St. Maarten PM: Tourism is key to economy
NEW YORK — It’s been nearly four years since Oct. 10, 2010 — the day the Netherlands Antilles was officially dissolved, allowing the Dutch-speaking islands in the confederation to go their own separate ways.
For tourism-dependent St. Maarten, the end of the Antilles — known locally as 10-10-10 — was a “turning point,” said Sarah Wescot-Williams, who took office that day as St. Maarten’s first-ever prime minister.
The La Salle University graduate, whose political career spans 35 years, spoke to NIMB during a recent Caribbean travel conference in New York. She told us that St. Maarten’s new status as a “constituent country” within the Kingdom of the Netherlands — along with the islands of Aruba and Curaçao — has freed up millions of tax dollars that previously had been paid every year to Willemstad, the Antillean capital on Curaçao.
“The promotion of tourism has always been a responsibility of the local government,” she explained. “One of the plus points of being on our own is that federal taxes, which were an impediment to tourism development, are no longer levied. As a part of the Netherlands Antilles, we had two levels of taxation [under which] the federal government levying taxes that applied to us, without us having a say. But with the dismantling of the Netherlands Antilles, that is no longer the case. Now the decision-making is done right there in St. Maarten.”
St. Maarten — home to about 41,000 people — occupies just under half of the 34-square-mile island it shares with French-speaking St. Martin, an overseas department of France. The prosperous territory enjoys an annual per-capita income of about $12,000 and unemployment is 10 percent, about half that of the French side.
Besides ranking among the Caribbean’s most popular duty free shopping destinations, St. Maarten also boasts one of its most attractive airports.
In May 2013, Princess Juliana International Airport (SXM) closed a $132 million bond to finance a long list of improvements. That list included rehabilitating the airport’s relatively short 7,150-foot runway, constructing a new fuel farm to store 15 days of jet fuel, building new taxiways to increase runway efficiency, expanding aprons to provide more aircraft parking, and acquiring land for future growth if necessary.
SXM also embarked on a redevelopment of its landside and airside retail areas to boost non-aviation revenues, deemed by a recent study to be considerably lower than regional and global norms for airports its size.
“We have made some major investments in our airport,” said Wescot-Williams. “The projects that were supposed to be executed on the basis of our bond issue have now started, such as extending the runway and acquiring land for further expansion.”
In May, a venture between Penha Group and International Liquor & Tobacco Trading (ILTT) won a five-year concession to operate a 1,000-sq-meter duty free store at SXM. The walk-through shop will sell tobacco, liquor and cosmetics. Both companies already had stores at the airport, which in December marked its 70th anniversary.
Wescot-Williams said her government’s huge investment in SXM is a reflection of the importance St. Maarten places on improving its tourism offer as competition heats up from other destinations such as Cuba.
“If we want to be successful in areas like combating crime, unemployment, human trafficking, corruption and environmental degradation, we need to strengthen opportunities for sustainable development,” she said. “Tourism for us is becoming — and should become — more and more of a development tool, which is why St. Maarten has invested so heavily in tourism infrastructure projects over the years.”
The prime minister added: “Tourists are interested in more than our normal offer of sea, sand and sun. As we develop our countries, we need to understand the new desires, especially in the areas of leisure and ecotourism. Anywhere from 85 to 90 percent of our GDP comes from tourism. Given St. Maarten’s size, we do not have any illusions that we can replace this pillar of industry.”
The United States and Canada account for 85 percent of the 2 million visitors to St. Maarten, and about three-fourths of those visitors arrive by cruise ship. Last year, the port of Philipsburg received 1,785,670 passengers — 32,455 more than in 2012, itself a banner year (by comparison, the port of Marigot, in French-speaking St. Martin, receives mainly smaller vessels catering to the luxury market).
In 2013, cruise passengers arrived in Philipsburg on 631 vessel calls, up from 622 the previous year. And this past February, Norwegian Cruise Lines’ 146,655-ton Norwegian Getaway made its inaugural call on St. Maarten, carrying 3,700 passengers and 1,600 crew members; its captain was presented with a plaque by top port official Hector Peters to mark the special occasion.
Incredibly, only 105,000 cruise ship passengers visited St. Maarten back in 1980, fewer than the amount which now visits in three weeks.
“The growth in our cruise market has been amazing,” Wescot-Williams said. “Because of the investments we have made in our seaport, some of the biggest cruise ships in the world are now able to dock at our facilities. Both sides of the island [French and Dutch] profit from that phenomenon. But now, we’re at the stage where we need to develop the stay-over tourist market. It’s a combination of shifting what we offer passengers — in addition to time on the beach — as well as seeking to attract a percentage of those passengers to come back.”
According to study conducted by the Florida Caribbean Cruise Association, passenger and crew visits together generated $356.1 million in revenues for St. Maarten during the 2011-12 cruise season, up 55 percent from the $230.3 million reported in the 2008-09 season. Per-capita passenger expenditures also rose dramatically, from $147.98 in 2008-09 to $185.40 in 2011-12 — by far the highest anywhere in the Caribbean.
The weighted average spend per party in 2011-12 came to $389.34 and was almost totally dominated by watches and jewelry ($267.03). Perfumes, cosmetics, liquor and electronics also contributed to overall sales, though at much lower levels. Crew members, however, spent slightly more on electronics than on watches and jewelry.
“Our duty free status is an important selling tool for visitors,” said the prime minister, whose four-year term ends this October. “But we need to make sure we do the right thing so that we remain a cruise-ship attraction. New markets are coming into play, for example China. While there are some issues we’d have to solve, that’s a huge market — and all the numbers indicate that they will continue to spend.”
That’s crucial, she said, given that more than 8,100 people are employed directly and indirectly by the cruise ship industry — nearly a fifth of St. Maarten’s population.
Wescot-Williams noted her government’s investment in a second multi-vessel pier 445 meters in length and 21 meters in width, as well as the 760-meter-long Simpson Bay Causeway linking SXM to the east bank of the Simpson Bay Lagoon.
“We still see that our return on investment is quite high. Not only do we provide employment for our own people, but also for many other islands and countries whose nationals come to St. Maarten,” she said, noting that her country’s population comprises residents from more than 100 countries. “We’ve had a problem with illegal immigration and have tried to rectify that situation so that the migrants can become part of the overall system rather than living on the margins of society.”