BREA

Economic Impact of the Cruise Industry

in the Canada/New England Market

Presented by

Andrew J. Moody, Ph.D.

Canada/New England Cruise Symposium

Saint John, NB

June 9, 2010

BREAwww.breanet.com Slide 2

Canada/New England Market

• Over the past decade the bed day capacity in the CNE market has trended up.

• The CNE share of global capacity has been fairly stable between 1.5 and 2%.

• Its growth has come in spurts with increases in excess of 30% in 2000, 2004 and 2007.

• It appears that capacity will exceed 2,000,000 bed days in 2010.

1.19%

1.93%

2.08%

1,107,689

1,488,585

1,911,135

1.00%

1.50%

2.00%

2.50%

3.00%

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

1998 2000 2002 2004 2006 2008

Global Share (Right() Bedday Capacity (Left)

Cruise Capacity in the Canada/New England Market

Source: Cruise Lines International Association

BREAwww.breanet.com Slide 3

Background

• Economic Impact Studies in Canada and the U.S.

– Canada (2007): Northwest Cruiseship Assn and Particpatingports.

– U.S. (2008): Cruise Lines International Assn.

• Data Sources

– Survey of association member cruise lines

• Operations: capacity, passengers, cruise days

• Revenues: cruise fares, on-board revenues

• Expenses by category, vendor and location

– Survey of cruise ports: cruise ship calls and passenger flows

– Passenger spending surveys: BREA and third-party surveys

BREAwww.breanet.com Slide 4

Sources of Direct SpendingUnited States Europe Canada Caribbean Total

Passenger & Crew Spending

Capital Expenditures

Cruise Line Operations

Cruise Line Employees

: Greater than 40% : Between 25% and 40% : Between 10% and 25%

: Less then 10%

BREAwww.breanet.com Slide 5

Industry Impact of Direct Spending

ManufacturingTransportation

& DistributionTrade

Financial & Business

Services

Passenger & Crew Spending

Capital Expenditures

Cruise Line Operations

Cruise Line Employees

Manufacturing & Services: High Wages/High Productivity

Distribution & Trade: Low Wages/Low Productivity

: greatest impact ……….. : least impact

BREAwww.breanet.com Slide 6

Cruise Industry Spending: Canada - 2007

• Throughout Canada the cruise industry generated a total of $1.1 billion in direct spending or $571 per passenger visit.

– On average cruise lines accounted for 60% of the expenditures and passenger and crew 40%.

– The higher the share of embarkations in a market the higher the percentage for cruise lines’ expenditures.

• Per passenger spending is higher in embarkation markets due to overnight stays.

• Crew spending on a per passenger basis is fairly similar across markets.

Segments CanadaSpend per

PaxBritish

ColumbiaSpend per

PaxQuebec

Spend per Pax

Atlantic Canada

Spend per Pax

Passenger Visits 1,955,937 1,415,631 110,136 409,514

Cruise Lines $666 $341 $381 $269 $51 $463 $30 $73

Passengers $420 $215 $362 $256 $24 $218 $24 $59

Crew $30 $15 $22 $16 $3 $27 $6 $15

Total (C$ Mil) $1,116 $571 $765 $540 $78 $708 $60 $147

Total Jobs 16,645 11,816 1,104 872 2,129

BREAwww.breanet.com Slide 7

Passenger Onshore Spending: Canada - 2007

• Lodging expenditures generally account for 40 to 50% of passenger expenditures at embarkation ports.

• Per passenger spending at the major transit ports average between $56 and $66.

– Tours and local transit account for about 40% of passenger expenditures and retail just under 50%.

– Average spending was slightly lower among the other (smaller) ports.

Montreal Quebec Halifax Saint John SydneyOther Ports

Passenger Visits 28,540 63,443 167,905 126,992 40,710 67,963

Lodging $66.57 $14.19

Tours and Local Transit $35.04 $33.10 $26.21 $24.41 $27.02 $25.01

Food and Beverages $31.53 $12.61 $8.34 $6.30 $4.91 $2.94

Other Retail $24.53 $61.47 $31.57 $25.99 $29.48 $20.60

Total $157.67 $121.37 $66.11 $56.70 $61.41 $48.56

Total Pax Spend (C$ Mil) $4.50 $7.70 $11.10 $7.20 $2.50 $3.30

BREAwww.breanet.com Slide 8

Cruise Industry Spending: U.S. - 2008

• The principal CNE ports in the U.S. are New York, Boston, Portland and Bar Harbor.

• Throughout the U.S. the cruise industry generated a total of $19.1 billion in direct spending or $1,322 per passenger visit.

– On average cruise lines accounted for about 70% of the expenditures and passenger and crew 30%.

– The higher importance of cruise line spending in the U.S. is the result of a higher proportion of passenger sourcing in the U.S., higher percentage of embarkations and administrative spending.

• Cruise line spending is higher in Massachusetts primarily due to spending for business and professional services.

• New York leads on passenger and crew spending due to higher percentage of embarkations.

SegmentsUnited States

Spend per Pax

New YorkSpend per

PaxMass.

Spend per Pax

MaineSpend per

Pax

Passenger Visits 14,425,000 533,800 172,000 190,800

Cruise Lines $13,126 $910 $983 $1,842 $398 $2,314 $2 $10

Passengers $4,140 $287 $149 $279 $32 $186 $22 $115

Crew $255 $18 $9 $17 $3 $17 $5 $26

Total (US$ Mil) $19,070 $1,322 $1,141 $2,138 $433 $2,517 $29 $152

Total Jobs 357,710 13,512 6,388 500

BREAwww.breanet.com Slide 9

Passenger Onshore Spending: U.S. - 2008

• Lodging expenditures generally account for 40 to 50% of passenger expenditures at embarkation ports.

• Per passenger spending at the major transit ports average between $56 and $66.

– Tours and local transit account for about 40% of passenger expenditures and retail just under 50%.

– Average spending was slightly lower among the other (smaller) ports.

New York Mass. Maine

Passenger Visits 533,800 172,000 190,800

Lodging $104.33 $14.85

Tours and Transportation* $19.02 $14.60 $19.83

Food and Beverages $23.00 $20.21 $20.57

Other Retail $28.45 $42.88 $58.25

Total $174.80 $92.54 $98.65

Total Pax Spend (US$ Mil) $93.31 $15.92 $18.82

BREAwww.breanet.com Slide 10

Estimated Impacts: CNE Market - 2009

• Embarking cruise passengers spend an average of $174.18.

– Those passengers who have a pre- and/or post-cruise overnight stay spend an average of $448.73 during their average 2-night stay.

– Those passengers who arrive on the day of the cruise spend an average of $4.23 primarily on taxis and parking.

• As noted previously, 42% of embarking passengers stay in NYC for an overnight stay either prior to or after their cruise.

– These passengers spend an average of just over $245 per passenger for lodging and another $72 for food and beverages

CNE Total

Individual Passenger Visits 1,629,415

Total Spend (C$ Mil) $1,740

Total Spend (US$ Mil) $1,582

Total Jobs 22,400

BREAwww.breanet.com Slide 11

Micro Impacts: 2,500 Pax Transit Call

• At the Port: 7 – 10 jobs

– Pilot, Ship Agent, Stevedores, Customs Agent

• Passenger Spending Impacts: 95 – 111 jobs

– 2,400 onshore visits: 1,500 tours; 1,500 shoppers; and 750 restaurant visits

– 25 - 30 tour buses with driver and guide: 50 - 60 jobs

– 50 - 75 taxi journeys/rental cars: 5 – 6 jobs

– 1,500 retail visits: 25 – 30 store employees

– 750 restaurant visits: 10 – 15 employees

• Crew Spending Impacts: 12 – 15 jobs

– 350 crew onshore visits: 250 shopper and 175 restaurant visits

– 50 - 75 taxi journeys: 5 - 6 jobs

– 250 retail visits: 5 - 6 store employees

– 175 restaurant visits: 2 - 3 employees

• Total Daily Employment Impact: 114 – 136 jobs per ship call