Travel Markets Insider / September 2006
By Larry Luxner
CURACAO, Netherlands Antilles — By next July, the Netherlands Antilles will cease to exist, and Curaçao will become a self-governing autonomous entity within the Kingdom of the Netherlands.
At least that's the plan.
Business leaders and government officials say the pending change in Curaçao's political status —supposed to take effect July 1, 2007 — will dramatically boost the island's stagnant economy by eliminating unnecessary layers of bureaucracy and encouraging foreign investment.
"The wind is blowing the right way. Everything will change," said Gerrit F. Schotte, Curaçao's minister of economic affairs and tourism. He hopes that within a few years, Curaçao's $2 billion economy will be growing at 3-5% annually, up from the current 0.2%.
"What we currently have is the central government and the Curaçao island government," said Schotte. "But it's not a country, just a total of five islands that together visualize a country called the Netherlands Antilles. Three of the islands [Saba, St. Eustatius and St. Maarten] live in another world compared to the two islands [Curaçao and Bonaire] down here."
Last April, Curaçao had a referendum in which 68% of voters elected for "status aparte" — following in the footsteps of nearby Aruba, which bailed out of the Netherlands Antilles confederation in 1986 and has never looked back.
Under status aparte, Curaçao's 130,000 inhabitants — who enjoy a per-capita income of $17,000 a year — will retain their Dutch citizenship but will no longer have to answer to the Netherlands Antilles central government, which happens to be headquartered in Curaçao's capital city, Willemstad.
Neither will the other four islands remaining in the confederation — effectively spelling the end of the Netherlands Antilles after more than half a century of existence.
"At the time, it made sense for the Dutch government not to deal with six islands and six prime ministers," said Schotte, who's also chairman of the Curaçao Development Corp. "But now, everybody's had their referendum. Bonaire, Saba and St. Eustatius will become overseas counties of Holland, and St. Maarten will get status aparte, like us."
Curaçao hopes to emulate Aruba, whose tourism industry took off once that island was on its own and was able to promote itself internationally.
"Unlike Aruba, you will never find Curaçao on the Internet because we are not a country. We don't have our own identity," Schotte complained. "We cannot affiliate ourselves with Caricom, for example, because we're not a country. And if we do, it's as the Netherlands Antilles."
Anticipating the expected tourism boom, this summer Curaçao inaugurated a $44 million international airport that boasts, among other things, one of the longest runways in the Caribbean.
The new 12,000-sq-meter passenger terminal — a bright and airy structure that emulates traditional Dutch architectural styles and is painted in cheerful, pastel colors — is designed to handle 1.6 million passengers a year, up from the current 1.1 million at the existing terminal.
"We've designed the building to have a Caribbean and a particularly Curaçao feel to it," said Walter Abernathy, CEO of Curaçao Airport Partners (CAP), the consortium that runs the new facility. "When we first presented it, some people were disappointed, saying they wanted a steel-and-glass building. But in our view, you can find that in Topeka, Kansas."
CAP is 51% owned by Alterra, 10% by local construction firm Janssen de Jong N.V. and 39% by Venezuela's Trim-Invest Ltd. Alterra — itself a consortium owned by Bechtel Holdings and Singapore Changi Airport — is also involved in managing the new international airport passenger terminal in Lima, Peru.
The new airport has a two-mile-long runway; in all the Caribbean, only the former Ramey U.S. Air Force Base in Aguadilla is longer. In addition, the project gives passengers 25% more processing space than before, room for four passenger X-ray baggage scanning units, twice as much adjacent check-in support office space, 65% more room for arriving passport control, a new area for departing passport control, four passenger loading bridiges and 50% more room for parking.
CAP began operations in Curaçao in August 2003 under a 30-year concession that foresees passenger traffic growing to 2.5 million per year by 2033. The consortium employs 156 people and is already making money, but not much.
"We're not as profitable as we expected to be," Abernathy told The STAR. "When we took over, the locally based Dutch Caribbean Airlines had 65% of the airport's total capacity. When that airline, which was government-owned, went into bankuptcy, we lost a tremendous part of our business."
He added: "Before we took over, we did some independent forecasts, which we based our modeling and financing on. At that time, we asked what would happen if DCA went under, and they predicted it would take four years to get back to where we were, and eight years to get back on plan."
In reality, it only took a year and a half to get back, said Abernathy.
"We know we'll go through some rough periods, but in the end, we'll be better off because it won't be a protected market," he said.
At present, the largest of the 14 carriers flying into and out of Curaçao is KLM Royal Dutch Airlines, though Abernathy says that'll change once Dutch Antilles Express relocates from Bonaire to Curaçao.
"We've also got new service planned by several airlines," he said, noting that Martinair is starting service in October with two flights a week to Amsterdam. KLM already offers daily flights to Amsterdam, while low-cost Dutch carrier ArkeFly goes there three times a week. In addition, American Airlines offers two daily flights to Miami, and American Eagle three flights a week to San Juan.
Curaçao's new airport terminal boasts more than a dozen duty-free shops including Aldeasa, Costa Rica-based Cafe Britt, electronics retailer Omni and Colombian Emeralds International. There's also the 5 Star Sports Bar — the only place in the entire terminal where smoking will be allowed.
"We did a commercial plan for the airport, looking at the type of mix we wanted, and we went through a competitive bidding process," Abernathy said. "After that, we made selections. We had competition in almost every one of the categories. We then looked for a blend of local and international products, and I think we've achieved that."
Maher Qassab, managing director of Aldeasa Curaçao N.V., said his three new airport stores total 245 square meters. The main store, covering 175 square meters, is in the departure lounge and offers perfumes, liquor and tobacco products. There's also a smaller, 30-square-meter shop for leather goods, toys, writing instruments and the like, as well as a 40-sq-meter arrivals shop for perfumes, liquor and tobacco.
Aldeasa operates in Curaçao under a five-year concession which expires in December 2009 and is renewable for another three years.
"Business is improving," said Qassab, a 30-year-old Jordanian who ran the Aldeasa shop at Amman's Queen Alia International Airport before relocating to Curaçao a year and a half ago. "This year is better than last year. We hope it'll continue like that. With the new terminal, we believe business will go up 20-25%, especially with the new airline coming in."
Qassab complained about local bureaucracy, telling Travel Markets Insider "it takes a long time here to achieve what you want, to get an answer to what you're applying for." Nevertheless, he expects Aldeasa to rack up $3 million in sales this year, a substantial increase over last year's figures.
Perfume comprises 49% of those sales, according to Qassab; the most popular brands are Lancome, Chanel, Dior and Calvin Klein. Liquor accounts for another 30% of sales, tobacco 17% and leather goods the remaining 4%.
Within the liquor category, local products like Curaçao Blue and Ponchi Caribe lead the way and are the focus of frequent Aldeasa promotions. And a humidor containing high-priced Cuban cigars account for half of Aldeasa's local tobacco sales.
With the new airport also comes Curaçao's first Colombian Emeralds International outlet.
Jeanette Keith, CEI's manager for Aruba and Curaçao, will supervise the new 600-sq-foot shop, which offers high-end jewelry and watch brands such as Omega, Longines, Tissot and Citizen.
"Business in Aruba is good," she said, noting that the largest of CEI's three shops in Aruba is a 3,000-sq-foot outlet at the Renaissance Hotel. "The only difference is that there, we have a lot of American clients, and here in Curaçao it'll be more European clients. We expect to be successful here as well, because throughout the Caribbean, wherever we have airport stores, we do very well."
Curaçao currently gets around 225,000 air arrivals a year, plus another 300,000 cruise-ship tourists. During the first half of 2006, the island received 116,528 stayover passengers, up 4.9% from the 111,085 passengers who visited in the first six months of 2005.
The Netherlands alone accounts for 36.5% of all air arrivals to Curaçao, followed by the United States (21.4%), Venezuela (8.8%) and Aruba (4.8%); other countries sent negligible amounts of tourists to the island.
Also during the first half of 2006, Curaçao received 174,528 cruise passengers and 95 cruise calls. While the number of cruise calls fell by 9.5% from the year-ago period, the total volume of passengers rose 15.3%.
Even so, that pales in comparison with the 1.6 million cruise-ship passengers who visit St. Maarten each year.
To boost tourism arrivals, the Curaçao government has launched a promotion campaign worth 31 million guilders (about $16 million) — an effort supported by CAP.
"We work very closely with the Curaçao Tourist Board, and we have a coordinated air route marketing strategy that assumes 3,000 new hotel rooms coming on board in the next two to three years," said Abernathy. "We are marketing specifically to the areas we think we need to serve: Europe, the Caribbean and the United States."
One of the most ambitious hotel projects to date is the Renaissance Curaçao Resort & Casino, a 240-room property located in Willemstad's historic Rif Fort. The $86 million hotel, which will target U.S. tourists, features imported Egyptian palm trees, a 1,600-square-meter casino and architecture designed to blend in with the decor of colonial Willemstad.
"Curaçao is a very unique island," said Ron Elferink, the local representative of Aruba-based MetaCorp, which will own the Renaissance. "I've been fortunate to travel around the world, and Curaçao has many private beach areas, natural beauty and a historic city with lots of culture. That's very unique for such a small place."
Elferink said the hotel will employ 350 people and pump 21 million guilders ($11.8 million) a year into the local economy.
"We're not getting any subsidies from the government. This is the only project on the island that's ever been constructed without subsidies," Elferink said, adding that "we will attempt to employ as many local people as possible. If we cannot find the right people on the island, we will have to look elsewhere."
Ramon Chong, director of economic affairs, conceded that with nearly a dozen hotel projects underway, the economy will soon be booming — and that Curaçao may not be ready for it.
"Our estimates are that by 2008, we will have a labor shortage," he said. "And we prefer to fill that shortage with people from Curaçao, without resorting to imported labor."
In the meantime, the local government has budgeted 7.3 million guilders ($4 million) for a program to teach local people how to treat tourists.
"We need to prepare the Curaçao population for an influx of tourists," Chong said. "People need to have a positive attitude toward them. They shouldn't see tourists as intruders. They should welcome them, and that requires a change in attitude."