Miami-Dade weighs new Royal Caribbean terminal, HQ expansion

This includes $2.5b from a PortMiami cruise terminal usage agreement plus $260m from an amended campus lease.

The agreement would generate a whopping 66,350,000 more contractually obligated passenger movements at the port.

New Terminal G and Berth 10

It calls for building a new Terminal G for Royal Caribbean Group's exclusive use and Berth 10, where the company would share the new terminal under construction by MSC Cruises.

The agreement also covers the continued development of Royal Caribbean's PortMiami headquarters, put on hold during the pandemic, and a lease extension there through at least 2072

New CTG able to handle Icon-class ships

Royal Caribbean's existing Terminal G has capacity for ships with about 4,000 passengers. The new CTG will be able to handle Icon-class ships — cruising's largest — with capacity for 7,000-plus passengers. It will be built to the county's sustainable buildings ordinance with solar panels and have a multi-level shared parking garage with ground-level intermodal facility, connecting roadways and a provisioning building.

It will occupy both the existing site and PortMiami’s 1963-era administrative building, to be demolished.

The cruise terminal usage agreement is for a 36-year term including three seven-year extensions. Miami-Dade County would undertake the CTG and Berth 10 capital improvements projects, not to exceed $325m, with Royal Caribbean reimbursing at least $152.75m plus interest and costs.

Minimum annual guarantees

The agreement provides the county with a minimum annual guarantee ranging from Royal Caribbean's current 600,000 annual passenger movements during a development period increasing to 1.5m annual passenger movements upon substantial completion of CTG, estimated in early fiscal 2027, and further increasing to 2.1m annual passenger movements from years 11 through the conclusion of the 36-year term.

Once Royal Caribbean reaches 2.1m annual passenger movements plus the company's approximately 1.55m annual passenger movements at its Terminal A, Miami's guaranteed passenger movements will exceed the port's record fiscal year 2019 volumes by 22%.

As covered in the existing cruise terminal agreement, the county will provide Royal Caribbean parking revenues and an annual marketing incentive, consistent with other cruise line agreements. The parking incentive's value is anticipated between $1.4m and $4.9m per year during the term, including extensions. The marketing incentive is anticipated between $2.9m and $6.4m annually.

Most favored port

If the agreement is approved, for the five-year period immediately following the effective date, Royal Caribbean warrants that its minimum annual guarantee at PortMiami will be the largest at any of its ports with sailings to the Caribbean basin.

Passing any other cruise line's passenger guarantee by 62%

Coupled with Royal Caribbean's current commitment at Terminal A, upon the completion of CTG, the company will guarantee PortMiami approximately 3.05m annual passenger movements increasing to 3.65m annually during the term. This represents an increase of 66,350,000 guaranteed additional passenger movements and Royal Caribbean's total annual passenger guarantee will reach a level that surpasses any other cruise line’s passenger guarantee at the port by 62%.

Royal Caribbean campus

Royal Caribbean had spent about $70m on improvements to its campus at the port before suspending construction in May 2020 to mitigate financial risks during the COVID-19 pandemic. In July 2021, the company notified the county of its intent to resume improvements and requested an extension of deadlines in its lease, which were approved in July this year.

The new agreement to be considered by commissioners on Tuesday would have the port complete Royal Caribbean's campus, capped at $450m in county-funded project costs, including improvements at the existing 1050 and 1080 buildings that collectively exceed $11.5m. Campus lease payments would increase by 125% of the county’s project costs including financing costs.

Miami-Dade would finance its campus construction costs through seaport revenue bonds or other financial mechanisms.

Jobs

Miami-Dade estimates the deal would add approximately 12,000 new permanent direct, indirect and induced cruise-related jobs and an additional 1,000 employees at the Royal Caribbean campus with $100m in annual wages.

The projects also are expected to generate an estimated 9,634 construction jobs.

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