Update Country Report Curaçao 21 Nov 2017

Event

On November 13th Curaçao celebrated the opening of its new US$43m "mega cruise" pier, designed to boost cruise arrivals to the island.

Analysis

The new Tula pier is located in the capital city of Willemstad, at Otrabanda, west of St Anna bay, and will provide an entrance point for cruise arrivals to visit the capital. The new pier is designed to complement an existing mega cruise terminal as well as the smaller Mathey Wharf pier. The Tula pier will formally open in March 2018 and we expect it to contribute to a moderate growth in cruise arrivals in 2018. In addition, Curaçao could benefit from having survived the 2017 hurricane season relatively unscathed, as it may be added to some cruise itineraries in the place of some islands more severely damaged by Hurricanes Irma and Maria.

The Tula pier project was tendered in 2015 at a point when tourist arrivals were growing steadily, with arrivals by cruise totalling around 560,000, compared with non-cruise arrivals of 500,000. The cruise industry is a lucrative market for Curaçao, providing direct employment in the tourism and infrastructure sectors. In addition, cruise arrivals tend to be relatively high spenders, compensating for their shorter stays. The new pier will allow the island as a whole to increase its cruise capacity and attract more visitors. The first vessel to dock at the Tula pier on November 13th was the Adventure of the Seas, operated by Royal Caribbean, which carried more than 3,000 passengers.

Should the new pier succeed in doubling arrivals (which we consider to be overly optimistic) this would provide a welcome boost to tourism receipts. Increased cruise visitors would be particularly welcome for Curaçao given that overall tourist arrivals in the January-September period have declined by 12% year on year, as a result of decreased arrivals from South America, primarily nearby Venezuela. With economic turmoil in that country likely to weigh on arrivals for quite some time, Curaçao will need to diversify its source markets in order to encourage the sector to return to growth.

Impact on the forecast

The greater capacity to accommodate cruise arrivals will lift overall arrivals and prompt us to revise our GDP growth forecast for 2018 slightly upwards.