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Caribbean Duty-Free Suffers Due To Autumn Hurricanes
Impact International / October 15, 1995

By Larry Luxner

The Caribbean's two busiest duty-free shopping destinations -- St. Thomas and St. Maarten -- are still in shock following a pair of back-to-back killer hurricanes that ripped through the islands in September, leaving at least 20 people dead, thousands of islanders homeless and several billion dollars' worth of damages in their wake.

Hurricane Luis, with its 140 mph sustained winds and blinding rains, roared into St. Maarten on Sept. 5 after spreading destruction throughout Antigua, Barbuda, Dominica, St. Kitts and Anguilla. Only 10 days later, Hurricane Marilyn followed in Luis' path, wrecking St. Thomas and Puerto Rico's offshore island of Culebra but largely sparing St. Croix, which had been devastated by Hurricane Hugo six years earlier.

In Antigua alone, damage from Luis was estimated at $400 million, with "severe damage to private dwellings and commercial buildings," according to a statement by Prime Minister Lester Bird. On Guadeloupe, trees were uprooted, while artificial beaches at the Bakoua and Meridien hotels were washed away on Martinique and three hotels badly damaged on St. Bartholemy.

It was St. Maarten, however, which suffered the brunt of the powerful storm, with 80% to 90% of all structures on the Dutch side either damaged or destroyed.

St. Maarten's public-relations agency, Robinson Yesawich & Pepperdine Inc. (RY&P), said the island sustained $100 million in losses, though Georges E. Greaux Jr., operations manager at Caribbean Liquors & Tobacco just outside Philipsburg, puts the damage estimate at nearly $1 billion.

"We're trying to piece things together and be ready by December," Greaux told Impact in a phone interview from St. Maarten. "The French side was fortunate to have communications during and after the hurricane, so they were able to get the ball rolling a lot faster than the Dutch side. Frontstreet, our main duty-free area, should be up and running in no time. Within a month or two, we should be ready to receive cruise ships."

Added Jackie MacKay, vice-president of public relations at RY&P: "Some of the reports we heard were highly exaggerated. They definitely had damages, but they've been very aggressive about cleaning it up." Nevertheless, it could be two months before electricity is fully restored to the island, and even longer before Wathey Pier at Pointe Blanche is readied for cruise-ship arrivals.

In 1994, some 1.2 million tourists visited St. Maarten, of which 718,000 were cruise-ship passengers; the other 647,000 flew in to Phillipsburg, capital of Dutch St. Maarten and site of Princess Juliana International Airport, which opened to military flights just two days after Luis struck, and to commercial flights one day later.

Caribbean Liquors is the biggest liquor store on St. Maarten, with annual sales of $25 million and nearly 70% of the island's retail liquor, cigarette and beer sales. The island has enjoyed duty-free status since 1648, when its two European colonizers, France and the Netherlands, divided the 37-square-mile speck of land into Dutch-speaking Sint Maarten (today part of the self-governing Netherlands Antilles) and French-speaking Saint Martin (an overseas dependency of the French Republic).

Myron Clements, who handles public relations for the French West Indies Tourist Board, agreed that the French side of the island wasn't hit as badly as the Dutch side, though he added that two hotels near Marigot -- the Club Orient and the LaBelle Creole -- were heavily damaged and will not be reopened for the 1994-95 tourist season.

"We're helping all these destinations get back on their feet," said Michele Paige, executive director of the Florida-Caribbean Cruise Ship Association in Miami. "The cruise industry is at a fantastic advantage in being able to redeploy their vessels to insure that passengers are kept safe." In lieu of St. Thomas, she said, cruise ships are being diverted to the nearby British Virgin Islands; instead of Antigua, vessels are heading to Trinidad or St. Lucia, and in lieu of St. Maarten, cruise ships are being directed to nearby Martinique.

Paige added that in Antigua, "things are not as bad as was reported, there's absolutely no structural damage to Heritage Quay (an upscale duty-free mall for cruise-ship passengers), the shops are standing and the pier is in perfect condition." She said that Antigua received 223,000 cruise-ship passengers last year. St. Kitts, which had 113,000 cruise passengers, suffered only minor damage, and Puerto Rico, whose offshore island of Culebra was wiped out by Luis, was otherwise spared. Last year, 977,000 cruise-ship tourists docked in San Juan.

Rick Steck, a spokesman for Royal Caribbean Cruise Lines in Miami, said RCCL will divert its three megaships -- Sovereign of the Seas, Monarch of the Seas and Majesty of the Seas -- to St. Croix's Frederiksted and Puerto Rico's Ponce until things return to normal. "Three of the Monarch's ports of call were Antigua, St. Maarten and St. Thomas, and all three of those are down," he said. "St. Thomas is pretty badly hurt, with considerable destruction, flooding and infrastructure damage. It's not in our plans to go there for awhile."

Ironically, in the days immediately following Hurricane Luis, Virgin Islanders were anticipating a windfall as cruise-ship companies announced plans to divert their vessels to St. Thomas from storm-ravaged St. Maarten. Those hopes were quickly shattered with the arrival of Hurricane Marilyn only 10 days later. That storm, packing winds of 127 mph, killed five Virgin Islanders, destroyed 25% of the houses on St. Thomas and damaged the remaining 75%.

At press time, it was extremely difficult to communicate with anyone on St. Thomas because of downed phone lines, and virtually impossible to assess damages to the island's duty-free trade. Jon Newman, a spokesman for the Virgin Islands Tourist Board, refused to say whether his agency would eventually mount a public-relations campaign to lure visitors back to the islands, commenting only that "the airport in St. Thomas sustained damage, the hurricane hit only a few days ago, and right now we're just trying to help those people."

In 1994, according to Virgin Islands Chamber of Commerce statistics, 1.2 million cruise-ship tourists visited St. Thomas, spending close to $350 million on duty-free purchases. Imported watches and jewelry comprised half of that total; liquor, cameras, electronic equipment, perfumes and cosmetics accounted for the rest. According to local merchants interviewed by Impact International before the storm, approximately 75% of the duty-free shoppers in St. Thomas come from the U.S. mainland; another 15% are Europeans, and 10% come from Latin America and elsewhere.

St. Thomas' biggest duty-free rival has traditionally been St. Maarten, which consistently undercuts St. Thomas by up to 35% in certain categories such as rum and vodka. Part of the reason is that St. Thomas liquor retailers must pay a 6% import tax along with a local excise tax of $6 per case, though Sebastino Paiewonsky, vice-president of A.H. Riise Gift & Liquor Stores Inc. in Charlotte Amalie, which sustained heavy damage during the latest storm, said local merchants have long been lobbying the Virgin Islands government to do away with those taxes in order to stay competitive with St. Maarten.

Meanwhile, St. Maarten liquor retailer Georges Greaux said his island was cleaning up from the disastrous hurricane season, and that several stores and hotels had already reopened by mid-September.

Yet when asked how long it would take for life on St. Maarten to return to normal, Greaux replied: "Really normal? That might take a year or more. It depends on how soon insurance companies take care of everyone's problems."

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