Puerto Rico: San Juan’s Luís Muñóz Marín International Airport to get $1.4 billion overhaul

Spectacular view of El Morro fortress, a landmark of Old San Juan. (Larry Luxner)

Editor’s Note: This is part of a series of stories on Caribbean tourism. Read the previous stories here.

A Mexican consortium has begun moving forward with plans to invest nearly $1.4 billion over the next 40 years to convert San Juan’s Luís Muñóz Marín International Airport — the largest in the Caribbean — from a congested facility notorious for poor customer service into what its new operators promise will be a “world-class gateway.”

The transition process that moves LMM from a public to a private facility will take six months, say officials.

The new Terminal A at San Juan’s Luís Muñóz Marín International Airport. (Larry Luxner)
The new Terminal A at San Juan’s Luís Muñóz Marín International Airport. (Larry Luxner)

Under the deal, Aerostar Airport Holdings LLC, a 50-50 venture between New York-based Highstar Capital and Grupo Aeroportuario del Sureste (ASUR) pays the Puerto Rico Ports Authority (PRPA) $615 million upfront, plus annual payments of $2.5 million and 5 percent of annual gross revenues for the next 25 years, dropping to 10 percent of gross revenues for the last 10 years of the contract. The PRPA will receive a total of $552.5 million over the life of the concession.

In a prepared statement, ASUR Chairman Fernando Chico-Pardo said: “We look forward to transforming LMM into a best-in-class facility that fully meets the needs of both domestic and international travelers to further enhance its position as the busiest airport in the Caribbean.”

In fiscal 2012, Luís Muñóz Marín International — named after the founder of Puerto Rico’s commonwealth movement — handled more than 8.4 million passengers. It recently opened Terminal A, which is served by JetBlue Airways.

Homeport cruise ship visitors, meanwhile, came to 456,109 in 2012, with 197 calls. That’s up from 403,613 in 2009. The cruise ship industry pumped $187 million into Puerto Rico’s economy in the 2011-12 season, generating 5,000 jobs and $70.3 million in wages, said a study commissioned by the Florida-Caribbean Cruise Association.

On the plus side, the Puerto Rico Tourism Company (PRTC) has signed a deal with Royal Caribbean that will bring the cruise line’s Oasis class of ships to Puerto Rico in 2014. Rivera Marín said the Oasis class makes up the largest passenger cruise ships in the world, with a displacement of about 100,000 metric tons, and has a total capacity for 5,400 passengers.

A view of Old San Juan includes the Carnival Glory cruise ship. (Larry Luxner)

Next year, the Disney Cruise Line will begin homeporting in San Juan. Jonathan Frontado, the company’s spokesman, said the Disney Magic’s weekly departures from San Juan to Antigua, St. Lucia, Grenada, Barbados and St. Kitts will generate $5 million for Puerto Rico’s economy in 2014.

Meanwhile, Royal Caribbean’s chief rival, Carnival Cruise Lines, remains active in Puerto Rico, despite earlier reports indicating it would no longer include San Juan as a homeport or port of call in its schedules starting next year.

Beautifully restored buildings grace Calle de San Francisco in Old San Juan. (Larry Luxner)
Beautifully restored buildings grace Calle de San Francisco in Old San Juan. (Larry Luxner)

“Carnival will continue to visit the port of San Juan during the current 2013-14 season and has been selling cruise departures from San Juan through April 2014. The Carnival Valor, which uses San Juan as a homeport, will continue to do the same for cruise departures through April 2015,” said PRTC Director Ingrid Rivera Rocafort.

On April 9, five cruise ships dropped anchor in San Juan, with about 15,000 passengers injecting a combined $3 million into the local economy of Old San Juan.

On the downside, Fajardo’s Marina Puerto del Rey — the largest marina in the Caribbean — has filed for Chapter 11 bankruptcy, listing $44.3 million in debt. With a capacity of 1,100 boats, Puerto del Rey has been in operation since 1988, offering 700 slips on concrete fixed piers and 450 covered dry racks for smaller boats.

Puerto Rico’s tourism industry still faces a number of obstacles, says Caribbean Update, including “the lack of a destination marketing organization, high energy costs, the proliferation of illegal slot machines and burdensome casino regulations.”

The newsletter said that with an estimated 25,000 illegal slot machines taking business away from the 7,000 operating legally, many casinos have had to cease operations, including those at El Conquistador Hotel in Fajardo, as well as at the Gran Meliá Resort in Río Grande.

Restored buildings grace Calle de San Francisco in Old San Juan. (Larry Luxner)

In general, tourism improved somewhat in 2012 compared with the previous year, though the island still has a long way to go. Hotel occupancy rose 7.3 percent between July and September 2012, with revenue per available room rising 10.7 percent in the third quarter of 2012 vs. 2011, while average daily rates rose by 3 percent.

The municipality of Guaynabo, a suburb of San Juan, is setting aside $85 million to build a 200-room hotel. Two major hotel chains, Marriott and Holiday Inn Express, are competing to flag the property, which will also house Guaynabo’s first casino.

The future hotel will be the first large-scale property of its type in Guaynabo, which is also in the midst of a $260 million redevelopment project in the city’s Amelia sector that — aside from drawing tourism activity to the waterfront area — aims to mitigate the zone’s flooding and housing problems.

On a much smaller scale, Old San Juan’s first bed and breakfast is scheduled to open soon in a renovated house on Calle del Sol.

“With only five guest rooms, Casa Sol is sure to provide that homey environment sought by some travelers, especially visitors from Europe,” writes local journalist and blogger Lorraine Blasor. The cozy new B&B, representing a $1 million investment by entrepreneur Eddie Ramírez, expects to generate annual revenues of between $350,000 and $500,000. Daily room rates will average $125 to $145, he said.



One thought on “Puerto Rico: San Juan’s Luís Muñóz Marín International Airport to get $1.4 billion overhaul

  • July 9, 2013 at 6:06 AM

    Why doesn’t Puerto Rico have any all-inclusive hotels? When the government of the island finally realizes that there exists a stray dog problem, and deals with the problem in a humane manner, maybe more tourists would come to visit and not be depressed at the sight of dead dogs on the roads or packs of starving dogs on the streets and the beaches!

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