PortMiami wants $285M in COVID rent breaks for cruise lines as debt pressures grow

Miami Herald ^ | Oct. 20, 2020 | Douglas Hanks

[Capt. Tom]

Faced with a crippled cruise industry as a one-time cash cow, PortMiami wants to slash required rent payments for ships and hope business picks up in time to cover debt payments for an ongoing expansion.

Once federal regulators lift the existing “no sail” order on cruises, cruise lines would resume rental fees for ships, but not have to meet minimum payments.

Kuryla said the agreements were tailored to keep Miami poised to remain the top cruise port once ships begin filling up again, and reduce berthing costs enough for companies to consider leaving the port with vessels at a fraction of their normal capacity.

The stakes are high for a cruise recovery, since PortMiami has about $1.4 billion in debt and some of that must be covered by sales taxes and other general government funds if docking fees can’t cover the payments.

Despite the coronavirus crisis, commissioners continued approving borrowing by the port. A September vote approved $335 million in new debt for cruise terminals and other projects, backed by property taxes and other governments for police, parks and transit if port revenues aren’t enough to cover the payments.

Moody’s has a negative outlook on the port’s finances, and included some grim words in an August analysis of the county-owned facility’s austerity measures and long-term outlook.

“PortMiami will face difficult decisions to initiate additional cost reductions and postpone discretionary capital expenditures beyond fiscal 2020 if cruise revenue falls short of minimum annual revenue guarantees for an extended period of time,” the for-profit debt rater wrote. “The negative outlook reflects the uncertainty around the return of cruise operations in the US, the rapid deterioration in the credit quality of cruise lines as well as a high risk that minimum annual revenue guarantee contracts may be renegotiated.”

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[SMARTY]

True- but for a lot of people who never had (and likely WILL never have) enough disposable income to travel in that way, the idea of saving the ‘cruise’ industry is almost an insult.

I understand that it IS an industry... but there are SO many businesses that are suffering right now (thanks Nancy) and may not recover at all, either with or without gov. assistance.

The plumber I have is self-employed in a business he and his family struggled to build over decades. He may have to go out of business altogether... and that’s unfair.

We are told all the time that ‘small businesses’ are the pivot point of the US economy...well...?

[Chgogal]

How about the people who lose their livelihood? Because people feel insulted does not mean there is no need!

[SJackson]

Note the aid is for the Port of Miami, not the cruise lines. Yes, they will benefit from rent reductions. As lots of business’ are right now. But the alternative may be a default by the Port. Not the end of the world in itself as it largely harms investors. At least financially, presuming the Port survives. But given the support others in the leisure industries have obtained, I’m not sure it’s entirely inappropriate.

[SJackson]

I believe the largest recipient in the leisure industries is Ashford Hospitalitly, which owns middle to luxury hotels.