business@tribunemedia.net
WEDNESDAY, JUNE 2, 2021
$4.91 ‘Distinguish’ Nassau through five-year tax break extension By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Downtown Nassau Partnership’s (DNP) co-chair has hailed the government’s five-year tax break extension for giving investors certainty and helping to “distinguish” Nassau’s city from other areas. Charles Klonaris told Tribune Business that the extension of the City of Nassau Revitalisation Act for five years to end-June 2026, together with its import duty, Excise Tax, VAT and real property tax incentives, was “such a huge benefit” to reducing the payback period for when entrepreneurs will see a return on their property upgrades. “We’ve been working on that for some time, and it’s key they [the government] keep extending it,” he argued. “The government has been very accommodating with the revitalisation of the city. It’s so critical. It encourages investment. We welcome that. It’s such a huge benefit. “When we do something, whether we get the traffic or not, it’s still a very expensive proposition to renovate, upgrade or do any building. You need a minimum of five years to at least see the benefits of your investment. It [the Act] shortens the return period, which is really so critical. If you don’t have that, you will be looking at a minimum of ten to 12 years depending on how successful the traffic flow is.” Mr Klonaris said himself and his brothers would not have constructed their multi-million dollar plaza, Elizabeth on Bay, at the corner of Elizabeth and Bay Streets, without the various tax breaks offered by an Act that was intended to incentivise property owners to enhance, repair and upgrade their properties to improve the appearance of downtown Bay Street and surrounding areas. Some observers will argue that, especially east of East Street, the provision of tax breaks has not had the desired effect, but Mr Klonaris told this newspaper. “We have to distinguish downtown vis a vis other areas for development. “The real encouragement in this is giving us an advantage over other areas such as Cable Beach, out east and Lyford Cay. If someone wants to open a law firm or high-tech office space, it makes more sense to pay $20 per square foot rather than $40-$50 per square foot. Downtown can offer that; no one else can offer that rate. Why pay $40-$50 per square foot, especially if they are just starting out?” Mr Klonaris called for talks between downtown merchants and the cruise lines over how Nassau can be better promoted to the latter’s passengers with that sector set to resume sailing within weeks following a 15-month COVID-imposed halt. “Neither they nor we have done a proper job in marketing the city of Nassau,” he said. “There’s quite a lot to offer. If you are ready to open a business there’s no better place than downtown because of the logistics as well as the cost of doing business. We’re talking huge advantages for those businesses that want to start-up downtown.” The DNP co-chair added that it was also critical to solve downtown Nassau’s long-standing parking woes if locals and residents are to be enticed back to Bay Street, especially as the city starts to re-open with the return of the cruise ships.
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Cargo port ‘starts to shrink the gap’
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
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ASSAU’S sole cargo port yesterday voiced optimism it has “started to shrink the gap” to pre-COVID business volumes with vehicle imports making up 20 percentage points during May alone. Dion Bethell, Arawak Port Development Company’s (APD) president and chief financial officer, told Tribune Business it “can sense within the past four to six weeks” that shipping business has picked up in line with the tourism industry’s post-COVID re-opening and that of the wider economy. Speaking after the BISXlisted operator of Nassau Container Port posted a 37
percent profits decline for the nine months to endMarch 2021, Mr Bethell said vehicle imports for that period had been down 50 percent year-over-year. However, following a spike in auto arrivals that began
at the end of April, this category was now down only 30 percent against prior year comparatives. APD’s performance is a good benchmark against which to measure that of the wider Bahamian economy,
ROYAL Caribbean is aiming to triple its Bahamas arrivals to 6m by 2030, a senior executive disclosed yesterday, adding that this nation must seize its opportunity to become a “permanent” home port base. Russell Benford, Royal Caribbean’s vice-president of government relations for the Americas, pledged to Tribune Business that the extra 4m passengers it plans to bring to this nation by 2030 will generate an additional $1bn in spending that stays with Bahamian companies - not the cruise line. While Royal Caribbean has projected a $1bn economic impact over a tenyear period for its planned Royal Beach Club on Paradise Island (see article in tomorrow’s Tribune Business), Mr Benford said the cruise industry’s projected
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• Targets bringing an additional 4m by 2030 • Urges nation to seize home port possibility • Says collaboration key to maximise spend
RUSSELL BENFORD post-COVID growth gives it little choice but to seek out new home ports outside the US. With Florida’s cruise ports at full capacity, and those in Texas and Louisiana rapidly approaching such status, he predicted that “somebody in the Caribbean will be the first” to achieve permanent home port status with the cruise lines.
And, with both Royal Caribbean and Crystal Cruises set to home port in The Bahamas this summer, Mr Benford said the outcome will determine if such operations “can be viable long-term for The Bahamas”. He added that the proposed Grand Lucayan acquisition, together with its Coco Cay private island and Nassau, would enable Royal Caribbean to offer sevenday cruises solely within The Bahamas. The Royal Caribbean executive revealed that the cruise line spent $70m during the COVID-19 lockdown upgrading its Perfect Day experience at Coco Cay in the Berry Islands, and estimated that by 2030 - with the Grand Lucayan, Paradise Island and the
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
Grand Bahama Shipyard included - it will have invested around $1bn in this nation. “As we look at growing that passenger number from 2m to 6m, the cruise industry itself will probably double the number of ships in the next decade and run out of existing home port space,” Mr Benford explained. With Florida home ports “at capacity”, and Texas heading in the same direction, the cruise industry “is going to look at home porting operations in the Caribbean for the next decade”. This, he added, was why Royal Caribbean’s summer home porting in Nassau, which is scheduled to begin
given that 90 percent of all imports to New Providence cross its bulkheads, and Mr Bethell said it was on target to return to pre-COVID shipping volumes by 2022’s first calendar quarter if present trends hold. “At the end of April, for the month of May, we saw an increase in the amount of vehicles that are now being imported,” he disclosed. “That, for us, is one indicator things are starting to improve compared to what it was. We’ve seen quite a few vehicles coming in, but not at pre-COVID volumes.
Royal Caribbean to triple Bahamas arrivals to 6m By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
Activist: Spanish Wells cruise call ‘very bad policy’ AN environmental activist is urging the government not to compound The Bahamas’ economic woes with “bad policy” by permitting Crystal Cruises to call on Spanish Wells as a home port destination. Sam Duncombe, reEarth’s president, told Tribune Business that employing Spanish Wells as an alternative destination to Harbour Island was “a really ill-conceived concept” as she queried why The Bahamas was “still pursuing” the cruise industry given the outstanding issues regarding its economic, environmental and other impacts. “I get that we’re in deep trouble, but this is not the time to be reactive with the kinds of projects you approve,” Mrs Duncombe charged. “That’s the equivalent of sending them to Harbour Island or Hope Town. Why not send them to Princess Cay? I just think it’s very short-sighted.” She spoke out after a petition opposing Crystal Cruises’ plan to use Spanish Wells as a port-of-call on its summer Bahamas ‘home porting’ itinerary, which will feature a series of seven-night voyages around this nation starting on July 3 and ending in November, garnered 1,047 signatures in just three days. The petition, featured on change.org, said: “We must stop Crystal Cruises from adding Spanish Wells, Bahamas, as a port of call and anchoring its ship at Egg Island. The Crystal Serenity ship carries between ship 900 to 1000 people. “Spanish Wells has a population of fewer than 2,000 people, it is only two miles long by a half-mile wide and is a quaint fishing town. It’s a quiet, safe and clean island. It is unlikely the Spanish Wells’ infrastructure can handle such a sudden increase in stress.” Continuing to make the case against Crystal, the petition added: “Over the last few years, Spanish Wells has created a strong and unique tourist brand and related products. Most who come to Spanish Wells
• APD makes up 20% pts on vehicle imports in May • Top executive ‘can sense’ revival in last six weeks • Eyes pre-COVID return by early 2022; profits off 37%
ARAWAK PORT
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Grand Lucayan’s sale ‘down to final papers’
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
A SENIOR Royal Caribbean Cruise Lines executive yesterday voiced optimism that its Grand Lucayan acquisition will finally “close this summer”, adding that negotiations were “down to a handful of documents”. Russell Benford, Royal Caribbean’s vice-president of government relations for the Americas, acknowledged to Tribune Business that many Bahamians are increasingly disbelieving that the resort’s redevelopment will ever happen but said the cruise line’s ambitions suffered a major hit when the entire industry was shutdown by COVID-19. While asserting that Royal Caribbean and its ITM Group partner were “close” to sealing the deal for Freeport’s former ‘anchor resort’ property, he also confirmed that talks with Hutchison Whampoa over the accompanying redevelopment of Freeport Harbour also have yet to complete. Mr Benford reaffirmed that Royal Caribbean/ITM,
• Royal Caribbean exec optimistic of ‘summer closing’ • But harbour talks with Hutchison ‘not completed’ • Project can’t proceed ‘as aggressively’ as planned
GRAND LUCAYAN and their Holistica joint venture, remain intent on completing both deals at the same time. He added that the government’s acquisition of Grand Bahama International Airport from Hutchison-controlled Freeport Harbour Company had also given the partners greater confidence to move forward given that the facility was the hotel’s airlift “lifeline”. “I think we’re close. I’ve been saying that for quite some time, I realise that,” Mr Benford told this
newspaper in a nod to the protracted negotiations. “I’m hopeful that we close this summer, and I think we’re down to a handful of documents that need to be reviewed and a couple of financial instruments that have to go through the legal process, but we’re getting there and are hopeful of a summer closing.” Tribune Business contacts, speaking on condition of anonymity, previously revealed at the time of the Grand Bahama
International Airport purchase that the government had been hoping to close the Grand Lucayan’s sale to Royal Caribbean/ITM by June 15. That timeline is only two weeks away, and appears unlikely to be realised. The government admitted as much in its 2021-2022 budget, allocating a $3m subsidy to Lucayan Renewal Holdings, the special purpose vehicle (SPV) that owns the resort, in a sign it fears it will be holding on to the property through September and the first quarter of its fiscal year at least. Acknowledging the frustration among many Bahamians that the Grand Lucayan sale has yet to complete, with many now adopting a “believe it when we see it attitude”, Mr Benford pointed out that the deal - which took place just weeks before the COVID19 lockdown - had been
derailed by the pandemic. With Royal Caribbean incurring billions of dollars in losses following the 15-month shutdown of the cruise industry, he explained that the cruise line remained committed to the project but will have to adopt a more phased approach to construction and redevelopment as cash flows allow. “I think the timelines have shifted a little bit,” Mr Benford said. “We are not able to be as aggressive as we’d like with reconstructing the project at once. We have to do it in phases and explore what we can do. It’s taken us a bit longer to negotiate with Hutchison... COVID19 was a tough time for all of us and to do business.” Besides the Grand Lucayan’s purchase from the government, the Royal Caribbean/ITM proposal also calls for the addition of new cruise berths at Freeport Harbour as well as the creation of a water-based adventure theme park for the thousands of passengers that the cruise line plans to bring to Freeport on an annual basis.
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