Cruise company takes 75-year lease on Vanuata island

The billion-dollar local cruise sector is pushing aggressively into Australian and New Zealand waters, and its American masters have long looked to buy private islands off Queensland’s coast to offer passengers exclusive destinations and further control passenger spending.

The Miami-based RCC, the world’s second-largest cruise company, would not be drawn on how much it plans to spend developing Vanuatu’s Lelepa Island off Port Vila into a “perfect day’’ resort, but it is believed it will be the largest capital investment on the South Pacific Island.

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Royal Caribbean says it expects three years will be the time period needed to get Lelepa Island ship-shape, including construction of private pools and spas and additional food and beverage outlets. Australia’s Cox Architecture has been hired as the lead architect.

Royal Caribbean has introduced its “perfect day” concept to a private island in the Bahamas and off Haiti. Chairman Richard Fain told The Australian on Tuesday that its American guests preferred a day at the cruise company’s private island to an actual port and he said RCC’s Australian passengers could also come around to this way of thinking.

US cruise lines have quietly inspected Queensland’s Daydream Island, in the Whitsundays. Norwegian Cruise Lines began the trend in the 1970s, buying Great Stirrup Cay, in the Bahamas, exclusively for its passengers.

Exclusive expenditure sound economics

“Cruise lines want an island that is exclusively for their cruise passengers,’’ Brisbane-based agent Wayne Bunz, national director of CBRE Hotels has previously told The Australian. “Every time a cruise ship calls into Cairns, once the passengers leave the ship the cruise line has no control over the expenditure of that tourist, so it makes sound economic sense to own the facilities they are dropping them to.”

Norwegian Cruise Lines own two private islands – Harvest Caye and Great Stirrup Cay – both fringed by crystal-clear ocean waters and delivering an exceptional array of water-based leisure activities, making them an itinerary highlight for guests.

Apart from CoCoCay, on a Bahamian Island near Nassau, RCC also owns Labadee Island, Haiti.

Ports to call

Growth rates for Australian cruises have been slipping since 2016 when they hit 21 per cent growth on the previous year. By last year, growth had slipped to 0.9 per cent from the previous year, but 1.35 million Australians still took a cruise that year, according to the Cruise Lines Industry Association.

Mr Fain blamed Sydney’s lack of port infrastructure on the slowing rate of growth of Australian cruise passengers – but despite the decrease, he said local growth was still well ahead of anywhere else in RCC’s operations throughout the world.

Mr Fain would not be drawn on whether RCC would deploy its Oasis class ships to Australia in an interview on Tuesday, but he said there were not many ports in the world where Oasis was not going to.

Sydney’s lack of cruise terminal infrastructure has become a real issue, he said.

Sydney infrastructure ‘limiting growth’

“We are a long-term business; we are here for the long-term. We think the infrastructure is a factor (in the slowing rate of growth). It’s limiting the growth,” the Miami-based Mr Fain told The Australian.

“We are a significant contributor in bringing more international guests here, we think that’s an important part of our contribution, but we need the infrastructure to do it.”

Fain, in Australia to make several key announcements, says RCC’s newer Oasis class ships, which can carry as many as 6200 passengers, tends to be larger and attract higher per diem guests, as well as a higher percentage of incoming cruise passengers including cashed-up Americans – which is great for Australia’s tourism economy.

As other capital cities such as Brisbane work to develop new cruise infrastructure allowing their terminals to cope with 6200-passenger ships, Sydney has only just announced it will investigate a third cruise terminal at Botany Bay after four year’s lobbying by cruise companies such as RCC.

That announcement has already met with staunch opposition by several local councils.

But at 360m, RCC’s new Oasis cruise ships could not fit in Sydney’s White Bay terminal or at Circular Quay. They can dock in the new Brisbane facility, as well as Hobart, Darwin and Fremantle. Most New Zealand ports, including the new terminal at Littleton (Christchurch) which is under construction, can also take the behemoths.

RCC has long argued that Botany Bay is the best place for Sydney’s third cruise ship terminal, pitting it against its rival Carnival, which proposed Defence’s Garden Island on Sydney Harbour.

“It won’t be the first time people have looked askance at what we have put forward. It’s nice to see movement on this,” Fain says. “Obviously we are making up for lost time, but we like to work closely with local communities.”

“Botany Bay seems like such a no-brainer. It’s good for the guests, especially non-Australians, because it is close to the Sydney Airport.

“It’s the least disruptive; it fires on every cylinder,” he says.

“Larger ships need to be taken into account, because they attract a higher per diem per guest.”

“I think we are moving towards a consensus that this is in Australia’s best interest.”

Meanwhile, Fain says the strong US dollar as opposed to the weak Australian dollar is “not good for RCC’s bottom line” but it’s a very long-term business. “Whatever comes around goes around – it’s frustrating in the short-term. Australia is such a powerful market it is an irritant, but we are on a strong trajectory.”

Fain says he will be meeting various NSW government officials while he is in Sydney to discuss the port infrastructure issues.

“Australia is one of our most important destinations,” he says.

This article originally appeared on www.theaustralian.com.au/property.