Dear Source,
Please permit me to comment on the recent pullout of the Carnival, Royal Caribbean and Norwegian cruise ship lines from St. Croix.
The big picture is, more than two years ago the Port Authority advertised a Request for Proposals for improvements to the Crown Bay Port, St. Thomas. Carnival and its main competitor, Royal Caribbean, joint ventured and submitted a proposal. After a considerable investment of time and money by the joint venture, and approval of the VIPA board of directors, the deal was squashed by Governor Turnbull. Five of the governor's cabinet members form the majority of VIPA's board of directors!
The governor squashed the deal due to the lobbing of The West Indian Co. (government-owned company), Havensite merchants and Main Street merchants who thought the deal would affect their businesses negatively. Of course, the governor didn't state the reasons as such, but instead used a classic patriotic guise — that control of the ports must be held by the Virgin Islands people and not outsiders. Most people on the Big Island saw through this, except maybe for the St. Croix senators.
The contract that VIPA negotiated with Carnival and RC had safeguard provisions to protect the people's interest to the nth degree. One of those provisions would allow for VIPA to buy out the lease from Carnival and RC! Remember, the original West Indian Co. owned the present WICO dock and land and had perpetual control due to the 1917 Transfer agreement with the U.S. government. The Crown Bay deal was a lease, with a lease term and buyout clauses.
Now, imagine you're the president or CEO of Carnival or RC, and you invested two years of your time and money into a government-advertised RFP, and then all of a sudden the rug is pulled out from under you! A little pissed? You bet. Of course, you didn't get to be president or CEO of Carnival by being stupid, so by late 2001 you start seeing the writing on the wall, i.e., the WICO-led lobbing effort to squash the deal. Crime is a Virgin Islands problem. However, it can't be a problem on St. Thomas, because too much money is involved there. But, well, St. Croix is a different matter.
Hmm, as the CEO you think, the governor squashed the Crown Bay deal; well, St. Croix does have a crime problem, and the demand is questionable, although not conclusive. So, as a smart executive you start planning an exit strategy. By late 2001, you write letters concerning crime on the Big Island and the reason for a possible pullout by your cruise line. In March 2002 the governor kills the deal, and then in April 2002 Carnival pulls out of St. Croix.
A coincidence? I don't think so. RC was part of the deal, so no further explanation needed there. The Norwegian line pullout is probably caused by the "domino effect."
The bottom line is if the Crown Bay deal wasn't killed, St. Croix would continue to get Carnival's and RC's ships by default. After all, as a smart executive you're not going to pull your ships out of St. Croix when you have a $30 million-plus deal / investment on St. Thomas, the No. 1 cruise port in the world. As a smart executive, you would work with the government / community, i.e., your business partner, to help solve problems concerning passenger safety; it would only make good business sense. To do otherwise would be like shooting yourself in the foot.
Carnival pulling out of St. Croix is an "unintentional consequence" of the WICO / St. Thomas lobby killing the Crown Bay deal. I don't think they intentionally planned it, but they couldn't have done a better job if they tried.
The whole mess is a tragedy for St. Croix, particularly for the old, new and planned entrepreneurs / businesses who were rapidly increasing shore excursions, shops and services for the ships' passengers and crew.
I challenge the governor to reinstate the Crown Bay deal and then see the amazing bargaining position he will have for convincing Carnival that St. Croix is not such a bad port of call after all.
Daniel F. Coughlin
Frederiksted, St. Croix
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