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Region needs better cruise ship facility to keep up with growth, report says

When it comes to the cruise ship industry, San Diego is on the bubble, according to Jack L. Williams, president and COO of both Celebrity Cruises and Royal Caribbean International.

"San Diego's on the margin -- it's competitive, but it's on the margin," he said Thursday after addressing a San Diego Port District-sponsored talk held at the Manchester Grand Hyatt.

Williams was referring to San Diego's need to take steps to remain competitive in the market.

Ships from both lines homeport here, meaning they start and end cruises in San Diego. So does Holland America Line. And starting in October, Carnival Cruise Lines' Carnival Spirit will homeport here to conduct eight-day cruises to Mexico through May, according to Rita Vandergaw, the Port of San Diego's marketing director.

San Diego is also a port of call for several other cruise lines. More than 190 ships visit the port annually.

In 2002, the cruise sector generated a total of 770 direct jobs paying an estimated $41.5 million in wage income, according to a port-commissioned cruise economic impact analysis.

Jobs had an average wage of $53,950 per year, 25 percent above the local average. There was a direct $132 million economic impact on the San Diego regional economy. The total impact was $248 million and 1,616 jobs.

Based on growth projections, by 2017 the region will see a significant growth in the economic impact of increased cruise operations, according to the report. Jobs will grow to 1,751 direct jobs, and total jobs in the region will be 3,650. Direct economic impacts will increase to $379 million and total impacts will exceed $715 million.

The cruise industry has a high value added visitor in the visitor trade, said Kelly Cunningham, research manager of the San Diego Regional Chamber of Commerce's Economic Research Bureau.

"The individuals tend to have spent more money, have more income," he said. "That's why they're a good target as far as bringing them to the region. It's a very competitive industry. It is the high end of visitor travel."

In August 2002, the port retained Bermello, Ajamil & Partners Inc. and a team of experts to prepare a cruise market and economic impact assessment and to provide guidance on design of future cruise facilities and operations.

Among findings: Average and median household incomes were $98,500 and $87,500, respectively, according to a Business Research and Economic Advisor (BREA) passenger survey for 2002.

San Diego cruise passengers come from around the world; 63 percent of embarking passengers arrived in San Diego by air; the typical passenger spent an average of $575 to travel to San Diego; and half of embarking passengers spent 1.7 nights here either prior or after their cruises.

Celebrity Cruises' William's underlying message is that the port needs to take this into consideration, according to Vandergaw.

"We need an improved facility," she said. "That is the number one priority for the port. We have a berth and a passenger facility that handles one ship very well. We need a facility that can handle two ships simultaneously."

In October 2002, the port completed a new $3.2 million cruise ship mobile passenger access gangway system and balcony, according to the chamber's 2004 economic bulletin on the port.

It provides easier and quicker access for passengers embarking and disembarking ships at the B-street Cruise Terminal, The cruise terminal has the potential for much greater activity, generating considerably more economic impact by upgrading facilities and providing greater terminal access, the report states.

This year, the port will collect about $3.6 million in fees from the cruise ships. About $1.4 million was collected last year. Figures from earlier years were unavailable because until recently the port lumped cargo and cruise industry revenues together.

The port charges the ships daily dockage fees based on the length of the vessel: it averages $2,000. Cruise ships also pay the port a fee for each passenger, depending on how many they bring to the market, Vandergaw said. Fees range from $4.40 to $6.10 per person.

"We charge less than the other West Coast ports," she said.

Related Article:

Coast Guard to board every foreign-flagged vessel (Jun. 29, 2004)

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