Royal Caribbean International and Carnival Cruise Line could delay their multimillion-dollar Grand Bahama projects for two years or more due to the financial hardship cruise lines have faced during the novel coronavirus (COVID-19) pandemic, Chairman of Global Ports Holding (GPH) Mehmet Kutman told Guardian Business.
Kutman made his grim revelation based on some of the United States’ Securities and Exchange Commission (SEC) filings of both Carnival and Royal Caribbean, which reveal that the billions in debt recently raised by the cruise lines in response to their COVID-19 shutdown will be used to fund their operations and repay debt, which could mean capital projects like those on Grand Bahama could be put on the back burner.
“For Grand Bahama…I don’t see anything happening there for a minimum of 24 months,” said Kutman. “The SEC filings are very clear on that.”
A Royal Caribbean filing states: “There shall be a presumption that any indebtedness incurred by the borrower between April 1, 2020 and December 31, 2021 shall be for the purpose of providing crisis and/or recovery-related funding, unless the intended use of proceeds from such indebtedness is specifically identified to be used for an alternative purpose.”
GPH is the parent company of Nassau Cruise Port Limited, which has begun the refurbishment of Nassau’s cruise port, something Andy Stuart, former president and chief operating officer of Norwegian Cruise Line, said will be one of the main catalysts driving Nassau’s primary role as a cruise industry stimulator post-COVID-19. The port is scheduled to be completed in 2022.
“I believe Nassau will move into a positive perfect storm in the recovery… Its proximity to Miami and then you add in the investment that is taking place and the ability of the destination and the cruise lines to market Nassau as a brand new destination, given this massive investment that’s taking place,” said Stuart.
“I think Nassau sits in the forefront of every positive position to be the beneficiary of an early-stage and long-term-stage recovery of the cruise industry.
“Nassau is at the beginning of the recovery and I believe that because I think the industry starts up with short cruises.
“I think the North American market is early in that recovery and I think the Port of Miami and Port Everglades are at the very beginning of that recovery.”
He said Nassau’s proximity to those two destinations puts The Bahamas in a good position for recovery, though he said that recovery might not begin in earnest until 2021.
“I believe that when cruising starts, Nassau will be at the very forefront… It will be one of the first places to receive cruise passengers once the industry and regulatory authorities are ready for that to occur,” he said.
Stuart told this paper that Nassau will be one of the prime designations to usher in the return of the cruise industry.
Carnival reported that it would not cruise again until August, adding that it has seen an increase in bookings since that announcement.
Royal Caribbean’s last statement contends the cruise ship company hopes to begin cruising again in June.