New York Times - Ships and Shipping

Thursday, 10 September 2015

Royal Caribbean Cruises planning expansion at PortMiami

Royal Caribbean International's Majesty of the Seas is shown at PortMiami in this file photo. Parent company Royal Caribbean Cruises plans to build a new terminal at the port.

Royal Caribbean International's Majesty of the Seas is shown at PortMiami in this file photo. Parent company Royal Caribbean Cruises plans to build a new terminal at the port. MARSHA HALPER MIAMI HERALD STAFF

Will PortMiami finally land one of the world’s largest cruise ships?
A deal in the works between Miami-Dade County and Royal Caribbean Cruises appears to be smoothing the way.
The cruise operator, which has headquarters at PortMiami, plans to finance, design, build and operate a new cruise terminal in the northeast section of the port, according to county officials. A preliminary vote before the Miami-Dade County Commission is set for Wednesday.
The agreement would last for no less than 20 years and no more than 60 — “an extraordinarily long period of time,” said deputy port director Kevin Lynskey.
Lynskey said the berth will be 400 meters long — which could fit “an Oasis and then some.” He was referring to the Royal Caribbean International’s Oasis of the Seas and its sister ships, which are the largest cruise vessels in the world. The third and fourth ships in the class will be delivered in 2016 and 2018.
The deal doesn’t specify which ships would come to the port, but both PortMiami and Royal Caribbean have expressed interest in having one of the megaships based in Miami. For now, Oasis of the Seas and Allure of the Seas are based most of the year at Fort Lauderdale’s Port Everglades, though the current commitment expires in 2018.
“I think there’s little question as you look out over the order book for large vessels throughout the world that [Miami] looks to see multiple of those large vessels, bigger than anything we have today, show up at the port — and that includes Royal Caribbean,” Lynskey said.
The new cruise terminal, which would be called Terminal A, would be operational by late fall of 2018.
“It’s an exciting project,” said Rob Zeiger, global chief communications officer for Royal Caribbean Cruises, in an email. “And it means even more to us knowing the jobs and economic activity that a new Port terminal could bring to Royal Caribbean's hometown.”
County officials expect Royal Caribbean, the world’s second-largest cruise company, to invest more than $100 million in the construction and to more than double its annual Miami cruise passengers to roughly 1.5 million once the terminal is complete. Lynskey said the port would likely spend less than $10 million as part of the development.
PortMiami would receive about $8.3 million a year in revenue as part of the deal, which includes $9.5 million in rent from Royal Caribbean but factors in the loss of about $1.2 million from displaced cargo operations.
Miami-Dade County Commissioners will vote on a nonbinding memorandum of understanding with Royal Caribbean Wednesday that lays out intentions for several agreements.
Those details, which would return to the county commission for approval over the next four months, include agreements for a ground lease, development and terminal operation. Lynskey said Royal Caribbean Cruises, the parent company that owns Royal Caribbean International, Celebrity Cruises, Azamara Club Cruises and some European lines, is also interested in extending the lease for the company’s office, on port land, for the same amount of time as it would operate the terminal.
With about $1.1 billion in debt, the county-owned port is under pressure to raise revenue and avoid a cash crunch caused by debt payments. Last year, Moody's downgraded the port's credit rating from low risk to moderate risk.
“Striking new deals that have our private partners put out a lot of the capital is becoming pretty appealing,” Lynskey said.

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