Travel Markets Insider / April 2007
By Larry Luxner
Renovation of Jamaica's two major international airports combined with massive investment in new hotels along the northern coast is likely to lure even more tourists to an island whose long-troubled economy is looking up for the first time in years.
According to Tourism Minister Ndombet Assamba, 2006 was a record year for Jamaica's tourism sector, with more than 3 million visitors generating $1.9 billion in revenues. The island received 1,680,642 stopover passengers (up 13% from 2005) and 1,334,441 cruise-ship passengers (up 17.5% from 2005).
Figures for 2007 are likely to be even higher, thanks to the ICC Cricket World Cup a major sporting event that for the first time ever was held this year in the English-speaking Caribbean. Jamaica hosted opening ceremonies and many of the 51 matches associated with the Cup, which began Mar. 13 and was scheduled to wrap up Apr. 28.
Despite some criticism that a poor island like Jamaica can't afford such luxuries, Finance Minister Omar Davies says this kind of debate "is not unique to Jamaica or the Caribbean"
"True, these resources could have been spent elsewhere, but we have already made the commitment to host the games," Davies told Travel Markets Insider. "If all these questions had been raised before we made that commitment, I'd have seen them as being more sincere."
Davies said that hosting the games will have cost Jamaica around $150 million, of which $33 million is a "very soft concessionary loan" from China for the building of the Trelawny stadium near Montego Bay.
"Apart from that, you're dealing with assets which have been acquired for public transport, so although this money was expended because of the games, they'll serve us beyond that," he said.
In any event, says the finance minister, Jamaica is doing well, with foreign direct investment coming to $600 million and tourism the island's key foreign-exchange earner clearly booming.
Peter Bunting, chairman of state-run investment promotion agency Jampro, said that last year, the economy grew by around 3%, pushing GDP to around $8 billion. But actual growth is higher, he said, since "the World Bank did a study showing that we consistently underestimate our economy by 1-3% per annum."
Montego Bay, Jamaica's tourism capital, is fueling a lot of this expansion.
At the moment, Montego Bay's recently privatized Sangster International Airport is undergoing a $160 million terminal renovation. In 2006, the airport handled 3.2 million passengers and over 46,000 takeoffs and departures representing a 13% jump in traffic over the year before.
Air Jamaica is the island's dominant carrier, accounting for roughly 50% of passenger traffic at both airports. Other important airlines serving Jamaica include American Airlines, Virgin (with nonstops between London and Montego Bay) and Caribbean Star, the successor to the bankrupt BWIA International.
"There's an increase in the world travel market, and Jamaica is making sure we position ourselves to take advantage of that," said Julet Stone, business development manager at the government-run Airports Authority of Jamaica (AAJ). "Since 9/11, there was a setback, but within a year and a half we bounced back. We anticipate we can get our share of that pie."
Montego Bay's Sangster International Airport is operated by MBJ Airports Ltd., under a 30-year concession agreement with the government of Jamaica.
MBJ itself began as a consortium of four companies Vancouver-based YVR Airport Services, Spain's Dragados, Israel's Ashtrom and Chile's Aunsa. Following a reorganization, Dragados now owns 74.5% of MBJ, and YVR the remaining 24.5%.
AAJ's president, Earl Richards, oversees a total staff of 160 and a budget of around $15 million.
"The government made a decision to expand and modernize the airports, which we began to implement in earnest in 2000, starting with Sangster International Airport. We commenced construction in 2002, and in April 2003 we privatized that airport, and they took over, completing Phase 1A and 1B of the expansion project."
Since MBJ Airports Ltd. assumed management and operations four years ago, Sangster International has doubled in capacity with the addition of 18 jet bridges and the 16,500-sq-meter East Concourse, which opened in December 2005 at a cost of $42 million.
On Mar. 22, Jamaican Prime Minister Portia Simpson Miller inaugurated Sangster's new customs and arrival hall. The 2,500-sq-meter facility, complete with 8-meter-high ceilings, houses international arrivals, customs, police, baggage delivery systems, rental car agencies, hotel arrival lounges, food and beverage outlets, tour operators, and airport customer-service operations.
"The opening of our new ground transportation arrivals hall marks a milestone in Phase 2 of our airport expansion program," said Jorge Sales, CEO of MBJ Airports Ltd. "This expansion is designed to make travel through the airport as convenient as possible, to exceed the expectations of travelers and airline customers, while incorporating the latest in security requirements. The new arrivals building will further help us greet arriving travelers with a warm Jamaican welcome."
Sales added: "One of our distinct design features is hotel arrival lounges; Superclubs, the Ritz-Carlton, Dolphin Cove, Sandals Resorts, Sunset Beach, Half Moon and Couples Resorts provide luxurious arrival facilities to make that all-important first impression."
The airport is now served by 54 airlines 32 charter and 22 scheduled carriers serving 69 cities on three continents. More than 300 passenger flights depart Sangster weekly: 220 to North America, 24 to Europe and 59 to Caribbean and South American destinations.
Although Sangster can handle all types of aircraft, up to and including B747-400 Boeing jets, the most frequent visitor to MBJ is the Airbus A320, which accounts for 35% of all planes that land in Montego Bay.
"MBJ Airports validates the government's belief that privatization, where properly applied, will provide the critical infrastructure required, especially in the competitive tourism industry," said AAJ Chairman Dennis Morrison. "The new Sangster International Airport will position Jamaica at the top of travel destinations of choice, not only in regards to facility, but also in service."
As part of the expansion, 1,200 sq meters of commercial space was added to the new concourse, which houses three duty-free shops, five specialty retail outlets, three food and beverage outlets and two service retail units. Well-known national brand names include the Jamaican Bobsled Cafι, Red Stripe Bar and Kidz Cool Gear.
Phase 2 of the expansion, budgeted for $51 million, began in January 2006 and will feature expanded departure hall facilities, a large retail mall with a greater selection of shops along with other customer service and operational improvements.
Among the six duty-free operators that recently won concessions at MBJ are DFASS' Buccaneer Duty Free Ltd., which runs a perfume and cosmetics concession under the name Blue Mountain Perfume. Other winners include Chulani Jewellers and K. Chandiram's Bijoux, each operating a jewelry and watches outlet; Jamaica Farewell with the tobacco and cigar concession, and T.M. Traders, operating a Bijoux Terner shop.
CRR Enterprises, which currently operates a liquor store in the departures area, is the airport's liquor concessionaire.
An additional 4,500 sq meters of commercial space will be added, which will house 10 duty-free shops, 13 specialty retail shops, 12 food and beverage outlets and four service retail units. Pending approval of an amendment to the Jamaica Customs Act, the airport will also have a large duty-free arrivals shop.
Dave Solloway, MBJ's director of marketing, said that when all is said and done, the combined development will boast 65 retail units covering an area of almost 6,000 sq meters. This will make MBJ's Airport Shopping Mall the largest shopping center in Jamaica.
Upon completion in 2008, Sangster's size will have tripled, and the airport will be handling 9 million passengers a year, or 24,600 per day.
Unlike the case at Montego Bay's Sangster where 95% of its users are foreigners on vacation tourists comprise under 20% of the passengers at Kingston's Norman Manley International Airport.
"Kingston has not been traditionally marketed as a tourism destination, mainly because we don't have beaches," said AAJ's Stone. "But Kingston is the entertainment, cultural and political capital of Jamaica, and we think heritage tourism has significant potential. Kingston can serve as a gateway to the Blue Mountain region, which has tremendous ecotourism potential."
Each year, NMIA handles about 1.5 million passengers, of which 53% are resident Jamaicans, 11% are Jamaicans living abroad and 36% are foreign nationals. This crowded, obsolete facility about half an hour's drive from downtown Kingston is currently undergoing a long-overdue $139 million renovation and expansion.
"The Norman Manley terminal dates from 1961," said Stone. "With all these new international security requirements, things have changed dramatically, which is one reason the airports are congested, so we need space to accommodate movement."
Phase 1A of the expansion, to be completed this October, calls for a new departures building at the eastern end of the present terminal. This new building to be integrated with the existing ticketing concourse will encompass three levels and contain roughly 10,000 square meters of space.
It will contain 66 airline check-in positions; expanded outbound immigration and security screening stations; a new departure lounge on the upper floor with expanded retail and food facilities; a new two-level passenger pier, enabling the separation of arriving and departing passengers, as required by international security protocols; four passenger boarding bridges, and major rehabilitation and upgrading of the terminal arrivals area, including immigration hall, customs and reception area for meeters and greeters.
Phase 1B, to take place between 2010 and 2012, foresees construction of a new arrivals area, further upgrading of existing buildings, intallation of new baggage-handling facilities and relocation of the General Aviation Center, among other things.
Phase 2, set to commence in 2013 and end in 2022, will involve additional improvement and maintenance works to the terminal, landside, airfield and support areas.
"NMIA is being transformed into a spacious and modern facility, with services and facilities to meet the needs and expectations of today's travelers," says an AAJ press release. "The airport's new physical layout incorporates cutting-edge design and functionalities which will enable the delivery of improved quality of service to passengers and other airport users. It will also ensure the airport's continued compliance with local and international standards for safety and aviation security."
Currently, the sole duty-free shop at NMIA takes up 168 sq meters, or only 17% of the 1,007 square meters of retail space at the airport. But that one shop and its 16-sq-meter in-bond delivery unit accounts for 55% of the airport's total retail sales of $2.2 million, according to Mark Williams, commercial manager at AAJ.
Upon completion of the airport's Phase 1A expansion in 2009 or 2010, the airport will have three duty-free shops totaling 684 sq meters, supported by a 30-sq-meter in-bond delivery unit. Subject to the approval of an amendment to the Jamaica Customs Act, a 130-sq-meter arrival duty-free shop will also be established.
This will more than double duty-free's share of total retail space at NMIA to 35%, though duty-free sales as a percentage of total retail sales will drop to 45%.
Williams said this is because the new terminal will include many more retail outlets including food kiosks and other non-duty-free shops.
"We're very conservative on the duty-free projections, because the primary driver for duty-free in Jamaica and the Caribbean is alcohol," said Williams, estimating that about 70% of all departing passengers buy spirits primarily Jamaican premium rum brands to take overseas. "We now want to venture into other traditional duty-free items like electronics, jewelry and perfumes."
As tourists continue to discover Jamaica, infrastructure is being expanded across the island and not just at the island's two international airports.
Agreement has been reached with the cruise industry to expand facilities at the Port of Montego Bay. In 2005, the port hosted 181 cruise ships carrying 326,964 passengers.
Anticipating a jump in tourism, several major Spanish hotel chains have begun feverishly building properties along the island's north coast.
Jesϊs Silva, Spain's ambassador to Jamaica, said that in the last three years, Spanish companies have invested $1.3 billion in six investment projects, and $160 million in the Montego Bay airport expansion project.
"Altogether, these six projects will represent 20 hotels and a net addition of 10,000 rooms," pushing Jamaica's stock from 21,000 to 31,000 hotel rooms. Silva expects a "very strong increase" in charter flights from Europe, bringing 100,000 Spaniards a year to Jamaica once these new hotels are open for business.
"The groups investing in Jamaica are the same ones who have previously invested in other Caribbean countries like Mexico, the Dominican Republic and Cuba," he said, noting that Riu alone is building resorts in four separate locations along Jamaica's north coast.
"They are big corporations and have a very strong clientele in the North American market. These days, Jamaica is a bit more expensive compared to other destinations, but that's because the offer was very small. This will equalize things."
Yet John Issa, chairman of SuperClubs, one of Jamaica's largest hotel chains, says Jamaica must strive to promote its own culture, art, food and music all things that make the island unique.
"The vast majority of our business is still Americans," says Issa. "What the Spaniards couldn't accomplish with the conquisitadores, they're accomplishing with the peseta. They're building large hotels in large numbers throughout the north coast, but these Spanish hotels could be almost anywhere. Their hotels are very cookie-cutter. I can close my eyes and walk into some of their hotels and find my way to the men's room."