Why Cruise Lines Are Building Their Own Caribbean Islands (And What It Means)
The New Wave of Cruise-Owned Caribbean Getaways
Carnival’s $600M Bet: Celebration Key
Set to open in July 2025, Celebration Key is a $600 million, 65-acre mega-resort exclusively for Carnival passengers. Think private beaches, luxury cabanas, and curated shopping—all behind the velvet rope of cruise exclusivity.
While access is complimentary for guests, the money machine runs on paid amenities: exclusive cabana rentals, boutique food options, and experiences that mirror a theme park’s monetization model. It’s Disney World meets Caribbean breeze.
A Proven Profit Paradise: Royal Caribbean’s "Perfect Day at Cococay"
Royal Caribbean’s “Perfect Day at Cococay” is already proof that this model works, raking in over $100 million in annual profits after a $250M facelift. Carnival’s executives expect their shiny new island to top $150M in year one.
Private Island Cruise Lines: The Economic Pros & Cons
These private islands divert passenger spending away from traditional ports like Nassau or San Juan, where independent shops, tour guides, and local eateries depend on cruise traffic. Instead, the cash flows into cruise company coffers, not island economies.
Cruise lines argue they’re bringing jobs, infrastructure, and training to local communities. Critics fire back, pointing to murky lease deals, a lack of transparency, and shrinking revenue for independent businesses in traditional port towns.
The Bahamas Pushes Back
As reported in Travel Weekly, the Bahamian government is trying to fight back with VATs and higher passenger taxes on these islands, claiming that the added revenue balances the scales. Cruise lines, for their part, say they’re hiring locals and supporting businesses, but those partnerships often remain vague.
According to Bahamas newspaper The Tribune, the government implemented the new charge on March 1. The move would end a nine-year run of the government exempting the private islands from the Bahamas' value added tax (VAT).
The Ministry of Finance's financial secretary, Simon Wilson, told The Tribune that the VAT puts private island activities at the same level of taxation as Bahamians who sell goods and services to travelers at other destinations. The vast majority of the cruise lines' private destinations are located in the Bahamas, including Royal Caribbean's Perfect Day at CocoCay, Norwegian Cruise Line's Great Stirrup Cay, Disney Cruise Line's Castaway Cay and new Lookout Cay at Lighthouse Point (scheduled to open in 2025), MSC Cruises' Ocean Cay, Princess Cruises' Princess Cays, and Carnival Cruise Line's Celebration Key (coming in 2025).
The Pro-Business and Tourism Perspective
With success in the Caribbean, cruise lines are already expanding the model. Royal Caribbean plans to launch “Perfect Day Mexico” by 2027, signaling the global rise of the cruise-controlled vacation economy. From a pro-business and tourism perspective, the rise of private cruise islands offers clear advantages. For tourists, these purpose-built destinations provide a seamless, safe, and luxurious experience tailored to their preferences—curated excursions, private beaches, and zero hassle.
Everything is designed to enhance comfort and eliminate the unpredictability of local ports. For shareholders, the financial upside is undeniable. With on-island spending tightly controlled, cruise lines capture significantly more revenue per guest. Investments like Celebration Key are already showing strong returns, turning once passive travel days into high-margin experiences. It’s a win-win for customer satisfaction and corporate profitability—an investor’s tropical dream.
Private Islands as Tourist Attractions: Who Benefits?
As I noted in my previous work on digital infrastructure and local impact, control over the ecosystem equals control over the profit. These private islands aren’t just tourist attractions—they’re micro-economies engineered to keep dollars inside corporate walls.
How Cruise-Controlled Islands Could Leave San Juan Adrift
As a proud resident of Puerto Rico, I can’t help but feel uneasy watching cruise lines build their own self-contained island destinations just miles from our shores. The new private islands—like Carnival’s upcoming $600 million Celebration Key—are being designed to keep passengers entertained without ever setting foot in a real port city like San Juan.
I believe that San Juan is far more than a backdrop for postcards—it’s a living, breathing city with small businesses, historic sites, artists, and tour operators that rely on cruise tourism to survive. Every traveler who skips our cobblestone streets for a private beach resort is a missed opportunity for our local economy. And it’s not just about lost revenue—it’s about lost connection, lost culture, and a lost sense of what makes Puerto Rico special.
In 2023, over 13 million cruise passengers visited the Caribbean. If even a fraction of them are diverted to private islands, that’s millions of dollars not going to local restaurants, drivers, artisans, or historic sites here in San Juan. Cruise lines might promise to hire locally or partner with island governments, but the reality is: when you control the entire destination, you control who gets paid.
Who Benefits When a Cruise Company Owns the Shore?
The Cruise Company is holding all of the cards. We’ve seen this in other industries. I wrote about undersea cable projects in Puerto Rico as a possible lifeline for our energy grid, but they also raised questions about who profits from our resources.
The private island model raises similar concerns:
As more cruise lines expand this model across the Caribbean, San Juan and other port cities need to take notice. We should demand transparency, fair taxation, and protections for local businesses before we become a footnote in vacation itineraries.
Puerto Rico is not just a stop on a route. It’s a destination. And we deserve to be treated like one. While they promise luxury and predictability for vacationers, the growing cruise monopoly on tropical experiences leaves independent Caribbean economies fighting for a smaller slice of the pie.
Would you rather sip rum on a curated beach or explore a real island culture?
About the Author: Mark Derho