Royal Caribbean Cruises has asked the Port of Galveston for a yearlong extension to begin construction on its new $100 million cruise terminal.
Port Director Rodger Rees informed the Wharves Board of Trustees about the company’s request Friday afternoon and included information about it in the board’s agenda packet for a planned meeting on Tuesday.
The delay isn’t official yet, Rees said Saturday. The port and the company must renegotiate terms of their agreement, he said.
“We don’t know yet,” Rees said. “The thing we’re waiting on is the actual contract language. That’s where we are.”
Royal Caribbean has put a hold on all capital projects because of the cruise stoppages caused by the COVID-19 pandemic. The company still intends to build the new terminal, just not this year, Rees said.
Royal Caribbean has not run any cruises anywhere in the world since March 13 and this week announced it would not begin offering trips again until at least May 12.
Health officials in the United States have explicitly warned people about the dangers of traveling by cruise ship during the pandemic and have recommended that people defer such travel until the crisis has passed.
The financial hit from the suspensions of cruises could possibly halt plans to start building the highly anticipated terminal at Pier 10 if the wharves board, which governs the port, agrees to the extension. After a year of negotiations, the port in December agreed to allow Royal Caribbean to build the $100 million after a 120-day due diligence period.
That due diligence period was set to end in April. Royal Caribbean is requesting for the due diligence period to be extended until April 9, 2021, according to port documents.
The port and the company are working to adjust the terms of the contract, according to the board’s documents. Changes to the contract will be discussed more in an executive session during Tuesday’s Wharves Board of Trustees meeting.
The delay in building a terminal at Pier 10 could have some effect on the port’s planned capital projects over the next year. Rees said he wasn’t ready to comment about whether any work would be delayed and added that some projects, such as expansion on the port’s west end to create more space for cargo, would benefit the public docks with or without the new cruise terminal.
Delaying the terminal project a year could also mean changes to the port’s expected revenue in coming years.
Plans had been to complete the terminal by the fall of 2021, at which time the port would begin collecting $4 million in annual rent. The port also was anticipating increased revenues from having more ships docking both at the new terminal and at other berths vacated by Royal Caribbean ships.
Despite the full stop on the cruise industry, Rees said he believes Royal Caribbean and other cruise companies would rebound quickly after the pandemic threat passes.
Royal Caribbean on Saturday did not respond to questions about its plans for Galveston.
The wharves board is scheduled to meet at 9 a.m. Tuesday. The board will meet via videoconference because of social distancing measures put in place during the coronavirus pandemic.