New Bahamas/Caribbean ports needed to meet cruise growth

From now until 2028 there's a 13% capacity increase but nowhere near that kind of growth in destinations, according to Miguel Reyna, chief development officer, Cruise Terminals International.

'A tremendous amount of capacity will be in the Caribbean,' Reyna said. 'This puts a lot of pressure on the destinations to expand.' He added that Florida homeports are growing, with berths/terminals being added or enlarged at PortMiami, Port Canaveral (and, possibly, Port Everglades), while Galveston, Texas is also expanding.

Meanwhile, capacity utilization at homeports is also up, with ships now departing throughout the week at Port Canaveral, Port Everglades and PortMiami.

'If all the homeport terminals along the US East Coast that serve the Bahamas/Caribbean were used at maximum capacity, there would not be enough transit ports to support the business,' said Luis Ajamil, principal of the Miami-based planning firm Bermello Ajamil & Partners and co-moderator of 'The New Market Fundamentals Driving the Future of Cruising.'

Stunning debt loads

Those new fundamentals include the need for cruise lines to pay down stunning debt loads amassed during the pandemic — as of 2023, more than $30b for Carnival Corp. & plc, more than $20b for Royal Caribbean Group and nearly $15b for Norwegian Cruise Line Holdings.

Raising revenues and cutting costs are ways to lower debt. Since fuel is the biggest cost item, planners need to plot the most efficient itineraries. Ajamil noted the cost difference between a 700-nautical-mile trip and a 2,100-nautical-mile trip is about half a million dollars.

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Co-moderator Carlos Torres de Navarra, far left, makes a point. Next to him is co-moderator Luis Ajamil, then Miguel Reyna and Ugo Savino

But planners also seek appealing ports. Destination remains the No. 1 reason people choose a cruise, said Ugo Savino, director of deployment and itinerary planning for Carnival Cruise Line. And destination is the key driver of ticket revenue and on-board spending (shore excursions).

Private destinations will be critical

In Reyna's view, private destinations will be critical — and not just ports, but experiences like the newly announced Royal Beach Club in Cozumel, the Caribbean's busiest transit port pre-pandemic and a place where another pier may be warranted though environmentalists have opposed that.

Close-to-home ports are desired, yet they can't all be the same. This makes an opportunity for destinations to differentiate themselves and create experiences guests are looking for, Reyna said.

Guest expectations are being exceeded at private destinations, co-moderator Carlos Torres de Navarra, principal of Azul Destinations said, and these places yield significant returns. In the quest to get out of debt, 'Those destinations are really helping.'

They're so vital that lines are investing hard-earned cash at a tough time to develop them.

The pricetag for Carnival's new Celebration Key is now an eye-watering $600m, Norwegian Cruise Line plans a $150m two-berth pier at Great Stirrup Cay, MSC Cruises is currently pouring a reported $100m into MSC Ocean Cay Marine Reserve, and Disney Cruise Line is soon opening Lookout Cay in Eleuthera, cost undisclosed. Royal Caribbean Group continues to invest in Perfect Day at CocoCay and Carnival plans its own destination with a berth at sister brand Holland America Line's Half Moon Cay.

Larger ships on shorter cruises

In another new fundamental, Royal Caribbean started the trend of positioning larger ships on shorter cruises. These ships tend to be newer so they offer the latest and greatest features yet still an affordable entry price for customers.

Bermello Ajamil figures show that in the Caribbean, cruises under seven days rose from 38% in 2017 to 45% in 2024. In the same period, longer cruises declined from 62% to 55%.

And back to supply growth: Pre-COVID, Carnival Cruise Line had the capacity to carry 4m passengers annually. With newbuilds and ships from sister brand Costa, by the end of next year, the Fun Ship fleet will be able to carry close to 6m.

'Right out of COVID, we experienced the largest berth increase. This is incredible,' Savino said, and such growth can only be sustained by drawing new people.

Balancing itinerary content and fuel cost

So itineraries have to be compelling. Savino must strike a balance between packing as many ports into an itinerary as possible versus more efficient runs to cut fuel cost. Greater efficiency doesn't necessarily mean fewer ports; it depands on their location. At the same time, he said new customers have higher expectations, and destinations need to evolve just as cruise ships are evolving with more sophisticated allures.

All this makes it clear why Carnival is building Celebration Key in Grand Bahama, which Savino called 'a game-changer.' All the line's ships from East Coast homeports, and beyond, will be going there — so far, 19 from 13 homeports, and more than 500 sailings are open to book.

Celebration Key — a game-changer for Carnival Cruise Line

Savino said Celebration Key is designed to provide memorable experiences, and even a year before opening, 'Demand is so strong they're already talking about building a second pier.'

But Celebration Key is one 'and we don't sell itineraries with only one port,' Savino continued. 'There are going to be a lot of ships in the region and not enough ports to receive all of them, so how destinations can prepare for this wave of guests is going to be very interesting.'

Calypso Cove

Torres de Navarra thinks Azul Destinations can be a solution with its plan to build the new Calypso Cove port at Long Island in The Bahamas. Its location makes it an itinerary enhancer for short cruises and it will be open to all lines.

Calypso Cove's focal point, Black Pearl Lagoon, is planned as a marquee attraction reimagined from an existing 63-acre salt water lagoon

'In this environment where debt is high and there's a scarcity of capital, there's opportunity for folks like myself and my partner ... [Lines] don't need to go spend another $400m, $500m to have another berth,' he said. 'If you're open to a destination that has a Bahamian flair and you're willing to park your ship next to another line's but at a destination that will be a marquee destination and offer financial benefits to you from shore excursions, and fuel-friendly, it starts to make a lot of sense.'

Torres de Navarra said Azul Destinations has locked in cruise line commitments that are expected to turn into long-term minimum guarantees, and is in negotiations with investors.

Government support is fundamental

Cruise Terminals International's Reyna noted: 'Developing ports takes a long time. It's very challenging. It takes years.'

He said government support for new ports is critical in emerging markets. Government needs to foster the conditions to attract investment, including creating a pipeline to develop human capital — the people who will provide tours and ship services. And responsible tourism requires action by all stakeholders. Shore power, for example, will be increasingly important.

'Not a time to just wait'

Ajamil reminded the Seatrade Cruise Global audience that historically, many of cruising's most dynamic, creative changes have sprung from periods of stress. Destinations need to grasp the new post-pandemic market fundamentals.

'It is not a time to just wait,' Ajamil said. 'If Carnival is spending $600m to create an incredible experience for their guests, that should trigger that the rest of the destinations need to figure out how can I do that?'

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