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New grouping wins rights to Kai Tak cruise terminal

Eddie Luk

Friday, March 09, 2012

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Worldwide Cruise Terminals Consortium has been awarded the right to operate and manage the long-awaited cruise terminal at Kai Tak.

The consortium is required to pay the government a fixed rent as well as a variable rent. The fixed rent for the 10-year operation is around HK$13 million. In addition, the government will receive a percentage of the operator's gross receipts as variable rent, with the percentage increasing from 7.3percent to 34percent as gross receipts rise.

The grouping is made up of Worldwide Flight Services, Royal Caribbean Cruises and Neo Crown.

The government said Neo Crown is owned by Shun Tak Holdings, which has core businesses in property development, leasing and management, and transportation.

A spokeswoman for the Tourism Commission said it is necessary to charge a variable rent as this will guarantee the government a higher rental income if usage and operation of the cruise terminal is satisfactory.

The consortium will pay the government 7.3 percent of revenue if it is less than HK$30 million a year. Between HK$30 million and HK$60 million, the percentage will be 18 percent. The figure will rise to 23 percent of revenue between HK$60 million and HK$90 million, and then to 34 percent for sums higher than that.

Worldwide Flight Services has a 60 percent interest in the consortium, while Royal Caribbean Cruises and Neo Crown each have a 20 percent stake.

The consortium will be responsible for the berthing of vessels and managing traffic, transport, security and shops.

The government said the terminal building and first berth are likely to begin operations in the middle of next year.

Barry Nassberg, chief operating officer of Worldwide Flight Services, said yesterday the company will co-operate with the Tourism Board to encourage more cruise liners to berth in Hong Kong. It will also develop new shore excursion programs to lure overseas visitors.

Li Kui-wai, associate professor of economics and finance at City University, said the terms set by the government are quite attractive and likely to encourage the consortium to invest more in promoting Hong Kong as a cruise hub.

The Kai Tak cruise terminal, which will cost about HK$8.15 billion, is expected to bring in between HK$1.5 billion and HK$2.6 billion a year by 2023 and create 5,300 to 8,900 jobs.


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