Cruise lines have long operated their businesses in Mexico as tourists seek to experience the beautiful landscape and culture. The price may soon increase, however, as Royal Caribbean seeks to develop a private resort near a Mexican seaside village, Mahahual. The lavish resort is expected to rake in millions for the cruise line. Expectedly, the Mexican Government seeks to benefit from the project as well.
Following months-long back-and-forth with the Mexican government, starting on Tuesday, cruise-goers will be assessed a $5 fee when their ship stops at a Mexican port. Eventually, the rates will rise to $21 for each passenger, which the industry is aggressively pushing back against.
Now, as Royal Caribbean seeks to build its private resort in Mahahual, an expansion of the industry’s craze to buy land for development in destination areas, tensions continue to rise. Royal Caribbean opened Coco Cay in 2019, a resort in the Bahamas, that acts as the blueprint for such development projects.
Royal Caribbean has started publicizing the development of its new resort, Perfect Day Mexico. The project will span 200-acre along the coast, and plans to open in 2027. The land is estimated to cost around $292 million, according to securities filings, and Royal Caribbean expects to close a land purchase deal this year.
Royal Caribbean anticipated the newly instated cruise passenger fee to affect the company’s earnings. However, Perfect Day Mexico still has the potential to add more than $125 million annually to the company’s revenue, before interests and taxes.
According to Michele Paige, chief executive of the Florida-Caribbean Cruise Association, “Cruise operators agreed to assess the tax on passengers while talks continue with the government on the role the industry should play in Mexico’s economic development goals.”
The Mexican government has qualms with the cruise industry over its lack of engagement with Mexican resources, including labor and commodities. Government officials have asked the industry to commit to hiring Mexican workers and using more Mexican products in their supply chains, according to a proposal viewed by The Wall Street Journal. Rubén Olmos Rodríguez, president of Global Nexus, told the Journal, “the Mexican government’s perspective is: ‘OK, fine, you bring prosperity. But you need to pay accordingly, like other tourists pay when they come via an airplane.”
According to Michele Paige, chief executive of the Florida-Caribbean Cruise Association, “Cruise operators agreed to assess the tax on passengers while talks continue with the government on the role the industry should play in Mexico’s economic development goals.”
As the cruise industry and government work towards a mutually beneficial relationship, Royal Caribbean anticipates that the Perfect Day Mexico project will create more than 1,000 construction jobs and employ more than 2,000 people throughout the region.
Mexico’s relationship with cruise lines continues to be a point of contention, as some lawmakers and government officials believe the companies should be paying more taxes. On the other hand, some local business owners in small port towns, who rely on the cruise industry for business, are concerned that increased taxes will result in fewer tourists.
