Galveston Weighs Royal Caribbean Deal for Cruise Terminal 14

Galveston Wharves directors will consider an amended framework with Royal Caribbean Group on Tuesday for Cruise Terminal 14, a fifth cruise terminal designed to handle Icon-class ships and approximately 2 million passenger movements annually. The meeting agenda also includes a proposed 2027 operating license for Margaritaville at Sea.

The Royal Caribbean proposal would divide project responsibilities along the lines of the cruise line’s Cruise Terminal 10 development: the port would build the marine and parking infrastructure, while Royal Caribbean would develop and construct the terminal. Approval would also place port funding for the project ahead of other new cruise-terminal developments, although Royal Caribbean would not yet be committed to proceed.

Port and Royal Caribbean would split construction

Cruise Terminal 14 would be located between Royal Caribbean’s Cruise Terminal 10 and the planned site for Battleship Texas, immediately east of Cruise Terminal 16. That terminal opened last year and serves MSC Cruises and Norwegian Cruise Line.

Galveston Wharves would fill the slip east of Pier 14 and construct a new pier and berth capable of accommodating Royal Caribbean’s approximately 248,663-gross-ton Icon-class ships. The vessels are about 1,197 feet long and carry 5,610 passengers at double occupancy.

The port would also modify Cruise Terminal 16 so ships using that facility could berth farther west. Parking would be another port responsibility, potentially including a garage, with Galveston Wharves retaining all parking revenue.

Royal Caribbean would build the passenger terminal and receive seven-day preferential berthing. The projected annual volume could also support two weekend ships combined with a five-, five- and four-day sailing rotation.

The port’s four cruise terminals already handle almost 4 million passenger movements a year.

Financial terms extend as long as 60 years

The proposed ground lease would run for 20 years, followed by four optional 10-year extensions. Its base fee would begin at $8.70 per passenger and rise 3% annually, with Royal Caribbean retaining the right to modify the fee. A separate passenger-movement charge tied to the amount assessed at Cruise Terminal 10 would increase 3% every five years.

At the projected volume, the base passenger fee would produce approximately $17.5 million in the first year, when rent would be about $4 million. By year 20, passenger-fee revenue is projected to approach $31 million, while rent would be about $5 million. Across the maximum 60-year period, the revenue stream has an estimated present value of $479 million using a 6% discount rate. The agreement does not include a passenger-threshold revenue-sharing mechanism of the kind used in some PortMiami deals.

Most of the memorandum of understanding would be nonbinding, but its capital-allocation provision would take effect if directors approve it. Until the port completes its portion of the work, Galveston Wharves would have to prioritize capital for Cruise Terminal 14 over other port-funded cruise-terminal development.

The exclusivity terms would allow ongoing discussions concerning Cruise Terminal 25, where Carnival Cruise Line has preferential berthing, and Cruise Terminal 28, where Disney Cruise Line has priority. However, the capital provision would prevent the port from directing its funds to those expansions.

No completion date has been set, and the budget and schedule for the port’s work remain unagreed. Royal Caribbean would not be required to sign definitive agreements until Dec. 31, 2027.

Bond upgrade and access projects support port plans

Fitch Ratings recently upgraded Galveston Wharves revenue bonds from A to A+, citing sustained cruise growth, financial performance and capital investment. The port issued approximately $198.5 million in bonds in 2024 to finance construction of its fourth cruise terminal.

“The upgrade directly benefits the port by helping us lower borrowing costs,” Galveston Wharves CEO and Port Director Rodger Rees said.

The port is also investing more than $8.5 million in six vehicle and pedestrian projects, supported by $7.4 million in state and federal grants and nearly $1.1 million from operating reserves. The work covers pedestrian safety, wayfinding and access planning for cruise and cargo areas, as well as connections with Historic Downtown Galveston.

A separate engineering study will examine refurbishing and reopening the elevated walkway at 25th Street and Harborside Drive to connect downtown with Cruise Terminal 25.

Margaritaville license would begin in 2027

The proposed Margaritaville at Sea license would initially cover 13 months, from Oct. 1, 2027, through Oct. 31, 2028, with two five-year renewal options. Operations would primarily use Cruise Terminal 28, with some calls at Cruise Terminal 25.

At Cruise Terminal 28, the line would pay $18.61 per passenger movement in 2027 and $19.17 in 2028. Cruise Terminal 25 use would cost $20.17 per movement. An additional city-services wharfage charge would be 27 cents per movement in 2027 and 28 cents in 2028, while annual increases during renewal periods would be capped at 3%.

Margaritaville at Sea would guarantee at least 200,000 passenger movements during the initial term, rising to 210,000 in the first renewal and 220,000 in the second. Paradise currently sails year-round from the Port of Palm Beach, Islander operates from Port Tampa Bay, and Beachcomber is scheduled to enter service at PortMiami in January. The proposed Galveston license does not identify which ship would be deployed.

See cruises departing Galveston on Cruise Lookup.