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HomeNewsArchivesCTO: PASSENGER HEAD TAX STILL IN TALKING STAGE

CTO: PASSENGER HEAD TAX STILL IN TALKING STAGE

Oct. 17, 2003 – The Caribbean Tourism Organization has made no decision on whether to impose a $20 passenger head tax — or what the CTO calls a levy — on cruise ships making calls at the ports of member states and territories.
Published reports over the last few weeks indicated the organization would take a vote at its 26th annual Caribbean Tourism Conference, taking place on St. Thomas this week. (See "CTO divided over $20 regional port head tax".)
But Obie Wilchcombe, CTO chair, said in a prepared statement issued on Friday that the $20 levy is just one of a number of revenue-enhancement proposals the organization is considering in order to create a Regional Sustainable Tourism Development Fund.
Discussions concerning the fund, he said, have been "ongoing for some time, and these discussions will continue as the governments of the region seek ways to finance tourism development in the Caribbean."
Wilchcombe said the CTO invited representatives of the Florida-Caribbean Cruise Association to this week's conference as "a logical development" in its discussions of possibly imposing a levy. He said the invitation was extended for two reasons:
– To explain directly to cruise line officials the reasons the levy is being contemplated and the uses for which it is intended.
– To discuss generally how the Caribbean region's governments, land-based tourism sector and the cruise industry could work together in the best interests of all stakeholders.
Wilchcombe said CTO officials held "productive" discussions with Michele Paige, F-CCA president; Michael Ronan, Royal Caribbean International vice president for destination development; and Steve Neilson, Princess Cruise Lines vice president. And he said plans are being laid for further meetings later this year or early in 2004.
Speaking at a press conference on Friday afternoon at Marriott Frenchman's Reef Beach Resort, the conference headquarters, Wilchcombe and Jean Holder, CTO secretary general, fended off reporters' questions on the head tax. They emphasized that the idea is only one of many under consideration to support the CTO development fund.
The programs to be funded are "wide ranging and will include activities such as marketing, product development, tourism education, research and information management, environmental and cultural development, and even safety and security as these relate to tourism," Wilchcombe said in his statement.
He said the discussions tie into this year's CTO conference theme, "Recovery and Growth in a Fiercely Competitive Environment." "Every stakeholder in the Caribbean, or operating in the Caribbean, is a potential beneficiary of this process," he said, "and the resources are needed for the process of transformation."
Head tax not formally proposed
In comments at the press conference, Wilchcombe said the levy has not been formally proposed but was raised during a caucus of the region's tourism ministers. "They raised it — not Holder," he said.
Asked if the $20 amount is "flexible," Wilchcombe replied: "It's very flexible — it could be $100 or $10, or nothing. We were just discussing ideas with the Caribbean ministers."
Holder said the CTO is a complex organization. The United Nations "doesn't have a membership like this," he said, "trying to meet the needs of our different members, French, Dutch, Spanish, English. Helping the CTO membership with the resources we have, and the inability of our members to find resources, you have a problem."
As far as Holder is concerned, "We have to be more aggressive." He thanked the media for its participation in the conference."It's important to dialogue," he said.
Earlier in the day, how the cruise industry is weighing in on recovery was the topic of a panel presentation for delegates. Cruise line representatives and Caribbean tourism officials discussed the challenges facing the industry and their strategies to address them.
The panelists were Peter Wild, managing director of GP Wild International, a British marine industries and tourism management, marketing and consulting firm; Royal Caribbean's Michael Ronan; V.I. Tourism Commissioner Pamela Richards; and Aruba Minister of Tourism Edison Breisen.
Although they were addressing a Caribbean audience, the cruise representatives in their presentations focused on the worldwide market in the aftermath of the Sept. 11, 2001, terrorist attacks on the U.S. mainland, global economic downturns and fighting in Afghanistan and the Middle East.
According to Wild, four issues that are of concern to the cruise industry are:
– Consumers' relative lack of confidence in the current economy.
– Consumers' stock market worries.
– The rising cost of oil, which affects the cruise industry.
– The reluctance of Americans to fly.
Americans represent a large segment of the cruise travel market. After the mainland terrorist attacks, Ronan said, many of them were fearful about traveling by airplane. And with the airlines in crisis, he said, air fares went up, boosting a trip to San Juan and back to about $500 from the previous level of about $200.
To address the problem, the largest cruise lines moved quickly to homeport vessels plying the Caribbean at locations easily accessible to large mainland population concentrations by land travel — Tampa, New Orleans and Corpus Christi, Texas. The down side of this strategy from the perspective of most CTO members is that ships departing from those ports cannot cruise the Eastern and Southern Caribbean in a week's time, and so their itineraries for the most part are in the Western Caribbean.
With limited time for each conference session, delegates were repeatedly left with a multitude of unanswered questions and concerns.
One woman asked Ronan what the Eastern Caribbean would have to do to keep cruise ships coming to its ports. He replied that the region is not being left out of the equation and in fact will benefit from the larger, more modern megaships that are now being built. The Southern Caribbean will benefit from longer cruises that will be offered, as well, he said.
Destinations develop demand
Ronan said that destinations have to market themselves in order to attract leisure visitors, including cruise passengers. "We don’t generate demand; you do," he said.
A lack of such demand on the part of travelers was one of the reasons cited by his cruise line and others for dropping St. Croix from their Caribbean itineraries in the last couple of years. The other reason was concern about crime on the island.
Another delegate questioned how much difference a $20-per-passenger increase in price would make to a cruise line.
"We have to hold costs as tightly as we can," Ronan said. "We can only control cost. We can't control the public."
Wild said the cruise market is extremely price sensitive. If you increase the price by 1 percent, demand will drop by 2 percent, he said.
Cruise ships are not like hotels that have a room rate and then add on the taxes, Ronan said. Passengers pay one price for everything, and any additional head tax or fee would be added into that base price.
Richards said she's convinced that "$20 is not going to make a difference. I believe whatever figure can be absorbed by the cost of the ticket."
Ronan mentioned that some Caribbean nations have been able to enter into long-term contracts with the cruise lines as a result of having their ports controlled by a private-public sector partnership, rather than the local government.
"We believe in long-term agreements," he said. "You can't go year to year" negotiating. "We have to get off the political roller coaster." He said the industry has had better success when dealing
with the private-public sector partnerships.
A public-private task force was created by the 23rd Legislature to work with the Florida-Caribbean Cruise Association in developing such an agreement. After three years of efforts, the task force and the F-CCA in the summer of 2001 produced a Long-Term Operating Agreement. The last official to sign it, in October of that year, was Gov. Charles W. Turnbull.
The agreement covered a wide range of benefits and quid pro quos for both sides. For a summary of the 13 points of agreement, see "V.I. ignores task force in cruise line pact p.r.".
Increasing the number of ships calling at St. Thomas in the summer and at St. Croix year-round was a part of it. The pact has not been implemented, and some key provisions, notably involvement of cruise lines in the development of Crown Bay on St. Thomas, have become moot.
Saturday's main CTO conference offerings are a session for delegates on event marketing and a motivational workshop for travel agents on selling destinations.
The conference ends on Saturday evening with a "Star-Spangled Gala" for delegates, hosted by the Virgin Islands.

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