Port of Galveston voting on deal with Royal Caribbean for third terminal

Port of Galveston officials are set to vote today on the details of a Cruise Terminal 3 in Galveston. If approved, look for Royal to announce soon an Oasis Class ship sailing from Galveston.

Port of Galveston officials are set to vote later today on the details of a third cruise terminal. Set to be built with Royal Caribbean, the new Terminal 3 would significantly expand cruise options from Galveston. Specifically, look for the addition of an Oasis Class ship sailing from Galveston in Fall 2021. What, specifically, is in the deal the Port is voting on?

Where will the new terminal be built?

The $100 million terminal will be built at Pier 10. Presently, cruise lines use two terminals at or near Pier 21. The new terminal will be near UTMB (the University of Texas Medical Branch). This is slightly further from the attractions of downtown Galveston.

What are the details of the deal?

The Port of Galveston is describing the new terminal as being a “$100,000,000 terminal.” The agreement with Royal Caribbean is for 40 years with 10 year renewal increments. That represents a significant long term investment in the Port by Royal Caribbean.

Royal Caribbean will pay $4 million per year in base rent once the terminal is operational. They will also pay the Port per passenger fees. The Port of Galveston will initially receive 95% of parking revenues, and in later years will receive 90%. Royal Caribbean will pay for the first $8 million in improvements, and port officials have committed to paying the next $8 million. A traffic plan will come later.

What should we expect to see next

First, expect to see Royal Caribbean announce an Oasis Class ship sailing from Galveston. I expect that announcement very, very soon. There is an Allure of the Seas sized hole in their schedule starting November 2021, and that is when work on this terminal should be completed. The only way this new work makes sense is if Royal intends to bring in a much larger ship.

Second, look for additional cruise lines to announce sailings from Galveston. Princess and Norwegian cruise lines both sailed from Houston before determining that port to be unworkable. Galveston is a better port, and port officials will be allowed to use the new terminal for other lines when Royal isn’t using it. Additionally, the new terminal may well open up space at the existing Terminals 1 and 2. Those announcements will likely take longer to develop, however.

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