Port of Seattle sees cruise ships as economic anchor
Seattle Times business reporter
The Port of Seattle, which spent $16.5 million in property taxes on a second terminal and will spend millions more in the next decade, is counting on the cruise business to help revive a flagging waterfront, where revenue from cargo and other maritime businesses dropped 21 percent last year.
The Port expects cruise ships to pump about $75 million into the region's economy this year, but other sources suggest it will be closer to $40 million.
Critics complain that the industry's economic impact is overstated and doesn't account for environmental and social issues that have plagued the industry for decades. Recently, the Norwegian Cruise Line ship Norwegian Sun dumped 16,000 gallons of human waste in the Strait of Juan de Fuca.
"There is an assumption that the cruise industry is good for us and that we have to jump on the bandwagon like everyone else without a lot of real thought given to what the benefits are," said Ross Klein, a cruise-industry critic and professor at Memorial University in Newfoundland.
It will take at least six years for the Port to recoup what it spent building the new terminal. Port officials expected to receive about $420,000 from operations at both of the cruise-ship terminals this year, a figure that is projected to grow to $3.9 million a year by 2007.
Estimates of the cruise industry's larger economic impact are based on studies commissioned by the industry. The Port hired a consultant to perform its own study later this year, nearly two decades after officials began pushing to bring the industry to Seattle.
There is little doubt that cruise ships, especially the four that are home-ported in the city, mean money.
For the next four months, the Star will call Terminal 30 home, stopping once a week for about 10 hours to load 2,600 passengers and enough food, drinks, flowers and souvenirs to keep them satisfied for a week at sea.
Each time one of its ships pulls into dock, Princess Cruises says it spends about $140,000 in port costs, including landing fees and pay for dockworkers who load the ship and handle baggage. About $100,000 is spent on food, produce and beverages, much of which comes from local distributors.
For longshoremen, who load and unload all the ships, the increase in cruise business has meant more work. The union added 50 positions this year to handle the increase.
"I know for the longshoremen, we appreciate it," said Rudy Finne, spokesman for International Longshore and Warehouse Union Local 19. "We would prefer cranes over cruise ships, but we wouldn't kick anything out."
But the most important element of the equation is the amount passengers and crew spend when they're not onboard the ship. Princess estimates passengers will spend an average of $100 each in Seattle restaurants, hotels and shops.
But that amount will vary widely depending on whether a passenger spends any time at all in the city. Most passengers arrive at the ships directly from the airport, and a growing number are locals who go straight to the terminal.
The Port has gone to extraordinary lengths to accommodate cruise-ship companies' desire to expand here. In less than a year, officials proposed, approved and built a second cruise terminal, despite the project costing three times more than they had planned.
Last week, workers hurried to complete the prefabricated structure at Terminal 30 in time for yesterday's opening, when the Star Princess left for the first of 18 trips to Alaska.
Three of the biggest brands in the industry now operate here. Norwegian Cruise Line was the first to show that Seattle could compete with Vancouver, B.C. — the traditional launching point of Alaska cruises — when it started running ships from Pier 66 in 2000.
By the beginning of 2002, Princess and Holland America Line announced plans to base ships in Seattle for the season.
It's an amazing turnaround for a city that, despite being the birthplace of the modern cruise business — Princess Cruises was founded by Seattle's Stanley McDonald — was a backwater hampered by geography and a more than century-old law that prevents foreign-flagged, foreign-crewed and foreign-built ships from taking passengers directly from one U.S. port to another.
Faster ships and a desire by American tourists to stay closer to home after the Sept. 11, 2001, terrorist attacks led cruise lines to target Seattle — along with Boston, New York, New Orleans, Galveston, Texas, and other coastal cities — for growth. They get around the foreign-flag issue by making a brief stop in Victoria, B.C., on the way to Alaska.
The focus has shifted partly at Vancouver's expense. For the first time, the number of sailings has dropped in that city. Princess moved the Star to Seattle this season.
"Vancouver is down 11 percent this year in terms of cruises," Klein said. "What they lost corresponds almost exactly what the increase is for Seattle."
But it required quite an investment to accommodate the cruise lines' expansion.
The Port's first terminal at Pier 66 can accommodate only one ship at a time. And Princess and Holland America both wanted room for weekend departures.
The Port had initially decided to put a two-berth cruise terminal at Pier 91, near the foot of Magnolia, at a cost of about $5.5 million to convert a warehouse into a passenger terminal.
But when an environmental review and permits threatened to delay the project, officials moved it to Terminal 30, south of downtown. The switch meant spending $11 million more to build a passenger terminal and gangway.
The pressure to move quickly came from cruise lines, which had started booking trips from the new terminal.
"It got complicated, and we needed to meet the customer's schedule," said Rosie Valencia Courtney, a Port spokeswoman.
The Port also stirred up a political controversy last fall, when it voted to raise property taxes by $18 million — slightly more than it cost to build the new terminal.
Mic Dinsmore, the Port's executive director, said the tax increase had little to do with covering the cost of the new terminal and was needed to protect the Port's bond rating and cover unanticipated security costs in the wake of Sept. 11.
Port officials will have to wait and see if their investment pays off.
The industry predicts that the Alaska cruise market will continue to grow by at least 5 percent a year for the foreseeable future, but there are no guarantees.
Cruise lines were some of the first areas of the tourist industry to recover after Sept. 11 because they were perceived as safer and because companies quickly moved ships to domestic ports.
Those trends provided a boost for Seattle. But they could just as quickly turn around. A terrorist attack or an outbreak of the SARS virus aboard a cruise ship could sink the market overnight.
"This is not a business where there aren't risks, but they are calculated risks," Dinsmore said. "We think Alaska is one of the most sought-after markets in the world, and we believe the impacts of the cruise industry are so significant and profound that it was worth the risk."
J. Martin McOmber: 206-464-2022 or email@example.com