substantially benefit the Havensight Mall owned by GERS.
This $12-million-dollar investment lays the foundation for a guaranteed return in the billions over the next two decade for WICO, GERS (owner of The Havensight Mall), The Government of the Virgin Islands, Government workers and Virgin Islanders on all three islands whose livelihoods depends on the cruise trade either directly or indirectly.
I appeal to our leadership, the board of WICO and VIPA, and the newly appointed CEO of WICO, Clifford F. Graham to undertake immediately this crucial harbor dredging project which ultimately will protect jobs and government taxes and give the Port of Charlotte Amalie commercial flexibility and capacity with the cruise lines, with respect to berthing multiples Oasis class ships between the WICO and Crown Bay Dock.
It’s time for us to recapture our position as the premier cruise destination in the region by enabling the West Indian Company Ltd, our marquee docking and shopping complex to berth the largest ships in the world.
Note: Filippo Cassinelli runs A.H. Riise Mall on St. Thomas, which has been in his family since 1928.
Source: St. John Source
