GVB was able to successfully partner with tourism experts from PATA for a full analysis on a cruise ship industry for Guam.
Guam – Progress continues to be made in bringing a permanent cruise ship industry to Guam and Micronesia, but there also continue to be setbacks. At a roundtable today discussion today at the Legislature led by Tourism Committee Chairperson Senator Tina Muna-Barnes, stakeholders updated lawmakers on strategies and ideas that could bring this dream to fruition.
Explore the Blue Continent. Discover Micronesia. The Undiscovered Islands. These are just some of the slogans that could be used in the future of a cruise ship industry for Guam and Micronesia. But during the roundtable, Micronesia Cruise Association President Gerry Perez did not hesitate to review some of the setbacks.
“The basic problem we have here in Micronesia is that we are a fragmented, very fragmented cruise destination. There’s lots of potential and diversity but we are relatively underdeveloped in terms of infrastructure and our institutional support base,” he points out. “We have no critical mass to support a sustaining industry development. We have scattered and unbundled attractions. Our shore income opportunities is very limited or non-existent therefore making us not an attractive destination for operators.”
It sounds discouraging, but Perez says the good news is there are many benefits to introducing a cruise ship industry to the region, such as creating more jobs and bringing in more tax revenue.
In addition, world renowned experts from PATA or Pacific Asia Travel Association have agreed to provide the Guam Visitors Bureau with a detailed analysis report on making Guam a homeport for a cruise ship. The report will be broken down into five parts–determine benefits, feasible locations, economic viability, existing and potential demand and ideal marketing strategies.
GVB Marketing Manager Pilar Laguana says GVB was able to request for this analysis free of cost since Guam is a PATA member.
Meanwhile, Perez says ideally, a home port would be preferred over a call port.
“A home-ported vessel can also potentially generate 50,000 plus passengers per year. Call ships today now average only 2,000 to 3,000 [passengers] per year,” he notes.
As far as getting an actual cruise ship, Perez says that there are five options. The first is build to order, but that would cost too much money. Second is to buy and refurbish, but he says there’s limited inventory. A third option is to hire out, but charters are difficult, he says and Guam would need to match or exceed vessel profitability if it were deployed elsewhere. Fourth is for a joint venture partner, but there’s a lot of risk involved especially with cash flow and management controls.
“So we’re left with the option of a concession approach. You can actually turn corporation and private risk capital into major opportunity. There’s very little or no public financial investment involved. A private operator assumes the risk and can access development capital more freely and can procure goods and services in a more timely manner than could a government agency,” Perez says.
Perez also says that in order to attract investors to Guam, the island’s port would also need to make some adjustments to its commercial lease agreements.
“We also need is to allow a 15 to 20 year lease of the commercial port; perhaps provide little seed money for setup, startup then the [special purpose company] reaches agreement with participating governments for cruise line operating in their area. SPC then develops the RFP for a private operator and is tendered out by the port authority,” explains Perez.
Laguana says the PATA task force will be visiting Guam in January and will be producing a final report by May.