An update, Sept. 20, 2012: I am pleased to see that many in Savannah have found this page, thanks going to 'Be Smart Savannah' and their campaign to bring more public attention to this important issue.
This page was composed in early 2011, after which I provided it to the Mayor and City Council, as well as reporters and editors at the Savannah Morning News.
Since this page was created there have been additional reports of cruise ship terminal misadventures by other cities, where public officials posited the expensive projects as worthwhile, and 'can't miss', investments. Most notably for the Southeast region is Mobile, Alabama, referenced several times in this write-up. No longer one of Carnival's home ports, Mobile's saga can easily be found on-line, thus I'll not add it here.
The most recent decision by the Council and Mayor to spend as much as $280,000 to get an opinion about where to put a cruise ship terminal begs for comment. It appears the Council and Mayor are using the City's money to purchase some faux credibility for its actions, which it cannot justify using business logic, the economic needs of the city, or quality of life for its citizens.
Additionally, once the new 'study' is in, the arguments by Council members for proceeding will most certainly include exclamations of having already invested so much money and time that it would now be a waste if the terminal is not built; rest assured.
January, 2011
Setting Sail
There is a small crowd in Savannah lobbying for a cruise ship terminal to be built by the city. If that's what they want, then let them buy the land and build it themselves, with their own dime. If they want the public to build it then there needs to be a rock solid business plan on the table that guarantees a means to pay off the public debt incurred. It's simple, if there isn't an existing public problem to solve then government isn't the proper place to go for funding, unless the benefits derived are substantial and assured (guaranteed) for the community as a whole.
Reality check: having a cruise terminal does not equate to having cruise ship business; I'll give a good example of this below with news reports on Norfolk.
For those who have visions of the Queen Mary or Titanic sendoffs, with streamers and thousands of waving hands on both the ship and dock, think again. Cruise sendoffs are mostly mundane events, no crowds waving on shore. For the port city, it's really only about economics: how do you get the most bang for your buck in hosting a couple of thousand people for a day. And, remember there are down sides to most any ventures of this sort, traffic congestion and pollution being just two. Here is a very high level article on pollution, Environmental Group Grades Cruise Ships. If you search for the subject, you'll find hundreds of more detailed and revealing articles. Georgia hasn't the laws in place to protect the delicate balance of life in the estuaries which are the source of the state's shrimp industry.
'Ayes' Wide Open Everyone needs to think on this as if they are literally spending their own dime. Even if becoming a cruise ship departure point is a fiscally sound move for Savannah, you won't, collectively, make a buck by spending all of your future earnings on a lavish place for ships to load and unload passengers. The 'build it and they will come' idiom only applies in dreamy movies, where you have the script writer on your side.
Cruise terminals are not so widely beneficial that a public subsidy is warranted for their construction and maintenance. They are definitely not a civic necessity, such as an airport. And yet, even airport expenditures are made using a fiscally prudent business plan; no less, and indeed more should be expected of any public expenditure for a cruise terminal.
There are three discussions to be had on this matter:
1) Does being a departure point for leisure cruises produce a significant net benefit for the city? Ancillary costs and benefits should be included, such as more flight connections offered by airlines (benefit), port congestion (cost) and opportunity costs, like the loss of river front space.
2) What is the extent of demand for cruise departures from Savannah; are cruise lines seeking to do business out of Savannah, if not, why not? Will the city have to woo cruise lines to use the terminal, perhaps have to provide other incentives to them, if so, those costs must be considered.
3) What are the minimum requirements, and thus minimum expenditures, for a facility sufficient to accommodate boardings and arrivals?
There are many details which could, and should, be elaborated upon on each of those discussion points. I don't intend this to be an exhaustive or even partial examination; I only want to raise the awareness of those who are undecided or a bit apathetic on the subject and/or generally okay with acquiescing to the 'build it' crowd who wants to spend a lot of your money on this endeavor.
Mind you, I'm not here to throw water upon and smother any economically prudent and publicly beneficial initiative. But, I'm here to remind all to remember that there is only so much commonwealth, and it must be spent as prudently as you spend your own household's purse. Don't spend two dollars to make two dollars when you can make the same two dollars by spending only one. If cruise patrons prefer Savannah over Charleston, Jacksonville and Mobile, it won't be because of the aesthetics of a staging area and ramp used for ship boarding.
Charleston
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| Charleston's Cruise Ship Dock |
Most of Charleston's cruise line history is with ships making it a port of call. Many in the city have not been pleased with the crowds brought in from visiting cruise ships. They amount to day visitors into the city, requiring no lodging, and but one small meal. A study by the College of Charleston revealed that passengers from ships making a stop in Charleston spent on average only $50 in the city. At that rate, the city would do better to host weekly wet t-shirt contests and beer festivals.
There is a distinction to be made between ships originating from the port and those only making it a port of call. For the latter, the city becomes a part of the cruise line's attraction package, for which the city should charge the cruise line appropriately.
Jacksonville
In Jacksonville there is talk of building a cruise terminal, but only after a number of years of experience in the business. And, as in Charleston, it won't be the city funding the tab for the facility, but the Ports Authority from its revenue stream. They built the current facility in 2003, a simple metal sided building and parking lot put up in 6 months.
The cruise line business in Jacksonville has been an 'on-again-off-again' experience. Their market attributes are mixed, having better air connections than either Charleston (or Savannah) and a half day closer to cruise destinations, but the south Florida ports draw most of the state's cruise patrons, leaving it to compete with Charleston and Mobile for the drive market in the near Southeast.
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| Jacksonville Cruise Dock/Terminal |
Back at Bull and Bay Streets
I feel the need to issue these caveats on account there is already evidence of a serious absence of good sense by those who should be looking out for the public interest. The city has already erred in an expenditure of $50,000 on behalf of those who are intent upon securing a government built cruise terminal of the finest quality. The problem with the expenditure lies more in its execution than its intended purpose and it is one that should have been caught by even the most groggy observer of government conduct (I've now offended the local press).
It does not bode well for the city that its officials will pay a firm to provide the city with a feasibility study on a cruise terminal's economic viability, when that firm's ultimate goal is to land a lucrative contract to design and oversee the building of that cruise terminal. Violations of common sense don't get any more obvious (and now I've offended the Mayor, and all of the city Aldermen/women).
The study's results are in and low and behold, surprise, surprise . . . "cruise ship feasibility study better than expected".
SavannahNow and the Savannah Morning NewsOy Vey
Cruise could bring 350,000 to Savannah
December 8, 2010
By Lesley Conn
The first phase of a cruise ship feasibility study has come back better than expected, prompting Savannah city officials to plan to move forward with the second half of the study.
If the City Council approves the final recommendation from a task force, the soonest a cruise line likely would be operating from a port somewhere near the Historic District would be 2014, task force members said Tuesday.
Initial estimates anticipated that Savannah could see 200,000 passengers annually traveling through a home port based here, but a more detailed analysis puts annual visitors at 350,000 a year by 2020. “It moves it to the potential of being an industry of $100 million a year, which is nothing to sneeze at in this economy,” Alderman Tony Thomas said.
The second phase of the study will consider economic conditions and factors in more detail. The consultants, BEA Architects of Miami, have been paid $129,500 for the two-phase study. Bruno Ramos, principal in charge at BEA, said Savannah’s warmer climate gives it an advantage over northern ports. Its cruising season can extend five months longer, projections show.
“If Savannah gets into the market, Savannah will be the marquee port between Port Canaveral (in south Florida) and New York,” Ramos [principal in charge at BEA] said.
I suspect that BEA had their 'study' ready before this matter was ever a sparkle in the eye of any Savannah promoter. They simply pulled it out of the drawer and changed the City of X to City of Savannah. Geesh! Was the sham not laughably obvious when the city had intended to garner over $200k for a feasibility study, but managed to muster only $130,000, when they then are informed, low and behold, that a BEA 'study' is priced at $129,500. Well, heck, it must be fate.
With regards to economic impacts, do you know how many such studies have been done in the past, and by groups for whom that function is their primary business? The city could pay less than $1,000 for existing data which reveal a fuller and more believable analysis of the economic impact of almost any particular industry in existence today, and the cruise industry is no exception. Cruise passengers who might go through Savannah are no different than those who would go to any Florida port, Charleston, New Orleans, Mobile or Norfolk. Do you think Savannah is the first city in the world to investigate how much money a cruise bound visitor will spend locally? You think it takes $129,500 to gather that information?
The only information that needs to be newly garnered is market data related specifically to Savannah's ability to attract cruise patrons, chiefly being that of its preference ranking when compared to other Southeastern departure points. And only a group who have no incentive to slant data, and in fact whose core business depends upon the integrity of their reports, should be commissioned to provide such. Instead of going that route, a total of $100,000 of public funds (50k city and 50k state), plus $30,000 of private, has been used to orchestrate a public snow job to give the good citizens of Savannah all the cozy warm feelings that their city government is managing things well. It's Bull hockey.
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| Elation, Mobile |
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| Fantasy, Charleston |
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| Fascination, Jacksonville |
The city could and should approach a reputable market research group well outside of the region who would have no connections with any one or group that would benefit by any of the findings. The study can be limited to finding the amount/level/percentage of cruise demand for which Savannah would be a preferential port of departure, and any other data related specifically to that aspect.
Such a study would not need to examine the economic impact of each passenger, as there is already loads of data on that subject. It would not need to study possible sites for a cruise terminal, as that is putting the cart before the horse. And, whatever the cost of market research by an unbiased group, it is infinitely more valuable than that already received.
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| Typical Six-Day Cruise |
The BEA report points to Savannah's geographical proximity to the cruise market (customers), but equally important is the city's less than appealing proximity to cruise destinations. The cruise itinerary which can be scheduled from each port ultimately limits its cruise target market.
By ship time, Savannah is greater than a full day each way north of Miami, about a half day each way from Jacksonville, greatly limiting cruise options for the port. Much like Charleston, cruise destinations for Savannah departures will primarily be limited to the Bahamas, Key West and Bermuda.
NORFOLK
The Virginian-Pilot
By Gregory Richards
April 7, 2007
NORFOLK - The rotunda's 45-foot wall of glass overlooking the Elizabeth River offers a view stretching from the shipyards of Berkley, across Olde Towne and the Navy hospital in Portsmouth and north up the river. A 54-foot-long mermaid - the symbol of Norfolk - inlaid in the terrazzo floor of the Half Moone Cruise and Celebration Center's rotunda beckons travelers.
The new downtown cruise terminal, which opens to the public today, is a $36 million gamble that they will come and fulfill the city's ambition to succeed as a cruise port. It's no sure thing in a competitive industry with cruise lines shifting from port to port every year.
In the Mid-Atlantic, the ports of Baltimore and Philadelphia vie for the same pool of cruise passengers. But Norfolk's new terminal, coupled with a short sail to the sea, offers some advantage. Filled with the latest technology and security features and designed to make boarding a ship as comfortable and entertaining as possible, the facility is expected to serve as a powerful lure for cruise lines.
"It's all we hoped it would be and more," Mayor Paul D. Fraim said Friday. Already two cruise lines have committed to sail 17 times from Norfolk in 2007 - the first coming on April 28. And both will return in 2008.
The Virginian-Pilot
By Robert McCabe
June 13, 2010
NORFOLK - Bon voyage. Royal Caribbean International's last round trip cruise from the city left Saturday, ending the line's run in Norfolk. The cruise ship Enchantment of the Seas is moving to Baltimore, where it will be home-ported beginning Friday, said Harrison Liu, a spokesman for Miami-based Royal Caribbean, which has sailed from Norfolk since 2007.
"It's not a reflection on Norfolk," Liu said. "It's about us being able to deploy a ship year-round out of Baltimore. We offer cruises where the demand is, and we believe that Baltimore offers the year-round demand that we're looking for."
In the spring of 2007, Norfolk opened its $36 million Half Moone Cruise and Celebration Center next to Nauticus, with hopes of capturing a share of the lucrative U.S. cruise market. Recently, however, the city's cruise venture has been dwarfed by Baltimore's.
THE BALTIMORE SUN
A Tale of Two Cities
June 17, 2010
Have you heard the one about the competition between Maryland and Virginia over a lucrative employer? One state invested $36 million of taxpayer money, with modest results. The other invested two-thirds less but is growing by leaps and bounds.
Another victim of Maryland's allegedly poor business climate? Not quite. That sobbing sound you hear is coming from the south, where the three-year-old Half Moone Cruise and Celebration Center in Norfolk is struggling to attract enough cruise ships to justify its cost.
Meanwhile, Baltimore's cruise business has grown from 27 home-ported (meaning originating and ending in Baltimore) cruises in 2008 to 91 this year. Next year, it's expected to expand to 113 cruises serving 240,000 passengers. Norfolk has 11.
Symbolizing the differing fortunes of the two cities is the 2,446-passenger Enchantment of the Seas, with its swimming pools, casino, rock-climbing wall and bungee trampolines. The Royal Caribbean International cruise ship left Norfolk for the last time last weekend. Beginning today, it will be deployed from Baltimore instead.
The Maryland Port Authority's $13 million South Locust Point cruise terminal has gotten so busy, it's reaching capacity. With just one berth, the terminal can only handle one ship per day. It's no Taj Mahal, but the converted paper warehouse has proved to be a smart investment.
If that's not enough to make you wary, here is a link to an article on a Fernandina, Fl (Amelia Island) web site entitled, 'Are Cruise Ships Pulling Out of U.S.?'
There is another article, which I can no longer find, that covers the annual debt which the City of Norfolk is now stuck with on its cruise ship terminal. It isn't getting anywhere near enough in revenues, despite renting it out as meeting space, to cover the payments on the construction debt; the city is now bleeding well over $500,000 annually for their gamble.
Let's Quickly Review
BEA is in the business of designing and building, and you just gave them $129,500 to give you their advice, which they would have gladly given you for free, but now it has 'market study' written at the top.
If the demand is there for cruise departures from Savannah, and it is healthy or even growing (my amateur assessment is that cruise demand will continue to grow in the immediate future, peaking in 2025, after that ?), hooray, but even if all of the signs on the demand side are positive there is no need to build a palace for ships to embark and disembark their passengers. Any pier will do, and a simple stairway will suffice. If cruisers would rather depart from Savannah over Charleston, Jacksonville and Mobile it won't matter if you use a forklift to load em onto the ship.
If the business is successful, the profits can be invested and after a sustained period, perhaps, a nicer facility could be built, but, first make sure there are really big crowds clamoring to cruise out of Savannah, and not just a small crowd in Savannah pitching you a snow job.
