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HomeNewsArchivesCRUISE LINES: CROWN BAY MUST EXPAND, OR ELSE

CRUISE LINES: CROWN BAY MUST EXPAND, OR ELSE

Editor's note: This article represents the views of the two cruise lines that have entered into agreement with the Port Authority to expand the Crown Bay dock and develop an adjacent shopping complex. The St. Thomas-St. John Chamber of Commerce is preparing a position paper on the development. The Source will publish a second article covering that document and viewpoints of downtown Charlotte Amalie business owners on the project.
Nov. 12, 2001 – In an unprecedented agreement with the Port Authority, the Royal Caribbean and Carnival cruise lines have pledged to spend $31 million to expand the Crown Bay dock and build a shopping complex, to be called the Crown Bay Cruise Center, on adjacent land.
The commitment is for $15.5 million for the dock expansion and $15.5 million for the shopping development.
In an interview, an official of one of the cruise lines expressed surprise at the negative reaction of some local business owners to the recently agreed-upon undertaking.
"I think they're missing the forest for the trees," John Tercek, Royal Caribbean Cruises Ltd. vice president for commercial development, said. He referred to recent meetings of cruise officials with a group of Main Street merchants and property owners and John de Jongh Jr., St. Thomas-St. John Chamber of Commerce president.
"These meetings were surprisingly negative," Tercek said. "We were quite taken aback. The development can only help the local economy. I think there's been a total misunderstanding."
Tercek was critical of Edward Thomas, president of The West Indian Co., who has been an outspoken critic of the Crown Bay project. "He has put fear in the retailers minds," the cruise line executive charged. "The fear was palpable in one eight-hour meeting we had."
For Tercek, the rational behind the project is beyond question. With all of the major cruise lines building megaships now, he said, "the problem is where are we going to put them?" He added that The West Indian Co. does a "great job" of shoe-horning in three big ships at the WICO dock, but that's all it can accommodate. "Three ships a day seven days a week in season leaves St. Thomas closed for further business with the larger ships," he said.
Giora Israel, vice president for strategic planning for Carnival Corp., which owns Carnival Cruise Lines, expressed the same view in a separate interview. "There's no question about it," he said. "By declaring a cap on Crown Bay development, St. Thomas will not be competitive in the future."
The size of the new ships has become the industry standard, the two executives said. In marine nomenclature these vessels are divided into two groups — "panamax" for those that can fit into the locks of the Panama Canal (seemingly with inches to spare), and "panamax max," for those too wide to do so. Carnival, Royal Caribbean and other lines are building ships which are in the Voyager class, designed to carry upwards of 3,000 passengers.
The deal: Take it, or they'll leave
"We are looking down the road about five to seven years," Tercek stressed. "If Crown Bay isn't developed the way we envision it, future business will diminish. If things don't improve, things become outmoded. If St. Thomas doesn't want to keep up with the industry, it will no longer be a major port." Further, he said, "Most ports fall flat in comparison to the ambience we create on the ships."
Israel said, "It's important to understand that the ships that don't go to Crown Bay will disappear."
Tercek went so far as to say that "Nassau and Cozumel will probably surpass St. Thomas in the next year" in numbers of passengers. And "Cozumel has five new retail projects there."
Royal Caribbean has phased out all but two of its smaller ships, which it uses for ports such as Bermuda that can't accommodate the larger vessels, Tercek said.
On busy cruise ship days, some ships now end up anchoring in the harbor, an option that is not popular with visitors, Tercek said. "Passengers don't like to be taken ashore by tenders," he said. "It's uncomfortable, and it limits the time they can spend on shore to dramatically fewer hours. It creates more congestion on the already crowded waterfront, and the crew usually doesn't get on shore at all."
WICO estimates that crew members coming ashore spend an average of about $73 a day. Large ships carry crews of a thousand and more.
Royal Caribbean's newest ship, the largest in the world, is to visit St. Thomas Nov. 24. The Adventure of the Seas, 1,020 feet long, will tie up at the WICO dock. It offers its 3,114 passengers such enticements as an ice-skating rink and a rock-scaling wall.
The Sunday San Juan Star reported that the Adventure of the Seas made a special visit to New York Harbor on Nov. 10, in response to Mayor Rudolph Giuliani's call to the nation to visit the city. The 142,000-ton ship was officially named by Giuliani and New York Fire and Police Department members in a ceremony where Royal Caribbean donated $50,000 to the Twin Towers Relief Fund.
Carnival Cruise Lines is replacing a dozen of its older, 1,400-passenger ships over the next two years, Israel said. The larger vessels that will take their place "will have to dock at Crown Bay," he said. "There won't be room for them at WICO … If they can't get to a dock, they won't bring them any more. It could be devastating for St. Thomas."
Upgrading Crown Bay a long-ago goal
Tercek said he has been asking VIPA for years to improve the Crown Bay area. "That grassy lot looks like a World War II torpedo field," he said of the landfill in Sub Base. "We told the authority that we would develop the dock if we could build alongside it. The contrast between the ambience we offer our passengers on our ships and the Crown Bay dock is a nightmare."
If the cruise lines can control Crown Bay, he said, "we can create the experience our passengers are looking for. Plenty of ports are doing more to update shoreside experiences in a variety of ways. There's more shore tours. People want more choices."
And the development will bring business to downtown, as well as the rest of the island, Tercek said. "It's a great opportunity for niche marketing," he said. "We will have shops exclusively for local arts and crafts."
Downtown merchants, however, don't want to see Crown Bay controlled by the cruise lines. Although they agree that people will want to take land and water tours, they fear that the shopping will be restricted to Crown Bay, de Jongh said. He said the business community strongly agrees with the need to expand the Crown Bay dock. Its concern, he said, is the amount of retail business the downtown merchants may stand to lose.
Crown Bay is an opportunity for the government and entrepreneurs to act together, Tercek said. Kent Bernier, Gov. Charles W. Turnbull's economic adviser, said at an August VIPA board meeting that the government's Economic Development Authority will coordinate the shopping center development.
Tercek scoffed at the idea of passengers staying in the Crown Bay area. "People aren't going to sit around Crown Bay all day," he said. "They want to take tours, see the historic areas of downtown, go to Carifest, go to Magens Bay, see the island."
Carifest, currently projected to open by 2003, is a Caribbean theme park being developed adjacent to Havensight Mall and the WICO dock on land owned by WICO. Tercek said he spoke with Carifest principals Eric Matthews and Leo Barbel, who had expressed reservations about the Crown Bay project.
"I explained to them that if the large ships don't come to St. Thomas because they have no place to dock, the projected revenues Carifest would show
to their investors down the line would be severely diminished. It will bring traffic to Carifest," he said.
Setup could avoid taxi-water tour conflicts
The project also could bring peace between the currently warring taxi drivers and water-tour operators. Tercek said there will be separate staging areas for taxis and for the water tour operators.
Long-simmering hostility between taxi drivers and water-tour operators at the WICO dock reached the boiling point last month. Sen. Celestino A. White Sr. had introduced legislation to bar the water-tour operators from the WICO dock but put it on hold pending further investigation of the conflict. At a meeting of the two groups in October, nothing was resolved.
"We can be an economic engine in the community," Tercek said.
"We'll be on the same side of the fence in the future as a landlord, with a sharing of the same economic concerns as other businesses." Israel said, "We won't be just here every Tuesday any more — we will be working with the territory. Everything that happens on land is a taxable entity."
"We have worked with our architects as to what the design should be," Tercek said, "looking at the whole 95,000-square-foot area, at zoning and what the maximum traffic flow could be. The shore side can be huge, with the taxis, the crew services, food and beverage outlets and a thematic reception area."
Tercek said a misunderstanding about the allotment of space in the development has "created a lot of ill will." He said initially there would be about 5,000 square feet for local arts and craft shops, about 7,500 square feet for food and beverage retailers, and about 30,000 square feet for competitive retail outlets. "The retail part of the project would be about the same size as Port of $ale mall at Havensight," he said, "It would be a fraction of Havensight, about 10 or 15 shops. This is what all the hue and cry is about."
He said the retail space could house a variety of crew-oriented shops — an Internet café, a video rental store, medical offices, car rental booths — and "the Chamber of Commerce and Hotel Association offices, if they should like."
Israel, a local resident for four years in the early 1980s when he oversaw the development of Coral World, said he has a "great affection for St. Thomas." He said, "We want only to work in harmony with everybody. We acted in good faith."
Both cruise line executives pointed out that their companies were the only ones to answer the request for proposals put out by VIPA. Israel said the project is moving forward with St. Thomas engineer Alton Adams Jr. heading the Coastal Zone Management permit process.
First ship calls to come in a year
The letter of intent between VIPA and the cruise lines calls for the development to get under way in the first quarter of 2002 and be completed in the fourth quarter, barring unusual delays. Initial ship calls at Crown Bay, under this time frame, should begin a year from now, with retail operations to starting in the first quarter of 2003. The agreement calls for the Crown Bay Development Co. to lease the land for up to 50 years, after which it will revert to VIPA.
VIPA will own and operate the dock and will grant priority berthing on an annual basis to ships of Carnival and Royal Caribbean Lines. Ships of other lines will be allowed to berth on an availability basis.
The Crown Bay Development Co., a partnership of Royal Caribbean and Carnival, will lease the land for $25,000 a year with consumer price index adjustments, with payment to commence upon the start-up of retail operations. The company also is to pay VIPA a percentage of its net pretax income annually, subordinated to mortgage debt service, according to a formula that starts at 7.5 percent for the first 10 years and gradually increases to 37.5 percent after 40 years.
Under the agreement, both cruise lines will get to keep 75 percent of the per-passenger fees and port tariffs for the first 20 years, and 25 percent for the next 10 years. The lines are projecting that 400,000 passengers will be aboard their ships docking in Crown Bay the first year and that the number will gradually increase.
VIPA has offered to cooperate with the two cruise lines to enable them to structure the most favorable third-party financing, including tax-exempt financing utilizing VIPA's legal status as a tax-exempt entity. A Port Authority representative will have a seat on the CBDC board of directors.
The agreement was signed by VIPA, a quasi-independent government agency, and the two cruise lines in August. There is no mention in the document of any need for legislative approval.

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Editor's note: This article represents the views of the two cruise lines that have entered into agreement with the Port Authority to expand the Crown Bay dock and develop an adjacent shopping complex. The St. Thomas-St. John Chamber of Commerce is preparing a position paper on the development. The Source will publish a second article covering that document and viewpoints of downtown Charlotte Amalie business owners on the project.
Nov. 12, 2001 - In an unprecedented agreement with the Port Authority, the Royal Caribbean and Carnival cruise lines have pledged to spend $31 million to expand the Crown Bay dock and build a shopping complex, to be called the Crown Bay Cruise Center, on adjacent land.
The commitment is for $15.5 million for the dock expansion and $15.5 million for the shopping development.
In an interview, an official of one of the cruise lines expressed surprise at the negative reaction of some local business owners to the recently agreed-upon undertaking.
"I think they're missing the forest for the trees," John Tercek, Royal Caribbean Cruises Ltd. vice president for commercial development, said. He referred to recent meetings of cruise officials with a group of Main Street merchants and property owners and John de Jongh Jr., St. Thomas-St. John Chamber of Commerce president.
"These meetings were surprisingly negative," Tercek said. "We were quite taken aback. The development can only help the local economy. I think there's been a total misunderstanding."
Tercek was critical of Edward Thomas, president of The West Indian Co., who has been an outspoken critic of the Crown Bay project. "He has put fear in the retailers minds," the cruise line executive charged. "The fear was palpable in one eight-hour meeting we had."
For Tercek, the rational behind the project is beyond question. With all of the major cruise lines building megaships now, he said, "the problem is where are we going to put them?" He added that The West Indian Co. does a "great job" of shoe-horning in three big ships at the WICO dock, but that's all it can accommodate. "Three ships a day seven days a week in season leaves St. Thomas closed for further business with the larger ships," he said.
Giora Israel, vice president for strategic planning for Carnival Corp., which owns Carnival Cruise Lines, expressed the same view in a separate interview. "There's no question about it," he said. "By declaring a cap on Crown Bay development, St. Thomas will not be competitive in the future."
The size of the new ships has become the industry standard, the two executives said. In marine nomenclature these vessels are divided into two groups -- "panamax" for those that can fit into the locks of the Panama Canal (seemingly with inches to spare), and "panamax max," for those too wide to do so. Carnival, Royal Caribbean and other lines are building ships which are in the Voyager class, designed to carry upwards of 3,000 passengers.
The deal: Take it, or they'll leave
"We are looking down the road about five to seven years," Tercek stressed. "If Crown Bay isn't developed the way we envision it, future business will diminish. If things don't improve, things become outmoded. If St. Thomas doesn't want to keep up with the industry, it will no longer be a major port." Further, he said, "Most ports fall flat in comparison to the ambience we create on the ships."
Israel said, "It's important to understand that the ships that don't go to Crown Bay will disappear."
Tercek went so far as to say that "Nassau and Cozumel will probably surpass St. Thomas in the next year" in numbers of passengers. And "Cozumel has five new retail projects there."
Royal Caribbean has phased out all but two of its smaller ships, which it uses for ports such as Bermuda that can't accommodate the larger vessels, Tercek said.
On busy cruise ship days, some ships now end up anchoring in the harbor, an option that is not popular with visitors, Tercek said. "Passengers don't like to be taken ashore by tenders," he said. "It's uncomfortable, and it limits the time they can spend on shore to dramatically fewer hours. It creates more congestion on the already crowded waterfront, and the crew usually doesn't get on shore at all."
WICO estimates that crew members coming ashore spend an average of about $73 a day. Large ships carry crews of a thousand and more.
Royal Caribbean's newest ship, the largest in the world, is to visit St. Thomas Nov. 24. The Adventure of the Seas, 1,020 feet long, will tie up at the WICO dock. It offers its 3,114 passengers such enticements as an ice-skating rink and a rock-scaling wall.
The Sunday San Juan Star reported that the Adventure of the Seas made a special visit to New York Harbor on Nov. 10, in response to Mayor Rudolph Giuliani's call to the nation to visit the city. The 142,000-ton ship was officially named by Giuliani and New York Fire and Police Department members in a ceremony where Royal Caribbean donated $50,000 to the Twin Towers Relief Fund.
Carnival Cruise Lines is replacing a dozen of its older, 1,400-passenger ships over the next two years, Israel said. The larger vessels that will take their place "will have to dock at Crown Bay," he said. "There won't be room for them at WICO ... If they can't get to a dock, they won't bring them any more. It could be devastating for St. Thomas."
Upgrading Crown Bay a long-ago goal
Tercek said he has been asking VIPA for years to improve the Crown Bay area. "That grassy lot looks like a World War II torpedo field," he said of the landfill in Sub Base. "We told the authority that we would develop the dock if we could build alongside it. The contrast between the ambience we offer our passengers on our ships and the Crown Bay dock is a nightmare."
If the cruise lines can control Crown Bay, he said, "we can create the experience our passengers are looking for. Plenty of ports are doing more to update shoreside experiences in a variety of ways. There's more shore tours. People want more choices."
And the development will bring business to downtown, as well as the rest of the island, Tercek said. "It's a great opportunity for niche marketing," he said. "We will have shops exclusively for local arts and crafts."
Downtown merchants, however, don't want to see Crown Bay controlled by the cruise lines. Although they agree that people will want to take land and water tours, they fear that the shopping will be restricted to Crown Bay, de Jongh said. He said the business community strongly agrees with the need to expand the Crown Bay dock. Its concern, he said, is the amount of retail business the downtown merchants may stand to lose.
Crown Bay is an opportunity for the government and entrepreneurs to act together, Tercek said. Kent Bernier, Gov. Charles W. Turnbull's economic adviser, said at an August VIPA board meeting that the government's Economic Development Authority will coordinate the shopping center development.
Tercek scoffed at the idea of passengers staying in the Crown Bay area. "People aren't going to sit around Crown Bay all day," he said. "They want to take tours, see the historic areas of downtown, go to Carifest, go to Magens Bay, see the island."
Carifest, currently projected to open by 2003, is a Caribbean theme park being developed adjacent to Havensight Mall and the WICO dock on land owned by WICO. Tercek said he spoke with Carifest principals Eric Matthews and Leo Barbel, who had expressed reservations about the Crown Bay project.
"I explained to them that if the large ships don't come to St. Thomas because they have no place to dock, the projected revenues Carifest would show to their investors down the line would be severely diminished. It will bring traffic to Carifest," he said.
Setup could avoid taxi-water tour conflicts
The project also could bring peace between the currently warring taxi drivers and water-tour operators. Tercek said there will be separate staging areas for taxis and for the water tour operators.
Long-simmering hostility between taxi drivers and water-tour operators at the WICO dock reached the boiling point last month. Sen. Celestino A. White Sr. had introduced legislation to bar the water-tour operators from the WICO dock but put it on hold pending further investigation of the conflict. At a meeting of the two groups in October, nothing was resolved.
"We can be an economic engine in the community," Tercek said.
"We'll be on the same side of the fence in the future as a landlord, with a sharing of the same economic concerns as other businesses." Israel said, "We won't be just here every Tuesday any more -- we will be working with the territory. Everything that happens on land is a taxable entity."
"We have worked with our architects as to what the design should be," Tercek said, "looking at the whole 95,000-square-foot area, at zoning and what the maximum traffic flow could be. The shore side can be huge, with the taxis, the crew services, food and beverage outlets and a thematic reception area."
Tercek said a misunderstanding about the allotment of space in the development has "created a lot of ill will." He said initially there would be about 5,000 square feet for local arts and craft shops, about 7,500 square feet for food and beverage retailers, and about 30,000 square feet for competitive retail outlets. "The retail part of the project would be about the same size as Port of $ale mall at Havensight," he said, "It would be a fraction of Havensight, about 10 or 15 shops. This is what all the hue and cry is about."
He said the retail space could house a variety of crew-oriented shops -- an Internet café, a video rental store, medical offices, car rental booths -- and "the Chamber of Commerce and Hotel Association offices, if they should like."
Israel, a local resident for four years in the early 1980s when he oversaw the development of Coral World, said he has a "great affection for St. Thomas." He said, "We want only to work in harmony with everybody. We acted in good faith."
Both cruise line executives pointed out that their companies were the only ones to answer the request for proposals put out by VIPA. Israel said the project is moving forward with St. Thomas engineer Alton Adams Jr. heading the Coastal Zone Management permit process.
First ship calls to come in a year
The letter of intent between VIPA and the cruise lines calls for the development to get under way in the first quarter of 2002 and be completed in the fourth quarter, barring unusual delays. Initial ship calls at Crown Bay, under this time frame, should begin a year from now, with retail operations to starting in the first quarter of 2003. The agreement calls for the Crown Bay Development Co. to lease the land for up to 50 years, after which it will revert to VIPA.
VIPA will own and operate the dock and will grant priority berthing on an annual basis to ships of Carnival and Royal Caribbean Lines. Ships of other lines will be allowed to berth on an availability basis.
The Crown Bay Development Co., a partnership of Royal Caribbean and Carnival, will lease the land for $25,000 a year with consumer price index adjustments, with payment to commence upon the start-up of retail operations. The company also is to pay VIPA a percentage of its net pretax income annually, subordinated to mortgage debt service, according to a formula that starts at 7.5 percent for the first 10 years and gradually increases to 37.5 percent after 40 years.
Under the agreement, both cruise lines will get to keep 75 percent of the per-passenger fees and port tariffs for the first 20 years, and 25 percent for the next 10 years. The lines are projecting that 400,000 passengers will be aboard their ships docking in Crown Bay the first year and that the number will gradually increase.
VIPA has offered to cooperate with the two cruise lines to enable them to structure the most favorable third-party financing, including tax-exempt financing utilizing VIPA's legal status as a tax-exempt entity. A Port Authority representative will have a seat on the CBDC board of directors.
The agreement was signed by VIPA, a quasi-independent government agency, and the two cruise lines in August. There is no mention in the document of any need for legislative approval.