Turks and Caicos Islands’ government invites tenders for main airport concession: part one
In some parts of the Caribbean attempts to invite private sector participation into the operation and financing of airports have gone fairly smoothly; for example, in Jamaica, the Bahamas and the Dominican Republic.
In some others, not so, although the delay to the Barbados Grantley Adams Airport concession, which was revitalised in 2022 (it did not achieve its 1H2023 completion target) was down to the 'new realities of aviation' that were, and still are, a consequence of the COVID-19 pandemic.
Nevertheless, over in the Turks and Caicos Islands (a financial centre, tax haven and tourist magnet for celebrities and the financially well-endowed), matters are moving ahead quickly following a government invitation to tender for a concession, under a PPP contract, to operate the Howard Hamilton International Airport on Providenciales Island. It is a demanding one, which specifies rapid investment in a new terminal. The intention is to wrap it all up by Feb-2024 - that's just six months away at the time of writing.
It will be fascinating to see which investors/operators will be attracted to a small airport. It has been described as 'unfit for purpose' by the local press; it serves a group of islands with a population of less than 60,000, but it is an airport that generates enormous wealth from the fat cats who pass through on their way to sparkling white beaches and five-star luxury accommodation.
- The Turks and Caicos Islands government has invited prequalification bids for a 30-year PPP contract to design, construct, finance, operate, and maintain the Howard Hamilton International Airport's redevelopment project.
- The contract is valued at USD360 million and includes the expansion of the existing terminal, construction of a new terminal, expansion of the car park, runway, taxiway system, and commercial apron.
- The new terminal had already been approved and signed off in 2022, and the government is now seeking a private partner with experience in the aviation sector to carry out the project.
- The islands have a population of around 57,000 and an annual GDP of USD1 billion, but they are known for their high-end tourism and offshore financial services sector.
- The tourism sector in Turks and Caicos is the second most tourism-dependent economy in the world after the Maldives, generating significant revenue and attracting wealthy tourists.
- The expansion of Howard Hamilton International Airport is of strategic relevance to the country's strong growth trajectory and its potential for further international tourism, especially from North American visitors.
Summary
- Turks and Caicos government invites prequalification tenders for the extension of the Howard Hamilton Airport.
- It will be a 30-year PPP concession valued at USD360 million.
- The government, backed by the British Sovereign Power, had already agreed on the need for a new terminal.
- Despite a small population, the islands are already an influential offshore financial centre, and they generate considerable high-end tourism.
Prequalification invited for a USD360 million contract to extend the main airport for the Turks and Caicos Islands
The Turks and Caicos Islands Government has invited prequalification bids for the proposed public-private-partnership (PPP) contract: to design, construct, finance operation and maintain Howard Hamilton International Airport's redevelopment project.
As far as it is known, there is no intention to offer the same with any other airport in the islands (there are nine in total).
A private partner "with proven experience in the aviation sector" will be responsible for construction, operating and financing costs of the USD360 million (over 30 years) investment scheme, with mandatory expansion works that include:
- Reconfiguration and expansion of the existing 92,000sqft terminal building by a minimum of 26,700sqft;
- Construction of a new 270,000sqft terminal with four aerobridges within five years;
- Expansion of the car park by over 200 spaces;
- Expansion of the runway and taxiway system;
- Expansion of the commercial apron by 383,200sqft.
The new terminal had already been decided upon
With respect to the new terminal, in 2022 it had already been decided to press ahead with it, in advance of the decision to seek a PPP with a wider brief.
As recently as 26-May-2023 the sovereign power (see below), by way of the UK's Foreign, Commonwealth and Development Office (FCDO), had approved and signed off the construction of the new passenger terminal following the Airport Authority's presentation of a business case to FCDO, requesting permission to proceed with a larger redevelopment under a public private partnership.
Unlike in some other countries, matters are progressing apace.
The deadline for submissions is 27-Sep-2023, with prequalified tenderers to be announced on 13-Oct-2023.
Invitation to tender formally for the 30-year contract will then be launched by the end of Oct-2023, with a preferred bidder to be chosen in Feb-2024.
The islands have 57,000 people and an annual GDP of USD1 billion
The Turks and Caicos Islands are collectively a British Overseas Territory, consisting of the larger Caicos Islands and smaller Turks Islands - two groups of tropical islands in the Lucayan Archipelago of the Atlantic Ocean and northern West Indies.
Their area is less than 1000sqkm (370 square miles).
Location of Turks and Caicos Islands
Although there is an elected premier and a (recently appointed) governor, in the islands (as an autonomous territory) there is also a UK government minister with responsibility for the islands, but that position is currently 'vacant' - an appropriate term in more ways than one.
The total population is around 57,000, producing annual GDP of USD1 billion. Despite British sovereignty, the currency is the US dollar.
Grand Turk (Cockburn Town), the capital since 1766, is situated on Grand Turk Island. But the larger population is on Providenciales, where Howard Hamilton International Airport (formerly Providenciales International Airport) is situated, and that is the main airport facility serving the islands. The airport is operated by the Turks and Caicos Islands Airports Authority.
The degree of expenditure and the scope of the work (extension of the runway and the terminal and the addition of a new terminal) suggest ambition more appropriate to a much larger population base.
An offshore financial centre that punches above its weight
But the islands are known primarily for tourism and as an offshore financial centre, both of which generate passenger traffic levels well beyond the norm.
They are but one of many tax havens in the Caribbean vying for the same business, but all the same, there is a desire to grow the nation's financial services sector further.
Advantages the country has over others in the region in that domain include that because it is a British Overseas Territory, both legislatively and constitutionally, it is effectively controlled by the UK Government. This ensures greater security and stability as the ultimate court of appeal for the Turks and Caicos is the Privy Council in London.
Another advantage is that the currency is the US dollar and has no exchange controls, ensuring strong connections with the United States to add a further layer of stability.
These strengths ensure that trading and dealing in the Turks and Caicos Islands is straightforward. And its regulator, the Turks and Caicos Financial Services Commission, is respected for its professionalism, reliability, and transparency.
The second most tourism dependent economy in the world
As for the tourism sector - Turks and Caicos is the second most tourism-dependent economy in the world after the Maldives.
In 2019 the country recorded a total of two million tourists, and it generated approximately USD787 million in revenues in the tourism industry alone. This is equivalent to 65.72% of its GDP - slightly down from 69.11% in the previous year - and approximately 3% of all international tourism revenue in the Caribbean.
It is useful to compare these statistics with a European country with a very high foreign visitor rate, for example Iceland. Iceland is another country with a low population and one that is swamped by tourists for most of the year, despite its high cost of living.
In 2019 tourist revenues in Iceland amounted to USD2,690,000,000, which equates to USD7,221 for each resident in the 372,520 population.
In the same period in Turks and Caicos the USD787 million revenues translated into USD13,807 for each resident.
That is why tourism is so important there.
Tourism promotion efforts are aimed unashamedly at the 'high end' in Turks and Caicos, but the government has latterly adopted a two-pronged strategy to increase it further.
Upmarket resorts are aimed at the wealthy (who may be also attracted by a 'Who's Who' of celebrities that own homes there, or who visit frequently), while a large new cruise-ship port and recreation centre has been built for the mass tourism that visits Grand Turk.
The French vacation village company Club Méditerannée (Club Med) has an all-inclusive adult resort called 'Turkoise' on Providenciales.
Visitor attractions include one of the longest coral reefs in the world and the world's only conch farm.
To boost tourism during the Caribbean low season of late (northern) summer, since 2003 the Tourist Board has taken a leaf out of Iceland's strategy of organising and hosting an annual series of music concerts during the off season called the Turks & Caicos Music and Cultural Festival. More than 10,000 people attend annually.
Howard Hamilton International Airport, and thus this expansion project, is of strategic relevance to the strong growth trajectory for the country's economy, which is clearly heavily reliant on the tourism sector.
The islands have a still higher potential for international tourism in the Caribbean region, especially for North American visitors (USA and Canada).
The tourism infrastructure is more than adequate
The tourism infrastructure is in place, especially on Providenciales.
The country has 4,647 rooms officially registered, and Providenciales has already a very high density of hotels: 55 rooms per square kilometre. There are other hotel developments planned, suggesting that a density of 60 rooms per sqkm will be reached in the short term, and higher development still could increase the ratio up to up to 65-70 rooms per sqkm.
In total, the islands are expected to reach more than 6,200 rooms in the medium term.
Higher values would mean building large resorts and mass tourism. Other islands in Turks and Caicos have more land availability to develop new accommodation offerings.
The niche tourist market will probably be perpetuated
However, it is not made clear whether the current mantra of catering mainly to a niche market of wealthier tourists will be maintained, by way of four and five star hotels, or if lower priced accommodation will be favoured for new developments.
That dilemma classes Turks and Caicos with Cape Verde for example, where most of the developments in the last decade have been at the high end, thus disenfranchising the original budget travellers who developed tourism there originally.