St. Maarten and St. Kitts will soon be home to two unrelated mega-resorts that aim to dramatically boost tourism to both Eastern Caribbean islands.
The first project, Maarten Quarter, is a $110 million joint venture between Royal Caribbean Cruises Ltd. and Trident Development, a subsidiary of Hill International. The second is Christophe Harbour, a $170 million hotel, retail and marina venture led by South Carolina-based Kiawah Partners that encompasses 2,500 acres on the southeastern peninsula of St. Kitts.
Both projects were profiled as case studies during last week’s 16th annual Caribbean Hotel and Tourism Investment Conference, held at the Sheraton Puerto Rico Hotel & Casino in San Juan.
Adam C. Petrillo, executive vice-president of Trident, spoke to NIMB following a presentation on Maarten Quarter — a “mixed-use hospitality project with retail” on a 9.5-acre parcel located within the existing port of Philipsburg, on the Dutch side of the 34-square-mile island 190 miles east of Puerto Rico.
“We’re answering the call of both the cruise industry and St. Maarten as well,” said Petrillo. “Our challenge today is accommodating these massive vessels. Royal Caribbean’s Allure of the Seas and Oasis of the Seas are each a billion-dollar investment, carrying 8,000 passengers and crew each.”
Petrillo noted that in 2011, St. Maarten received 1,656,159 cruise ship arrivals in 596 ship calls, surpassing the 2010 figure by 344,200. Officials attribute that impressive growth to the direct marketing to cruise-line executives and itinerary planners by Theo Hayliger, deputy prime minister and harbor affairs minister, and by Mark Mingo, CEO of Harbour Group.
“They did a magnificent job reinvigorating Front Street and redeveloping Philipsburg. The island is now unrivaled in the Caribbean, and we view Maarten Quarter as an absolute necessity,” said the Miami-based executive.
“The longer you can keep passengers on your shore spending money, the better off you are. But if there’s too much congestion, people get frustrated and move on,” he said. “By creating unique offerings and attractions, they tend to want to stay longer — and being close by, they’re less concerned about missing their boat.”
Even so, he told NIMB, “St. Maarten is in a very strong position, particularly from the cruise industry standpoint. It’s the farthest east and south as you can go on a seven-day cruise from Fort Lauderdale or Miami. It has the facilities to accommodate large ships, as well as an incomparable mix of entertainment, retail shopping and hotels. And the dual French and Dutch culture on one island is very unique.”
Maarten Quarter is to employ 250 workers in the construction phase and 400 full-time workers upon its completion in 2014. The project is expected to break ground by September or October of this year; Petrillo said he’s been in negotiations with Hilton, Marriott and Inter-Continental about managing the 125-room hotel its planners envision.
“We’ve also had contact with some international restaurant and entertainment brands, and major rum manufacturers,” he said without elaborating.
Familiar with the Caribbean
Hill International isn’t exactly a newcomer to the Caribbean. Its most recent project there was its venture with RCCL in building the cruise-ship port of Falmouth, Jamaica — a $200 million endeavor.
“In Falmouth, we did an extensive sea-bottom reclamation and created real estate from dredging and filling. This project is not as large because there are no marine works. Rather, this is an existing property within the port. St. Maarten can already accommodate 7-8 cruise ships. We’re not building any additional pier space,” Petrillo explained.
“What we’re really aiming to do is create new offerings in entertainment, food and beverages so we have a sustainable business after the cruise ships leave. How many retail shops will depend on the number of lead tenants we bring in, though it probably won’t exceed 20 in total.”
Hill, founded in 1976, has 3,200 employees worldwide and has worked on dozens of impressive projects ranging from the $4 billion expansion of Dubai International Airport to the partial rebuilding of the Pentagon following 9/11.
Yet securing money for Maarten Quarter has been a major headache, said Petrillo.
“There’s probably never been a more challenging time to find money for mixed-use projects in the Caribbean. It’s very hard to find equity sources for projects of this scope and complexity,” he said. “Banks are generally averse to hotel construction risks, and are either unable or unwilling to lend.”
In the end, he said, “we were able to work through the Dutch Ministry of Finance and an insurance company. We have two firms listed on the New York Stock Exchange sponsoring this, but to fill in the additional capital pockets, we really had to be creative and look to both the hotel and gaming industry to be able to pull this together.”
As soon as financing arrangements are completed this summer, a formal joint venture will be signed between Trident and RCCL.
Global downturn stalls St. Kitts resort project
A much larger project is planned for the twin-island nation of St. Kitts & Nevis.
Christophe Harbour is the brainchild of Kiawah Partners, which in the mid-1970s developed 10,000-acre Kiawah Island into an exclusive resort community with more than 4,000 residential units. In 1999, Kiawah acquired the 390-acre Doonbeg golf community in Ireland, and now sees St. Kitts as its next great investment opportunity.
Phil Keb, executive vice-president of Cristophe Harbour Development Corp., said his company has spent $170 million since 2006 on land acquisition, bungalows and a beach-house restaurant as well as golf and marina development.
The 2,500-acre property encompasses six beaches and 13 miles of shoreline on the southeastern peninsula of St. Kitts.
“Our master plan has been approved for 2,000 units, a marina, multiple hotels and a golf course,” said Keb, adding that in the past three years, he’s racked up more than $55 million in lot sales.
St. Kitts already boasts Port Zante, which is located in the capital, Basseterre, and which can already receive the world’s largest cruise ships. Cristophe Harbour aims rather to lure wealthy yacht owners, which is why its developers are dredging the harbor to accommodate 18- to 20-foot yachts. That and the planned marina will cost around $25 million to $30 million. There’s also a residential and retail complex valued at $10 million.
But the global economic downturn has forced Kiawah Partners to lower its expectations for the time being.
“When the project first got started, capital was available so we started our marina and golf project,” said Keb. “We spent about $10 million doing bulk earthmoving work. When we realized that capital markets were not cooperating like we though they would, we stopped construction on the golf course, and will restart once we have demand.”
So far, Christophe Harbour has sold 47 lots. About 80 percent of those buyers are from the United States, 10 percent from Europe and the remaining 10 percent from the Asia-Pacific region and the Middle East.
“Given the state of the market, we’ve done fairly well. It’s all about selling a lifestyle,” said Keb. “We have 25 founding members who bought real-estate. We made a commitment to them that we’d provide amenities.”
All told, said the executive, “we’re looking at new investments of $50 million for primary capital projects focused on allowing us to continue to sell real-estate. That’s the name of the game for us. We will soon announce a 125-room luxury hotel and a $5 million to $10 million co-investment along with a developer from Dubai.”
Keb said Christophe Harbour is benefitting from a unique program approved by the twin-island nation in 1984 that grants St. Kitts citizenship to anyone investing at least $400,000 in an approved local property. That’s a strong attraction for foreigners — particularly wealthy Arabs — who have difficulty entering the United States with their current passports.
“If you have a St. Kitts passport, it allows you to travel to 132 countries visa-free, so there’s strong interest in that,” said Keb. “If we’re lucky, we’ll get enough traction on this program to break ground and announce the first hotel soon.”