Port of Los Angeles 2006 Cruise Study Draft Full Report Submission

Chapter
1
2006 Port of Los Angeles Cruise Study
Prepared for the Port of Los Angeles
Full Report Submission
July 2006
Prepared by:
Bermello-Ajamil & Partners, Inc.
I

Chapter
1
Acknowledgements and Disclaimer
This report was prepared solely for the use of the Port of Los Angeles. It is not intended to, and
should not be, relied upon by any other party. The information presented in this document reflects
available data on the cruise industry and our interpretation of market trends as of the date of this
report. Projections are based on the best available information but can not be guaranteed due to
changes in market conditions.
1

Chapter
1
Contents
Chapter 1: Overview
1.1 Background and study objectives..................................................................................................................1
1.2 Terminology used in this study......................................................................................................................3
Chapter 2: The Global Cruise Industry
2.1 Section Summary...............................................................................................................................................6
2.2 Historic levels of worldwide growth............................................................................................................7
2.3 Future direction of the worldwide cruise industry...............................................................................11
2.4 Cruise Lines, ships and other industry characteristics ......................................................................... 15
Chapter 3: The U.S. West Coast Cruise Region
3.1 Section summary ............................................................................................................................................ 32
3.2 The U.S. West Coast Cruise Region........................................................................................................ 33
3.3 Projected Growth in the U.S. West Coast Region............................................................................... 68
Chapter 4: The Port of Los Angeles - Current Situation
4.1 Section Summary............................................................................................................................................ 72
4.2 Description of the Port of Los Angeles cruise activities...................................................................... 72
4.3 Operational assessment for the Port of Los Angeles........................................................................... 82
Chapter 5: Projection of Cruise Growth
5.1 Section summary ............................................................................................................................................ 95
5.2 General approach to forecast preparation.............................................................................................. 96
5.3 Forecasts of cruise passenger and vessels .............................................................................................103
Chapter 6: POLA Facilities Demand
6.1 Monthly Traffic Analysis and Seasonality....................................................................................................105
6.2 Daily Traffic Analysis and Peaking Periods.................................................................................................109
Chapter 7: Facility Demand
7.1 Facility demand assessment ..........................................................................................................................115
7.2 Facility Demand Conclusions.......................................................................................................................119
Chapter 8: Financial Model
8.1 Section Summary ....................................................................................................................................120
Chapter 9: Cruise Tariff Economics
9.1 Section summary .............................................................................................................................................126
9.2 Tariff scenarios ..................................................................................................................................................126
9.3 Conclusions........................................................................................................................................................132
Chapter 10: Capital Program
10.1 Capital Program Analysis ............................................................................................................................133
10.2 Revenue Program Conclusions.................................................................................................................136
10.3 Financing Strategies.......................................................................................................................................137
Chapter 11: Business Models
11.1 Section Summary...........................................................................................................................................138
11.2 Terminal Operating Models.......................................................................................................................138
11.3 Operational Conclusions ............................................................................................................................141
11.4 Study Conclusions..........................................................................................................................................141
11.5 Strategies Moving Forward..........................................................................................................................142
II

Chapter
1
List of Figures
Figure 1: Conventional worldwide cruise passenger growth, 1990-2005............................................................7
Figure 2: Historic and projected North American industry berth supply.........................................................13
Figure 3: Projected North American passenger levels, 2004 – 2020..................................................................14
Figure 4: Projected North American and worldwide passenger levels, 2005 – 2020 ...................................15
Figure 5: Cruise Capacity by Cruise Group ...............................................................................................................16
Figure 6: Cruise Terminal and Ship Capacity Growth Comparison, 1970 - 2010.......................................... 21
Figure 7: North American capacity placement by region, 2005...........................................................................27
Figure 8: Destination selection: What’s important to the cruise lines..............................................................30
Figure 9: U.S. West Coast Region Cruise Per Diems by Sector, 2006.............................................................. 35
Figure 10: U.S. West Coast Region Cruises by Sector, 2006...............................................................................36
Figure 11: U.S. West Coast Sub-Sectors Average Cruise Duration, 2006.......................................................42
Figure 12: West Coast Ports Homeport and Total Calls, 2006 ..........................................................................65
Figure 13: West Coast Ports Homeport and Total Passengers, 2006...............................................................65
Figure 14: Projected Scenarios of Capacity Growth for Alaska Sector (Rev. Pax.) .......................................69
Figure 15: Projected Scenarios of Capacity Growth for Mexico West and US Coastal West Sectors
(Rev. Pax.) ....................................................................................................................................................................69
Figure 16: Projected Scenarios of Capacity Growth for Trans Panama Canal Sector (Rev. Pax.) ............70
Figure 17: Projected Scenarios of Capacity Growth for Hawaii Sector (Rev. Pax.).......................................70
Figure 18: Projected Scenarios of Capacity Growth for South Pacific and World Sectors (Rev. Pax.)...71
Figure 19: World Cruise Center..................................................................................................................................73
Figure 20: POLA passenger volumes 1999-2006......................................................................................................75
Figure 21: POLA cruise calls 1999-2006......................................................................................................................75
Figure 22: Cruise Ship Passenger Volumes to POLA 1999-2006 ........................................................................76
Figure 23: Cruise Ship Berth Utilization 1999-2006.................................................................................................81
Figure 24: Cruise Ship Seasonality 1999-2006 ...........................................................................................................81
Figure 25: Approach A - Prospective Future Growth of Cruise Passenger Throughput for the Port of
Los Angeles 2006 to 2020 ......................................................................................................................................96
Figure 26: Approach A - Prospective Future Growth of Cruise Vessel Throughput for the Port of Los
Angeles 2006 to 2020 ..............................................................................................................................................98
Figure 27: Approach B - Prospective Future Growth of Cruise Passenger Throughput for the Port of
Los Angeles 2006 to 2020 ......................................................................................................................................99
Figure 28: Approach B - Prospective Future Growth of Cruise Vessel Throughput for the Port of Los
Angeles 2006 to 2020 ..............................................................................................................................................99
Figure 29: Approach C1 - Prospective Future Growth of Cruise Passenger Throughput for the Port of
Los Angeles 2006 to 2020 ....................................................................................................................................101
Figure 30: Approach C1 - Prospective Future Growth of Cruise Vessel Throughput for the Port of Los
Angeles 2006 to 2020 ............................................................................................................................................102
Figure 31: Approach C2 - Prospective Future Growth of Cruise Passenger and Vessel Throughput for
the Port of Los Angeles 2006 to 2020..............................................................................................................103
Figure 32: POLA Monthly Passenger Traffic, 2002 - 2006...................................................................................105
Figure 33: POLA Monthly Passenger Traffic, 2002 - 2006...................................................................................106
Figure 34: POLA Monthly Passenger Model, 2002 - 2006...................................................................................106
Figure 35: POLA Monthly Projected Passenger Traffic - 2010...........................................................................107
Figure 36: POLA Monthly Projected Passenger Traffic - 2015...........................................................................107
Figure 37: POLA Monthly Projected Passenger Traffic - 2020...........................................................................108
Figure 38: POLA Peak Month Passenger Traffic, 2006 - 2020............................................................................108
Figure 39: POLA Peak Month Cruise Ship Calls, 2006 - 2020............................................................................109
III

Figure 40: POLA Daily Passenger Traffic Comparison (,000), 2002 – 2006...................................................110
Figure 41: POLA Daily Passenger Traffic Comparison (%), 2002 – 2006........................................................110
Figure 42: POLA Saturday/Sunday passenger traffic comparison, 2002 – 2006............................................111
Figure 43: POLA Saturday/Sunday passenger traffic comparison (%), 2002 – 2006.....................................111
Figure 44: POLA Friday/Monday Passenger Traffic Comparison (%), 2002 – 2006.....................................112
Figure 45: POLA Friday/Monday Passenger traffic comparison, 2002 – 2006...............................................112
Figure 46: POLA Passenger Traffic Comparison - Sat/Sun; Mon/Fri; and Other, 2006 ..............................113
Figure 47: POLA peak month passengers (non Monday/Friday), 2006 - 2020 ..............................................114
Figure 48: POLA peak day passengers, 2006 - 2020..............................................................................................114
Figure 49: POLA Cruise Calls Per Day, 2002 - 2006 ............................................................................................115
Figure 50: POLA peak month berth demand, 2007 - 2020 .................................................................................116
Figure 51: POLA average winter berth demand, 2007 - 2020............................................................................116
Figure 52: POLA Berths vs. Volumes – Low Projection, 2007 - 2020.............................................................117
Figure 53: POLA Berths vs. Volumes – Mid Projection, 2007 - 2020 ..............................................................117
Figure 54: POLA Berths vs. Volumes – High Projection, 2007 - 2020.............................................................118
Figure 55: POLA Metric Passenger Use Year Round Ports, 2000 - 2020.......................................................118
Figure 56: Passenger Fees (published rates), 2006..................................................................................................122
Figure 57: Passenger Fees (actual rates), 2006.........................................................................................................123
Figure 58: Passenger Fees Competitive Sphere (actual rates), 2006.................................................................123
Figure 59: Total Revenues Per Passenger, 2006......................................................................................................124
Figure 60: POLA Port Marine Revenues Scenarios, 2006 - 2020......................................................................127
Figure 61: POLA Total Revenues (Run 1– no fee increase), 2006 - 2020 ......................................................127
Figure 62: POLA Total Revenues (Run 2– with fee increase), 2006 - 2020...................................................128
Figure 63: POLA Total Terminal Operating Expenses, 2006 - 2020................................................................128
Figure 64: Terminal Operating Expenses as Percentage of Total ......................................................................129
Figure 65: POLA Net Marine Revenues, 2006 - 2020...........................................................................................130
Figure 66: POLA Daily Parking Rates, 2006 - 2020................................................................................................130
Figure 67: POLA Parking Revenues, 2006 - 2020...................................................................................................131
Figure 68: POLA Total Net Revenues, 2006 - 2020..............................................................................................132
Figure 69: POLA Potential Revenue Based Capital Program, 2006 - 2020.....................................................133
Figure 70: POLA Total Net Revenues, 2006 - 2020..............................................................................................135
Figure 71: POLA Potential Revenue Based Capital Program, 2006 - 2020.....................................................135
Figure 72: U.S. Terminal Operating Models .............................................................................................................139
Figure 73: Operational Costs ($ per passenger) by Selected Ports..................................................................140
Figure 74: Operational Costs ($ per passenger) by Selected Ports..................................................................140
IV

Chapter
1
List of Tables
Table 1: Cruise passenger source regions .....................................................................................................................9
Table 2: Cruise ships on order worldwide, January 2006......................................................................................10
Table 3: Primary Cruise groups by brand, no. of ships, and market segment, 2006......................................19
Table 4: Evolution of the modern cruise ship............................................................................................................20
Table 5: Sample of Large Cruise Ship Types...............................................................................................................22
Table 6: Cruise Demographic Profiles, North Americans.....................................................................................25
Table 7: Cruise Embarkation Benefits, North Americans......................................................................................26
Table 8: Cruise capacity placement by region, North American Operators...................................................28
Table 9: Cruise Capacity Placement - U.S. West Coast, North American Operators.................................34
Table 10: Total Operator Capacity by Brand in U.S. West Coast Region, 2006 ...........................................37
Table 11: Total Operator Capacity by “Big Three” in U.S. West Coast Region, 2006................................37
Table 12: Estimate of Operator Capacity in U.S. West Coast Sub-Regions, 2006 ........................................38
Table 13: Cruise Traffic at Principal West Coast Base Ports, 2002 and 2006.................................................40
Table 14: Cruise Traffic Impacts from U.S. West Coast Sub-Regions, 2006 ...................................................41
Table 15: Sample Patterns of Alaska Cruise Itineraries 2006................................................................................44
Table 16: Sample patterns of Hawaiian cruise itineraries 2006............................................................................45
Table 17: Sample patterns of Mexican Cruise itineraries 2006 ............................................................................47
Table 18: Sample Patterns of Repositioning Cruise Itineraries 2006..................................................................49
Table 19: Sample patterns of Panama Canal cruise itineraries 2006...................................................................51
Table 20: Sample patterns of Mexico Baja cruise itineraries 2006 ......................................................................53
Table 21: Sample patterns of world cruise itineraries 2006..................................................................................54
Table 22: Sample Patterns of So. Pacific, Pacific Northwest Cruise Itineraries 2006..................................... 55
Table 23: Fit of the Port of Los Angeles in Identified Target Markets (Summary).........................................56
Table 24: Summary of U.S. West Coast Regional Ports and Support Destinations ......................................61
Table 25: Summary of U.S. West Coast Region Major Ports, 2006...................................................................64
Table 26: U.S. West Coast Sector Participation (No Alaska/Pacific Northwest) 2006................................66
Table 27: Summary of POLA Market Sector Capture, 2006................................................................................67
Table 28: Summary of POLA Market Sector Capture Opportunities, 2006 ...................................................67
Table 29: Projection scenarios of passengers in the U.S West Coast Market, 2010, 2015 and 2020
(Revenue Passengers)...............................................................................................................................................71
Table 30: Statistical Review of POLA’s Cruise Ship Activities, 2006.................................................................77
Table 31: Statistical review of POLA’s cruise ship activities, 2002 - 2006........................................................77
Table 32: Statistical Review of POLA’s Cruise Ship Activities By Group, 2006.............................................79
Table 33: Statistical Review of POLA’s Cruise Ship Activities by Day 2002-2006 ........................................82
Table 34: Attractiveness of Port of Los Angeles as a Cruise Homeport (Summary)...................................88
Table 35: SWOT Summary for the Port of Los Angeles......................................................................................89
Table 37: Approach A - Prospective Future Growth of Cruise Passenger Throughput for the Port of
Los Angeles 2006 to 2020 ......................................................................................................................................97
Table 38: Approach B - Prospective Future Growth of Cruise Passenger Throughput for the Port of
Los Angeles 2006 to 2020 ....................................................................................................................................100
V

Chapter
1
Overview
1.1 Background and study objectives
Over the past two decades, the cruise industry has emerged as a major participant in
the worldwide travel and leisure business. In 2004, cruise lines welcomed over 13.4
million passengers on cruise vacations in nearly every conceivable region worldwide
and it is projected that the 2005 cruise statistics will exceed 14 million cruise
passengers. With 27 new cruise vessels scheduled for delivery through 2009 and a
vast majority of travel and leisure enthusiasts still new to the world of cruising, most
industry analysts agree that the cruise industry has a significant growth period ahead.
Continued expansion of the industry will further opportunities for established and
emerging cruise destinations to welcome operations, and consequentially, accrue
fiscal and social benefits associated with this dynamic business.
The Port of Los Angeles (POLA) is one of the leading cruise homeports on the West
Coast of the United States with more than 250 cruise calls and 1.1 million passengers
scheduled for 2006. As recently as 2002, POLA invested more than $15 million into
the renovation of terminal 93 to accommodate the world’s largest cruise ships. In
2005, POLA began planning efforts for the redevelopment of its cruise infrastructure
to support cruising well into the future in conjunction with planning efforts
undertaken as part of the San Pedro waterfront development’s “Bridge to
Breakwater” project.
Based on preliminary findings, in the fall of 2008 Royal Caribbean International’s
138,000-GT Voyager-class cruise ship is tentatively scheduled to begin homeport
operations from the POLA. With a 3,114 passenger capacity this vessel will certainly
define the next generation of terminal requirements for the POLA.
A. The cruise line industry, California, and the Port of Los Angeles
According to the Cruise Lines International Association’s (CLIA) Spring 2005
Overview the cruise industry contributed more than $30-Billion to the U.S. economy
in 2004. Business Research and Economic Advisors (BREA) found that the cruise
industry supported nearly 316,000-jobs nationwide and paid more than $12.4 Billion
in wages and salaries in 2004. Also in 2004 Cruise lines, passengers and crew were
responsible for approximately $14.7 Billion in direct economic impacts supporting
more than 135,000 jobs. More than 75% of the cruise industries global economic
impacts are expenditures made with U.S. based businesses and suppliers.
U.S. ports and port cities are major beneficiaries of cruise line growth and economic
impacts. In 2004 the Top Ten embarkation ports accounted for 87% of the total
traffic; they are Miami, Port Everglades, Port Canaveral, New York, Los Angeles,
1

Galveston, Tampa, Long Beach, New Orleans and Seattle. In addition, 81% of the
total $30 Billion economic impact was generated in the following 10 states: Florida,
California, New York, Alaska, Texas, Washington, Georgia, Illinois, Colorado and
Hawaii.
The State of California ranked 2 nd in economic impacts at $1.5 Billion with just over
10% of the direct economic expenditures from the cruise industry. Other statistics
covered by the BREA study specifically for California included:
• Cruise industry generated 44,667 jobs;
• Wages totaled $1.9 Billion; and
• Average annual wage for a California cruise industry worker at $43,400.
Major California suppliers that benefit from the cruise industry include tourism
related businesses such as travel agencies; airlines and hotels; business service
providers; food processing; ship repair companies; advertising and legal services;
insurance carriers; petroleum refining; and the entertainment and amusement
industries.
In addition, California is one of the most active cruise passenger source markets in
the world. CLIA has estimated in 2004 that more than 1,185,000 passengers (11.33%
of the total North American Market) were generated from the State of California,
second only to Florida in this regard. This is likely to increase in 2005 to over
1,400,000 passengers. The four major ports of California accounted for more than 1
million passenger embarkations in 2004, which is almost 14% of the U.S. total.
Overall, the Pacific Coast region is one of the largest cruise passenger source
markets with more than 1,400,000 passengers. Southern California, specifically Los
Angeles also hosts two major cruise headquarters with Princess/Cunard Lines and
Crystal Cruises.
B. Report overview
As an initial step in the planning process for future cruise facilities, Bermello, Ajamil &
Partners, Inc. (B&A) was commissioned by POLA to prepare an analysis of global and
regional cruise market trends and to determine potential levels of future business to
establish the appropriate infrastructure to support cruise operations and to analyze
the financial and business plan strategies to implement such facilities. Key
components of the market study presented in this report include:
• An overall statistical review of POLA cruise operations.
• Assessments of the worldwide and regional cruise industry trends and growth
patterns.
• Cruise line and stakeholder interviews to determine the present and future
operational conditions for the cruise industry at the POLA.
2

• Strengths, Weaknesses, Opportunities and Challenges associated with cruise
operations to the POLA.
• Cruise passenger and vessel market projections over the short (5-year), mid (10-
year), and long-term (15-year) horizons to provide the POLA with a baseline for
future planning efforts.
This report summarizes the analysis and findings associated with each of these
components.
1.2 Terminology used in this study
Several cruise industry terms and acronyms used throughout this report may not be
familiar to the reader. We define several of there terms in the following section. 1
• Air Draft. The maximum height of a ship above the waterline.
• Apron. Area immediately adjacent to the vessel berth where ships’ lines,
provisioning, gangway and other operations occur.
• Anchorage. Location where a ship may anchor. In destinations where docks
are not present to accommodate ship operations, anchorages are used and
passengers are shuttled to/from the cruise vessel to a landside location using a
small boat (tender). Anchorages are generally only used in ports-of-call.
• Beam. The width of the cruise ship at its widest part. Panamax Vessels refer to
ships with beams than can transit the Panama Canal (beam is equal to 36m or
less). Post-Panamax Vessels have beams that exceed the width of the Panama
Canal, or greater than 36m.
• Bed (berth)-nights. A typical cruise industry form of capacity measurement
representing the number of lower berths (a bed on a cruise vessel, with the
aggregate total generally determining the vessel’s normal passenger capacity)
times nights of operation in a region.
• Berth. (1) A bed, generally attached to the deck and/or bulkhead onboard a
ship. (2) An anchorage or dock space for a ship in port.
• Bunkers. Marine fuel used for propulsion.
• Cabotage Laws (also referred to as coastwise shipping laws). Relates to the
ability of foreign-flagged vessels to transport goods and passengers between
domestic ports. Cabotage Laws are often put into place to protect domestic
shipping industries.
• Conventional cruises. Leisure oriented voyages on deep-water, ocean-going
cruise vessels of two-or-more nights often to a variety of destinations.
1 Bermello, Ajamil & Partners, Inc. 2005, and Israel, Giora and Laurence Miller, Dictionary of the Cruise Industry, Seatrade Cruise
Academy, 1999.
3

Conventional cruises are offered either by regional or international operators
marketing to a variety of consumer sectors and nationalities.
• Cruises-to-Nowhere. Generally geared toward a local consumer market
(within a one-hour drive) with the mainstay of the cruise experience is focused
around on-board gaming, food and entertainment.
• Deadweight Tonnage. Refers to the actual weight of cargo, fuel and stores
required to bring the ship down to her load-line marks.
• Displacement Tonnage. The amount of water displaced by the vessel or the
actual weight of the ship.
• Dockage. Fees levied by a port or destination for the right to dock a vessel.
• Draft. The depth of water required by a vessel to float; the measurement in
meters of the extent to which the ship projects below the surface of the water.
• Ferry. Term usually applied to a vessel transporting passengers and vehicles
from point to point. The key difference between these operations and
conventional cruises is that ferry operations have as their primary business focus
offering transportation services, not a travel and leisure experience.
• Gross Register Ton (GRT). A measure of a ship’s enclosed volume. This
term has emerged as the standard measure of communicating a ship’s size. A
Mega-ship generally refers to a vessel of 70,000 GRT or larger.
• Ground Transportation Area (GTA). Zone in which vehicles, including
buses, taxis and private cars are organized and accessed as part of cruise
terminal/destination embarkation and disembarkation activities.
• Homeport (also referred to as baseport, port of embarkation, turnaround port). A
marine facility and destination city that serves as the base of operations from
which the cruise begins and/or terminates.
• Itinerary. Ports visited on a given cruise. Two itinerary types are generally
observed. Open-jaw itineraries refer to those deployments where the cruise
begins at one homeport and end at another. Closed-jaw itineraries—the more
common type observed—begins and end from the same homeport.
• Length Overall (LOA). Total length of a cruise vessel, including any incidental
structure that may extend this dimension.
• Lower Berth Capacity. The number of beds of standard height on a cruise
vessel. The number of lower berths determines the vessel’s normal passenger
capacity. Maximum Passenger Capacity refers to the total number of passengers
that can be accommodated on the cruise ship in lower berths and other flexible
berths (also referred to as upper berths).
• Mixed-Use Facility. Refers to facility or complex with more than one type of
real estate or operational use. Mixed-use facilities are generally: (1) Contiguous
4

in nature; (2) Developed within a broader master plan constructed at one time
or in phases; and, (3) Provide for a symbiotic relationship to occur among all uses
such that the sum of the mixed-use facility from a real estate or operational
perspective is greater than its parts. Mixed-use maritime facilities often include
cruise, ferry, marina, commercial, residential, recreational and other upland
transportation facilities.
• Passenger Tax (also referred to as a head tax). Port charge assessed against
each passenger aboard the vessel. Generally the principal income stream to
ports and destinations for accommodating cruise activities.
• Port-of-call (also referred to as a way-port). One of several destinations visited
as part of the cruise itinerary. The focus of the port-of-call is on tourism
activities adjacent to the cruise arrival area and the transportation of passengers
to regional points of interest.
• Terminal. Building where cruise passengers embark and/or disembark in a
homeport destination.
• Throughput Passenger (also referred to as a revenue passenger). Total
number of passengers arriving and/or processed at a cruise homeport and portof-call.
• Transit Passengers. By literal definition, the status of cruise passengers at a
port-of-call.
5

Chapter
2
The Global Cruise Industry
2.1 Section Summary
This section analyzes the major trends prevalent for the worldwide cruise industry.
Following is a summary that delineates the major issues that shape the current global
cruise industry:
1) The cruise industry has emerged as one of the fastest growing and popular
segments of the worldwide travel and leisure industry. Between 1990 and 2004,
passenger levels have expanded from 4.4 to an estimated 13.4 million worldwide.
With many of the fundamentals that contributed to the success of the industry
still in place, cruise passenger volumes are expected to continue their positive
growth trend. Projection of the worldwide industry suggests passenger carrying
levels could expand from the present projected 13.4 million to between 19.3 and
30.1 million by 2020. Continued strong passenger growth is incumbent upon
between 40 and 120 additional new vessels being placed into operation over the
next 15 years, a trend that will create demand for a number of present homeport
and port-of-call facilities to expand—especially those found within the industry’s
most popular and profitable regions—and over the mid- to long-term, encourage
expansion into new market regions.
2) Three major cruise operators dominate the cruise industry worldwide—Carnival
Corporation, RCCL and Star/NCL Cruises. These cruise consortiums have
widespread influence on cruise marketing, operations and deployment trends
worldwide. A fourth relatively newcomer to the industry, MSC Cruises is
aggressively ordering ships and is beginning to enter the North American market.
3) Inclusive of all cruise operators, the Caribbean remains the principal location for
cruise capacity placement, followed by the Mediterranean, Northern Europe and
Alaska. In total, over twenty different cruise sub-regions are present within the
global marketplace, with many of these consisting of even smaller deployment
characteristics and typical itineraries. Some of these will be further explored in
the West Coast Regional section.
4) Cruise line selection criteria for homeports and ports-of-call generally fall into
three categories: Appeal and demand as a travel and leisure destination; type and
quality of cruise tourism infrastructure needed to support vessel operations,
movement and quality of experience for cruise visitors; and, a market basis and
strategic fit within a greater cruise ship deployment scheme.
6

2.2 Historic levels of worldwide growth
Over the past two decades, the cruise industry has emerged as one of the fastest
growing and popular segments of the worldwide travel and leisure industry. In 1980,
1.4 million individuals embarked on a conventional cruise operated by a North
American cruise line, a level that climbed to over 9.3 million by 2004. 2 We estimate
that 4.5 million international passengers were carried on European and Asian
marketed vessels in 2005, elevating the worldwide cruise industry passenger total to
nearly 14.7 million (Table 1). It is anticipated that 2005 cruise statistics will generate
an approximate 4.7% growth rate for North American passengers, based on Cruise
Line International Association’s (CLIA) 19-member line 4 th quarter analysis to more
than 10.2 million. Critical growth has also been seen in the U.K., European
Continental and Asian cruise markets over this time period.
Figure 1: Conventional worldwide cruise passenger growth, 1990-2005
Source: CLIA, PSA, and B&A, 2006
16,000
14,000
12,000
Passengers ('000)
10,000
8,000
6,000
4,000
2,000
0
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05
North America Europe Asia
The industry’s success over this period is primarily a result of the following:
• Cruise lines created products that work to convert land-based resort
guests into cruise passengers. Cruise lines were able to package and mass
market an all-inclusive resort package-at-sea that is highly price competitive when
compared to similar land-based resort vacations. These all-inclusive packages
were marketed through a variety of distribution channels inclusive of travel
agents, internet-based retailers, charter operations and cruise line based phone
and internet networks.
2 North American operators are those lines that market the majority of their ships to North American consumers in the U.S. and
Canada. Similarly, European and Asian operators market a majority of their vessel offerings to each respective consumer market.
7

• Cruise lines were highly successful in introducing new vessel inventory
and developing onboard products that generated sustained interest in
cruising. Lines continually worked to improve the quality and quantity of onboard
experiences with more diverse food and beverage venues, entertainment
and deck activities, meeting and conference facilities, and recreation areas.
Discarding smaller ships and older capacity, larger and more lavish vessels
furnished with veranda-style outside cabins, grand central atriums, health spas,
and other amenities found in the best land-based resorts became the norm in the
mid-1990s. This trend has continued as cruise line brands introduce innovative
products and services on the newest vessels to further differentiate themselves
from the competition and generate renewed public interest in cruising.
Consumers generally met each new vessel launch with enthusiasm, and
ultimately, increased passenger bookings. In fact, due to the strong correlation
observed between vessel supply expansion and increased passenger carryings
over the past twenty years, many industry experts concluded the industry
exhibits tendencies of being supply led (see Figure 2). 3 Review of future vessel
deliveries remains the primary tool used to project future industry passenger
growth.
Responding to this demand, cruise lines continue to order new vessels, although
at a more restrained pace than observed at the peak of vessel orders in the later
1990s and early 2000’s. As of February 2006, 27 new cruise vessels with a total
berth capacity of 78,159 are scheduled for delivery over the next four years. For
comparison purposes, in December 2002 the forward cruise vessel order book
also contained 26 vessels with a berth capacity of 56,428. This is an increase of
28% in terms of berth capacity over a 4-year timeframe, with each new vessel
currently on order carrying an additional 725 berths. 4
In February 2006 Royal Caribbean International announced an order for the next
generation of cruise ship – Project Genesis for delivery in fall 2009. It is
approximately 43% larger than their current ship on order – Freedom of the Seas
at 220,000 GT.
3 Clearly, a number of factors are at work beyond the basic introduction of vessel tonnage and passenger industry increases. Many
of these other factors are discussed in detail as part of this Chapter. While the relationship between vessel deliveries and
passenger carryings is very strong, we surmise that much of this relationship is supported by high consumer demand for cruise
industry products; cruise lines’ sophisticated marketing and distribution pre- and post-vessel launches; and, flexibility in pricing,
deployment, and itinerary duration.
4 Project Genesis accounts for a majority of additional berths. Without the Genesis ship the total is approximately 628-new berths
per ship.
8

Table 1: Cruise passenger source regions 5
Source: CLIA, PSA, and B&A, 2005
Period
North
America
Europe** Asia Totals % Change
1990 3,640,000 620,000 162,000 4,422,000 -
1991 3,979,000 700,000 170,000 4,849,000 9.7 %
1992 4,136,000 777,500 178,000 5,901,500 5.0 %
1993 4,480,000 779,231 194,000 5,453,231 7.1 %
1994 4,448,000 822,854 240,000 5,510,854 1.1 %
1995 4,378,000 995,812 298,000 5,671,812 2.9 %
1996 4,656,000 1,204,529 359,000 6,219,529 9.7 %
1997 5,051,000 1,460,361 421,000 6,932,361 11.5 %
1998 5,428,000 1,715,075 572,000 7,715,075 11.3 %
1999 5,894,000 1,885,898 730,000 8,509,898 10.3 %
2000 6,882,000 2,058,964 643,800 9,584,764 12.6 %
2001 6,906,000 2,144,034 726,787 9,776,821 2.0 %
2002 7,640,000 2,397,876 852,377 10,890,253 11.4 %
2003 8,189,750 2,700,374 894,956 11,785,080 8.2 %
2004 9,310,250 2,958,260 940,003 13,208,513 12.1 %
2005* 10,210,000 3,400,000 1,150,000 14,760,000 10.0%
Notes: *Estimate; **Includes Eastern Europe, Russia and Cyprus
• Cruise operators have effectively controlled competition, operational
costs, and generated revenue streams from several sources beyond
net ticket sales. Innovations in cruise ship design and the move toward larger
vessels allowed cruise lines to reap increased economies of scale. The majority
of cruise industry capacity is held by a handful of cruise conglomerates, a factor
that has served to reduce competition by keeping barriers to entry into the
market high; increased leverage on cruise destinations to keep cruise fees low;
and, allowed for significant cost-savings resulting from a high degree of vertical
integration throughout the cruise onboard and destination delivery cycle. This
trend has magnified with the creation of a super-cruise group – Carnival
Corporation, whose combined brand capacity exceeds that of its next nearest
rival by some 30,000 berths and which accounts for over half the new vessels
shown in Table 2.
5 2005 statistics for the worldwide and specific source regions are not yet available. The estimates above are base don preliminary
quarterly reports from CLIA and PSA on the cruise industry.
9

Table 2: Cruise ships on order worldwide, January 2006
Source: www.cruisecommunity.com and B&A, 2006
Cruise Operator
Vessel Name
Gross
Tonnage
Lower Berth
Capacity
Cost (US$
Millions)
2006
Costa Cruises Costa Concordia 112,000 3,004 $565
Holland America Line Noordam 85,000 1,848 $400
MSC MSC Musica 90,000 2,568 $630
NCL Pride of Hawaii 93,000 2,376 $395
Princess Cruises Crown Princess 113,000 3,100 $500
RCI Freedom of the Seas 160,000 3,643 $750
2007
AIDA Cruises Unnamed 68,500 2,030 $390
Carnival Cruise Line Carnival Freedom 110,000 2,974 $500
Costa Cruises Costa Serena 112,000 3,004 $627
Cunard Line Queen Victoria 90,000 2,000 $468
MSC MSC Orchestra 90,000 2,568 $630
Princess Cruises Emerald Princess 116,000 3,100 $525
NCL Norwegian Pearl 93,000 2,384 $500
NCL Norwegian Gem 93,000 2,384 $510
RCI Freedom Class 2 158,000 3,643 $750
2008
AIDA Cruises Unnamed 68,500 2,030 $378
Carnival Cruise Line Unnamed 112,000 2,974 $584
Holland America Line Unnamed 86,000 2,044 $450
MSC MSC Fantasia 133,500 3,300 $550
P&O Cruises Ventura 116,000 3,100 $602
Princess Cruises Unnamed 116,000 3,100 $570
RCI Freedom Class 3 158,000 3,643 $828
2009
AIDA Cruises Unnamed 68,500 2,030 $390
Carnival Cruise Line Unnamed 130,000 3,608 $668
Costa Cruises Unnamed 112,000 3,004 $579
MSC Cruises MSC Serenata 133,500 3,300 $550
RCI Project Genesis 220,000 5,400 $1,000
Totals 27 78,159 $15.289
In addition, Celebrity Cruises has signed a letter-of-intent with Meyer Werft
Shipbuilders for the construction of an 117,000 GT vessel accommodating 2,850
passengers to be delivered in 2008. The deal also includes an option for a second
ship of the same class.
• Cruise industry products consistently deliver a high level of passenger
satisfaction. The Cruise Lines International Association (CLIA), through its
annual passenger surveying efforts, has year after year reported the cruise
experience consistently exceeds expectations on a wide range of important
vacation attributes, and on a comparative basis versus other vacation categories,
cruising consistently receives top marks. Satisfaction with cruise vacations keeps
customers coming back; several cruise lines report client retention levels of well
over 45%. Cruise lines place considerable emphasis upon passenger retention, as
10

it is easier and less costly to retain a current passenger than to market to and
cultivate new passengers.
2.3 Future direction of the worldwide cruise industry
A. Geopolitical uncertainties, economic and other issues: The Industry - 2001 to 2006
Without question, the events of September 11 and its aftermath created a period of
uncertainty and flux both within the cruise industry and for tourism and leisure
providers worldwide. Immediate reactions by the cruise industry to September 11
were increased financial conservatism, deployment drawback to North American and
other home waters and amplified flexibility in deployment. The financial pressures of
the post-September 11 period led to bankruptcies of several smaller international
cruise operators, including Renaissance Cruises, American Classic Voyages (AMCV),
Festival Cruises and Royal Olympic. Deployment drawback to North America (often
referred to as Homeland Cruising) and reluctance of North Americans and some
Europeans to fly long distances remain features of the market today. Although most
current North American cruise passenger trends appear to be once again leaning
toward expanding travel patterns outside of the U.S. cruise regions. September 11
and subsequent events discussed below are also thought to have had a weakening
effect on the size of the cruise vessel forward order book presented in Table 2. This
impact is discussed in greater detail in Section 2.3, B.
By October 2002, confidence was returning. The cruise industry, however, was due
to face further challenges brought on by a combination of war, terrorism concerns,
health issues and a relatively weak economic outlook. In particular, the Iraq War
(March 2003), terrorism threats and the SARS pandemic in Asia had a dramatic
impact on international travel. These major events led to a dramatic collapse in
demand for air travel, especially to Asia. This experience was mirrored by the cruise
industry throughout the world, but particularly in the Asia-Pacific region where a
number of cruise calls were cancelled and itineraries redrawn to take tonnage out of
the region.
Presently, signs point to the cruise industry moving into a boom period with all the
major lines, comprising improved profitability and higher yields. Cruise industry
sensitivities, and thus, a degree of financial and operational conservatism still remains
due to the issues outlined above. For the near term, lines will continue to be
cautious in deploying their fleet to more distant and potentially less financially
productive regions. This is due in part to both a cost increase in MDO/MDG fuels
and the subsequent impacts on the purchasing and supply chain for those vessels
deployed farther a field from normal North American suppliers. Terrorism also
continues to be a major point of worry for cruise lines, especially given the high
profile of a cruise ship as a potential target. In November 2005, the Seabourn Spirit
was attacked 100-miles off the Somali Coast by pirates with machine-gun fire and
rocket-propelled grenades. In August 2004, UK press reported that a terrorist plot
to blow up the Queen Elizabeth 2 during a cruise was uncovered. Similar terrorism
concerns and threats exist for all shipping activities in the Straits of Malacca. While
11

cruise lines and ports have radically improved port security, we anticipate lines will
continue to take a conservative approach with deployment.
Finally, safety and security of passengers and crew on-board cruise vessels has been
highlighted in 2005 and will likely continue as a discussion topic for the foreseeable
future as cruise vacations continue to increase in popularity. Several high profile
injury, ADA, assault, missing-persons and other criminal activities have somewhat
sidetracked the public relations engine of the industry. However, these issues have
had very little impact on the overall long-term growth prospects. Much of the
attention is an inevitable by-product produced by the public specter of the cruise
industry’s vessels.
B. Future market direction of the worldwide cruise industry
In looking forward at the direction of the market in the future, each of the industry
fundamentals responsible for its dramatic rise over the past two decades are
expected to remain in place and continue to propel the industry forward in terms of
passenger and financial expansion over the long-term. Strong 2005 3 rd quarter cruise
passenger growth and future bookings showed marked improvement over 2004
levels and industry experts suggest significant long-term consumer demand also exists
in the marketplace (see Section 2.4, C). Despite short-term impacts of major world
events, demand for cruises has shown particular resilience in times of conflict,
recession and economic downturns.
As discussed previously, review of the forward cruise vessel order book is a key
indicator used to project future passenger volumes. It is clear that demand can
plummet and then rapidly recover following events that have a major impact on
consumer confidence. The effects of these same events have a more lasting influence
on the supply side of the cruise industry. There has been an extended downturn in
the size of the new building order book from a peak of nearly fifty to the present 26
vessels detailed in Table 2.
Over the last 2 quarters of 2005 significant new-build orders have been placed which
have substantially increased the outlook for additional capacity worldwide. Leading
the new-build charge Carnival Corporation signed a four-ship deal in December 2005
with options for two additional vessels, while MSC Cruises placed its largest newbuild
order for two 133,500 GT, 3,300-passegners cruise vessels. This increased
volume with fewer ships provides each cruise line with more flexibility on itinerary
and port selection based on their overall brand fleet size. However, in combination
many ports must increase their port infrastructure and tourism support products to
meet the demands of the larger vessels in port.
Barring some unpredictable event, the industry will see continued gradual revival in
new building through 2006 and beyond. Controlled growth and an emphasis on
increased vessel berth capacity, size and amenities will be more likely. Our scenarios
for cruise ship supply expansion for North American capacity - as measured in vessel
berths over the next several years are provided below: 6
6 Scenarios present berths in net terms and envisage some withdrawal of older ships, and thus, capacity from service. This occurs
on a fairly regular basis at present. New Safety of Life at Sea (SOLAS) rules in 2010 will inevitably hasten the withdrawal from
12

• Scenario 1 (Low). [Post 2009] One to three new vessels and an expansion of
total supply by an additional 4,800 to 5,400 net new berths per annum.
• Scenario 2 (Medium). Three to six new vessels and an expansion of total
supply by an additional 12,100 to 13,500 net new berths per annum.
• Scenario 3 (High). Six to nine new vessels and an expansion of total supply by
an additional 19,300 to 21,600 net new berths per annum.
Our forecast for the growth of North American capacity is presented in Figure 2. As
shown, total berth inventories are anticipated to grow from approximately 241,400
lower berths in 2004 to between 353,500 (low) and 551,900 (high) lower berths.
Figure 2: Historic and projected North American industry berth supply
Source: B&A, 2006
2020
600,000
551,900
500,000
452,700
Berths
400,000
300,000
2004
241,400
353,500
200,000
100,000
0
'94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
Net Future Berth Supply (Low) Net Future Berth Supply (Middle) Net Future Berth Supply (High)
Sources: B&A, 2004.
Net North American berth inventory anticipated to add an additional
112,000 to 310,000 berths by 2020.
Using our forecast for berth supply expansion presented in Figure 2, a range of
anticipated North American cruise passenger growth was developed and is
presented in Figure 3. Passenger levels are expected to climb from 9.3 million in
2004 to between 13.6 million (low) and 21.2 million (high) by 2020. The anticipated
range of average annual growth is between 2.4% (low) and 5.3% (high). Actual
passenger levels are anticipated to occur within the range shown in Figure 3. Our
projection model includes a number of assumptions extrapolated over the 15 year
time horizon, including anticipated rates of berth utilization, vessel occupancy, cruise
itinerary duration, growth in average vessel size and other factors. Our model also
assumes that consumer demand keeps pace with vessel supply over the period
reviewed. Due to cruise lines placing cruise vessel orders at a maximum of five years
into the future, our model is inherently less reliable beyond 2009.
service of a considerable number of ships that were built at or before 1969. This series of SOLAS rules looks to eliminate all wood
from cruise vessels.
13

Figure 3: Projected North American passenger levels, 2004 – 2020
Source: B&A, 2006
2020
30,000,000
Passengers
25,000,000
20,000,000
15,000,000
10,000,000
2004 = 9.3 M
21.2 M
17.4 M
13.6 M
5,000,000
2010 = 12.4 M
2015 = 14.8 M
0
'94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
Total NA Passengers (Low) Total NA Passengers (Middle) Total NA Passengers (High)
Sources: B&A, 2004.
Using a similar projection model, passenger forecasts for the worldwide industry -
inclusive of European and Asian carriers were generated and are presented in Figure
4. As shown, worldwide passenger carryings are expected to grow from 13.2 million
to between 19.3 million (low) and 30.1 million (high) by 2020. The medium and high
projections include additional factors which take into account more aggressive
growth of European and Asian markets over the mid- to long-term.
Projection scenarios herein anticipate that ports and destinations will rise to meet
this opportunity of continued expansion of the cruise industry. With medium and
high future growth scenarios above suggesting between 40 and 120 additional new
vessels in operation, continued new ship deliveries will place additional demand for
port facilities. This trend will create demand for a number of present homeport and
port-of-call facilities to expand - especially those found within the industry’s most
popular and profitable regions and over the mid- to long-term, encourage expansion
into new market regions. Placement of new vessels will be especially challenging
during the months of November through April when operations in profitable, coldwater
regions are unfeasible. As a trend, expansion of supply and the subsequent
need of cruise lines to expand their overall regional coverage is a favorable trend for
the Port of Los Angeles.
14

Figure 4: Projected North American and worldwide passenger levels, 2005 – 2020
Source: B&A, 2006
30,000,000
25,000,000
2015 = 14.8 M
2010 = 17.6 M
2020
30.1 M
24.7 M
Passengers
20,000,000
15,000,000
10,000,000
2004 = 13.2 M 19.3 M
5,000,000
0
'94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
Total World Pax (Low) Total World Pax (Middle) Total World Pax (High)
Sources: B&A, 2004.
2.4 Cruise Lines, ships and other industry characteristics
A. Leading cruise operators
Today, three major cruise operators dominate the cruise industry worldwide (see
Figure 5). The “big three” were formed through merger and consolidation to
provide each with better economies of scale, progressive marketing options and
increased channels of distribution. In spring 2003, the Carnival Corporation and
Princess Cruises merger was officially accepted by shareholders of P&O Princess, plc,
thus forming the nucleus of a cruise company that at the end of 2005 had more than
48% of total berth capacity worldwide. This merger continues to reshape the
industry, creating one large super cruise consortium with widespread influence on
cruise marketing, operations and deployments. RCCL (24%) and Star/NCL Cruises
(10%) are the other major industry participants. The remaining 18% of industry
capacity is shared among over 50 cruise lines, ranging from medium-sized lines
typically operating between two and five vessels to small cruise line operators with
one ship.
We summarize several attributes of each of the major cruise lines as well as several
smaller operators in the following section. Cruise line information is summarized in
Table 3.
15

Figure 5: Cruise Capacity by Cruise Group
Source: B&A, 2006
RCCL, 24%
Carnival
Corporation,
48%
Star/NCL
Cruises, 10%
Others, 18%
• Carnival Corporation. Publicly held and traded, Carnival Corporation
controls over 136,000 lower berths on 79 vessels. Carnival Corporation
presently has additional 16-20 cruise vessels on order or option. Carnival
Corporation’s portfolio of 12 brands is remarkable and includes many of the gold
standard cruise companies: Carnival Cruise Lines, Holland America Line,
Princess Cruises, Seabourn Cruise Line and Windstar Cruises in North America;
P&O Cruises UK, Cunard Line, Ocean Village and Swan Hellenic in the United
Kingdom; AIDA in Germany; Costa Cruises in Southern Europe; and, P&O
Cruises Australia. 7 These brands combine to offer a range of vacation products
to consumers with varied tastes, income levels, and national origins. Combined,
more than 6.5-million people sail on Carnival brands annually.
• Royal Caribbean Cruises, Ltd. (RCCL). Under its three brands Royal
Caribbean International (RCI), Celebrity Cruises and Island Cruises, as well as
Celebrity Xpeditions RCCL operates a fleet of 30 ships with four additional
vessels set for delivery and another two on option. Current fleet capacity is
slightly over 61,000 lower berths. In 2005, RCCL’s brands combined to host
more than 3-million cruise passengers. RCCL is also a publicly held corporation.
• Star/NCL Cruises. Star Cruises is the leading cruise line in Asia, and with
acquisition of NCL Holdings 2000, is the third largest cruise line operator in the
world. Star Cruises’ combined fleet consists of 18 ships and over 26,000 lower
berths. The NCL and Orient brands are marketed primarily to consumers from
North America, Europe and Australia. The Star Cruises brand is focused on
tapping into the Asia-Pacific consumer markets. Star Cruises is a publicly held
7 Carnival Corporation owns two land-based tour operations in Alaska—Holland America Tours and Princess Tours—that operate
buses, hotels/lodges and train cars for sightseeing.
16

company listed on the Hong Kong Stock Exchange. NCL is preparing to become
a publicly traded company in 2006.
While lines in the “other” category are far smaller in terms of fleet size than the “big
three,” the remaining 18% of the cruise industry includes a number of important and
unique brands that provide increased diversity within the industry overall.
Representative lines include:
• Disney Cruise Lines. Disney Cruise Lines is the leading family entertainment
cruise provider with 3-, 4-, and 7-night itineraries to the Bahamas and Caribbean
offered on two cruise ships (Disney Wonder and Disney Magic). While linking
cruise offerings to upland facilities is not unique in the industry, Disney’s
combination of family brand and upland theme parks creates inherent interest
their cruise product. In 2005, Disney Cruise Lines took their formula to Los
Angeles with 7-night Mexican Riviera cruises during the peak summer season.
These cruises were very successful based on feedback from the cruise line.
To date, no new cruise ship orders have been placed by Disney; while many
industry experts anticipate this could change as early as 2006, we believe it is
more likely a mid-term decision to deliver a new ship into the Disney fleet and
will likely occur after 2010.
• Crystal Cruises. Crystal Cruises offers ultra-luxury cruises to destinations
worldwide and is a sizable cruise line contributor to the West Coast
marketplace. With headquarters in Los Angeles, Crystal Cruises is whollyowned
by Nippon Yusen Kaisha (NYK), the largest shipping company in the
world. Crystal Cruises has a two ship fleet with the Crystal Harmony being
recently sold and sailing as the new Asuka.
• MSC Cruises. MSC Cruises offers mid-class cruises to destinations
throughout Europe and the Caribbean. MSC North America is currently under
start-up operations and is intended to cater to a more upscale niche market
with its ships. This is a private family held Swiss/Italian company backed by MSC
Cargo and privately held by the Aponte family. While they have strong financial
backing some industry analysts are hesitant as to what their level of success will
be in the North American market due to brand placement. However, they have
recently ordered an additional 2 large vessels and now have four set for delivery
over the next three years. While unlikely that they will grow to the dominance
of either RCCL or Carnival this line will certainly impact the industry over the
next decade.
• Radisson Seven Seas Cruises and Silversea Cruise Line are luxury-class
cruise lines offering itineraries throughout the world to a mainly North American
clientele. Both lines are privately held companies by the Carlson and Vlasov
Groups respectively. At present, only Silversea Cruises is planning to expand its
fleet through new-build capacity in line with what they currently offer with the
Silver Whisper and Silver Shadow.
Similar in composition to the hospitality industry, each major cruise group is
comprised of several cruise line brands with ships positioned to appeal to different
17

geographic markets and consumer tastes. The majority of cruise brands generally fall
into one of the following four segments:
• Luxury. The luxury segment offers cruises of greater than seven days on high
quality, small and medium-sized ships. Luxury vessels tend to sail worldwide and
offer superior food and service.
• Premium. The premium segment is geared towards more experienced
cruisers, often older and more affluent with time to vacation. Service and food
quality are emphasized under the premium segment.
• Contemporary. Ships found in the contemporary segment appeal to
passengers of all ages and income categories with a focus on middle income
levels. While this segment has a healthy rate of past-passenger participation
(estimated at between 30% to 50% of the industry), this segment is highly
dependent on the continued introduction of new cruise passengers to the
marketplace.
• Budget. The budget segment tends to be a less expensive version of the
contemporary market, with ships generally older, smaller and offering fewer
amenities. There are many of these operations existing in Europe. However, it
is unclear with the implementation of the SOLAS regulations by 2010, whether
this segment will be one that will be able to continue any growth through the
acquisition of older ships in the major world fleets.
Several other secondary market segments exist, including: Exploration and soft
adventure cruises; niche cruisers; river cruises; and coastal operations. In addition,
several tour operators have chartered vessels for their niche market segments.
Cruise capacity from the contemporary and premium segments of the North
American consumer segments comprise the majority of POLA’s cruise base. Smaller
European and Asian cruise brands visit sporadically at the POLA as they either
reposition or as a homeport on World cruise segments. Carnival and Royal
Caribbean International offer the only 3 & 4-day cruise patterns on the U.S. Pacific
Coast along with a major 7-day Mexican Riviera presence. We anticipate this trend
will continue over the near to intermediate term. Thus, the contemporary and
premium vessels constitute a large share of present cruise operations homeporting
from the POLA and Port of Long Beach.
18

Table 3: Primary Cruise groups by brand, no. of ships, and market segment, 2006
Sources: CLIA, 2006; Cruise Industry News Annual 2005, and B&A 2006.
Brand
Operator
Group
Ships
Market
Geo.
Segment
Consumer
The Cruise Industry’s “Big Three”
Carnival Cruise Lines 21 C NA
Princess cruises 14 C / P NA
Cunard Line 2 P / L NA/ UK
Carnival Corporation
Seabourn 3 L NA
Windstar 3 L NA
Holland America*
12 P NA
Sub-total Carnival – North American brands 55
Costa Crociere 11 P E
Swan Hellenic 1 L UK
AIDA Cruises 4 C Germany
Carnival Corporation
P&O Cruises UK 5 C / P UK
P&O Australia 2 C AUS
Ocean Village
1 C UK
Sub-total Carnival – UK, European, others 24
Total for Carnival Corp. 79
Celebrity Cruises 8 P NA
RCI 19 C / P NA
RCCL
Island Cruises 2 C UK
Celebrity Xpeditions
1 P NA
Total for RCCL 30
Orient Line 1 C / P NA / E
NCL Star Cruises
9 C NA
Star Cruises
4 C A / AUS
Total for Star Cruises 14
Selected Other Leading Operators
Crystal Cruises Crystal Cruises 2 L NA
Disney Cruise Line Disney Cruise Line 2 P NA
MSC Cruises** Mediterranean Shipping Cruises 2 C E
Radisson Seven Seas Radisson Seven Seas 5 P NA
Silversea Cruises Silversea Cruises 4 L NA / E
Key: Segments: C = Contemporary, P = Premium, B = Budget, L = Luxury
Geo. Consumer: NA = North American, E = European, A = Asian,
AUS = Australia, UK = United Kingdom
*Holland America will deliver the Noordam in February 2006
**MSC Cruises markets mainly in Europe, but will begin US operations in 2006
B. Cruise Vessel Evolution
The evolution of the cruise ship has been one of the principal mechanisms propelling
industry growth. It has also required that cruise destinations—both the maritime
port facilities handling homeport and port-of-call operations as well as the
destinations themselves—evolve to meet the challenges presented by these ships if
they wish to participate in the large-scale segment of the cruise industry.
Cruise vessels have advanced through a number of developmental phases, from the
small, 500-passenger vessels of the 1970s to the rise of the Post-Panamax, 3,600-
passenger ships of the late 1990s to the sophisticated ultra-vessels of today (see
Table 4).
19

Table 4: Evolution of the modern cruise ship
Source: B&A, 2006
Period Length Draft PAX Characteristics of the Period
1960 508 ft. 36 ft. 500 Vessels acquired & refurbished.
1970 705 ft. 32 ft. 650
1980 803 ft. 29.5 ft. 1,500
1990 902 ft. 26.25 ft. 2,600
1997 965 ft. 26.25 ft. 3,600
2000 1,000 ft. 29.5 ft. 3,000
2006 1,000 ft. 29.5 ft. 4,000
Next
Generation
1,100 – 1,400 ft. 32 - 36 ft. 5,000+
Standard business model used with
profitable results until the fuel crisis.
Change in business model;
experimentation with larger ships and
operating itineraries.
Larger ships becoming the destination.
Shallower drafts.
Mega-ships that are floating cities.
Focus on maximizing passenger
capacity. One-region vessels not
capable of Panama Canal Transit.
Larger ship volume concentrating on
creating efficiencies with ship design,
outside cabin development, ship
services and flexible deployment.
Freedom and Pinnacle classes, 160,000-
GT. Allows for increased onboard
revenue areas, largest ship in the world
status (ego boost), and economies’ of
scale.
Product and service led design; new
innovative marine hull design to
support more above water structure.
Separate apartment towers,
entertainment zones and amenities.
Limited port deployment options.
For comparison, in the early 1980’s when the POLA’s Terminal 91/92 was in initial
operation the average new vessel carried 1,500-passengers and required total
terminal space of approximately 15- to 22-sq. ft. per passenger or between 22,500
and 33,000-sq. ft. The actual size of Terminal 91/92 is less than 20,000-sq. ft. A ship
of today’s passenger capacity of more than 3,000-passengers for the Port of Los
Angeles would require a minimum of 45,000-sq. ft. – more than double the size of
the present terminal 91/92 facility. In addition, due to the cruise berth layout two
large ships are placed alongside the terminal on three or more ship days.
Furthermore, since this is a homeport terminal there is actually double the amount of
passengers using the facility during the days cruise homeport call as passengers both
depart from and arrive to the cruise vessel.
20

Figure 6: Cruise Terminal and Ship Capacity Growth Comparison, 1970 - 2010
Source: B&A, 2006
Note: Square footage estimated at 18-sq. ft. per passenger for all years. North American average is between 15
and 22-sq. ft. per passenger.
Figure 6 above provides a snapshot of the impacts the growth of the cruise passenger
vessel has played over the past 35 years and beyond. In the early 1970’s as ships
were approximately 500-passengers a small 10,000-sq ft. terminal facility would be
able to accommodate the needed requirements of the homeport operation. As ships
grew and the complexity of moving large amounts of passengers and baggage;
increased security procedures; and facilities in the United States for the Bureau of
Customs and Border Protection also needed to expand in order to accommodate
the needs of the cruise line. Technology and operational innovations have helped
keep space demands down, however, with the deployment of cruise ships of more
than 3,000-passengers, terminals still must have adequate space for the necessary
functions of the facility to meet the needs and expectations of the cruise line and
passengers. When delivered this spring, Freedom of the Seas will utilize terminals of
more than 60,000-sq. feet minimum to adequately meet the ship’s demands.
21

Float-out of the Freedom of the Seas, 2006
Over the past five years, the newest and most popular generation of ships continues
to have greater volumes and lengths to accommodate the area needed for large scale
outside cabin development. These vessels range in length from 950 – 1,100 feet and
have lower berth passenger complements of between 1,950 and 2,600. Cruise lines
are focusing on improved operational cost savings by ordering standardized hulls for
multiple brands. By example, Carnival Corporation uses its Spirit-class ship hull for
Carnival, Holland America, P&O and Costa vessels.
Grand-, Destiny-, Voyager-class vessel orders, however, are not expected to disappear;
several orders for each of these type vessels are still outstanding and it is likely that
more will continue to be issued over the next decade, with Costa being the first
European operator to order a ship of this type. Carnival Corporation’s Queen Mary
2, Pinnacle project and RCCL’s newest Genesis Project vessel suggests that the quest
for larger cruise vessels is not over (see Table 5).
Table 5: Sample of Large Cruise Ship Types
Source: B&A, 2006
Type
First Post -
Panamax
Today’s
Post-Panamax
Tomorrow’s
Largest
Name Grand Princess Freedom of the Seas Genesis Project
Operator Princess Cruises RCI RCI
Group Carnival RCCL RCCL
Built 1998 2006 2009
Pax (LBs) 2,600 3,634 5,400
Pax (Max) 3,000 4,200 6,400
GT 108,000 160,000 220,000
LOA (ft) 950 1,112 1,181
Beam (ft) 118 150 154
Draft (ft) 27 28 30
Air Draft (ft) 200 210 213
22

For the Port of Los Angeles, the net result of the cruise vessel development trends is
that current and future facilities will need to be able to accommodate these large
cruise ships for the POLA to remain competitive in the marketplace and be able to
fully accommodate the future generation cruise vessels service requirements. This
will include the ability to offer industry operators cruise berth(s) capable of
accommodating vessel lengths and structural loads of a 1,100-plus foot cruise vessel
with a passenger complement upwards of 3,000 – 6,000 persons per ship.
Future cruise ships will likely continue the trend began in the past decade of
incorporating environmentally friendly systems into the design of their ships. Some
examples of improvements in the past include: Technological changes in vessel
engines that have significantly reduced emissions (e.g., gas turbines); superior
wastewater handling systems which allow ships to hold and treat their wastewater in
more environmentally friendly ways; and, garbage handling improvements that
minimize impacts to the environment. As technological changes in the environmental
systems continue their advance, cruise vessel design will continue to incorporate
these “green” technologies. Some lines are beginning to adapt a no-discharge policy
and the trend will continue into the future. Alternative Maritime Power (AMP),
while challenging due to the deployment of cruise vessels worldwide is likely to
become a much broader topic as air emissions for all marine vessel types are studied.
C. Cruise vacationers
Although the cruise industry continues to strive toward globalization, the majority of
cruise passengers are still sourced from two significant locations—North America
and the United Kingdom. In 2005, these source markets accounted for more than
80% of the total worldwide cruise bookings. Continental Europe and Asia provide
solid cruise numbers as well, although growth overall has been much slower.
The U.K. source market jumped over a million passengers in 2003 for the first time
and is continuing that upward trend. Record cruise bookings were achieved
worldwide despite the Iraq War and other security concerns, proving the resiliency
and ability of the cruise industry to perform within the overall vacation market.
Germany’s provisional 2004 cruise figures show a 25% increase in cruise sales over
2003 with 550,000 passengers, double the level observed eight years ago. This
growth is the result of the emergence of a new German brand targeting younger
consumers (AIDA Cruises), pan-European cruising and the deployment of
International brands specifically for the German domestic market. 8
The Passenger Services Association (PSA), the U.K. based cruise marketing group
and Cruise Lines International Association (CLIA), North America’s cruise marketing
body released studies that provide some indication as to the consumer trends of the
industry and more importantly the potential cruiser profile that is critical to the longterm
success of the industry within the vacation market. Much of the detail provided
below is gleaned from these survey reports and other market sources as indicated.
8 Annual Cruise Review 2004 (UK and Europe) PSA.
23

North American consumers
Consumer trends continue to be supportive of further industry growth worldwide.
We highlight several of these below:
• Almost 45-million people have cruised at least once; and of these, nearly 23-
million (51%) have cruised within the past three years.
• In the 2004 Market Profile Summary from CLIA, the most likely number of
cruisers over the next three years is 29-million; and a high potential of 48-
million. 9
• Cruise passengers spent approximately US$1,651 per person on a typical cruise
vacation inclusive of cruise fare and onboard expenses. Cruisers spend nearly
50% more than non-cruising visitors.
• The average cruiser has taken 3.3 cruises. Destination driven cruise passengers
sail more with 8.1 cruises, followed by luxury (6.3), premium (5.0) and
contemporary (3.5).
• The average age of actual and potential cruise consumers continues to increase
(age 48.3 in 1992 vs. 50 in 2004). Household incomes for cruise passengers are
high, averaging US$99,000 in 2004 for North Americans, increasing from
US$58,400 in 1992 and US$79,000 in 2000. As products continue to diversify,
however, cruising (as evidenced by cruise prospects) continues to be considered
by individuals with lower household incomes.
• Cruisers plan their vacations further in advance (4.3 months on average) than
non-cruisers (3.4 months).
• 50% of travelers used cruise line sites to conduct research, but only 5% actually
book online. Hotel and airline sites are the most popular source for research and
booking.
• Cruising is seen by a large majority of passengers as a good way to sample a
geographical area/destination for future vacations. After sampling the geographical
areas/destinations on their recent cruise, more than 75% say they will return for
another type of vacation.
9 Cruise Industry Overview, CLIA, May 2004. This estimate does not factor cruise industry capacity; Estimates are based solely on
consumer intentions. Updated in spring 2005.
24

Table 6: Cruise Demographic Profiles, North Americans
Source: Cruise Industry Overview, CLIA, May 2004 (Updated May 2005)
Category
Representative
Sample
Cruisers
Non-Cruise
Vacationers
Average Age Mean Years 48 50 46
Average Income (1,000’s) US$90 US$99 $86
Gender
Male 49% 50% 50%
Female 51% 50% 50%
Married 82% 83% 81%
Marital Status
Divorced/Sep. 9% 8% 10%
Single 9% 9% 9%
Employment Status
Education
Full-time 63% 58% 67%
Retired 13% 19% 9%
College Grad
or Higher
58% 66% 41%
Post Graduate 18% 24% 12%
According to the 2005 CLIA Market Study Update, Cruisers tend to be older (median
of 47) than average respondents (44), with higher household incomes ($78,000 vs.
$71,000), and higher levels of educational attainment (65% college grad vs. 58%; 24%
post-graduate vs. 18%). Both groups are predominantly married (83% cruisers vs.
82% total). Consistent with their older age, cruisers are more likely to be retired
(19%) than those in the total representative sample (13%).
Cruise embarkation options available in North America
For North American cruise passengers, the largest benefit to having more cruise
embarkation points available is the cost savings that they represent. Convenience in
being able to drive to the port and not having to fly are also benefits to the cruise
passenger. However, trends are re-emerging that indicate that North Americans are
looking to travel outside of the U.S. on cruise vacations. This has already spurred the
niche premium lines such as Silversea and Radisson Cruises to deploy ships back into
Europe, and the larger contemporary brands are now aggressively redeploying
overseas. Table 7 below shows more information on the primary benefits of North
American cruise homeports.
25

Table 7: Cruise Embarkation Benefits, North Americans
Source: Cruise Industry Overview, CLIA, 2005 Update, B&A, 2006
Cruiser Type
Representative
Sample 2004 Cruisers Destination Luxury Premium Contemporary
Cost Saving – Not
having to fly reduces
the overall cost of
your vacation
Convenience – Can
drive to the cruise ship
Convenience –
Reduces need and
hassle of flying to the
port of embarkation
or provides alternative
markets to fly into
Added vacation value –
Money saved on not
needing to fly can be
applied towards
bigger/better cruise
cabin/accommodations
29% 27% 18% 10% 24% 26%
26 27 35 36 30 30
20 20 24 29 25 18
17 16 12 19 11 17
No perceived benefit 8 9 12 7 10 9
Base: Definitely/probably take a cruise vacation or an ocean/sea voyage
For POLA, a focus on the development of regional Mexican Riviera and similar cruise
patterns is the key to success over the mid- to long-term. This may also include
expansion of the repositioning cruises associated with the Alaska summer market
and a greater potential for developing itinerary patterns that area favorable to the
regional cruise consumer base and allow for increased cruise per diems over time.
California is clearly a major cruise source market – and a clear strategy is to continue
influencing this market growth over the mid- to long-term, while also focusing on the
development of the mid-western, southwest and northwest source markets
immediately available to the POLA market basin through direct airlift and drive
programs. Over the long term, European and Asian consumers will likely make
increasing contributions to POLA’s cruise business, but they will still be a minority of
the overall cruise passenger market.
D. Primary cruise regions
Once focused primarily on the Caribbean and Mediterranean cruising regions, cruise
operations are now found around the world. CLIA remains the primary source of
detailed data on deployment by cruise sub-regions, and while not inclusive of all
operators worldwide, this data provides a good overview of each of the primary
26

cruise sub-regions present in the global marketplace. 10 Specific deployment by all
operators within the U.S. West Coast region is discussed in detail in Chapter 3.
Inclusive of all cruise operators, the Caribbean remains the principal location for
cruise capacity placement, followed by the Mediterranean, Alaska, Europe, and
Mexico West (see Figure 7). 11 In total, over twenty different primary cruise subregions
are present within the global marketplace, with many of these consisting of
even smaller deployment characteristics and typical itineraries.
Figure 7: North American capacity placement by region, 2005
Source: CLIA, and B&A, 2006
Alaska
4
5
Mexico West
N. Europe
3
2
Caribbean
1 Mediterranean
For North American lines, the Caribbean received a significant increase in terms of
capacity placement between 1995 and 2004—over 15 million bed-nights—resulting
from delivery and deployment of several of the industry’s new, large vessels (see
Table 8). Capacity growth was also very strong in the Mediterranean, with North
American operators increasing their presence between 1995 and 2004. As
presented deployment by North American operators in the primary sectors of
Mexico West and U.S. West Coast have increased significantly over the period. The
reasons behind this trend are discussed as part of Chapter 3.
10 CLIA data, while one of the best data sets available, is not comprehensive as it largely excludes non-members. Market updates
for 2005 are anticipated in March 2006. However, membership is not exclusively North American and many European-based lines
increasingly choose to join CLIA. Members lines as of July, 2004, include: Carnival Cruise Lines, Celebrity Cruises, Costa Cruises,
Crystal Cruises, Cunard Line, Disney Cruise Line, First European Cruises, Holland America Line, MSC Italian Cruises, Norwegian
Coastal Voyages, Norwegian Cruise Lines, Oceania Cruises, Orient Cruises, Princess Cruises, Radisson Seven Seas Cruise Line,
Royal Caribbean International, Seabourn Cruise Line, Silversea Cruises, Swan Hellenic, Windstar Cruises
11 Operations in seasonal cruising regions usually occur over a six- to eight-month period, with vessels repositioned to another
seasonal or year round cruising region during the off-season. By example, operations in Alaska typically occur from late April
through late September, with vessels transiting the Panama Canal to return to the Caribbean to offer cruise itineraries through the
winter.
27

Region
Table 8: Cruise capacity placement by region, North American Operators
Source: CLIA, and B&A, 2006
Bed-Nights
97 98 99 00 01 02 03 04 05
%
Change
04 to
05
Caribbean 15,986,819 17,117,659 16,666,328 21,510,142 21,833,347 26,741,052 28,999,049 31,210,605 31,450,239 0.77%
Mediterranean 3,286,598 5,092,530 5,898,948 6,277,064 7,546,816 6,497,444 8,153,251 9,704,398 9,734,348 0.31%
Alaska 3,625,946 3,790,816 4,086,620 4,197,332 4,698,538 5,052,907 5,265,159 5,913,967 6,417,134 8.51%
Bahamas 3,115,496 2,891,352 3,060,866 3,200,346 4,698,724 2,876,295 3,305,636 3,656,705 4,397,472 20.26%
Trans Canal 2,817,313 2,612,788 3,036,208 2,573,444 2,396,424 2,092,723 2,783,975 2,930,528 2,718,752 -7.23%
Mexico West 1,887,210 2,421,126 2,529,106 2,680,934 1,166,756 3,386,475 3,390,768 4,827,262 5,759,636 19.31%
N. Europe 2,821,643 3,714,437 3,475,922 3,744,693 4,837,375 6,922,608 7,721,741 7,560,171 5,522,005 -26.96%
Bermuda 1,103,553 1,094,982 1,482,573 988,391 1,269,952 1,226,806 1,476,443 1,324,690 1,329,274 0.35%
Trans Atlantic 711,714 725,040 961,213 1,015,625 1,129,669 1,005,665 1,145,651 1,425,596 1,747,363 22.57%
Hawaii 570,164 745,216 885,268 857,390 1,557,438 1,903,302 1,953,200 2,629,458 2,907,444 10.57%
South Pacific 293,656 369,507 947,382 1,155,217 1,158,004 835,464 1,099,056 683,506 657,382 -3.82%
SE Asia 413,671 157,705 150,107 244,620 429,550 346,196 123,350 20,372 58,120 185.29%
Africa 107,060 291,850 184,373 502,773 401,011 259,962 188,964 17,640 67,624 283.36%
Canada / New
England
492,547 527,530 681,689 1,107,689 1,138,975 1,150,950 1,105,274 1,488,585 1,174,160 -21.12%
Far East 315,498 218,988 188,038 201,582 215,022 360,022 219,358 403,538 644,148 59.63%
Mississippi 345,888 353,510 353,088 347,140 403,956 0 0 0 0 0%
World 440,986 545,242 565,824 414,342 613,046 582,314 375,384 462,934 460,670 -0.49%
S. America 482,506 943,392 657,992 825,670 1,422,755 1,394,808 1,653,535 1,088,569 1,417,357 30.20%
Coastal West 98,538 136,198 65,108 217,518 1,944,752 216,338 376,709 643,792 433,436 -32.67%
Indian Ocean 68,079 90,159 40,572 120,698 227,483 93,708 23,148 10,544 38,440 264.57%
U.S. Coast
East *
n/a 50,648 113,387 1,402,429 80,312 147,422 837,540 60,072 34,056 -43.31%
Other 395,768 350,037 286,065 277,778 411,421 492,750 488,326 1,235,534 211,712 -583.6%
Totals 39,380,653 44,240,712 46,316,677 53,862,817 59,581,326 63,585,211 70,685,517 77,298,466 77,230,956 -0.09%
Notes: * Total included as part of Other prior to 1998.
E. Requirements in selecting homeports and ports-of-call
Cruise line criteria in making deployment decisions and in their selection of
homeports and ports-of-call generally fall into three categories:
• Appeal as a travel and leisure destination;
• Type and quality of cruise tourism infrastructure needed to support vessel
operations and movement of passengers; and,
• A market basis and strategic fit within a greater cruise ship deployment scheme.
In this section, we discuss and assess the first two of these “supply side”
characteristics for cruise destinations.
28

Selling the cruise experience is central to everything a cruise line does. Lines are
focused on development of products for first-time and repeat passengers that deliver
high levels of satisfaction and a vacation experience superior to land-based options.
The cruise ship and itinerary are the primary tools lines used to achieve this goal.
What begins to differentiate cruise lines is how they select these two primary
components to attract clientele and deliver their version of the cruise experience.
Several general strategies used by lines include:
• Development of cruise vessels and congruent products targeted to specific
consumer tastes, lifestyle and income levels;
• Creation of cruise itineraries that take cruise passengers where they want to
travel;
• Deployment of cruise vessels close to cruise consumer groups;
• Development of cruise itineraries that fit within consumer vacation patterns (e.g.,
short-duration weekend getaways, weeklong voyages and multi-week trips); and,
• Inclusion of a cruise homeport and port-of-call destinations that are known
commodities to consumers.
Some lines focus only one or two of these general strategies; others, including most
of the large cruise line consortiums, apply all of these strategies to differentiate their
product offerings.
Destination selection for vessel deployment and itinerary assembly is an essential part
of implementing the strategies described above. Cruise lines and their respective
decision making groups—marketing and sales, marine operations, logistics, and
finance—expend significant effort in evaluating a destination, and congruently, an
itinerary to ensure it meets the various criteria established to differentiate their
product offering and sell desirable and profitable cruise products. 12 A general list of
cruise line decision making groups and their primary focus in the destination selection
process is provided in Figure 8.
12 While we have presented the groups in general terms; in reality and depending upon the size of the cruise line, the groups can
include several departments and decision-makers as part of the overall destination and itinerary selection process.
29

Figure 8: Destination selection: What’s important to the cruise lines?
Source: B&A, 2006
Marketing and Sales
• Consumer awareness and marketability of a
cruise destination
• Access to consumers
• Fit with cruise brand philosophy
• Fit with consumer vacation patterns
• Landside access
• Airlift
• Lodging
• Shore excursions and destination venues
Logistics, Air-Sea and Shore Excursions
Marine Operations
• Marine navigation and access
• Berth, apron and terminal features
• GTA and parking
• Provisioning and Security
• History of operations from the port /
destination
• Terminal charges
• Labor, fuel and other operating costs
• Regulatory issues
• Maritime law
Finance and Legal
Marketing and sales followed by marine operations are the driving forces in cruise
line decision making. For the marketing and sales group, evaluation of a destination
and itineraries’ appeal, consumer access (market infiltration) and fit of the overall
product with the cruise product differentiation strategy are essential tasks.
Marketing and sales teams also endeavor to include marquee destinations that have
name brand recognition or are a jumping-off point for cities and venues of known
value (i.e., the Port of Piraeus for the City of Athens, Greece). The essential concern
of the marine operations group is the actual functionality of a destination and
itinerary in its ability to accommodate their cruise vessels. Can the vessel get into
the harbor and dock at the port? Are the upland facilities capable of accommodating
the needs of the vessel, passengers and crew? Is the region and port safe? These and
other questions are central in marine operations evaluation of a destination and
itinerary.
Cruise lines have different needs for port-of-call and homeport operations, and
accordingly, cruise line decision making groups focus on different attributes for each
type of facility and destination for which it is a part. As such, sales and marketing
teams are highly involved in reviewing a homeport city for its ability to provide close
access to a base of consumers. Similarly, a cruise terminal is a much greater element
of the homeport process; terminals are generally not needed at a port-of-call. The
marine/land operations group will spend time reviewing and evaluating a homeport
destination as to the suitability of its cruise terminal to support vessel and passenger
operations.
30

Cruise lines are also concerned with assembling destinations that are complementary
to one another on an itinerary. Ideally, destinations visited need to be a balance of
shopping, natural areas, cultural and historical attractions among other amenities.
Itineraries also need to balance periods at sea and at port. For the City of Los
Angeles, its strength as a cruise homeport is as much a function of its primary and
secondary tourism offerings as its geographic placement within the region and
amongst an assemblage of cruise ports-of-call that reach along the U.S. West Coast,
Hawaii, Mexico and the Panama Canal.
The entire process of destination and itinerary planning begins from 18 months to
two years before the cruise ship takes on its first passenger. Terrorism incidents,
natural disaster and changing the consumer patterns have forced cruise lines to
become more flexible in their overall deployments. While the traditional itinerary
planning period still remains the general norm, lines can now more easily move cruise
vessels into new cruise regions or within regions to alternative homeports in order
to avoid potential conflicts or tap into higher potential per diems.
Travel and leisure destinations have varying influence on the overall process of
evaluating a destination and itinerary. Basic destination attributes evaluated by the
marketing and sales team—consumer awareness and perception, access to consumer
markets, strategic “fit” within an itinerary or cruise line brand philosophy—are hard
to influence and often subject to externalities that are generally outside of a
destination’s purview.
Destinations have a greater amount of control (influence) on ensuring cruise tourism
infrastructure meet cruise line requirements for ship placement and the operational
fit of a destination within an itinerary pattern. Through improving these attributes
destinations can improve their chances of being included in an itinerary and having
certain types of vessels operate from their port.
31

Chapter
3
The U.S. West Coast Cruise Region
3.1 Section summary
1) While facing challenges over the past five years, the U.S. west Coast region
continues to reflect a long-term positive growth trend with improved prospects
for 2005 observed for all of the region’s primary sectors—Mexican Riviera,
Mexican Baja, Panama Canal, Hawaii and Alaska. Mid- to long-term prospects are
positive. In 2006, 1,201-itineraries with a lower-berth capacity of 2,516,577-
passengers spread across 10 cruise sectors were identified as compared to 2004
with approximately 1,950,000-passengers on 975 sailings in the region. 13
2) Carnival Corporation remains the largest operator in the U.S. West Coast subsectors
with greatest impacts to the POLA – Mexican Riviera and Baja offering
201-sailings with more than 500,000-passengers in 2006. Royal Caribbean
International and Princess Cruises also contribute heavily to the capacity in the
regional sub-sectors directly affecting the POLA, as well as Alaska and Hawaii.
While NCL offers fewer sailings from West Coast ports at present over the
long-term they are likely to diversify into longer-haul Hawaiian and coastal
cruises.
3) Over the near-term, growth prospects in the region are likely strongest for the
Mexican Riviera and Hawaii sectors. While providing indirect impacts, Alaska will
also grow significantly over the mid- to long-term provided homeport berths are
available in the key ports of Seattle and Vancouver. The Panama Canal sector
will see some growth over the mid- to long-term mainly due to the movement of
vessels to and from the region on a seasonal basis.
4) Continued growth in the Mexican Riviera and Mexican Baja sectors is also
predicated on the requirements for additional downstream port-of-call berths to
provide for increased numbers of vessels in ports on a daily basis. Puerto Vallarta
and Cabo San Lucas are constrained at present. There are few alternatives
within the typical 8-day cruise patterns to support growth in the mid-term.
West Coast homeports inclusive of POLA, Long Beach and Port of San Diego
must also develop facilities to support the next generation of cruise vessels to be
introduced into the region (Voyager-class) mid-term, and provide for long-term
planning in anticipation of 5,000 passenger vessels. Increased collaboration
among destinations must continue its growth. Improvements in port capabilities
and cruise tourism infrastructure will undoubtedly make the region more
appealing overall for operators, and thus, should work to expand market
opportunities for all regional destinations.
13 2005 CLIA statistics have not been generated to date. Once completed, we will revise for 2005.
32

3.2 The U.S. West Coast Cruise Region
A. Capacity Deployment Levels
We define the U.S. West Coast Cruise region as covering ports ranging from the
Gulf of Alaska, Hawaii, the states of Washington, Oregon and California, Mexican
Baja Peninsula and the Mexican West Coast. There is a smaller influence on the
region by South America and the South Pacific areas as well in terms of cruise
placement. Based on market share the Port of Los Angeles serves as a primary
homeport for Mexican Baja (50%) and Mexican Riviera (39%) cruise products. In
addition, the POLA is also influenced by the Hawaiian (18%), US West Coast (23%)
and Panama Canal (28%) cruise regions. The World, South Pacific and Alaska also
play a role in the deployment schemes of vessels homeporting at the POLA through
their influence on ship positioning.
In terms of growth the U.S. West Coast region is maturing, especially as far as the
North American-based market is concerned. From the North American cruise
market perspective the region has been one of the mainstays for the past ten years
despite some downturns in growth in the early 2000’s. This is illustrated in Table 9,
where the CLIA’s destination analyses from 1996 to 2004 are used to plot the
growth in this region.
The Mexico West sector is the core of the region and has shown strong growth
through 2004. It is anticipated that these numbers will increase in 2005. In total for
2006 we have identified 1,201 itineraries with a lower-berth capacity of 2,516,577
passengers spread across 10 cruise sectors. Our 2006 analyses identify 238 cruises
in this sector with more than 535,000-passengers and approximately 4,691,950 bednights
based on an average 8.77-day sailing. This activity is somewhat muted by the
fact that the key downstream ports along the Mexican West Coast are berth
constrained. This will be discussed in more detail in section G of this chapter. In
addition, there are still strong passenger levels in the Mexican Baja 3 and 4-day
market sector with 207-cruises and more than 512,000-cruise passengers. While not
directly related to the West Coast Region, the Alaska cruise region does influence
traffic along the West Coast influencing 44 Repositioning sailings of which the Port of
Los Angeles captures 22.5% of the passenger traffic generated. To a great degree
many of the Panama Canal itineraries identified in the study are also directed related
to cruise vessel repositioning to and from the Alaska cruise sector. The Hawaii
sector also plays an important role in the potential expansion of the U.S. West Coast
regional cruise market due to its anticipated growth.
33

Table 9: Cruise Capacity Placement - U.S. West Coast, North American Operators
Source: CLIA and B&A, 2006
Region
Bed-Nights
%
Change
04 to
05
97 98 99 00 01 02 03 04 05
Alaska 3,625,946 3,790,816 4,086,620 4,197,332 4,698,538 5,052,907 5,265,159 5,913,967 6,417,134 8.51%
Trans Canal 2,817,313 2,612,788 3,036,208 2,573,444 2,396,424 2,092,723 2,783,975 2,930,528 2,718,752 -7.23%
Mexico West 1,887,210 2,421,126 2,529,106 2,680,934 1,166,756 3,386,475 3,390,768 4,827,262 5,759,636 19.31%
Hawaii 570,164 745,216 885,268 857,390 1,557,438 1,903,302 1,953,200 2,629,458 2,907,444 10.57%
South Pacific 293,656 369,507 947,382 1,155,217 1,158,004 835,464 1,099,056 683,506 657,382 -3.82%
World 440,986 545,242 565,824 414,342 613,046 582,314 375,384 462,934 460,670 -0.49%
Coastal West 98,538 136,198 65,108 217,518 1,944,752 216,338 376,709 643,792 433,436 -32.67%
Overall, the U.S. West Coast region (inclusive of Alaska) accounted for 23.6% of
North American total capacity in 2005, a 2% increase in capacity over 2004 figures. In
2000, this percentage stood at a regional level of 17.4%. Overall, for 2005 it is
projected for the market to drop a total of -0.09%. Thus it is reasonable to conclude
that from a CLIA operator perspective, the U.S. West Coast region has benefited
greatly from the expansion of the cruise market and the diversification of itineraries
away from the traditional cruising-grounds of the Caribbean, Mediterranean and even
Alaska. Why? Cruise industry interviews and others sources suggest that, at present,
the U.S. West Coast market are easily accessible cruise sectors from the core North
American cruise passenger base. Furthermore, they are also highly favorable in
terms of operational costs and provide a very solid platform from which to operate
vessels targeted to North Americans due to the airlift capability, drive-market
influence and overall passenger comfort levels. However, overall per diems for those
cruise sectors directly influencing future deployments for the POLA (Mexico West
and Mexican Baja) are not at the levels anticipated. By example, the average Alaska
per diem is $271.94 on an 8-day sailing, while the average for a comparable
accommodation on an 8-day Mexico West sailing was $144.64. 14 The 4-day Mexican
Baja sailings are averaging a $109.49 per diem.
14 Per diems based on internet cruise advertised pricing for an outside deluxe passenger cabin with balcony.
34

Figure 9: U.S. West Coast Region Cruise Per Diems by Sector, 2006
Source: B&A, 2006
$350
$300
$250
$200
$150
$100
$271.94
$288.85
$252.37
$220.11
$214.65
$187.00
$157.75
$144.64
$109.49
$205.20
$50
$0
$0.00
Alaska
Hawaii
Mexican Riviera
Repositioning
Panama Canal
Mexican Baja
World
Dollars Spent Per Day
South Pacific
Pacific Northwest
Charter
West Coast Avg.
Despite the lower per diem performance the region has continued to grow due to
the market volume and necessity to place cruise vessels into ports servicing the key
North American cruise demographics. North American cruise operators have been
successful in developing a clear understanding of how to market and develop cruise
products that appeal to the tastes of specific North American consumer groups, as
illustrated by the continued expansion of onboard products and services, sales &
marketing programs, and shoreside programming
North American operators suggest that there are limited opportunities present in
the region within the mid-term as their focus is likely to remain on the traditional
cruising grounds of the Caribbean and expansion of the European cruise regions.
Likely, most of the growth in the U.S. West Coast region will occur through vessel
expansion, not necessarily through the addition of more ships to the cruise sectors in
the region. By example, Princess Cruises intends in time to continue its pattern of
growing the market through the replacement of the 1,950-passenger Island-class
ships with the larger 2,600-passenger Grand-class vessels. This concept will allow
for continued ship deployments at similar levels, while increasing passenger counts in
the region to reflect demand. The tightening of industry supply, with cruise lines
having far fewer vessels available to deploy in peak seasons has further emphasized
this cruise line strategy. However, it is of interest to note that due to the success of
the Alaskan and Hawaiian markets there is a great deal of influence placed on the
development of the Mexican cruise sector as to avoid the unnecessary movement of
cruise vessels out of the region during the winter months.
35

Figure 10: U.S. West Coast Region Cruises by Sector, 2006
Source: B&A, 2006
600
500
480
400
Cruises
300
200
164
238
207
100
0
44
40
5
3
14
6
Mexican Baja
Panama Canal
Repositioning
Mexican Riviera
Pacific Northwest
South Pacific
Alaska
Hawaii
World
Charter
B. Cruise Operators in the U.S. West Coast Region
Table 10 shows scheduled deployment by operator in the U.S. West Coast region
for the 2006 season, excluding one-night cruises to nowhere. As expected North
American cruise operators dominate the cruise region with the “Big Three” all very
active in the market due to the vast population in close proximity to the homeports
and the exceptional passenger demographics in the region. Of the North American
operators, Carnival Cruise Lines is currently the market leader, with Royal
Caribbean International, Princess Cruises and NCL all making significant
contributions. Holland America Line and Celebrity Cruises also figure into the overall
cruise region mix with more than 500,000-passengers and some 330 cruises. From
the European perspective, P&O Cruises, Cunard, Delphin, Saga and Hapag Lloyd are
also in the region, but contribute very little overall. North American Premium cruise
lines also participate in the region in 2006. Examples are Silversea Cruises, Crystal
Cruises, Oceania, Radisson Seven Seas and Residensea.
36

Table 10: Total Operator Capacity by Brand in U.S. West Coast Region, 2006
Source: B&A, 2006
Cruise Line Brand Passengers Sailings / Itineraries
Carnival Cruise Lines 514,740 201
Celebrity Cruises 229,932 105
Crystal Cruises 6,200 6
Cunard Cruise Line 14,036 6
Delphin Cruises 700 1
Hapag-Lloyd 800 2
Holland America 355,584 228
NCL 453,228 204
Oceania Cruises 1,368 2
P&O Cruises 1,874 1
Princess Cruises 443,390 207
Radisson Seven Seas 18,426 24
Residensea 200 1
Royal Caribbean International 470,850 200
Saga Cruises 665 1
Silversea Cruises 4,584 12
TOTAL 2,516,577 1,201
Table 11: Total Operator Capacity by “Big Three” in U.S. West Coast Region, 2006
Source: B&A, 2006
BIG THREE PARTICIPATION Passengers Itineraries
Carnival Corporation 1,329,624 643
Royal Caribbean Cruises, Ltd. 700,782 305
Norwegian Cruise Line 453,228 204
As presented in Tables 10 and 11 and bearing in mind the qualifications expressed in
relation to the Alaska and Hawaii cruise sectors, the anticipated volume of
conventional cruise passengers in the region is anticipated to be 2,516,577 individuals
in 2006.
37

Table 12: Estimate of Operator Capacity in U.S. West Coast Sub-Regions, 2006
Source: B&A, 2006
Operator Ship Operations Homeports Sector Cruises Pax Max Total Pax
Carnival
Cruise Lines Carnival Spirit International
EN, HO,
VAN, SD H, A, M 44 2680 117920
Carnival Pride International LB M 52 2680 139360
Carnival
Paradise International LB B 105 2452 257460
Celebrity
Cruises Infinity International SF, VAN, LA
P, M, A, PN,
R, H 24 2449 58776
Mercury International SD, EN, SEA,
M, R, A, PN,
P 47 1870 87890
Summit International LA, VAN H, R, A 34 2449 83266
Crystal
Cruises
Crystal
Serenity International LA M, R 4 1,080 4,320
Crystal
Symphony International LA P, M 2 940 1,880
Cunard
Cruise Line Queen Mary II International LA SP, B, H, W 4 2,620 10,480
Delphin
Cruises
Queen
Elizabeth II International LA P, R 2 1,778 3,556
Delphin
Renaissance International H W 1 700 700
Hapag-Lloyd
Cruises C. Columbus International LA, H H 2 400 800
Holland
America Zaandam International
NCL
Oosterdam
International
SD, VAN,
SEA
P, R, M, C, A,
H 33 1,440 47,520
SD, VAN,
SEA M, R, PN, A 47 1,848 86,856
Ryndam International SD, VAN P, R, PN, A 23 1,266 29,118
LA, SEA,
Westerdam International VAN P, R, A 25 1,848 46,200
Volendam International
LA, VAN,
SEA, SD P, R, H, A 26 1,440 37,440
Zuiderdam International SF, VAN P, R, A 24 1,848 44,352
Veendam International
SD, VAN,
SEA P, R, PN, A 24 1,266 30,384
Statendam International VAN A 19 1,266 24,054
Amsterdam International SD H, P 7 1,380 9,660
Norwegian
Star
International
LA, VAN,
SEA, SF M, R, A 46 2,240 103,040
Norwegian
Wind International HO, SF, VAN H, R, A 39 1,748 68,172
Norwegian
Sun International SF, VAN, SEA P, R, A 24 2,359 56,616
Pride of
America International HO H 49 2,300 112,700
Pride of Aloha International HO H 46 2,450 112,700
Oceania
Cruises Regatta International LA P 2 684 1,368
P&O Cruises Aurora International SF W 1 1,874 1,874
Princess
M, R, PN, A,
Cruises Dawn Princess International SF, VAN, SEA P 44 1,950 85,800
Radisson
Cruises
Sun Princess International SEA P, A 21 1,950 40,950
Diamond
Princess International SF, VAN, LA SP, A, R, M 34 2,600 88,400
Island Princess International LA, VAN H, R, A 36 1,950 70,200
Coral Princess International VAN P, A 20 1,950 39,000
Sapphire
Princess International LA, VAN M, A, R 36 2,600 93,600
Regal Princess International SF, LA P, A 16 1,590 25,440
Seven Seas
Mariner International LA, VAN, SF A, R, P, H 22 769 16,918
Seven Seas
Voyager International LA P, SP 2 754 1,508
Residensea The World International EN W 1 200 200
38

Table 12: Estimate of Operator Capacity in U.S. West Coast Sub-Regions, 2006
(Continued)
Source: B&A, 2006
Operator Ship Operations Homeports Sector Cruises Pax Max Total Pax
Royal
Caribbean
Intl.
Monarch of
the Seas International B LA 101 2,500 252,500
Radiance of
the Seas International SD, VAN, LA P, H, R, A 22 2,500 55,000
Serenade of
the Seas International
SD, VAN,
HO, EN
P, R, A, H,
M 24 2,500 60,000
Vision of the
Seas
International
LA, VAN,
SEA M, B, R, A 53 1,950 103,350
Saga Cruises Saga Ruby International S W 1 665 665
Silversea
Cruise Line Silver Shadow International VAN, SF, LA A, R, M, P 12 382 4,584
Totals 1,201 2,516,577
C. Nationality of Passengers in the Region
The data contained in Table 12 is used in to make a rough estimation of the
nationality make-up of passengers likely to be visiting the region on international
vessels during 2006. Where operators have not given guidance, it has generally been
assumed that U.S.-based vessels carry 90% U.S. passengers and 10% other
nationalities. Those vessels with primary European or other non-North American
markets are also indicated above, and it is anticipated that those vessels carry more
than 97% of their main market base and 3% North American passengers or other.
The three key source markets are North America, the UK and Germany, in
accordance with the three principal cruise passenger demographic markets
worldwide. Based on these values we estimate that of the approximately 2.516-
million passengers in the cruise region in 2006 – North American 2,249,194 and
International 267,383. The U.S. West Coast Region and Los Angeles in particular is
unique, such as New York City on the East Coast in that it has a high level of
International tourism supported by an extensive infrastructure, abundant airlift and
other accommodations and programs that meet the needs of visitors worldwide.
The cruise industry benefits from this unique drawing power in local cruise sales and
longer-term cruise passenger development.
D. Principal U.S. West Coast Homeports
The principal U.S. West Coast homeports are set out in Table 13. This table
considers only conventional cruise operations, and not short one-night cruises. The
table indicates that whereas the POLA and Port of Vancouver clearly dominate the
West Coast market. However, significant impacts to the POLA cruise operations
have been made by the movement of the Carnival Cruise Line’s vessels to the Port of
Long Beach. 15 The Port of San Diego, Seattle and San Francisco have all increased
their respective passenger volumes over the past four years as the cruise lines have
moved to diversify their product offerings. Ensenada is mainly a port-of-call for
vessels sailing from the POLA, but is still used as a homeport for some long-haul
Hawaii sailings due to the PSA requirements. Both Seattle and Vancouver are
complimentary homeports to the POLA as they each mainly serve the needs of the
15 The Port of Long Beach Cruise Facility is a Carnival Corporation project and operation. The facility can handle one ship per day.
While open to all of the corporate brands, the facility mainly caters to the Carnival Cruise Line brand only.
39

Alaska cruise sub-sector and generate repositioning sailings along the U.S. West
Coast and Hawaii. San Francisco is a niche homeport, generally servicing smaller
vessels on longer sailings to both Alaska and the Mexican Riviera. Along with the
Carnival Port of Long Beach operation, the Port of San Diego is the primary
homeport competitor for the POLA. While San Diego provides a smaller local drive
market opportunity, it still provides a strong tourism draw, airlift and hotel
accommodations. In addition, due to the speeds & distances required in the 8-day
Mexican Riviera itinerary the 90-nautical mile difference between the POLA and San
Diego is also a strategic advantage to the Port of San Diego.
Table 13: Cruise Traffic at Principal West Coast Base Ports, 2002 and 2006
Source: B&A, 2006
2002 2006
Homeport Cruises Passengers Cruises Passengers †
% in Passenger
Levels
Port of Los Angeles 257 1,075,102 258 1,150,548 +3.7%
Port of Long Beach 0 0 157 793,640 +793%
Port of San Diego 117 310,000 162 538,489 +42%
Port of San Francisco 52 83,538 78 256,606 +167%
Port of Ensenada, MX 164 319,019 154 369,181 +13.5%
Port of Seattle 79 250,000 200 757,088 +302%
Port of Vancouver, BC 342 1,130,000 351 1,322,706 +14.6%
Total 1,011 3,167,659 1,360 5,188,258 +38.9%
E. U.S. West Coast Cruise Sub-Regions and Itinerary Patterns
There are several cruise sectors within the region that have direct impacts on the
Port of Los Angeles. In this section we have identified those significant cruise subregions
and examine each below. Cruise sub-regions and itinerary patterns include:
• Alaska;
• Hawaii;
• Mexican Riviera;
• Repositioning;
• Panama Canal;
• Mexican Baja;
• World;
• South Pacific;
• Pacific Northwest; and
• Charters
In the section that follows, we discuss each in terms of the characteristics of vessel
deployment, passenger demographics and volumes, leading regional operators and
itinerary composition, as well as present the relevance to each for present and future
40

cruise operations to the POLA. To some degree, each of these groupings are
considered target markets for the POLA in terms of being able to generate
homeport and port-of-call operations. Table 14 provides an outline as to how each
of the sub-regions identified impacts the operations of the U.S. West Coast Region.
Not all have direct impacts and are discussed mainly due to the cruise ship
movements they precipitate through the region that impact the POLA. This is the
case specifically for the Alaska and Pacific Northwest cruise sub-regions.
Table 14: Cruise Traffic Impacts from U.S. West Coast Sub-Regions, 2006
Source: B&A, 2006
Cruise
Sub-Sector
Sailings
Passengers
Average
Number
of Days
Average
Voyage
Price
Average
Per Diem
Pax Per
Sailing
Alaska 480 909,415 8.09 $2,200.52 $271.94 1,895
Hawaii 164 359,041 10.67 $2,349.20 $220.11 2,189
Mexican Riviera 238 535,995 8.77 $1,269.10 $144.64 2,252
Repositioning 44 81,855 6.59 $1,232.34 $187.00 1,860
Panama Canal 40 68,873 16.64 $3,571.82 $214.65 1,722
Mexican Baja 207 512,078 4.49 $491.37 $109.49 2,474
World 5 6,059 24.00 $6,932.33 $288.85 1,212
South Pacific 3 5,974 22.67 $5,720.33 $252.37 1,991
Pacific Northwest 14 25,689 4.00 $631.00 $157.75 1,835
Charter 6 11,598 8.00 N/A N/A 1,933
West Coast Avg. 1,201 2,516,577 11.39 $2,774.69 $205.20 1,936
As can be identified from above the Alaska cruise area is the dominant sector in the
region. However, there is little direct impact on the POLA. The Mexican Riviera
and Mexican Baja sectors provide the greatest direct impacts on the region, and
specifically the POLA overall. Hawaii is also a sub-sector that has seen tremendous
growth over the past few years particularly with the emphasis placed on U.S. flagged
ships by NCL. This sub-sector provides a long-haul market from the major West
Coast homeports inclusive of the POLA. There are two other significant factors in
addressing the cruise sub-sector data above. First, the per diems associated with the
major sectors of the Mexican Riviera and Baja are the lowest overall. Second, these
are also the same sub-sectors that support the largest vessels sailing in the U.S. West
Coast Region at 2,252-passengers per sailing (Mexican Riviera) and 2,474-passengers
per sailing (Mexican Baja). These are significant in that the cruise industry is primarily
driven by deploying ships where they can garner the highest per diems. However,
the capacity of the vessels deployed off-sets this factor in the region to some extent
due to the volume, potential for onboard revenue production and market presence
in the region year-over-year, which does have a high value for growing and
maintaining a cruise passenger base in the region.
41

Figure 11: U.S. West Coast Sub-Sectors Average Cruise Duration, 2006
Source: B&A, 2006
30.00
25.00
24.00
22.67
20.00
16.64
15.00
10.00
5.00
8.09
10.67
8.77
6.59
4.49
4.00
8.00
11.39
0.00
Alaska
Hawaii
Mexican Riviera
Repositioning
Panama Canal
Mexican Baja
World
South Pacific
Days
Pacific Northwest
Charter
West Coast Avg.
Figure 11 shows the average cruise duration of the region’s sub-sectors. The POLA
serves as the major homeport for both the Mexican Riviera (8.77-days) and Mexican
Baja (4.49-days) sub-sectors. This provides the POLA with a high level of berth
utilization within these sectors and a good distribution pattern as the Baja cruises
typically sail on Monday and Friday, while the Mexican Riviera cruises depart on
weekend days. This will be discussed further within the Berth Demand Analysis.
Alaska - Inside Passage (round-trip cruise) and Open-jaw Cruises (one-way)
Overview
The Alaska cruise sub-sector is the largest market on the West Coast with more
than 900,000-annual passengers and 480 sailings. The Inside Passage cruise itinerary
is the primary staple of the Southeast Alaska cruise program for the major North
American Cruise Lines operating in the region. This is a typical 8-day cruise pattern
that has historically departed from the homeport of Vancouver and fed the Alaskan
region. The Port of Seattle provides an excellent homeport option for cruise lines
sailing the Inside Passage to Alaska with large fast ships. More than any other pattern
this has become the standard marketing itinerary and has the most consumer
recognition. The Open-Jaw (one-way cruise) cruise within this sector all originate at
present from the homeports of Vancouver in the south and Seward in the north of
the region for the large North American cruise ships. Due to geographic location,
this itinerary provides for limited options in terms of variation on the standard
42

duration and ports in Southeast Alaska. Small ship adventure cruises on Cruise
West, Lindblad, and Society Expeditions depart from Seattle to reposition into
Alaska. The major cruise lines in this market are Princess Cruises, Holland America,
RCI and Celebrity Cruises. Each of these cruise lines also owns, operates and
supports infrastructure that offers pre- and post-interior packages from Seward as
well as Canadian Rocky Mountain trips from Vancouver. The POLA does capture
one Alaska sailing in 2006.
Cruises in this sector range from 8- to 12-days in length and typically run on a
seasonal basis for North American operators. The seasonal nature of cruise
operations (May through September) is due in great part to weather and other
marketable itineraries available for these operators throughout the world—most
specifically the Caribbean—during the winter months.
Impact / Relevance to the Port of Los Angeles
While the Alaska cruise sub-sector does not provide any direct homeport
opportunities for the POLA, due to its cruise volume generation it does provide
increased traffic in the region overall and provides for new opportunities to grow
other sub-sectors within the region. By example, the Vision of the Seas is deployed to
the West Coast Region year-round and operates in the Mexican Riviera sub-sector
in the months of October through April and within the Alaska sub-sector from May
through September. Other cruise vessels follow similar patterns. Thus, Alaska
provides the impetus for continued deployment within the region supported by the
Mexican Riviera sub-sector.
Due to the strategic nature of Alaska as a primary North American summer cruise
destination, the linkages to the cruise lines and growth opportunities envisioned for
the region over the mid- to long-term it is possible to see almost a doubling in
throughput over the 10- to 15-years. This will drive additional growth in other
regional sub-sectors as well. Linking this cruise sub-sector the POLA is important in
generating new growth opportunities for the region overall and specifically for the
POLA. The movement of vessels along the U.S. West Coast (passing through the
POLA) en route to and from this region offers solid growth potential and will likely
lead to additional capacity placement in the region through vessel size and new vessel
deployments.
43

Table 15: Sample Patterns of Alaska Cruise Itineraries 2006
Source: B&A, 2006
Operator
Carnival
Ship
Pax
(Lower
Berths)
Length
(days)
Carnival
Spirit 2680 8
Celebrity
Cruises Infinity 2449 13
Celebrity
Cruises Summit 2449 8
Celebrity
Cruises Summit 2449 8
Holland
America Zaandam 1440 8
Holland
America Ryndam 1266 8
Holland
America Ryndam 1266 8
Norwegian
NCL Star 2240 8
Norwegian
NCL Wind 1748 8
Norwegian
NCL Sun 2359 8
Diamond
Princess Princess 2600 8
Diamond
Princess Princess 2600 8
Sapphire
Princess Princess 2600 8
Sapphire
Princess Princess 2600 8
Regal
Princess Princess 1590 11
Season
Number
of
Cruises
Baseport
May -
Sept. 19 Vancouver, BC
May -
Sept. 2
San Francisco,
CA
May -
Sept. 8 Vancouver, BC
May -
Sept. 8 Seward, AK
May -
Sept. 20 Seattle, WA
May -
Sept. 8 Vancouver, BC
May -
Sept. 8 Seward, AK
May -
Sept. 19 Seattle, WA
May -
Sept. 21 Vancouver, BC
May -
Sept. 21 Seattle, WA
May -
Sept. 8 Vancouver, BC
May -
Sept. 8 Whittier, AK
May -
Sept. 8 Vancouver, BC
May -
Sept. 8 Whittier, AK
May -
San Francisco,
Sept. 12 CA
Sample Itinerary
Vancouver; Juneau; Skagway;
Ketchikan; Vancouver
San Francisco; Vancouver; Icy
Strait Point; Skagway; Juneau;
Ketchikan; Victoria; S.F.
Vancouver; Juneau, Skagway;
Sitka, Icy Strait Point; Seward
Seward; Skagway; Juneau; Icy
Strait Point; Ketchikan;
Vancouver
Seattle; Juneau; Sitka;
Ketchikan; Victoria
Vancouver; Juneau; Skagway;
Ketchikan
Seward; Haines; Juneau;
Ketchikan; Vancouver
Seattle; Juneau; Skagway;
Ketchikan; Victoria
Vancouver; Ketchikan;
Juneau; Skagway
Seattle; Ketchikan; Juneau;
Skagway; Prince Rupert
Whittier; Skagway; Juneau;
Ketchikan; Vancouver
Whittier; Skagway; Juneau;
Ketchikan; Vancouver
Vancouver; Ketchikan;
Juneau; Skagway; Whittier
Whittier; Skagway; Juneau;
Ketchikan; Vancouver
San Francisco; Ketchikan;
Juneau; Skagway; Victoria
Hawaii
Overview
Cruise itineraries within this sector originate from homeports in Hawaii (Honolulu),
the U.S. (Vancouver and San Diego), and Ensenada and provide the opportunity to
explore the islands of Hawaii. Due to the Passenger Services Act (PSA) foreignflagged
cruise ships cannot sail directly to/from/within Hawaii without calling or
homeporting in a far-foreign port. Most of the cruises originating in Hawaii are now
controlled by NCL as their fleet sailing within the Hawaiian Islands are U.S. flagged
allowing for inter-island cruising. Since 2001 Hawaii has more tripled its passenger
bed-nights from 857,000 to 2.6-million primarily as a result of NCL’s Pride of America
and Pride of Aloha sailing year-round in the sub-sector within Hawaii. Honolulu serves
as the core homeport in the sub-sector with San Diego and POLA contributing to
the longer cruise patterns. All of the major cruise lines offer Hawaiian sailings.
Challenges for Hawaii have been the PSA, cruise homeport infrastructure
considerations, shore excursion product needs, and an on-going political debate
about the general impact of the industry on Hawaiian tourism. The Hawaii State
DOT has recently issued an RFQ (Request for Qualifications) for a Port Master Plan
Study that does have cruise included as an element.
Hawaii is also used as a repositioning cruise in conjunction with the Alaska cruise
season due its potential for increased per diems over potential U.S. West Coast
itineraries. Whether a regular Hawaii cruise departing from a U.S. West Coast port
44

or repositioning sailing each requires extensive sea time, (approximately 5-days), to
complete the transit to/from Hawaii. This does provide a limiting factor on the
number of sailings a cruise operator will offer in this sector due to operational costs
associated with the long transit and a weakened onboard revenue stream due to an
abundance of sea days.
Impact / Relevance to the Port of Los Angeles
From a strategic standpoint, the Port of Los Angeles is in a good position to continue
as a homeport for North American cruise vessels offering Hawaiian sailings. The
estimated cruising distance to the Hawaiian ports within these itinerary patterns from
West Coast ports does present a substantial marketing / operational issue for cruise
lines. However, the overall demand for the sailings is good and expansion is
anticipated. There will be an effort to expand the Hawaiian sub-sector primarily
through increased sailings from the U.S. West Coast over the mid- to long-term.
Table 16: Sample patterns of Hawaiian cruise itineraries 2006
Source: B&A, 2006
Operator
Carnival
Cruise Lines
Celebrity
Cruises
Celebrity
Cruises
Cunard Cruise
Line
Hapag-Lloyd
Holland
America
Holland
America
Holland
America
NCL
NCL
NCL
Princess
Royal
Caribbean
Royal
Caribbean
Ship
Carnival
Spirit
Pax
(Lower
Berths)
Length
(days)
Season
Number
of
Cruises
Baseport
2680 12 Spring 1 Honolulu, HI
Infinity 2449 15 Spring 1 Los Angeles, CA
Summit 2449 16 Spring 13 Los Angeles, CA
Queen
Mary II
MV
Columbus
2620 12 Winter 1 Los Angeles, CA
400 16 Winter 2 Honolulu, Hawaii
Zaandam 1440 16 Winter 4 San Diego, CA
Volendam 1440 19 Spring 1 Vancouver, BC
Amsterdam 1380 16 Winter 6 San Diego, CA
Norwegian
Wind
Pride of
America
Pride of
Aloha
Island
Princess
1748 12
2300 8
2450 8
1950 16
Spring /
Winter
Yearround
Yearround
Spring /
Winter
17 Honolulu, HI
49 Honolulu, HI
46 Honolulu, HI
15 Los Angeles, CA
Serenade 2500 12 Fall 1 Honolulu, HI
Serenade 2500 12 Fall 1 Ensenada, MX
Sample Itinerary
Ensenada; Hilo; Maui (Kahului);
Maui (Lahaina); Kona; Kauai
(Nawiliwili); Honolulu
L.A.; Nawilliwili; Honolulu; Hilo;
Kailua Kona; Lahaina;
Ensenada; L.A.
L.A.; Lahaina; Nawilliwili; Napali
Coast; Hilo; Honolulu; Kailua
Kona; Ensenada; L.A.
L.A.; Mount Maunganui NZ;
Honolulu; Kailua Kona; L.A.
Acapulco; Zihuatanejo; Cabo
San Lucas; Los Angeles;
Lahaina; Nawiliwili; Hilo;
Honolulu.
San Diego; Hilo; Honolulu;
Kona; Maui; Ensenada; San
Diego
Seattle; Hilo; Kona; Hnonolulu;
Kauai; Maui; Vancouver
San Diego; Kona; Honolulu;
Nawiliwili; Hilo; Ensenada; San
Diego
Honolulu; Hilo; Lahaina;
Nawilliwili; Fanning Island; Kona
Honolulu; Maui; Hilo; Kona;
Kauai
Honolulu; Kauai; Hilo; Maui;
Kona; Maui
Los Angeles; Kona; Honolulu;
Kauai; Maui; Hilo; Ensenada;
Los Angeles
Vancouver; Kona; Hilo; Maui;
Honolulu
Honolulu; Kauai; Maui; Hilo;
Kona; Ensenada
45

Mexican Riviera
Overview
This is the largest sub-sector along the U.S. West Coast Region in 2006 with 238
sailings and more than 535,000-passengers. Cruise operations generally are
originating from POLA or Port of San Diego and, to a lesser extent, San Francisco.
Carnival offers a year-round 8-day program from the Port of Long Beach on the
Carnival Pride. Cruises in this sector range from 5- to 10-nights in length with an
average of 8.77-days and typically run—depending on the cruise operator—on a
seasonal basis from October through May. The typical Mexican ports used are Cabo
San Lucas, Mazatlan and Puerto Vallarta. Additional ports in the Sea of Cortez, such
as La Paz are still being developed. Other ports included are Acapulco, Huatulco and
Zihuatanejo / Ixtapa on the longer sailings. The seasonal nature of most North
American cruise operators (October through May) is due in great part to other
marketable itineraries available for these operators throughout the world during the
summer months – such as the Alaska and Mediterranean cruise sectors.
In 2002 there were 118 Mexican Riviera sailings with 231,860-passengers. San Diego
was homeport for 60 cruises and the Port of Los Angeles had 53 cruises. In 2006
POLA has 93 sailings. In the past four years this sector has more than doubled in
capacity. While all of the major cruise operators are present in the market, the
contemporary brands tend to use POLA, while the premium brands are utilizing the
Ports of San Diego and San Francisco facilities. This is likely due to vessel capacity,
market concentration and itinerary length. By example, Celebrity Cruises Mercury
homeports from San Diego, while Royal Caribbean International’s Vision of the Seas is
in Los Angeles. Princess Cruises is also actively involved in the Mexican Riviera
market and offers this sub-sector on its two largest 2,600-passenger ships, while
deploying the smaller premium model Regal Princess to the Port of San Francisco.
Smaller niche operators tend to move their ships frequently to provide their
consumer market with a variety of itineraries and ports throughout the year. We do
not envision small operators to begin standard Mexican Riviera patterns.
In 2001 the Mexican Riviera saw a substantial decline in total capacity due in part to
product perception in the Mexican ports-of-call on behalf of the cruise line and
consumer, but also a movement of cruise vessels into the Caribbean and other
competing markets during the traditional Mexican Riviera cruise season. New shore
excursion products and enhanced shoreside services have been able to assist the
sector in growing since 2001. However, there is still a need to expand the Mexican
port-of-call berthing infrastructure to support future growth in the sector. Based
on cruise line feedback and our analysis there is an artificial cap to the growth due to
berthing requirements specifically in Puerto Vallarta and Cabo San Lucas. While
Puerto Vallarta has a master plan in place inclusive of cruise expansion it appears they
are physically limited to the overall vessel size, thus allowing for a maximum of two
panamax ships at berth daily. Cabo San Lucas is still investigating a possible pier
facility, but it appears unlikely this will occur in the short- to mid-term.
46

Impact / Relevance on the Port of Los Angeles
POLA is in a strong position to continue a strong bid for growth in homeporting in
this sub-sector – without acknowledging potential capacity issues at the POLA on
key weekend homeport days. Given the positive destination characteristics of Los
Angles such as airlift, hotel, destination image and proximity to numerous tourism
locations there is room for potential growth. Still there is likely cautious growth in
this sector as cruise lines look to position new vessels into those market sectors
offering the highest per diems. Long-term, we also envision a potential opportunity
with Disney Cruise Line. They had a very successful 2005 cruise season according to
key Disney representatives. Until a new ship is delivered it is unlikely they will
develop along the U.S. west Coast in conjunction with the Disneyland theme park.
Table 17: Sample patterns of Mexican Cruise itineraries 2006
Source: B&A, 2006
Operator
Carnival
Cruise
Lines
Carnival
Cruise
Lines
Celebrity
Cruises
Celebrity
Cruises
Celebrity
Cruises
Crystal
Cruises
Crystal
Cruises
Crystal
Cruises
Crystal
Cruises
Holland
America
Holland
America
Holland
America
NCL
NCL
Princess
Princess
Princess
Royal
Caribbean
Royal
Caribbean
Royal
Caribbean
Silversea
Cruises
Ship
Pax
(Lower
Berths)
Length
(days)
Season
47
Number
of
Cruises
Baseport
Carnival Spirit 2680 8 Spring/Fall 20 San Diego, CA
Carnival Pride 2680 8
Year
round
52 Long Beach
Mercury 1870 11 Spring/Fall 8 San Diego, CA
Mercury 1870 12 Spring/Fall 9 San Diego, CA
Mercury 1870 8 Spring/Fall 1 San Diego, CA
Crystal
Serenity
Crystal
Serenity
Crystal
Serenity
Crystal
Symphony
1080 15 Spring/Fall 1
1080 7 Spring/Fall 1
1080 8 Spring/Fall 1
940 15 Spring/Fall 1
Los Angeles,
CA
Los Angeles,
CA
Los Angeles,
CA
Los Angeles,
CA
Zaandam 1440 11 Spring/Fall 3 San Diego, CA
Oosterdam 1848 9 Spring/Fall 1 San Diego, CA
Oosterdam 1848 8 Spring/Fall 26 San Diego, CA
Norwegian
Star
Norwegian
Star
Dawn
Princess
Island
Princess
Sapphire
Princess
2240 9 Spring/Fall 22
2240 10 Spring/Fall 1
1950 11 Spring/Fall 26
1950 7 Spring/Fall 1
2600 8 Spring/Fall 18
Los Angeles,
CA
Los Angeles,
CA
San Francisco,
CA
Los Angeles,
CA
Los Angeles,
CA
Serenade 2500 6 Spring/Fall 1 San Diego, CA
Vision of the
Seas
Vision of the
Seas
1950 11 Spring/Fall 1
1950 8 Spring/Fall 31
Silver Shadow 382 10 Spring/Fall 1
Los Angeles,
CA
Los Angeles,
CA
Los Angeles,
CA
Sample Itinerary
San Diego; Acapulco;
Zihuatanejo/Ixtapa; Manzanillo;
San Diego
Long Beach; Puerto Vallarta;
Cabo San Lucas; Long Beach
San Diego; Catalina; Cabo San
Lucas; Puerto Vallarta; Acapulco;
Ixtapa; San Diego
S.D.; Cabo San Lucas; Mazatlan;
Puerto Vallarta; Acapulco; Ixtapa;
Manzanillo; S.D.
San Diego; Cabo San Lucas;
Mazatlan; Puerto Vallarta; San
Diego
L.A.; San Diego; Cabo; Acapulco;
Ixtapa; Puerto Vallarta; Mazatlan;
La Paz; S.D.; L.A.
L.A.; Cabo; Puerto Vallarta; L.A.
L.A.; Cabo; Mazatlan; Puerto
Vallarta; L.A.
L.A.; San Diego; Cabo; Acapulco;
Ixtapa; Puerto Vallarta; Mazatlan;
La Paz; S.D.; L.A.
San Diego; Puerto Vallarta;
Mazatlan; Topolobampo; Loreto;
La Paz; Cabo
San Diego; Cabo; Puerto
Vallarta; Mazatlan; La Paz
San Diego; Cabo; Mazatlan;
Puerto Vallarta
Los Angeles; Manzanillo; Puerto
Vallarta; Mazatlan; Cabo
Los Angeles; Acapulco; Ixtapa;
Puerto Vallarta; Cabo
San Francisco; Catalina; Puerto
Vallarta; Mazatlan; Cabo; San
Diego; San Francisco
Los Angeles; Puerto Vallarta;
Mazatlan; Cabo San Lucas; Los
Angeles
Los Angeles; Puerto Vallarta;
Mazatlan; Cabo San Lucas
San Diego; Ensenada; Cabo; San
Diego
Los Angeles; Cabo; Acapulco;
Ixtapa; Manzanillo; Puerto
Vallarta; Los Angeles
Los Angeles; Cabo; Mazatlan;
Puerto Vallarta
Los Angeles; San Diego;
Mazatlan; P.V.; Cabo; Ensenada;
Los Angeles

Repositioning
Overview
Repositioning sailings are continually increasing year-over-year along the U.S. West
Coast due mainly to the continued expansion of the Alaskan cruise market. This
sector primarily offers sailings of 6.59-days in duration between Southern California
homeports and the homeports feeding Alaska-Vancouver and Seattle. Some 44
sailings with 81,000-passengers were identified in 2006. Cruise lines either sail along
the West Coast or through Hawaii (Hawaiian cruises were identified accordingly) as
part of the repositioning process. These cruises could also be called West Coast
Cruises due to their nature. Ports typically include San Francisco, Astoria and Seattle
or Vancouver depending on the final destination. Of the 44 sailings in this sector the
POLA captures 25% (11 sailings) of which most are already homeporting from the
POLA on Hawaii or Mexican Riviera cruises.
Holland America Line offers the most U.S. West Coast short cruise patterns mainly
due to the number of vessels passing through or already in the region and HAL is
typically starting and ending the Alaska season prior to the other cruise lines. As can
be seen in Table 18, all of the major lines offer these cruises. Crystal Cruises offers a
repositioning sailing from Los Angeles to Lima, Peru for the South American cruise
season.
Impact / Relevance on the Port of Los Angeles
While there is not a strong impact from these cruises, they do offer another cruise
sector to the overall mix in the region and provide a good opportunity for the cruise
lines to offer passengers another option. For the POLA there is expansion options
either as a port-of-call or homeport as Alaska continues its growth over the mid- to
long-term.
48

Table 18: Sample Patterns of Repositioning Cruise Itineraries 2006
Source: B&A, 2006
Operator
Celebrity
Cruises
Celebrity
Cruises
Celebrity
Cruises
Crystal
Cruises
Holland
America
Holland
America
Holland
America
Holland
America
Holland
America
Holland
America
Holland
America
Holland
America
Holland
America
Holland
America
Holland
America
Holland
America
Holland
America
NCL
NCL
NCL
NCL
Princess
Princess
Princess
Princess
Princess
Radisson
Seven
Seas
Radisson
Seven
Seas
Royal
Caribbean
Royal
Caribbean
Royal
Caribbean
Silversea
Cruises
Ship
Pax
(Lower
Berths)
Length
(days)
Infinity 2449 11
Mercury 1870 12
Summit 2449 15
Crystal
Serenity
1080 15
Zaandam 1440 4
Zaandam 1440 2
Zaandam 1440 4
Oosterdam 1848 5
Oosterdam 1848 5
Ryndam 1266 4
Westerdam 1848 4
Volendam 1440 4
Volendam 1440 4
Zuiderdam 1848 4
Zuiderdam 1848 4
Veendam 1266 6
Veendam 1266 5
Norwegian
Star
Norwegian
Star
Norwegian
Wind
Norwegian
Sun
Dawn
Princess
Dawn
Princess
Diamond
Princess
Island
Princess
Sapphire
Princess
Seven
Seas
Mariner
Seven
Seas
Mariner
Radiance
of the Seas
Radiance
of the Seas
Serenade
of the Seas
Silver
Shadow
2240 2
2240 4
1748 4
2359 5
1950 3
1950 3
2600 8
1950 4
2600 8
769 19
769 16
2500 7
2500 8
2500 8
382 13
Season
Spring /
Fall
Spring /
Fall
Spring /
Fall
Spring /
Fall
Spring /
Fall
Spring /
Fall
Spring /
Fall
Spring /
Fall
Spring /
Fall
Spring /
Fall
Spring /
Fall
Spring /
Fall
Spring /
Fall
Spring /
Fall
Spring /
Fall
Spring /
Fall
Spring /
Fall
Spring /
Fall
Spring /
Fall
Spring /
Fall
Spring /
Fall
Spring /
Fall
Spring /
Fall
Spring /
Fall
Spring /
Fall
Spring /
Fall
Spring /
Fall
Spring /
Fall
Spring /
Fall
Spring /
Fall
Spring /
Fall
Spring /
Fall
Number
of
Cruises
1
Baseport
San Francisco,
CA
1 Seattle, WA
1 Los Angeles, CA
1 Lima, Peru
Sample Itinerary
Vancouver; Sitka; Juneau;
Ketchikan; Icy Strait Point;
Skagway; San Francisco
Ensenada; San Francisco;
Ketchikan; Juneau; Skagway;
Prince Rupert; Seattle
Vancouver; Ketchikan; Skagway;
Juneau; Sitka; Victoria; Seattle;
S.F.; Catalina; L.A.
L.A.; Acapulco; Huatulco; Puerto
Quetzal; Ecuador; Lima
1 Vancouver, BC San Diego; Sea; Vancouver
1 Vancouver, BC Seattle; Vancouver
1 San Diego, CA Vancouver; San Diego
1 Vancouver, BC
San Diego; San Francisco;
Vancouver
1 San Diego, CA Vancouver; Victoria; San Diego
1 Vancouver, BC San Diego; Sea; Vancouver
1 Los Angeles, CA Vancouver; Sea; Los Angeles
1 Vancouver, BC Los Angeles; Sea; Vancouver
1 San Diego, CA Vancouver; Sea; San Diego
1 Vancouver, BC San Francisco; Victoria; Vancouver
1
San Francisco,
CA
1 Vancouver, BC
Vancouver; Astoria; San Francisco
San Diego; Seattle; Victoria;
Vancouver
1 Los Angeles, CA Vancouver; Seattle; Los Angeles
1 Vancouver, BC Seattle; Vancouver
1 Los Angeles, CA Vancouver; Victoria; San Francisco
1 Vancouver, BC San Francisco; Victoria; Vancouver
1 Los Angeles, CA
Vancouver; Astoria; San Francisco;
Los Angeles
1 Vancouver, BC San Francisco; Vancouver
1
San Francisco,
CA
1 Los Angeles, CA
Vancouver; San Francisco
Vancouver; Victoria; Astoria; San
Francisco; Santa Barbara; San
Diego; Los Angeles
1 Los Angeles, CA Vancouver; Sea; Los Angeles
1 Whittier, AK
1 Los Angeles, CA
1
San Francisco,
CA
1 Vancouver, BC
1 Los Angeles, CA
1 Vancouver, BC
1 Los Angeles, CA
L.A.; San Diego; Santa Barbara;
San Francisco; Astoria, Victoria;
Vancouver
Auckland; Rarotanga; Bora Bora;
Moorea; Tahiti; Rangiroa; Nuku
Hiva; Los Angeles
FTL; Key West; San Andres;
Panama; Huatulco; Acapulco;
Cabo; L.A.; S.F.
San Diego; San Francisco; Astoria;
Victoria; Vancouver
Vancouver; Nanaimo; Victoria;
Astoria; San Francisco; Los
Angeles
San Diego; San Francisco; Astoria;
Victoria; Vancouver
Vancouver; Sitka; Juneau;
Ketchikan; Victoria; San Francisco;
Ventura; Los Angeles
49

Panama Canal
Overview
This sector of the cruise region has seen fluctuations over the past 10-years, but is
continuing to expand. Although the majority of the expansion is occurring on the
Caribbean side of the Panama Canal with the development of cruises that are able to
do limited Panama Canal transits and then return back to the Caribbean Sea. These
cruises are typically open-jaw with Miami, Fort Lauderdale, Port Canaveral,
Galveston, New Orleans, or San Juan serving as Eastern homeports and Acapulco,
Ensenada, San Diego, Los Angeles and San Francisco serving as homeports along the
West Coast. Due to the seasonal repositioning of cruise ships to/from Alaska, this
cruise sector also entails several one-off repositioning cruises that are not regular
Panama Canal cruise offerings. Most itinerary patterns include port calls in Cabo San
Lucas, Acapulco, Puntarenas, Panama Canal, Costa Rica, Aruba and Curacao. Other
variations of this itinerary pattern exist based upon operator, cruise duration and
target market.
Holland America Line offers 11-sailings in this sector, which fits its demographic
pattern along with Princess Cruises with 7 total sailings. In 2006 there are 40 full
Panama Canal sailings with 68,873-passengers. Besides the World cruise sector, the
Panama Canal has the lowest per passenger capacity with 1,722-persons. POLA
captures 30% of these sailings with approximately 19,000-passengers. The remainder
of the cruise lines homeport in San Diego, San Francisco or Seattle.
Impact / Relevance on the Port of Los Angeles
POLA provides an excellent homeport option for this sector due to the passenger
demographic in the market, airlift and others. Likely, this long-haul sector will grow
at a pace consistent with the deployment of larger vessels into the region, not
necessarily through the deployment of new ships to this sector. Continued
development of West Coast round trip Panama Canal sailings such as Holland
America currently offers and is noted below is likely only as more vessels come into
the Alaska marketplace. Indications are that due to the length of this cruise,
passenger demographics and per diems it is not a high priority for expansion. The
majority of growth in this sector will be occurring in the Caribbean region and not
affecting Los Angles directly. Instead, this sector will serve as a repositioning cruise
and the POLA does have opportunities for minimal expansion in this sector.
50

Table 19: Sample patterns of Panama Canal cruise itineraries 2006
Source: B&A, 2006
Operator
Celebrity
Cruises
Celebrity
Cruises
Crystal
Cruises
Cunard
Cruise Line
Holland
America
Holland
America
Holland
America
Holland
America
Holland
America
Holland
America
Holland
America
NCL
Oceania
Cruises
Princess
Princess
Princess
Princess
Radisson
Seven
Seas
Royal
Caribbean
Royal
Caribbean
Silversea
Cruises
Ship
Pax
(Lower
Berths)
Length
(days)
Infinity 2449 15
Mercury 1870 17
Crystal
Symphony
Queen
Elizabeth 2
940 16
1778 15
Zaandam 1440 18
Ryndam 1266 15
Westerdam 1848 19
Volendam 1440 15
Zuiderdam 1848 19
Veendam 1266 19
Amsterdam 1380 19
Norwegian
Sun
2359 18
Regatta 684 17
Sun
Princess
Coral
Princess
Regal
Princess
Regal
Princess
Seven
Seas
Mariner
Radiance of
the Seas
Serenade
of the Seas
Silver
Shadow
1950 18
1950 20
1590 20
1590 16
769 16
2500 15
2500 14
382 18
Season
Fall /
Spring
Fall /
Spring
Fall /
Spring
Fall /
Spring
Fall /
Spring
Fall /
Spring
Fall /
Spring
Fall /
Spring
Fall /
Spring
Fall /
Spring
Fall /
Spring
Fall /
Spring
Fall /
Spring
Fall /
Spring
Fall /
Spring
Fall /
Spring
Fall /
Spring
Fall /
Spring
Fall /
Spring
Fall /
Spring
Fall /
Spring
Number
of
Cruises
3
Baseport
Los Angeles,
CA
2 San Diego, CA
1
1
Los Angeles,
CA
Los Angeles,
CA
1 San Diego, CA
1 San Diego, CA
2
2
2
Los Angeles,
CA
Los Angeles,
CA
San Francisco,
CA
2 San Diego, CA
1 New York, NY
2
1
San Francisco,
CA
Los Angeles,
CA
2 Seattle, WA
1 Vancouver, BC
1
Los Angeles,
CA
1 San Juan, PR
1
San Francisco,
CA
2 San Diego, CA
2 San Juan, PR
1 Miami, FL
Sample Itinerary
FTL; Aruba; Panama; Costa Rica;
Huatulco; Acapulco; Cabo San
Lucas; L.A.
FTL; Aruba; Curacao; Panama; CR;
Huatulco; Acapulco; Puerto Vallarta;
Cabo; S.D.
Tampa; Grand Cayman; Aruba;
Panama; Costa Rica; Huatulco;
Acapulco; Cabo; L.A.
New York, FTL; Curacao; Panama;
Acapulco; L.A.
FTL; Half Moon Cay; San Juan;
Aruba; Panama; Huatulco; Acapulco;
Cabo; SD
Tampa; Grand Cayman; Cartagena;
Panama; Costa Rica; Huatulco; P.V.;
Cabo; SD
FTL; Half Moon; Grand Turk; San
Juan; Tortola; Aruba; Panama; CR;
Huatulco; Acapulco; P.V.; Cabo; Los
Angeles
Fort Lauderdale; DR; Cartagena;
CR; Nicaragua; PQuetzal; Huatulco;
PV; Cabo; L.A.
FTL; Half Moon; Aruba; Curacao;
Panama; CR; Guatemala; Huatulco;
Acapulco; Cabo; S.F.
Tampa; Cayman; Cartagena;
Panama; CR; Chile; Huatulco; PV;
Mazatlan; Cabo; SD
S.D.; Cabo; P.V.; Huatulco;
Guatemala; Costa Rica; Panama;
Cartagena; FL; NY
Miami; Curacao; Aruba; CR;
Panama; Huatulco; Acapulco; Cabo;
San Francisco
Miami; Cozumel; San Andres;
Panama; CR; Guatemala; Acapulco;
Cabo; L.A.
FTL; Aruba; Panama; CR; Huatulco;
Acapulco; Cabo; San Francisco;
Seattle
FTL; Aruba; Panama; CR; Huatulco;
Acapulco; Cabo; S.F.; Astoria;
Victoria; Vancouver
L.A.; Cabo; Acapulco; Huatulco; CR;
Panama; PCorinto; PQuetzal; Ixtapa;
PV; L.A.
L.A.; Cabo; Acapulco; Huatulco; CR;
Panama; Colon; Aruba; St. Kitts;
San Juan
FTL; Key West; San Andres;
Panama; Huatulco; Acapulco; Cabo;
L.A.; S.F.
Miami; Aruba; Panama; CR;
Huatulco; Acapulco; Cabo; San
Diego
San Diego; Cabo; Acapulco;
Huatulco; CR; Panama; Aruba; San
Juan
Los Angeles; P.V.; Acapulco;
Guatemala; Nicaragua; CR;
Panama; Colombia; Miami
51

Mexican Baja
Overview
This cruise sector relies to a large degree on the regional market demographics for
successful cruise operations. Historically, this sub-sector has seen little growth in
terms of vessels, but has grown in passenger capacity as the major lines have placed
larger vessels into the sector. Operating from POLA (Royal Caribbean International
– Monarch of the Seas) and Port of Long Beach (Carnival Cruise Line – Carnival
Paradise) this sector utilizes the ports of Catalina Island, San Diego and Ensenada, MX
on 3- and 4-day cruise patterns. Following a pattern set in 2001 Carnival Cruise Line
has continued to increase capacity in this sector through the deployment of larger
vessels with the 2,452-passenger Carnival Paradise replacing the 2,052-passenger
Ecstasy. In June 2003, RCI’s Viking Serenade was replaced with the 2,500-passenger
Monarch of the Seas. These deployments have significantly increased the capacity in
this sub-sector growing from 135 cruises and 272,712-passengers in the sector in
2002 to more than 200 cruises and 500,000-passengers in 2006.
Over the past several years this cruise sector has been through numerous difficulties
due to both private and public sector situations. These include the California Gaming
Act, which closed the onboard casinos for period of time in the mid-1990’s and
forced cruise lines to alter the cruise itinerary (dropping San Diego) in order to
operate the casinos onboard the ships on the 4-day cruise. In addition, marine
operations in both Catalina (tendering contracts) and Ensenada (mandatory tug
regulations) have impacted the itinerary pattern. Acting as the far-foreign port on
this itinerary pattern, Ensenada has not matured to a satisfactory level to
accommodate cruise passengers and support further growth.
At present it does not appear that any additional North American cruise operators
will enter into this competitive and operationally tight market sector. The likely
candidates NCL and Princess Cruises do not offer short cruise patterns at present
and this is not their chosen cruise passenger demographic. Growth, if any, will likely
come from the two current lines replacing a vessel with a larger class over time. As
RCI has just spent several million on the refurbishment of the Monarch of the Seas
specifically for this sector it is unlikely this ship will depart the market in favor of
another ship. The Carnival Paradise is also a relatively new vessel and compares
favorably in the sector. Thus, the trend for growth is minimal at this time.
Impact / Relevance on the Port of Los Angeles
The POLA is in a generally excellent position to accommodate regular homeport
activities associated with the Mexico Baja cruise itineraries given its marquee value
and historic association with this type of cruise pattern in Southern California. These
short duration cruises can easily be assembled for this type of deployment and the
combination of passenger market access and volume provides Carnival and RCI with
satisfactory comfort levels in this sector. This is also the sector that could provide
the highest negative impact to the POLA with the departure of the regularly
scheduled year-round vessel. This is a potential scenario that the POLA must
consider in its long-term planning scenarios.
52

Table 20: Sample patterns of Mexico Baja cruise itineraries 2006
Source: B&A, 2006
Operator
Carnival
Cruise Lines
Carnival
Cruise Lines
Royal
Caribbean
Royal
Caribbean
Royal
Caribbean
Ship
Carnival
Paradise
Carnival
Paradise
Monarch of
the Seas
Monarch of
the Seas
Vision of the
Seas
Pax
(Lower
Berths)
Length
(days)
2452 4
2452 5
2350 5
2350 4
Season
Year
round
Year
round
Year
round
Year
round
Number
of
Cruises
1950 4 Fall 1
Baseport
53 Long Beach
52 Long Beach
50
51
Los Angeles,
CA
Los Angeles,
CA
Los Angeles,
CA
Sample Itinerary
Long Beach; Ensenada; Long
Beach
Long Beach; Catalina Island;
Ensenada; Long Beach
Los Angeles; San Diego;
Catalina; Ensenada
Los Angeles; Ensenada
Los Angeles; Catalina;
Ensenada
World
Overview
The round-the-world cruise market is very limited and mainly caters to wealthy
passengers able to take an extended time away from home on luxury cruise vessels.
These sailings are typically 80- to 120-days in duration, divided into more modest 15-
to 55-day cruise segments. These cruises pass through several regions of the world
as they navigate the globe, thus all calls on the itineraries are usually one-off calls (i.e.,
they do not repeat ports). These sailings are also seen as exotic, and as such, these
operators do not spend a significant amount of time in the larger, mass-market cruise
regions. This market is likely to see some low growth; especially as Cunard Line and
a handful of other luxury vessels evolve this sector. With the reputation of Los
Angeles this market will always provide a few homeport and / or port-of-call segment
break opportunities within the U.S. West Coast region. Other homeports such as
San Diego and San Francisco will also see segmentation homeport visits from the
world cruise ships. In 2002, we identified only Residensea in this market sector. In
2006, 5 sector sailings with approximately 6,000-passengers were identified. The
POLA captures 5 of these sailings due to its destination and operational value. An
outline of the sailings registered is found below.
Impact / Relevance on the Port of Los Angeles
The POLA will continue to be in an excellent position to be a segment homeport for
World Cruises. The growth of this sector is limited. Los Angeles will most likely
continue to play a leading role on the West Coast in this cruise sector due to its
overall cruise homeport logistics.
53

Table 21: Sample patterns of world cruise itineraries 2006
Source: B&A, 2006
Operator
Cunard
Cruise Line
Delphin
Renaissance
Ship
Queen Mary
II
Delphin
Renaissance
Pax
(Lower
Berths)
Length
(days)
Season
Number
of
Cruises
Baseport
2620 39 Year round 1 New York, NY
700 167 Year round 1
P&O Cruises Aurora 1874 20 Year round 1
Hamburg,
Germany
San Francisco,
CA
Residensea World 200 13 Year round 1 Ensenada, MX
Saga Cruises Saga Ruby 665 68 Year round 1 Southampton, UK
Sample Itinerary
L.A.; Acapulco; CR; Panama;
Esmeraldes; Callao;
Santiago; Chile; Argentina;
etc.
Barcelona; Caribbean;
Caribbean; Colombia;
Panama Canal; Mexico;
Pacific Islands; Asia; Middle
East; Mediterranean;
Germany.
Southampton; Azores; St.
Lucia; Margarita; Aruba;
Panama; Acapulco; San
Francisco
Acapulco; P.V.; Cabo; San
Diego
Singapore; Southeast Asia;
Japan; Hawaii; San
Francisco; L.A.; San Diego;
Mexico; Central America;
Caribbean; Bahamas;
Bermuda; Azores; England
South Pacific (repositioning), Pacific Northwest and Charters
Overview
These last 3 sectors that fall within or pass through the U.S. West Coast region
provide minimal direct impacts to POLA. Of three South Pacific sailings, POLA
captures 2; and of 14 Pacific Northwest sailings, as would be the case with this cruise
sector, no sailings directly affect POLA. For the South Pacific sector most vessels are
in the premium market sand are positioning to and from the Asia/Pacific region. The
Pacific Northwest sub-sector is a short duration market similar to repositioning
sector sailings. Homeports are typically Seattle and Vancouver. This sector has seen
continuous activity and likely will continue -overall growth is low. Charters are a
large part of the cruise industry and while there is not much influence that can be
swayed by the homeport in choosing itinerary patterns for this sector, according to
cruise line decision-makers, tourism destinations like Los Angeles work well with this
sector due to the overall logistic requirements.
Impact / Relevance on the Port of Los Angeles
Overall there is limited impact for POLA within these sectors. However, each does
provide some level of influence on the region.
54

Table 22: Sample Patterns of So. Pacific, Pacific Northwest Cruise Itineraries 2006
Source: B&A, 2006
Operator
Ship
Pax
(Lower
Berths)
Length
(days)
Celebrity
Cruises Infinity 2449 4
Celebrity
Cruises Mercury 1870 4
Cunard
Cruise Line
Queen Mary
II 2620 15
Holland
America Oosterdam 1848 4
Holland
America Ryndam 1266 5
Holland
America Veendam 1266 3
Dawn
Princess Princess 1950 2
Dawn
Princess Princess 1950 2
Princess
Radisson
Seven Seas
Diamond
Princess 2600 29
Seven Seas
Voyager 754 24
Season
Number
of
Cruises
Baseport
Sample Itinerary
Spring /
Fall PN Vancouver, BC San Francisco; Victoria; Vancouver
Spring /
Seattle; Victoria; Campbell River;
Fall 8 PN Seattle, WA Seattle
Sydney; Callao; Esmereldes; Fuerte
Spring /
Los Angeles, Amador; Caldera; Acapulco; Los
Fall SP CA
Angeles
Spring /
Fall PN Seattle, WA Vancouver; Victoria; Astoria; Seattle
Spring /
Vancouver; Port Angeles; Seattle;
Fall PN Vancouver, BC Victoria; Vancouver
Spring /
Fall PN Vancouver, BC Seattle; Victoria; Vancouver
Spring /
Fall PN Seattle, WA Vancouver; Seattle
Spring /
Fall PN Vancouver, BC Seattle, Vancouver
Sydney; Hobart; Dunedin; Auckland;
Spring /
San Francisco, Fiji; Pago; Bora; Papeete; Honolulu;
Fall SP CA
Maui; S.F.
Spring /
Fall SP Sydney, AUS
L.A.; Nuku Hiva; Tahiti; Moorea;
Raiatea; Nora Bora; Auckland; Bay
Islands; Sydney
55

Fit of the Port of Los Angeles within Identified Target Markets
Each of the target markets identified above affords the Port of Los Angeles varying
degrees of potential cruise line port-of-call and homeport operations. In Table 23,
we summarize POLA’s general potential for participation in each of the target
markets reviewed. POLA’s strategic position in each market was assessed either as
being strong (), fair (), or weak ().
Table 23: Fit of the Port of Los Angeles in Identified Target Markets (Summary)
Source: B&A, 2006
Target Market POLA as a Port-of-Call POLA as a Homeport
Alaska (complementary)
Hawaii /
Mexican Riviera
Repositioning /
Panama Canal
Mexican Baja
World Cruises /
South Pacific (Repositioning)
Pacific Northwest (complementary)
Charters
Key: strong (), fair (), or weak ().
As presented above, POLA’s strength in terms of strategic fit is to serve as a
homeport for the Mexican Riviera, Panama Canal, Mexican Baja, World, South Pacific
and Charter sectors. As a port-of-call, World Cruise and Charter operations may
have a strong appeal given present deployment philosophies. POLA is considered a
poor port-of-call for most sectors. This observation is primarily due to the strength
of the POLA as a homeport which overrides the option as a port-of-call in most
cases. Los Angeles has a strong strategic position in the region with overwhelming
tourism infrastructure, market demographics and marquee value. The Alaska and
Pacific Northwest sectors offer complementary homeport options due to the
influences of the vessels passing to and from the sectors.
56

G. Regional Destinations Supporting Cruise Operations
Several regional destinations were assessed as to their potential short and long-range
impact to cruise activities in the region. The ports listed below vary in capacity,
attributes and attractions. Many of the ports support multiple cruise sectors in the
region. Several of the ports identified have expansion plans and a few are dedicated
exclusively to cruise operations and land-based tourism activities. Each of these ports
is presented in brief in the following section based upon their primary sector role. A
summary of the attributes of each is offered in Table 24. A brief description of each
of these ports follows:
Mexican Riviera Ports
• Port of Vallarta, Mexico: Currently the port is dedicated exclusively to
tourism trade taking advantage of the attractions of Banderas Bay. The port
offers two cruise ship berths of 663-ft. and 380-ft. with a draft of 31-ft. A
purpose built cruise reception facility provides the potential for homeport
operations. Under the ports current master plan the cruise facilities are
expected to be expanded to accommodate three mega-ships simultaneously.
A new reception facility with retail areas will also be included. Project
completion is anticipated for 2009. The tourism support infrastructure has
improved markedly over the past few years and provides a good variety of
shore excursion and independent activities.
• Port of Mazatlan, Mexico: The bustling port city of Mazatlan has four
berths capable of receiving cruise vessels in the industrial harbor. They range
in length from 473- to 1,468-ft., and offer drafts of between 28- to 34-feet.
The piers are dual use handling both cargo and passenger traffic. There is no
dedicated reception facility at the port. There are no plans for either berth
expansion or dedicated cruise facilities in the mid-term. The City has
expanded some of its tourism offerings, but additional tourism infrastructure
is required.
• Port of Cabo San Lucas, Mexico: A popular destination for land-based
and cruise passengers, Cabo San Lucas does not provide any berthing facilities
for cruise ships. A small marina is available for small expedition cruise ships
and supports tender operations from 3 anchorages in the bay area. Over the
past several years there have been efforts to build a cruise berth. However,
this appears unlikely due to local politics. Shoreside tourism infrastructure is
excellent.
• Ports of Baja California Sur, Mexico: The Port Authority of Baja
California Sur operates five ports of which four have cruise ship handling
capabilities: Port Santa Rosalia, Port of Escondido, Port of La Paz, and Port of
Pichilingue. Of these four ports only Port Pichilingue (supporting La Paz) has
capacity to berth a large cruise vessel. The remaining ports are able to berth
small passenger vessels and offer tender operations. The ports vary in their
settings, with some being in isolated bays, while others such as Port Rosalia
having picturesque working waterfronts and marinas. These ports do offer
some potential for increased berthing accommodations and growth in the
57

Mexican Riviera sector. Cruise line interest and possible project participation
is likely needed to move any effort forward.
• Port of Huatulco, Mexico: This new resort destination on the Mexican
coast promises to be a popular land and cruise destination. A 919-ft. pier has
the capacity to simultaneously berth two large vessels. Passengers debark at
a small fishing village surrounded by resorts. Tourism support infrastructure
is expanding and feedback is positive.
• Port of Manzanillo, Mexico: This is the largest Mexican port on the west
coast. The industrial cargo port is currently converting some area into a
cruise passenger operations zone. The identified area has three piers that
range in lengths of 217- to 820-ft., and offer drafts from 39- to 57-feet. The
upland tourism support is questionable at this time. However, as the
industry expands in the region, positive growth is possible.
• Port of Acapulco, Mexico: The main port of this popular tourist resort
has a quay of 676-ft. with a depth of 35-feet. The facilities offer a Passenger
Terminal to accommodate homeport operations. Acapulco serves to some
extent as a homeport for Panama Canal cruises. However, there have been
operational cost disputes, fuel supply issues, airlift difficulties and others that
have limited the opportunities for Acapulco in this area. The Port Authority
is refurbishing the existing pier and a new tender dock is being constructed.
Only one large ship can be accommodated at berth.
• Ixtapa/Zihuatanejo: This port is fairly new and provides two anchorage
sites for tender operations to a main marina area. There are no passenger
reception facilities. The tourism support infrastructure is mainly beach areas,
but overall this is an excellent relaxing destination.
Mexican Baja Ports
• Port of Ensenada, Mexico: This purpose built cruise port has three
berths, two of 591-feet and the third at 525-feet. The port has separate
cruise reception facilities for the berths and a large marina area. A long range
master plan for the port includes a commercial center, retail, expanded crafts
market, entertainment venues and a mixed-use development. In early 2005,
the Port Administration announced plans to move forward with several
projects to expand cruise tourism opportunities.
Panama Canal Ports
• Port of Punta Caldera, Costa Rica: This industrial/passenger port has
attractive natural surroundings and is able to accommodate vessels of up to
25,000-DWT with a draft of 36-feet. The only passenger facility is a small air
conditioned terminal with an information desk and a small offering of craft
vendors.
58

• Port of Guadalajara, Mexico: This port has two cruise ship berths – 315-
ft. and 381-feet. There is a passenger terminal with an adjacent crafts market.
Currently the port is at capacity with cruise lines set on a rotating schedule.
• Port of Chiapas, Mexico: The port has a 1,800-ft long pier with a 33-ft.
draft. A tender pier is also available. A small reception terminal receives
incoming passengers. The facility includes retail, medical, communications,
and transportation areas. A new yacht facility is also planned.
• Port Limon, Costa Rica: The port has a cruise pier of 984-ft. and a draft
of 33-feet. Passengers disembark directly into the city since there are no
passenger terminal facilities. Tourism infrastructure for organized tours is
good.
• Port Colon 2000, Panama: This port sits in an industrial area, but
provides a passenger terminal, 328-ft. pier and a depth of 36-feet. The facility
includes a retail area and center for shore excursions. Plans are underway
for a second pier and theme park.
• Cristobal Pier 6, Panama: This port has a pier with a length of 2,060-feet
that is capable of berthing two mega-ships simultaneously. The passenger
terminal includes luxury shops, handicrafts, and a covered zone for tour
dispatches.
• Fort Amador, Panama: The port at the Pacific entrance of the Panama
Canal has a passenger terminal and a pier of 328-ft. with a draft of 34-feet.
Two tender landings are also available. The port includes retail, hotel,
marina, and a floating pier for yacht-class ships. A new pier with the capacity
for two large cruise ships is under construction.
• Port of Balboa, Panama: This is mainly a cargo facility that also receives
cruise passengers. The port has the capacity to receive vessels with up to
39.7 feet drafts. Facilities are undergoing a phased expansion that will result
in a total of 1,500-feet of deep water quay.
Hawaiian Islands Ports
• State of Hawaii Department of Transportation: The Harbor at
Honolulu has three berths for large vessels and three for mid- to small ships.
These range in length from 163- to 1,850-feet, and depths of 15- to 35-feet.
The facilities are adjacent to Honolulu’s downtown and a market place at the
port offers retail shopping and attractions. There are plans for a new cruise
ship terminal at the Harbor. The State DOT has recently requested RFQ’s
for a statewide port facilities master plan.
U.S. West Coast Ports
• Port of San Diego: This homeport adjacent to San Diego’s downtown has
a passenger terminal and four berths (2 for large ships) with lengths of 997-
feet and depths of 34.8-feet on the B Street Pier. The adjacent Broadway
59

Pier has a berth of 400-feet and a depth of 34.8-feet. The Port of San Diego
is a major West Coat homeport and serves as a port of call for the Mexican
Baja sector. The Port recently awarded a contract for a new multi-million
dollar project inclusive of new cruise homeport facilities, parking, hotels,
retail and other entertainment venues on the B Street, Broadway and
adjacent uplands areas. Planning is currently underway with completion
anticipated for 2010 to 2012. The port may be able to accommodate up to 3
large homeport ships daily.
• Port of San Francisco: This full service port has two cruise berths – 991-
ft. and 803-feet with drafts of 36-feet. The berths are located adjacent to
Pier 35 where the cruise terminal is located at its center. Construction has
started on a $400-million mixed-use development at Piers 30 and 32 which
will include an 110,000-square ft. terminal capable of accommodating two
large cruise ships. Completion is anticipated in 2008.
• Port of Catalina Island: Mainly serving as a port-of-call on the Mexican
Baja sector, Catalina Island supports two large cruise ships with anchorages
and tender operations. The upland support infrastructure is excellent. The
location is a short distance off the Los Angeles coastline and provides
additional passenger throughput for the POLA on the significant ferry traffic
to the island. There are no plans for any future expansion of berths or
anchorages.
• Port of Seattle: This homeport has two cruise terminal facilities at present.
Bell Street Pier 66 has a 56,000-sq. ft. two level passenger terminal with pier
lengths of 1,600-ft. and 400-ft. and depths of 35- to 63-ft. at mean low water.
The second 95,000-sq. ft. terminal opened in May 2003 and accommodates
two ships with 2,000-ft. of berth face. There are also 700-on site parking
spaces. The port is planning to expand cruise operations at Berth 90 in 2007.
• Port of Long Beach: In 2003 Carnival Cruise Lines began operations of a
new cruise facility in the Port of Long Beach dedicated to their brand,
although other lines may also use the facility. One large ship can be
accommodated at the facility located in the old Spruce Goose Hanger. Based
on cruise line feedback the facility works well in terms of technology, but
does provide challenges due to its internal flow, basically providing for a oneway
operation only.
• Port of Vancouver, BC: Vancouver is the largest cruise homeport facility
on the West Coast of North America with 2 main cruise terminals. Canada
Place can accommodate up to three large vessels with berths of 1,660-ft.,
1,070-ft. and 900-ft. Water depths are form 27.5- to 33-feet. Total area is
166,000-sq. feet (baggage area 64,000-sq. ft.). Ballantyne Terminal is 134,000-
sq. feet (baggage area 25,000-sq. ft.) and has one main berth of 1,200-ft. and
can also accommodate another vessel at an adjacent overflow facility.
Tourism support infrastructure in Vancouver and the surrounds is excellent.
60

Additional smaller ports along the U.S. West Coast provide facilities for cruise ships
on an infrequent basis due to operational issues, PSA, and others. They include
Monterey, CA., Santa Barbara, CA., Astoria, Oregon and Vancouver, Washington.
Table 24: Summary of U.S. West Coast Regional Ports and Support Destinations
Source: B&A, 2006
Port
Cruise Berth(s)
Cruise Facilities
Cruise Terminal(s)
Future Plans / Notes
(S) Strengths / (W)
Weaknesses
Port of Vallarta,
Mexico
Ports of Baja
California Sur,
Mexico
Berth 1: 663.37ft (31ft
depth)
Berth 2: 380ft
(31ft depth)
3 Tender Piers
Port Santa Rosalia:
276.57ft (29.86ft
depth)
Port of Escondido:
271.98ft (29.85ft
depth)
Port of La Paz:
216.53ft (15ft depth)
Port of Pichilingue:
656.17ft (34.45ft
depth)
Single, purpose built
terminal with homeport
capacity.
All ports receive
passengers at their piers
The port will soon complete a
major expansion of cruise
facilities, increasing capacity to
simultaneously berth three of
the large vessels. A new cruise
Terminal is also to be built
adjacent to the existing one.
Limited information of future
plans. Only Port Pichilingue (La
Paz) has the capacity to berth a
large cruise vessel, all others are
oriented for smaller cruises or
tender operations.
(S) Port purpose built for
tourism operations; (W)
Limited capability to handle
large ships long-term
(S) Ports are in isolated and
pristine areas; (S) Port
Rosalia has picturesque
working waterfront; (W)
Most ports limited to
Tender operations and
berthing to only small
passenger vessels.
Port of Punta
Caldera, Costa
Rica
Accommodations for
vessels up to 25,000
DWT; A total of three
berths with depth of
36.09ft
A small air-conditioned
terminal with
information desk and
craft vendors
Limited information of future
plans.
(S) Attractive destination for
cruise vessels; (w) Cannot
handle large passenger
volumes.
State Hawaii
Dept. of
Transportation
A total of three berths
for large cruise vessels
and 3 for small
passenger vessels are
located in Honolulu
Harbor.
Pier 2: 1850ft (35ft
depth)
Pier 5: 200ft (15ft
depth)
Pier 6: 163ft (15ft
depth)
Pier 8: 602ft (34ft
depth)
Pier 10: 502ft (34ft
depth)
Pier 11: 472ft (34ft
depth)
Terminal at pier 10 next
to Aloha Tower Market
Place.
New cruise ship terminal
planned at Honolulu Harbor,
Additional Master Plan for the
Hawaiian Ports will likely be
completed in 2006.
(S) Excellent tourism
infrastructure and marquee
value, (W) Ports are
problematic for cruise
operations, (W) Growth is
limited due to the PSA.
Port of Cabo
San Lucas,
Mexico
Three berths for small
passenger vessels and
tender operations.
Two anchorages
available.
Passengers disembark at
the Cabo San Lucas
Marina.
No future plans for cruise berths.
(S) Excellent tourism
infrastructure and marquee
value, (W) Growth is
limited due to anchorages
only.
Port of
Ensenada,
Mexico
Berth 1: 525ft
Berth 2: 591ft
Berth 3: 591ft
Purpose built port for
cruise operations.
Includes terminals.
Long term plan includes a
commercial center, retail center,
expanded crafts market, and
mixed-use development. The
port has an operational marina.
(S) Berth facilities are
available, (W) Poor
infrastructure for tourism
appeal.
61

Port
Cruise Berth(s)
Cruise Facilities
Cruise Terminal(s)
Future Plans / Notes
(S) Strengths / (W)
Weaknesses
Port of
Guadalajara,
Mexico
Pier 1: 315ft
Pier 2: 381ft
Passenger Terminal and
reception area adjacent to
crafts market.
No information on future plans.
However, the port is operating at
capacity, with cruise lines on
rotating schedules.
(W) Limited port capacity
already operating at peak.
Port of
Huatulco,
Mexico
919ft long wharf for
two ships up to
101,000-gt.
Passengers disembark at
small fishing village.
This is a new resort area. No
information on future plans
available.
(S) Jungle, 9 bays, 36
beaches, clearest water
along the Mexican West
coast; (W) Distance in
respect to the West Coast
homeports for the Mexican
Riviera sector.
Port of
Manzanillo,
Mexico
North Pier: 712ft
(42.65ft depth)
South Pier: 217ft
(39.04ft depth)
Marginal Pier: 820ft
(56.76ft depth)
No Terminal.
Cargo pier area is currently being
converted into a cruise dock in
the city center.
(S) Large port infrastructure
for expansion; (W) Limited
tourist appeal due to brand
recognition.
Port of
Mazatlan,
Mexico
Pier 3: 525.75ft (27.9ft
depth)
Pier 4: 542.81ft (32.8ft
depth)
Pier 5: 1168.4ft (34.4ft
depth)
Pier 6: 473.1ft (32.8ft
depth)
No dedicated passenger
terminal. Facilities are for
shared use between
cargo and cruise
operations.
No information on future plans.
(S) Large port infrastructure
for supporting cruise
operations; (S) Marquee
value as a destination (W)
Visitor appeal is low; (W)
Weak tourism
infrastructure.
Port of Chiapas,
Mexico
Pier: 1,800ft (33ft
depth)
Tender pier
Passenger Terminal with
retail, medical,
communication, and
transportation center.
A new yacht facility is planned.
(S) Good growth option for
Mexico West; (S) Marquee
value as a NEW destination
(W) Visitor appeal is high;
Port of
Acapulco,
Mexico
Quay: 675.85ft
(34.78ft depth)
Passenger Terminal.
Refurbishment of passenger dock
and construction of tender pier.
(S) High marquee value; (S)
Good tourism support
infrastructure; (W) Limited
growth capacity for cruise;
(W) Poor operational and
labor reputation.
Port of Ixtapa /
Zihuatanejo,
Mexico
Port of San
Diego
Two tender
anchorages
Three berths:
997.37ft (34.8ft depth)
One berth:
400.26ft (34.8ft depth)
No reception facility.
Passenger Terminal
accommodates 2 ships for
homeport with tent
structures.
No future expansion plans.
Planned expansion of B Street
Pier, Broadway and adjacent
uplands to support 3 homeport
cruise operations, hotel, parking,
retail and other mixed-use.
(S) High marquee value for
a new destination; (S) Good
tourism support
infrastructure; (W) Limited
growth capacity for cruise;
(W) Distance from
homeports.
(S) High marquee value; (S)
Great tourism support
infrastructure; (S) Good
cruise line relationship; (W)
Limited growth capacity for
cruise at present; (W) Small
homeport facility
Port of San
Francisco
Pier 35
Berth 1: 990.8ft
(36.1ft depth)
Berth 2: 803.8ft
(36.1ft depth)
Passenger Terminal at
Pier 35
Construction started on $400m
mixed-use development at Piers
30 and 32 with an 110,000sq ft
terminal for two ships.
Completion slated for 2008.
(S) High per diem
demographic; (S) Marquee
value;; (S) New facility; (W)
Location in relation to key
destination ports.
62

Port
Cruise Berth(s)
Cruise Facilities
Cruise Terminal(s)
Future Plans / Notes
(S) Strengths / (W)
Weaknesses
Port of Long
Beach, CA
1 berth
accommodating 1
vessel. Approx. 900-ft.
Carnival Terminal with
1,450-on site parking
spaces.
No current known plans for
expansion. Difficult to determine
potential for Long Beach cruise
options. None adjacent to
present facility today.
(S) Excellent homeport
location for region; (S)
Marquee value; (S)
Independent facility; (W)
Limited or no growth
options in area; (W)
Terminal is a one-way
operation.
Port of Seattle
Bell Street Pier 66
pier lengths of 1,600-
ft. and 400-ft. and
depths of 35- to 63-ft.
Pier 30 - two ships -
2,000-ft. berth
56,000-sq. ft. two level
passenger terminal;
95,000-sq. ft. terminal
with 700-on site parking
spaces.
The port is planning to expand
cruise operations at Berth 90 in
2007.
(S) Excellent homeport
location for Alaska; (S)
Marquee value; (S) New
facilities; (W) Limited
growth.
Port of
Vancouver, BC
5 berths total -1,660-
ft., 1,070-ft. and 900-
ft. Water depths are
form 27.5- to 33-feet;
and1,200-ft.;
Canada Place -166,000-sq.
feet (baggage area 64,000-
sq. ft.). Ballantyne
Terminal - 134,000-sq.
feet (baggage area 25,000-
sq. ft.)
The port’s master plan provides
for two new cruise berths and
supporting terminal facility
adjacent to Canada Place. No
timeframe on expansion is set.
(S) Excellent homeport
location for Alaska; (S)
Marquee value; (S) PSA
good; (S) solid operations
(W) Cost.
Port of Catalina
Island, CA
Two cruise
anchorages available
Small reception facility at
pier with tourism booth.
No future plans for cruise facility
growth.
(S) Good marquee value for
region; (S) high tourism
infrastructure; (S) Proximity
to POLA; (W) Limited or
no growth.
Port Limon,
Costa Rica
Pier: 984.25ft length
(32.8ft depth)
No passenger terminal.
No information on future plans.
(S) Good tourism
infrastructure; (W) Limited
or no growth.
Port Colon
2000, Panama
Pier: 328.1ft (36.1ft
depth)
Passenger terminal.
Plans underway for a second pier
and possibly a theme park. The
facilities currently include a retail
center and shore excursions.
(S) Good tourism
infrastructure; (W) Low
marquee value.
Cristobal Pier 6,
Panama
Pier 6: 2060.4ft,
capable of berthing
two mega-ships
simultaneously
Passenger Terminal with
luxury shops and
handicraft goods and
covered zone for tour
dispatches
No information on future plans.
(S) Good tourism
infrastructure; (W) Low
marquee value.
Fort Amador,
Panama
Pier 328.1ft (34.45ft
depth)
Tow tender landings
available.
Cruise terminal.
Pier for two cruise ships under
construction. The port currently
includes retail, marina, a hotel,
plus a floating pier for yacht class
ships.
(S) Good tourism
infrastructure; (W) Low
marquee value.
Port of Balboa,
Panama
Cargo port with
capacity to berth
vessels with up to
39.7ft draft.
No dedicated cruise
passenger terminal.
Port undergoing phased
expansion, resulting in a total of
4,500-ft. of deep water quay.
(S) Large port area; (W)
Low marquee value.
63

The Port of Vancouver hosts the most cruise calls (349) and passengers (658,904)
along the North American West Coast with the POLA second in throughput. See
Table 25. Los Angeles and Vancouver are similar in their predominant sectors in that
they are the leading homeport and do not support port-of-call activities. The Port of
San Diego is the most diverse port in the region with an abundant homeport and
port-of-call traffic pattern. Most San Diego port-of-call visits are generated directly
from ships sailing from the POLA. From a U.S. West Coast competitive standpoint
the POLA captures 36% of the regional traffic. The Port of Long Beach captures
25%, of which most is from Carnival Cruise Lines.
Table 25: Summary of U.S. West Coast Region Major Ports, 2006
Source: B&A, 2006
Los Angeles Long Beach San Diego
San
Francisco
Ensenada Seattle Vancouver
Homeport
Calls 257 157 122 60 5 194 349
Homeport
Passengers 574,299 396,820 199,276 111,638 11,600 372,896 658,904
Port-of-Calls 1 0 61 18 149 6 2
Port-of-Call
Passengers 1,950 0 139,937 33,330 345,981 11,296 4,898
Total Calls 258 157 183 78 154 200 351
Total
Passengers 576,249 396,820 339,213 144,968 357,581 384,192 663,802
Pct. Of Market
Capture (Full) 22.90% 15.77% 13.48% 5.76% 14.21% 15.27% 26.38%
Pct. Of Market
Capture
(No Alaska) 36.71% 25.28% 21.61% 9.23% 22.78%
Figure 12 below illustrates the overall cruise calls along the west Coast. From this
figure we can see that the Port of Ensenada serves primarily as a port-of-call for the
Mexican Baja sector. However, cruise lines also use the port for Hawaiian sector
sailings due to the PSA.
64

Figure 12: West Coast Ports Homeport and Total Calls, 2006
Source: B&A, 2006
Calls
400
350
300
250
200
150
100
50
0
Ensenada
Seattle
Los Angeles
San Diego
Long Beach
San Francisco
Vancouver
Homeport Calls
Total Calls
Figure 13 sets out similar illustrations focusing on passenger throughput. In this
instance, it is apparent that the 2006 vessel size is significant. Vancouver and POLA
are the dominant ports in the region. We did not include the Hawaiian Ports
primarily as they do not compete directly due to their isolation in this sector. Thus,
Honolulu does not compete directly against the POLA for cruise traffic as would be
the case between the Port of San Diego and the POLA. Instead, itineraries and
homeports in the Hawaiian sector are based on broader strategic ideas, such as U.S.
flagged vessels sailing within the islands versus foreign-flagged ships that must
accommodate the U.S. PSA requirements.
Figure 13: West Coast Ports Homeport and Total Passengers, 2006
Source: B&A, 2006
700,000
Passengers
600,000
500,000
400,000
300,000
200,000
100,000
0
Los Angeles
San Diego
Long Beach
San Francisco
Ensenada
Seattle
Vancouver
A
Homeport Passengers
65
Total Passengers

As a part of the analysis and projection process we reviewed the overall market
sectors in the region and survey potential opportunities for either the POLA to
capture existing traffic or possibly lose traffic to other ports in the region. By
example, the POLA lost potential traffic to the Port of Long Beach (Carnival Cruise
Facility). However, based on our assessment most of the brands in the region are
focusing more on the cruise passenger fundamentals and fit of homeports with their
brand philosophy. While there is some overlap in this process, most brands believe
in a “fit” with certain ports based on their passenger demographic, airlift, destination
value and other factors. Table 26 illustrates the 2006 market participation with the
U.S. west Coast Region. There are a total of 701 sailings (without Alaska, Pacific
Northwest and Charters) reflected in the table as they all provide little or not direct
impact on the POLA cruise market. The largest cruise sectors are the Mexican
Riviera (535,995-passengers/238-sailings/34.14%) and the Mexican Baja sector
(512,078-passengers/207-sailings/32.6%). This accounts more than two thirds of the
total market.
Table 26: U.S. West Coast Sector Participation (No Alaska/Pacific Northwest) 2006
Source: B&A, 2006
Avg.
Number
of Days
US West Coast Cruise Region Mkt. Sector Participation
Avg. Per
Diem
Price
Total
Sailings
% of Total
Itineraries
Total Pax
% of Total Pax
Hawaii 10.67 $220.11 164 23.40% 359,041 22.87%
Mexican Riviera 8.77 $144.64 238 33.95% 535,995 34.14%
Repositioning 6.59 $187.00 44 6.28% 81,855 5.21%
Panama Canal 16.64 $214.65 40 5.71% 68,873 4.39%
Mexican Baja 4.49 $109.49 207 29.53% 512,078 32.62%
World 24.00 $288.85 5 0.71% 6,059 0.39%
South Pacific 22.67 $252.37 3 0.43% 5,974 0.38%
TOTAL $157.46 701 100% 1,569,875 100%
Table 27 shows actual 2006 POLA capture rates for the sectors listed. In addition,
the POLA does have 1 Alaska sailing on the Radisson Seven Seas Voyager which
accounts for the 257 sailings and approximate 575,000-passengers shown below.
The POLA is a leading homeport for the Mexican Riviera and Mexican Baja. In
addition, it is also the primary U.S West Coast homeport for the Hawaiian cruise
sector. As anticipated the POLA also captures 80% of the World sector. From our
analysis we would assume that the POLA would be in a good position to capture
additional sailings in the Panama Canal and Repositioning sectors. The capture rate
for 2006 does not reflect the normal trends in these markets to operate from
marquee ports, such as the POLA to assist in the required market capture and per
diem for these sailings.
66

Table 27: Summary of POLA Market Sector Capture, 2006
Source: B&A, 2006
Avg. #
of Days
Avg. Per
Diem
Price
Port of Los Angeles Mkt. Sector Capture
Total
Sailings
% of Total
Itineraries
Total Pax
% of Total Pax
Hawaii 15.81 $198.71 33 20.12% 67,776 18.88%
Mexican
93
Riviera 8.44 $156.66
39.08% 205,699 38.38%
Repositioning 9.47 $172.00 11 25.00% 18,486 22.58%
Panama
12
Canal 17.42 $239.68
30.00% 19,836 28.80%
Mexican Baja 4.49 $123.87 103 49.76% 257,070 50.20%
World 39.00 $244.00 4 80.00% 5,859 96.70%
South Pacific 19.50 $311.50 1 33.33% 754 12.62%
TOTAL 16.30 $206.63 257 36.66% 575,480 38.31%
Finally, Table 28 outlines the potential for additional homeport calls within the U.S
West Coast Region based on a non-constrained approach. It is important to note
that due to the current levels of berth utilization at the POLA it would not be
possible to capture all of the sailings illustrated. Those cruises outlined are for the
most part cruises that start at competing ports and sail similar itineraries, such as the
Port of San Diego’s Mexican Riviera cruises. This does not include Alaska sailings
from the Port of San Francisco as it is not possible to conduct the similar cruise
pattern from the POLA. Overall, there are 295 potential sailings with 669,000-
passengers that could be captured in the region in 2006. Within the projection
scenarios we may focus on some of these potential capture scenarios. However, the
main focus will be on new cruise vessels deployed in the region over time and
additional capacity based on the replacement of ships already sailing from the POLA.
Table 28: Summary of POLA Market Sector Capture Opportunities, 2006
Source: B&A, 2006
Avg. #
of Days
Port of Los Angeles Mkt. Sector Potential Capture
Avg. Per
Diem
Price
# of
Itineraries
% of Total
Itineraries
Total Pax
% of Total Pax
Hawaii 14.93 $231.79 14 8.54% 24,400 6.80%
Mexican
144
Riviera 8.95 $139.10
60.50% 329,914 61.55%
Repositioning 5.83 $156.33 12 27.27% 21,136 25.82%
Panama
20
Canal 16.85 $180.90
50.00% 38,375 55.72%
Mexican Baja 4.49 $98.95 104 50.24% 255,008 49.80%
World 16.50 $349.50 1 20.00% 200 3.30%
TOTAL 295 42.08% 669,033 42.6%
67

3.3 Projected Growth in the U.S. West Coast Region
As presented in Section 3.2, historical capacity placement data indicates some minor
regional fluctuations on a year to year basis with the long-term trend suggesting a
range from stability to solid growth. Several additional mid- to long-term trends add
weight to an overall positive outlook for the U.S. West Coast region:
• Global industry fundamentals remain positive.
• Cruise line decision makers interviewed as part of the 2006 Study indicate
they are considering expanding operations that would influence the West
Coast region through the future placement of larger vessels in the region and
possible key vessel placements. By example, Disney Cruise Lines possibly
adding a year-round vessel in the mid- to long-term.
• Key regional ports are actively pursuing infrastructure enhancement projects
to support increased cruise vessel operations and additional new ports are
anticipated to supply berths downstream over the long-term.
The region, however, is not without its challenges. Per diems are low for the key
sectors and there are favorable worldwide cruise trends indicating North Americans
are looking to expand their cruise horizons into more exotic destinations, prior Sept.
11. Expanded commitment by cruise lines over the long-term will be incumbent on
mid-term success in marketing cruises, developing products that appeal to diverse
consumer groups, and ultimately, selling cruises at per diems competitive with other
worldwide regions. Positive factors include the airlift, hotel and other tourism
infrastructure in the region that can support cruise operations and provide a platform
for serious commitments to year-round operations.
With these opportunities and challenges in mind, several capacity placement
projection scenarios were considered and framed as to the potential U.S. West
Coast market growth over the next fifteen years. These projection scenarios only
consider conventional cruise operations.
• Consideration of future key market sector capture levels is based on the
projected future North American passenger levels.
• Key sectors for the U.S. West Coast Region are considered overall with a
focus on those sectors directly impacting the POLA operations. They include
Mexico West and U.S. Coastal West; Panama Canal; Hawaii; South Pacific
and World markets.
• In addition, preliminary projections are estimated for the Alaskan cruise
sector due to its influence on the traffic patterns along the U.S. West Coast.
See the figures below for the future market capture scenarios for the key sectors
specified above.
68

Figure 14: Projected Scenarios of Capacity Growth for Alaska Sector (Rev. Pax.)
Source: B&A, 2006
Revenue Pax
2,000,000
1,800,000
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
06*
07*
08*
09*
10*
11*
12*
13*
14*
15*
16*
17*
18*
19*
20*
Figure 15: Projected Scenarios of Capacity Growth for Mexico West and US Coastal
West Sectors (Rev. Pax.)
Source: B&A, 2006
2,500,000
2,000,000
Year
Alaska (Low) Alaska (High) Alaska Midpoint
Revenue Pax
1,500,000
1,000,000
500,000
0
06*
07*
08*
09*
10*
11*
12*
13*
Year
14*
15*
16*
17*
18*
19*
20*
Mexico West and U.S. Coastal West (Repositioning) (Low)
Mexico West and U.S. Coastal West (Repositioning) (High)
Mexico West and U.S. Coastal West (Repositioning) (Midpoint)
69

Figure 16: Projected Scenarios of Capacity Growth for Trans Panama Canal Sector
(Rev. Pax.)
Source: B&A, 2006
Revenue Pax
500,000
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
06*
07*
08*
09*
10*
11*
12*
13*
Panama Canal (Low)
Panama Canal (Midpoint)
Year
14*
15*
16*
17*
18*
19*
20*
Panama Canal (High)
Figure 17: Projected Scenarios of Capacity Growth for Hawaii Sector (Rev. Pax.)
Source: B&A, 2006
Revenue Pax
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
06*
07*
08*
09*
10*
11*
12*
13*
70
Year
14*
15*
16*
17*
18*
19*
20*
Hawaii (Low) Hawaii (High) Hawaii (Midpoint)

Figure 18: Projected Scenarios of Capacity Growth for South Pacific and World
Sectors (Rev. Pax.)
Source: B&A, 2006
250,000
200,000
Revenue Pax
150,000
100,000
50,000
0
06*
07*
08*
09*
10*
11*
12*
13*
Year
14*
15*
16*
17*
18*
19*
20*
South Pacific and World (Low)
South Pacific and World (High)
South Pacific and World (Midpoint)
Table 29 below combines the projected revenue passengers produced by each of the
sectors described above.
Table 29: Projection scenarios of passengers in the U.S West Coast Market, 2010,
2015 and 2020 (Revenue Passengers)
Source: B&A, 2006
Scenario 2010 2015 2020
Average length of a Cruise set at 6.9 Days (North American Average)
Scenario 1 (Low – 2.1%
growth per annum)
Scenario 1 (Mid – 4.2%
growth per annum)
Scenario 2 (High – 5.4%
growth per annum)
2,180,068 2,361,744 2,552,687
2,694,182 3,252,185 3,838,652
3,208,295 4,142,626 5,124,618
71

Chapter
4
Port of Los Angeles – Current Situation
4.1 Section Summary
1) POLA’s total cruise passenger throughput was at its peak of 1,164,126
throughput passengers in 2001 and then declined to 806,000 passengers in 2003.
However, since then there has been a steady increase in traffic again. Primarily
the decline resulted from the departure of Carnival cruise operations to the Port
of Long Beach. Despite this setback POLA has continued to increase overall
capacity with limited increases in actual cruise vessel calls.
2) POLA has some room for improvement, especially in its cruise terminal facility
offerings. Areas for focus include: the number of terminals, the size of the
terminals, availability of additional berthing areas at the Pacific Coast Terminal on
peak days of operation and into the future; and, ingress/egress issues impacting
cruise operations.
4.2 Description of the Port of Los Angeles cruise activities
A. Cruise statistics
The Port of Los Angeles is primarily a homeport with very limited port-of-calls. Ferry
operations to Catalina Island are also conducted from an adjacent passenger ferry
terminal opposite berth 93, close to the Vincent Thomas Bridge.
Cruise passenger activities are primarily hosted at POLA’s World Cruise Center,
located in San Pedro (see Figure 19). The World Cruise Center consists of two
separate terminal facilities with three cruise berths. A full discussion of facilities and
capabilities of the World Cruise center is provided later in this Chapter.
72

Figure 19: World Cruise Center
Source: POLA, 2006
B. Vessel Operations
Table 30 provides a detailed overview of cruise vessel traffic operating from the
POLA between 2000 and 2006 outlining the name, operator, ship characteristics,
vessel frequency per annum and total number of passengers by vessel.
World Cruise Center
73

The POLA World Cruise Center currently consists of berths 91 / 92 totaling 1,590-
feet; and berths 93A / 93B totaling 1,260-feet. These three total berths can
accommodate three large vessels simultaneously at 93 A/B and two others at berths
91 and 92. Depth alongside is 37-feet. This draft meets the needs of all present
modern cruise ships in operation within the worldwide market. Ships generally
require more than 3.2- to 6-feet of bottom clearance when berthing – dependent
upon vessel characteristics and propulsion systems. Wharf height is 15-feet above sea
level with approximately 36.5 feet of working apron area capable of supporting the
necessary storing operations for large cruise vessels.
The marine access channel is approximately1,ooo feet wide and 1.2 miles in length
from the harbor entrance to Berth 93. The turning basin adjacent to the cruise ship
berths provides limited space (approx. 1.1x vessel length) of ships less than 1,000-
feet. The combination of channel width and bridge air draft does not allow for ships
of more than 1,100-ft. (approx.) to maneuver safely. Thus, as was the case in
February 2006 with the 1,227-ft. Queen Mary 2, the vessel must back down the
channel to berth. While this is acceptable under special circumstances, it is unlikely a
large vessel with more frequent calls would be able to operate in this condition.
Adjacent to Berth 93 is the Vincent Thomas Bridge with an air draft clearance of
between 165- and 185-feet. Modern mega-ships generally have an air draft clearance
of more than 200-feet.
Two dedicated cruise terminals support berths 93 A/B and 91 / 92. Terminal 93 is a
large two storey structure capable of progressive debarkation and simultaneous
check-in. Terminal 92 is limited due to its functioning size providing 35,000-square
feet of baggage lay-down space. This terminal is not capable of providing two way
operations for a cruise ship – meaning the disembarkation of passengers, and the
acceptance of embarking passengers in the terminal for check-in and baggage
processing. The terminals are operated by Pacific Cruise Ship Terminals through a
contract with POLA.
Immediately adjacent to the cruise ship terminals are 2,560-secured at-grade parking
lot spaces operated by Parking Concepts, Inc. through a contract with POLA. The
charge is currently $11 per day per vehicle. Oversized vehicles are charged a
premium for parking. This parking area provides a convenient location for cruise
passengers.
In addition, POLA offers bunker fuel; customs house brokers; pilotage; port agents;
ship chandlers and marine supplies; ship repair; tub assistance; warehousing; water;
and security services.
The POLA cruise facilities are located proximate to the newly developed Los
Angeles Cruise Ship Promenade connecting the cruise facilities with Ports O’Call
Village – San Pedro’s waterfront restaurant and waterfront development.
74

Figure 20 presents a summary of cruise passenger volume growth from 1999 through
2006 in terms of both actual passengers and homeport throughput. POLA has seen
a 13.7% growth rate with no additional cruise calls over time.
Figure 20: POLA passenger volumes 1999-2006
Source: POLA and B&A, 2006
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
2005
2006
2004
2003
2002
2000
2001
1999
Passenger Totals
Total Throughput
Figure 21 presents a summary of cruise vessel calls from 1999 through 2006. As
indicated, peak vessel capacity was seen in years 2000 and 2001 with more than 300-
vessel calls per annum. A decline followed in 2002 and 03 with the movement of
ships from the POLA to Long Beach.
Figure 21: POLA cruise calls 1999-2006
Source: POLA and B&A, 2006
350
300
250
258 260
226 228
257
319 315
295
Ships
200
150
100
50
0
2006
2005
2004
2003
2002
2001
2000
1999
75

POLA has seen an increase in ship passenger volume of 25% over the period 1999 -
2006 as shown in Figure 22. As indicated ship passenger volumes continue to
increase from 1,683-passengers per ship in 1999 to an estimate of 2,234-passengers
per ship in 2006 based on lower berth capacity.
Figure 22: Cruise Ship Passenger Volumes to POLA 1999-2006
Source: POLA and B&A, 2006
2,500
2,234
2,115 2,079
2,092
Passengers Per Ship
2,000
1,500
1,000
1,768
1,825
1,718 1,683
500
0
2006
2005
2004
2003
2002
2001
2000
1999
As shown in Table30, the 2006 statistical review of cruise traffic to the Port of Los
Angeles the peak traffic occurs in the months between October and April with a
marked decrease in the summer months as vessels move to other destinations such
as Alaska, Northern Europe and Mediterranean. In 2006 December provides the
highest passenger volumes with approx. 66,000 and 33 cruise calls. There are only 7-
days in this period without ships in port. In contrast, during August there are 23-
days without ships and only 20,000 passengers may transit the port on the short
Mexican Baja cruises. On average POLA have 22 ships per month and four days with
3 ships. The average daily passenger throughput is 1,588 passengers, while the
maximum throughput is 5,075 passengers. From a practical perspective the
maximum throughput on a day is 7,423 passengers in September.
76

Table 30: Statistical Review of POLA’s Cruise Ship Activities, 2006
Source: B&A, 2006
JAN. FEB. MAR. APR. MAY JUN JUL AUG SEP OCT NOV DEC AVG
PASSENGERS 65,013 56,509 55,023 62,717 38,906 22,500 22,500 20,000 48,566 62,107 55,958 66,765 48,047
% OF TRAFFIC 11.28% 9.80% 9.54% 10.88% 6.75% 3.90% 3.90% 3.47% 8.42% 10.77% 9.71% 11.58% 8.33%
SHIPS 32 24 24 28 17 9 9 8 23 27 24 33 22
PASSENGERS/SHIP 2,032 2,355 2,293 2,240 2,289 2,500 2,500 2,500 2,112 2,300 2,332 2,023 2,235
Days with no ships 10 10 10 9 18 21 22 23 13 13 11 7 14
Days with 1 ship 12 13 19 14 9 9 9 8 13 11 15 16 12
Days with 2 ships 7 4 1 7 4 0 0 0 3 5 3 7 3
Days with 3 ships 2 1 1 0 0 0 0 0 0 2 1 1 1
Average Day 2,097 2,018 1,775 2,091 1,255 750 726 645 1,675 2,003 1,865 2,154 1,588
Maximum Day 6,899 6,140 5,064 4,740 4,550 2,500 2,500 2,500 7,423 6,790 6,349 5,449 5,075
Table 31 outlines a statistical review of traffic from 2002 – 2006 inclusive of the
potential capture associated with the movement of Carnival Cruise Line to the Port
of Long Beach. Year over year growth continues despite the 2003 downturn in
cruise vessel traffic. The dominant factor is vessel size in the continuation of growth
to the POLA. Days with no ships per annum has been steady, while 2 and 3 ship
cruise days have increased over the past three years. No 4 ship days have been
recorded since 2003, and it is highly unlikely the POLA could accommodate this
volume with present berth and terminal capacity.
Table 31: Statistical review of POLA’s cruise ship activities, 2002 - 2006
Source: B&A, 2006
2002 2003
WLB
2003
WOLB
2004 2005 2006
PASSENGERS 606,942 656,290 504,200 488,361 520,699 576,564
GROWTH % 114.63% n/a 84.51% 117.62% 101.75% 105.58%
SHIPS 258 291 233 219 237 258
PASSENGERS/SHIP 2,352 2,255 2,164 2,230 2,197 2,235
Days with no ships 157 174 174 183 168 167
Days with 1 ship 163 108 108 151 160 148
Days with 2 ships 40 79 79 30 34 41
Days with 3 ships 5 10 10 4 3 8
Average Day 2,918 3,298 2,534 1,327 1,427 1,584
Maximum Day 7,044 9,696 8,070 6,020 7,099 7,423
77

Vessel LOA, GT and passenger capacity are tabulated as part of the berth demand
analysis to provide baseline in the determination of the Design Vessel. Clearly the
trend toward larger ships is continuing. The Queen Mary 2 at 148,000-GT and 1,227-
ft. has been the largest ship to berth in the POLA. However, the Diamond and
Sapphire Princess vessels also sail from the POLA. They are sister ships
accommodating 2,600-passengers, 117,000-GT and 951-feet. The majority of ships
operating in the region and from the POLA are North American brands, which
overall are significantly larger than the worldwide deployed fleets inclusive of
European and Asian branded vessels. As will be discussed in more detail later in the
Study, it is these larger vessels on a regional and then worldwide basis, that will
become the norm in terms of regular port-of-call and homeport operations.
For the period reviewed there were 28 separate cruise vessels from 15 cruise brands
and 11 cruise groups with a total of approximately 565,000-passengers on 258
sailings. Royal Caribbean Cruises, Ltd. remained the primary operator from the Port
of Los Angeles, responsible for over 64% of all cruise passenger throughputs
(365,433-passengers on 154-sailings). Vessels operated under several brands
controlled by Carnival Corporation were the second largest POLA cruise market
participants in terms of total passengers carried with approximately 137,000 on 61
sailings for 24% of total passengers. NCL is third with 9.8% and 56,000-passengers
on 24 sailings. The remaining 18 cruises are on 8 brands with approximately 12,000-
passengers.
The average vessel LOA for the major contemporary/premium fleets of Carnival,
Royal Caribbean and NCL is 923.8-feet with an average 87,506-GT. The maximum
vessel air draft is approximately 210-feet on the Queen Mary 2, while the Diamond
and Sapphire Princess ships are approximately 203-feet in height.
The remaining worldwide fleet of premium and luxury ships calling at the port has an
average LOA of 653.2-feet and is 37,568-GT.
78

Table 32: Statistical Review of POLA’s Cruise Ship Activities By Group, 2006
Source: B&A, 2006
Cruise
Calls
(Total)
Ship
Capacity
(Lower
Berth)
Cruise Calls
(By Type)
Total Pax.
Throughput
(approx.)
Vessel
GT
Vessel
LOA
(feet)
Total POLA
Participation
(Pct)
Carnival Corp. 61 137,424 24%
Queen Mary 2 3 2,620 W, R, B (SP) 5,240 148,000 1,227
Queen Elizabeth 2 1 1,778 R, (P) 1,778 70,327 963
Westerdam 2 1,848 P, R, (P), (R) 3,696 81,811 936
Volendam 1 1,440 R, (P) 1,440 60,906 780
Veendam 1 1,266 P, (R) 1,266 55,541 607
Aurora 1 1,874 W 1,874 76,152 886
Diamond Princess 14 2,600 14 M, (R) 36,400 117,875 951
Island Princess 16 1,950 15H, 1M, (2 R) 31,200 91,627 965
Coral Princess 1 1,950 P - POC 1,950 91,627 965
Sapphire Princess 19 2,600 18 M, 1 R 49,400 117,875 951
Regal Princess 2 1,590 P 3,180 69,845 811
RCCL Group 154 365,433 64%
Infinity 2 2,449 1 P, 1 H 4,898 90,228 965
Summit 15 2,449 15 H, (R) 36,735 90,280 965
Monarch of the
Seas
101 2,500 B 252,500 73,941 962
Radiance of the
Seas
2 2,500 H, P, (R) 5,000 90,090 962
Vision of the Seas 34 1,950 32 M, B, R (R) 66,300 78,941 915
NCL Group 25 56,119 9.8%
Norwegian Star 24 2,240 23 M, R, (R) 53,760 91,740 965
Norwegian Sun 1 2,359 P, (R) 2,359 78,309 853
79

Table 32: Statistical Review of POLA’s Cruise Ship Activities By Group, 2006
(Continued)
Source: B&A, 2006
Cruise
Calls
(Total)
Ship
Capacity
(Lower
Berth)
Cruise Calls
(By Type)
Total Pax.
Throughput
(approx.)
Vessel
GT
Vessel
LOA
(feet)
Total POLA
Participation
(Pct)
OTHERS 18 12,903 2.2%
Crystal Serenity 4 1,080 3 M, R 4,320 68,870 820
Crystal Symphony 1 940 M, (P) 940 51,004 790
Delphin
Renaissance
1 700 W 700 30,277 594
MV Columbus 2 400 H 800 14,903 472
Regatta 1 684 P, (P) 684 30,300 590
Seven Seas
Mariner
4 769 A,R,H,P,(P) 3,076 48,075 709
Seven Seas
Voyager
1 754 SP, (P) 754 41,500 677
World 1 200 W 200 38,000 644
Saga Ruby 1 665 W 665 24,492 626
Silver Shadow 2 382 R, P, (M) 764 28,258 610
C. Vessel Seasonality and Itineraries
Review of previous cruise seasons reveals the year-round nature of POLA cruise
operations. The majority of International cruise operators typically are present in
the region from October to May (see Figure 23). While the summer months of June
– August mainly play host to the Mexican Baja ships. Cruise ship calls peaked in the
months of January, September, October and December as illustrated in Figure 18.
For Royal Caribbean International conventional cruise deployment of the Monarch of
the Seas follows a year-round pattern, with cruises departing on Monday and Friday.
80

Figure 23: Cruise Ship Berth Utilization 1999-2006
Source: POLA and B&A, 2006
Passenger Throughput
200,000
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
- - - - - - -
SUN MON TUE WED THU FRI SAT
2006 2005 2004 2003 WLB 2003 NOLB 2002
The typical weekend cruise deployment pattern to fit within North American
vacation patterns also follows as shown in Figure 24 and Table 33. In 2006, Friday
and Monday departures have approximately 26% of departures occurring on each of
these days due to the dominance of the Mexican Baja sailings. Saturday and Sunday
departures are at 21% and 18% respectively. Weekdays average approximately 3%
overall. Future berth demand will likely continue to occur on the peak days indicated
above. See the averages in Table 33 for additional detail. The 9-day sailings on the
Norwegian Star are a logistical challenge for berth demand as they continually rotate
to the next day of the week for homeporting in the POLA.
Figure 24: Cruise Ship Seasonality 1999-2006
Source: POLA and B&A, 2006
Passengers Per Month
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
2006 2005 2004 2003 WLB 2003 NOLB 2002
81

Table 33: Statistical Review of POLA’s Cruise Ship Activities by Day 2002-2006
Source: POLA and B&A, 2006
SUN MON TUE WED THU FRI SAT
2006 18.01% 24.73% 2.73% 4.81% 3.95% 24.64% 21.13%
2005 12.15% 28.78% 5.54% 4.37% 2.37% 28.55% 18.25%
2004 20.53% 31.03% 4.22% 3.68% 2.78% 32.31% 5.44%
2003 WLB 26.53% 27.46% 3.49% 1.82% 1.65% 26.09% 12.96%
2003 NOLB 26.06% 26.18% 4.54% 2.37% 2.14% 24.93% 13.78%
2002 26.54% 26.27% 1.80% 1.88% 2.55% 26.84% 14.14%
AVERAGES
(2002-2006) 20.50% 26.66% 3.74% 2.88% 2.35% 26.75% 12.45%
4.3 Operational assessment for the Port of Los Angeles
A. World Cruise Center Terminals and surrounds
The World Cruise center has served as POLA’s primary cruise facility for over three
decades. Immediately accessible from the 110 Freeway via Harbor Boulevard, the
location provides a short marine channel (approximately 1-mile) to the open ocean.
With the implementation of the new “Bridge to Breakwater” project and other
community improvements in San Pedro, the surroundings will provide the cruise
passenger with excellent local opportunities for sightseeing, dining and shopping. The
improved Downtown Long Beach area and waterfront also provides a strong draw.
Cruise line feedback provides minimal direct insight into the area as most of the
activities of the port are homeport activities with limited direct impacts on the
surrounds through port-of-call visits.
Marine Access
Marine access to the Cruise Center Terminals and berths is achieved through a short
transit into the POLA from the Pacific Ocean of approximately 1-mile. For the
present fleet, this channel access width and distance is adequate. For the next
generation of ships proposed by the cruise lines interviewed the POLA facilities it is
likely best to provide a shorter transit, broader channel and larger turning basin for
ships. As an example, for maneuvering purposes with the present 1,000 feet wide
channel that this is not 1,000-ft. clear. Instead, due to the presence of daily cargo
ships adjacent to the present cruise berths (Evergreen Terminal), channel width is
reduced by 250-ft. with a large cargo vessel, plus additional space lost in the turning
basin with the Lane Victory taking another approximately 150-ft. In addition, there is a
minimum of 100-ft. clearance required for safety on each side of the cruise ship when
maneuvering in a channel. Thus, a ship with a beam of 150-ft. has less than 350-ft. of
channel width to maneuver in clearly. For the larger cruise ships of more than 1,000-
ft. this poses a serious problem when entering keel-first into the channel. This is the
reason why the Queen Mary 2 will back down the channel to berth. This maneuver is
difficult, time-consuming.
82

Pier / Berthing
POLA offers cruise operators two primary berthing locations. Both berths provide
enough length for large cruise ships. However, berths 91 / 92 are short when two
large ships are berthed at more than 950-feet each. The mean average of ship in the
POLA for main North American operators is currently 923-feet, and there are days
when two ships larger may be at the same berth combination. Lengthening /
straightening berth 91 / 92 or providing an alternative for large ships in the mid- to
long-term is likely a requirement for capturing some future deployments. Large ships
(with air drafts of more than 185-ft. and lengths of 1,000-ft.) trying to berth at 93 will
also have difficulties in maneuvering in the turning basin and swinging into the berth
due to a combination of factors. First, there is a height restriction on the Vincent
Thomas Bridge of 185-ft.; second, the Lane Victory provides another obstacle in the
turning basin taking away valuable water area; and third the width of the channel
forces the vessel to turn into the slip almost with no leeway. Depending upon the
cruise line, most agree that an acceptable turning radius for a conventional cruise
vessel (stern drive with no azipods) is from 1.3 to 1.5 times the length of the ship.
For azipod propulsion ships the turning radius is from 1.1 to 1.3 times the length of
the ship. Even for large 950-ft./200+ air draft vessels berthing at Piers 91 and 92 and
coming into the channel keel-first they must turn adjacent to the Vincent Thomas
Bridge and Lane Victory prior to berthing. This is a difficult maneuver. Finally, in
season ships in the channel must also deal with winds. As ships continue to grow the
sail area (overall surface area exposes above water on either side of the ship) also
gets greater and exposes the ship to increased movement based on wind direction
and speed.
Apron and gangway conditions
POLA has a modest apron space for provisioning, ship servicing and security
purposes at both present berthing locations at 36.5-feet. Cruise operators prefer
aprons with 50-feet or more width to provide space for trucks, baggage movement
and other activities. Gangways are sufficient to provide access to Terminal 93.
However, there are issues with the gangway operations for Terminal 91/92 as there
is only one gangway system and a second ship at this berth must utilize temporary
gangways. In addition, the distance from the gangway to terminal entrance is
extensive due to the ship lengths normally at berth. Weather can also be
problematic as the gangway and concourse are open to the elements at both
terminal facilities.
Terminal operations
The World Cruise Center terminals are operated as efficiently as possible in most
regards based on cruise line stakeholder feedback. Terminal 93 has undergone
renovations which provide for excellent spaces to accommodate the mega-ships
calling at the port. The two-story structure provides adequate baggage
accommodations, check-in area, waiting areas and other amenities allowing it to be
flexible for individual cruise lines requirements. Two-way operations are possible
from this facility. In some ways the terminal is antiquated with outdated signage, lack
of flat screen monitors and an overall ambience of the building exterior and interior
design scheme.
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Based on our assessment, cruise line feedback and other stakeholder discussions
Terminal 91/92 is not adequate and cannot support the large ships due to space
limitations. The design of the terminal building does not provide adequate space for
a full homeport operation for ships of more than 2,000- to 2,800-passengers sailing
on conventional cruises. Compiling this problem is the addition of a second ship
along the same pier face. Overall, providing a remedy for the immediate needs of the
cruise ships using this berth is essential. There is a need for short-term expansion of
adjacent facilities, such as tensile tent structures to provide baggage lay-down and
space accommodations for incoming cruise passengers. At present, most lines
operating from this terminal are forced to off-load and move all passengers through
the Terminal 91/92 facility prior to accepting embarking cruise passengers and
baggage into the facility. This compounds passenger issues, security processing and
related services for the ship at berth.
Terminal 91 / 92 can successfully accommodate ships of less than 1,000-passengers.
However, one must note that the POLA has very limited calls with this size of
passenger ship. Thus, Terminal 91 / 92 is very much outdated from a homeport
perspective due to its present internal size and external support areas.
A Terminal provides a structure for several types of operations based on the cruise
line operating from the POLA facility. Thus, the terminal must provide:
1) Flexibility: Allowing cruise lines to meet the needs of their passengers and
operating program for the individual cruise vessel. By example, Princess
Cruises may choose to use 15 check-in stations for their passengers and
provide a separate area for VIP passengers, while Crystal Cruises may want
separate check-in and waiting areas for their passengers based on cabin type.
Each line also has developed different baggage handling systems to allow for
the volume of luggage handled, efficient manpower use shoreside and
shipboard, and allowing for passenger satisfaction. Providing space and
systems to allow each line to operate to their standards is essential.
2) Functionality: The layout of the terminal facility must provide a flow that
allows for quick and efficient movement and operations to meet the security
and operational requirements of the cruise lines, while also meeting
passenger expectations in relation to check-in processing, boarding, and
other processes. Barriers to functionality can be a lack of doorway apron
access from terminal baggage areas; poor security control points that
congest corridors and circulation areas and others.
3) Affordability: Both in terms of facility cost to the cruise line in terms of
fees to use the terminal (based on construction costs) and the operational
requirements such as how much labor is required to efficiently operate the
homeporting process, cost of related services and others.
Ground Transportation Area (GTA)
Ground transportation areas are constrained for both terminal facilities to some
extent. However, some of this may be based on the cruise type (Mexican Baja vs.
World Cruise) - use of bus transportation versus independent vehicle parking.
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Terminal 93’s ramp to the second level appears to cause some congestion issues
based on cruise line feedback. The area adjacent to Terminal 93 on the first floor
provides good areas for bus accommodations supporting approximately 15 – 20
coaches. Terminal 91/92 has a relatively small drop off/pick up area to support
operations for large cruise ships. Independent vehicles and coaches are also mixed in
some scenarios. There are approximately 10-bus parking spaces. Additional
operational space at Pier 92 would assist in alleviating some of these issues. Again,
this entire area surrounding Terminal 91 / 92 was built to accommodate much
smaller ships than are presently using the facilities.
Parking
Location of the parking facilities is excellent. Some cruise lines have identified an
issue with overflow parking requirements related to port days with more than 3-
vessels. Additional information needs to be gathered as to the capacity of the parking
facility in relation to the present and future cruise activities at POLA. Additional
information must be assembled and analyzed on this topic as par of Phase 2 of the
Study.
Provisioning
Provision availability serves as a strength of the destination overall. The availability of
provisions and stores is reported as good. A majority of the goods provided come
via container as part of a vessel homeport operation. Provisions and stores sourced
locally generally include dairy products and other food items and medical supplies.
Fresh water, garbage disposal and fuel provisioning are all available. No reports were
received by cruise lines as to difficulties encountered by these operations with the
exception of access issues into the port area via Harbor Boulevard.
Security
Based on our stakeholder interviews the World Cruise center is in compliance with
the International Ship and Port Facility Security Code (ISPS Code). From an
operations perspective cruise lines offered poor feedback for consistency in
operations.
B. Other Port of Los Angeles assessment items
Landside Access
Access to the cruise facility is via Harbor Boulevard. Based on cruise line and
stakeholder interviews there is considerable difficulties at the intersection entrance
to the cruise complex. This may be due to the proximity of the entrance ramp on to
the boulevard in conjunction with the port gates and other factors. This is a choke
point and creates issues for not only the cruise lines, but also the surrounding
community. This situation is exacerbated by the peak hours of mid-morning and
afternoon traffic in the area. Additional traffic analyses are required to thoroughly
define the problem and solution related to landside access.
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General appeal as a travel and leisure destination
Consumer awareness of Los Angeles as an appealing travel and leisure destination is
high with most cruise lines contacted as part of this project effort. Similarly, appeal is
also thought to be high with consumers in Asia, Europe and North America.
Importantly, Los Angeles has and continues to dedicate significant resources in both
hardware and software sectors to generate interest in travel for leisure and business
purposes. The water front improvements underway in San Pedro will complement
and lend to continued draw in the area and region overall.
Marketing / communications
Cruise line interviews indicate that the general marketing supported by POLA works
well to assist the individual brands with their efforts in the region. Present contracts
with NCL, Princess and Royal Caribbean Cruises, Ltd. provide for direct marketing
funding for regional cruise marketing of sailings departing POLA. While this is likely
beneficial to POLA, it is somewhat difficult to monitor the spending of marketing
funds and to determine their impact to the POLA. In addition, cruise lines
continuously revise their marketing programs, personnel and other factors
contributing to the programs established in each region in support of cruise
operations.
Communications between the POLA staff and cruise line operations personnel
appears to be strong. Cruise lines such as Royal Caribbean International and
Princess Cruises have offered praise of the communication efforts of POLA staff and
Pacific Cruise Ship Terminals Management. However, interviews have also reflected
the need for two specific items: dedicated cruise marketing/operations personnel to
serve as a daily contact and information source. This position must also provide for a
higher level of decision-making ability to prevent lengthy turn-around times on
operational issues, deployment questions and other essential issues. The second
item is internal in nature to the POLA based on cruise line feedback. POLA must at
all times, clearly frame issues related to present and future cruise operations. By
example, prior to the presentation of the AMP Process (shoreside power) to the
cruise line industry. Understanding the implications to the cruise line deployment,
operations, costs and other issues is essential to formulate a flexible package to meet
the needs of the cruise line and the POLA.
C. Summary of the Port of Los Angeles strengths and room for improvement
Table 34 summarizes the observations and findings presented in Section 4.3. The
fundamentals of POLA’s cruise infrastructure are generally good. Strengths include:
• Marine access features. Channels, turning basins, and ease of navigation
are generally good for cruise vessel operations. Channel widths and depths
are capable of accommodating most current cruise vessels. Future vessel
classes likely need facilities closer to the port entrance due to the width of
the channel, turning basin and air draft restrictions of the Vincent Thomas
Bridge.
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• Position of the World Cruise Center. The location within POLA’s
harbor provides passengers easy access to the facility via major highway and
airport access. It is also within a short distance to open ocean. A new facility
for larger ships at a facility outside of the main channel would be preferred,
such as Pier 45 – 47. This would assist them in maneuvering, save time in
berthing and likely provide a facility to meet the operational needs of each
ship.
• Access to regional consumers. Los Angeles and the region provide an
excellent passenger source for cruise operations and Los Angeles serves as
an excellent destination for both North American and International
passengers. California is second only to Florida in the total number of cruise
passengers produced annually.
• High quality tourism infrastructure and tourist offer. Los Angeles’
tourism infrastructure is well developed. Landside access, airport, airlift,
hotels, attractions and its general appeal as a travel and leisure destination all
serve as important strengths. The airport does provide challenges for
incoming cruise passengers due to the size and scale of the facility. The drive
to/from the airport to cruise port can also be long due to traffic congestion.
Areas for consideration and improvement include:
• Operational characteristics of the World Cruise Center Terminals.
The current structural capability of Pier 91/92 Terminal is a limiting factor to
future cruise operations to the POLA. Short-term semi-permanent
structures should be used to meet the needs of cruise operations. Longterm
this Terminal building must be expanded considerably to meet the
demands of one or more simultaneous cruise ships calling at the adjacent
berths. Accordingly, two vessels fitting a large ship profile and calling at the
POLA presently—the Sapphire Princess and Diamond Princess—cannot be
accommodated at Terminal 91/92 without severe operational impacts. The
size of the terminal is not able to meet the requirements set out by the
cruise lines for normal operating procedures. The size and space allocations
associated with baggage, terminal check-in and waiting areas are limited.
Facilities must be able to accommodate the new generation of cruise vessels
sailing in the worldwide cruise fleets.
• Berths. While the present berths can accommodate the overall lengths of
cruise ships in the region and calling at the POLA today, future ship
deployments will require berths to accommodate vessels of more than 1,000-
to 1,300-feet long-term. In conjunction with the channel width and turning
basin this will be a challenge in the future for large ships.
• Berth utilization. POLA has maintained cruise call levels over the past
several years. The size of the ships is increasing impacting berth
accommodations and support terminal infrastructure. Berth utilization is high
on Monday and Fridays in peak season; low on weekdays; and very low in the
summer months based on the seasonality of current deployments in the
sectors impacting the POLA operations.
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• Landside Access. Access to the POLA cruise facilities via Harbor
Boulevard acts as a choke point for traffic into and out of the facility and San
Pedro waterfront. This area along with the gate accommodations should be
assessed to provide for increased flow for the entire area.
• Airport / Airlift. Several cruise lines have commented on the poor
operations provided at the Los Angeles International Airport (LAX) for
cruisers to and from the Cruise Center in the mid AM hours exacerbate the
issue. Working to provide a more operationally friendly service to/from LAX
would be beneficial to future cruise operations.
Table 34: Attractiveness of Port of Los Angeles as a Cruise Homeport (Summary)
Source: B&A, 2006
Criteria
Marine Access
Terminal Location(s)
Pier / Berthing
Apron
Gangways
Terminal Operations – Embarkation (91)
Terminal Operations – Embarkation (93)
Terminal Operations – Disembarkation (91)
Terminal Operations – Disembarkation (93)
Ground Transportation Area (GTA)
Parking
Provisioning
Security
Landside Access
Airport and Airlift
Lodging
Attractions and Venues
Access to Consumers
General Appeal
Marketing / Communications
Key: Strong (), Fair (), Weak ()
Assessment
(long channel) (channel width)
(poor for large ships) /
(length and water depth) / (structure)
/
/ (open to elements/technically aged)
(terminal size issue)
/
(terminal size issue)
/
(Location to terminal) / (volume)
/ (poor consistency)
/ (Intersection challenges)
(flights and carriers ) / (location/operations)
(consistent message/decision-making) /
The weaknesses identified above will likely impair POLA’s potential for short- and
mid-term cruise growth. Long-term, if facilities are in place, then the POLA should
be able to meet its long-term growth potential. The significant issues related to
adequate terminal size to accommodate today’s large 3,500+ passenger ships and
tomorrow’s 5,000+ passenger ships; convenient non-congested roadway access to
the cruise port terminal, parking and support facilities and the identification of
potential new berths to accommodate the next generation of cruise ship can be
identified and dealt with now in order for the POLA to continue as the leading
homeport on the U.S. West Coast. Unless suitable additional berth capacity and
expansion/modification of existing facilities (Terminal 91/92) are put into place, the
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undersized and structurally inadequate nature of the Pacific Cruise Ship Terminal
facilities could result in significant loss of future POLA and regional revenues
associated with the cruise industry and reduce the overall stature of Los Angeles as a
leading regional destination for cruise homeport activities.
D. SWOT Summary of the Port of Los Angeles Cruise Operations
Below is a SWOT (Strengths, Weaknesses, Opportunities and Threats) Summary
based on B&A’s preliminary assessment and cruise line stakeholder interviews. In this
section those elements discussed in the preliminary report sections 2 and 3 will be
further distilled into a manageable set of issues and opportunities for the future of
cruise homeport operations to the POLA. A specific analysis of Strengths,
Weaknesses, Opportunities, and Threats (SWOT) of the POLA is found below.
Strengths and weaknesses are internal to the destination; opportunities and threats
are external. By example, an opportunity for the POLA will be defined as an idea
that should be pursued because it has potential to successfully attract cruise line
operators to the port. Threats (Challenges), on the other hand, are circumstances or
trends that could erode POLA’s competitive cruise position (i.e., expansion of
facilities in San Diego or Long Beach).
Table 35: SWOT Summary for the Port of Los Angeles
Source: B&A, 2006
STRENGTHS – Internal Analysis
1) Present marine access and conditions.
2) Ability to berth multiple cruise ships.
3) Location of the Port.
4) Cruise port operations.
5) Historical cruise value.
6) West Coast Regional sector access.
WEAKNESSES – Internal Analysis
1) Terminal 91/92 homeport accommodations (space
accommodations).
2) Future marine access and conditions.
3) Roadway access.
4) Passenger and cruise line satisfaction.
5) Green policy.
6) Alternative Maritime Power (AMP)
7) Future facilities costs.
OPPORTUNITIES – External Analysis
1) POLA’s marquee value as a homeport.
2) Geographic location in U.S. West Coast Region.
3) Mild winter months that is good for cruising.
4) Supply of provisions and services.
5) Local and regional attractions and venues.
6) Airlift and hotel accommodations.
THREATS – External Analysis
1) New cruise projects at competitive homeports.
2) Mexican ports cruise berth and tourism infrastructure
constraints.
3) Cruise per diems vs. competitive world cruise sectors.
4) PSA – foreign-flagged cruise vessel regulations.
5) Cruise line trends towards larger ships with present
facilities.
6) Movement of Monarch of the Seas to alternative sector or
port.
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STRENGTHS – Internal Analysis
1. Present marine access and conditions: With the current worldwide
vessel fleet the access and conditions at the POLA are advantageous for
cruise ships due to the direct access to ocean and location of the cruise
berths/terminals. This is slowly changing due to the increasing length, width
and air draft of cruise vessels and will likely become a threat to future
deployments if the present configuration is maintained and no other
accommodations are made for larger cruise ships.
2. Ability to berth multiple cruise ships: POLA has the ability to berth
three large cruise ships at present, which provides adequate berth utilization.
There are minimal days with more than 4 ships in port and the use of berths
on key weekend days is still low. As growth continues, berthing large ships is
also dependent on the upland support infrastructure. This is a weakness of
the POLA with Terminal 91/92 not being adequate for today’s cruise vessel
passenger contingent. In addition, ship length may also play a role in the use
of berth face along the edge of the channel and other designated cruise port
areas in the POLA.
3. Location of the POLA: POLA is in a strategic position to accommodate
ships sailing on several key cruise sector patterns and lies in a heavily
populated cruise oriented community. This is a key to long-term draw of
cruise passengers and the success of the port’s cruise operations over time.
4. Cruise port operations: Overall, cruise lines report operations as being
very good at the POLA. However, due to the size limitation of Terminal
91/92 security, check-in and baggage operations do suffer. PCST and the
POLA try very hard to accommodate the needs of the lines and still
accomplish their goals in terms of security and finance.
5. Historical cruise value: Although more of a perception. It is important to
note that the POLA has been a major cruise homeport for more than 30-
years and serves as the hub of cruise activities along the U.S. West Coast.
This provides for excellent marketing opportunities and gives potential cruise
lines a good comfort level. Cruise passengers also associate the POLA with
cruise operations, particularly due to the “Love Boat” television show.
6. West Coast regional sector access: As noted above in port location,
the POLA provides access to the major sectors of the region inclusive of the
Mexican Riviera, Mexican Baja and Hawaii. In addition, the POLA provides
an excellent market base for these regions and can support short cruise
operations due to the major population base in the region.
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WEAKNESSES – Internal Analysis
1. Terminal 91/92 homeport (space): It is clear that Terminal 91 / 92 do
not provide for the space requirements of a majority of cruise ships using the
facility. It is out-of-date in terms of size and functionality for large cruise
ships. This does hurt the port, as it undermines the passenger and cruise line
experience on each call and provides for continuous challenges in meeting
the needs of the lines. If competing cruise facilities are put in place in the
region that can provide for a higher level of service this may affect the mid- to
long-term growth of POLA cruise operations. Addressing the impacts of this
small terminal should be high on the priority list for the POLA. Adding a
tensile tent structure for support operations adjacent to the facility would
provide for additional needed space.
2. Future marine access and conditions: As defined above in the
Strengths section clearly the POLA provides quality marine access and
security at present for the majority of cruise vessels in the market today.
However, growth is continuing to occur for the region and POLA mainly due
to the deployment of larger ships in terms of passenger capacity, length, air
draft and tonnage. Combined with the continued advancement in the size of
cargo ships occupying adjacent berths in the main channel and other marine
factors (turning basin, security, etc.) it is clear that the future demands of
cruise ships will likely heavily impact marine cruise operations inclusive of
transiting the channel, maneuvering and berthing. It will not be the choice of
the line to make difficult marine maneuvers as part of a routine at the POLA.
3. Roadway access: Ingress and egress for the POLA cruise facility provides a
constant challenge during cruise days. The main thoroughfare into the POLA
is Highway 110. This is the access corridor from Los Angeles International
Airport and most of the outlying residential areas surrounding the POLA.
Access is also available via the Vincent Thomas Bridge from Long Beach, but
provides limited accessibility from airports and other communities. All of the
roadways intersect adjacent to the cruise port facilities entrance on Harbor
Boulevard providing a significant traffic impact. This situation is exacerbated
on days with more than one cruise ship and during peak hours of operation.
Gate security entering the cruise facility also impedes flow into the area from
harbor Boulevard. Overall, this situation provides a serious impact to the
cruise operations and traffic flow in the area overall.
4. Passenger and cruise line satisfaction: This is one of the factors a port
is judged by during the deployment process. Providing the line and
passengers with a positive experience is essential in the long-term
relationship of the POLA. This satisfaction level is obtained through daily
cruise operations performance. At present, feedback from the cruise lines
indicates that the overall expectations are not being reached at the POLA on
a daily basis. This is primarily due to the influences of Terminal 91 / 92 size,
security and traffic access. While cruise lines noted the POLA and PCST
tried to deliver a good experience, it was not possible due to the physical
obstacles.
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5. Green policy: Applying this policy to the cruise operations and facilities
contributes a significant increase in the overall costs associated with
operating from POLA. This may increase port tariffs generated for
environmental programs, operational costs (low-sulphur fuel requirements)
and through other fees associated with new construction that must take into
consideration this mandate.
6. Alternative Maritime Power (AMP): POLA must provide the cruise
line industry with a well thought out plan prior to establishing the program
parameters. Cruise lines, particularly those that have past and present
experience with this system should be able to provide their feedback and
input into the program. If this is not done correctly and competing ports
either provide a solid program plan or do not require AMP then this could
likely affect cruise deployments to POLA.
7. Future facilities costs: Based on our initial meetings with POLA staff we
could foresee substantial costs associated with new cruise terminal facilities
and berths for the POLA. Consideration must be paid to the return on
investment that POLA will receive from future facilities. For cruise
operations, future revenue and investment returns should not only be
considered in terms of the direct impacts to the POLA, but also the very real
impacts on the surrounding community, tourism venues, suppliers and others
that benefit from the cruise industry. The POLA is considered a gateway for
the City and surrounds providing the economic engine to propel the region
forward. Without this view, it is unlikely that new cruise terminal facilities on
their own merit could be justified.
OPPORTUNITIES – External Analysis
1. POLA’s marquee value as a homeport: This is of significant value to
the cruise line industry. Los Angeles and the port provide a great tourist
destination for potential cruise passengers from outside of the region creating
an excellent draw for the cruise brands deployed to the POLA. In addition,
the POLA is strategically located in a high density population area that
provides a very high number of cruisers and potential cruise passengers
worldwide. Placing the POLA on an itinerary pattern as a homeport allows
for a higher level of comfort for travelers. As example, although Carnival
Corporation sails from the Port of Long Beach, all of their marketing and
itineraries identify Los Angeles as the homeport.
2. Geographic location in U.S. West Coast Region: The POLA is well
placed to capture a high number of cruise passengers, provides access to key
cruise sectors in the region and is along the transit corridor to the major
summer cruise sector of Alaska.
3. Mild winter months that is good for cruising: Peak cruising for the
Mexican Riviera, Baja and Hawaiian cruise sectors occurs during the winter
months. Weather allows for mostly pleasant conditions in the region and is
attractive to those potential cruise passengers in the colder climates of the
North American and world markets. Thus, deployments in the region are
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focused to capture the significant potential cruise market. However, the key
sectors must also compete against the Caribbean, largest cruise region
worldwide, during this time period.
4. Supply of provisions and services: Due to the location of the POLA it is
strategically well placed to accommodate cruise ships. There are numerous
local service providers due to the large population base. Provisions, normally
containerized and shipped from central warehouse locations are easily placed
at the POLA via truck or ship, dependent on the cruise operator. Cost
should also be competitive due to the number of service providers.
5. Local and regional attractions and venues: Los Angeles and the
surrounding region already provide numerous tourist attractions and key
venues that draw tourists to the area. This allows cruise liens to work in
conjunction with land-based attractions to provide pre and post cruise
packages or take advantage of their marketing draw and sway potential landbased
vacationers to a cruise experience.
6. Airlift and hotel accommodations: Los Angeles International Airport
provides for abundant airlift from all parts of North America and other
regions worldwide. This allows an excellent passenger access opportunity
for the cruise lines. Due to the large number of land-based attractions in the
region there are also numerous hotels placed at different star levels
throughout the area.
THREATS (CHALLENGES) – External Analysis
1. New cruise projects at competitive homeports: San Diego and San
Francisco are already working on new cruise projects. While not currently
planned, Long Beach could also add another berth and terminal to
accommodate ships close to the existing facilities. These will likely influence
cruise vessel deployments and may take potential cruise traffic from POLA if
the present facilities are not upgraded or new facilities constructed to
accommodate the needs of the cruise lines.
2. Mexican ports cruise berth and tourism infrastructure constraints:
While POLA and the other competing homeports may continue to expand
to accommodate future cruise vessel deployments, the downstream ports in
the Mexican Riviera must also be able to meet the needs and expectations of
the cruise line and passenger in order to continue growth in the sector.
These ports can be a constraint due to the lack of berth space or upland
tourism infrastructure, particularly when multiple cruise ships call in the same
day. Either staggering arrivals or developing infrastructure to accommodate
more and larger ships is necessary to expedite growth. Additionally, new
ports-of-call in the region can also supply additional options for cruise lines.
But, homeports, ports-of-call and cruise lines must work together to prepare
for future growth scenarios.
3. Cruise per diems vs. competitive world cruise sectors: Our analysis
and cruise line feedback indicates that the major cruise sectors operating
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from the POLA offer lower cruise per diems than others offered during the
same period in other regions. Cruise lines and ships are highly mobile assets.
They are placed in cruise markets where they can produce the highest
revenues for the individual company based on operational costs, marketing
costs, cabin revenues and onboard spending. Thus, all cruise sectors
compete against each other for cruise deployments based on cruise
passenger demand and revenues. Those with better performances get more
ship deployments. The Mexican Riviera and Baja are lower on average than
other competing cruise sectors. However, they are also within easy reach of
a large potential cruise passenger source and provide for a lower cost of
operations at present.
4. PSA – foreign-flagged cruise vessel regulations: These regulations
prohibit foreign-flagged ships from operating essentially U.S. itineraries. For
the most part the PSA is a hindrance to cruise ships operating cruises
to/from/within Hawaii on the West Coast. It has little effect on Alaska or
Mexican itineraries. It may impact some repositioning cruise itineraries along
the U.S. West Coast, but for the most part has little influence on deployment
at present. A major reason for this is that the deployments are generated by
passenger demand. Demand from North American passengers is for
destinations outside of the North American norm. Thus, they want to sail
from U.S. ports to foreign destinations. Where this is significant is the
deployment of U.S. flagged ships under the NCL flag to Hawaii. This allows
them to stay within the State and operate rather than sailings to a far-foreign
port. This restriction hinders possible deployments from the POLA.
5. Cruise line trends towards larger ships with present facilities: As
indicated prior ships sailing to the POLA are increasing in size – from
passenger count to length and height. This means the shoreside support
infrastructure must also be able to accommodate the newest ships and
anticipate the future generation of ships calling at the POLA cruise facilities.
The present facility, particularly Terminal 91/92, does not meet the
requirements of the cruise line industry and provides a very negative
passenger experience. This must be corrected in order to continue to
accommodate cruise ships at the POLA.
6. Movement of Monarch of the Seas to alternative sector or port:
Today, the Monarch of the Seas provides year-round homeport operations
and passenger throughput for the POLA. It replaced the Viking Serenade,
which was sold and deployed to the Mediterranean. POLA must consider
the potential ramifications for the potential movement of the ship to an
alternate competing port or different sector. The ship may be replaced with
a new vessel or may be taken out of the market completely. Working with
RCCL to influence this decision is important during future contract
negotiations as this ship provides the entire cruise throughput to the POLA
from June – August of each year.
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Chapter
5
Projection of Cruise Growth
5.1 Section summary
Cruise forecasts for the Port of Los Angeles were prepared based on a variety of
factors inclusive of worldwide cruise market trends, regional cruise sector trends,
POLA sector capture rates, cruise line interviews and other factors. Three
approaches were used to assist in determining the potential growth range for the
POLA over the period from 2006 through 2020. We believe these are fairly
conservative growth projections for the POLA over the given time period.
• Cruise vessel and passenger traffic to the region and POLA will
continue its growth over the long-term. Based on our projection scenarios
we envision an approximate average annual growth of 4.17% over the 15-year
study period. Cruise throughput would expand from 1,150,000-revenue
passengers in 2006 to between 1,732,000 and 2,200,000 (rounded) passengers by
2020. Similarly, cruise vessel calls would climb from 258 to nearly 400 calls by
2020. Cruise vessel calls increase at a lower rate of 2.48% on average per annum
due to the continued increased vessel size in the POLA cruise market.
• The average cruise ship passenger capacity will increase for the POLA
over the study period impacting the requirements for cruise facilities
inclusive of marine channels, piers, cruise terminals and upland
support areas. From 1999 - 2006 cruise ship passenger capacity has increased
25% from 1,683-passengers per ship to an estimated 2,234-passenger in 2006. In
the next 2 – 5-years there will be much larger cruise ships deployed to the region
and the POLA that need to be accommodated. They will reach capacities of
more than 3,500 to 6,000-passengers in the long-term (10 – 15 years). Any new
facilities should be designed to accommodate cruise ship maximums, not
averages. Based on our projections we estimate the average cruise passenger
capacity per ship to be 2,383 in 2010; 2,587 in 2015; and 2,810-passengers in
2020. POLA cruise facilities must have the capability of accommodating cruise
vessels with a passenger complement upwards of 3,500-passengers per ship in
the long-term (10 – 15-years).
• Our study indicates that within 3-years a Voyager-class cruise vessel will
be deployed in the region with the POLA as the primary homeport if
adequate facilities are available. Cruise ships will continue to increase
in physical dimensions. Vessel statistics for the Voyager-class include: Tons -
138,000; Length- 1,020-feet; Height above water – 210-feet; Passenger capacity –
3,114 lower beds and 3,840-maximum passengers per cruise; and Crew – 1,080-
persons. Royal Caribbean International’s Genesis project scheduled for delivery in
2009 will accommodate more than 6,400-passengers and be more than 1,180-
95

feet in length. While it is unlikely this ship will be deployed to the U.S. West
Coast region in the mid-term, it is possible that a ship of this size will be deployed
in the region within the next 10 – 15-years.
5.2 General approach to forecast preparation
A. Growth Scenarios
As part of our POLA Market Study, three growth projection scenarios were identified
that reflected the anticipated future direction of cruise activity for the Port of Los
Angeles. From information assembled, we believe these scenarios provide a solid
growth projection model. Our testing indicates that the scenarios presented are
within a reasonable range for the region and present a conservative future growth
projection for the POLA. These projections are un-constrained in nature and do not
take into account the potential berth capacity, utilization or other limiting factors of
the POLA or downstream port facilities. These scenarios are discussed below:
• Approach A (Baseline). Under this scenario, a general trend / regression
analysis was used based on past growth in each of the primary cruise sectors.
This follows the historic tends of growth for the POLA over the past five years.
Vessel call projections are based on the current vessel capacity growth trend in
the region and for the POLA vessel growth rate of 1.7%.
Figure 25: Approach A - Prospective Future Growth of Cruise Passenger
Throughput for the Port of Los Angeles 2006 to 2020
Source: B&A, 2006
Revenue Pax
2,000,000
1,800,000
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
-
05
1,158,828
1,283,928
06*
07*
08*
09*
10*
11*
12*
1,508,313
1,732,698
Projections under approach A range from 1,158,828-revenue passengers in 2006 to
approximately 1,732,000 in 2020. This approach provides for an approximate 2.9%
growth per annum producing approximately 866,349 actual passengers in 2020.
13*
Year
14*
15*
16*
17*
18*
19*
20*
96

Table 36: Approach A - Prospective Future Growth of Cruise Passenger Throughput for the Port of Los Angeles 2006 to 2020
Source: B&A, 2006
06 07 08 09 10 11 12 13 14 15 16 17 18 19 20
Est.
Passenger
Throughput
(Revenue)
1,158,828 1,149,297 1,194,174 1,239,051 1,283,928 1,328,805 1,373,682 1,418,559 1,463,436 1,508,313 1,553,190 1,598,067 1,642,944 1,687,821 1,732,698
Est.
Passenger
Throughput
(Actual)
Est. Vessel
Throughput
(Growth of
Vessel Size
Method)
Est. Vessel
Throughput
(Trend of
Vessel
Growth
Method)
Est.
Passengers
per Ship
576,249 574,648 597,087 619,525 641,964 664,402 686,841 709,279 731,718 754,156 776,595 799,033 821,472 843,910 866,349
258 253 259 264 269 274 279 283 287 291 295 299 302 305 308
258 256 259 263 266 270 273 276 280 283 287 290 293 297 300
2,234 2,270 2,308 2,346 2,385 2,424 2,465 2,505 2,547 2,589 2,632 2,675 2,720 2,765 2,810
97

Figure 26: Approach A - Prospective Future Growth of Cruise Vessel Throughput
for the Port of Los Angeles 2006 to 2020
Source: B&A, 2006
350
300
250
258
269
291
308
200
150
100
-
50
05
06*
07*
08*
09*
10*
11*
12*
13*
14*
15*
16*
Vessels
17*
18*
19*
20*
Year
For cruise vessel calls over the period from 2006 to 2020 an additional 50 cruise calls
are projected based on this scenario and growth based on a total of 19.5% growth.
Thus, we envision approximately 269 vessels in 2010 and more than 300 vessel calls
in 2020 for the POLA.
• Approach B – Cruise region market capture. Based primarily on the 2006
analysis this approach focuses on the potential of POLA to capture market sector
traffic in each of the primary sectors of the U.S. West Coast region. Totals
presented are actual revenue passengers. This is then divided into the actual
passenger projections generated. For this Approach we have generated a low,
midpoint and high range for both revenue passengers and cruise vessel calls.
Cruise vessel growth is set at the 1.7% annual rate for this scenario.
98

Figure 27: Approach B - Prospective Future Growth of Cruise Passenger
Throughput for the Port of Los Angeles 2006 to 2020
Source: B&A, 2006
3,000,000
2,500,000
Revenue Pax
2,000,000
1,500,000
1,000,000
500,000
-
06*
07*
08*
09*
10*
11*
12*
13*
Year
14*
15*
16*
17*
18*
19*
20*
Under this approach ranges fall from a low of 1,309,000 revenue passengers in 2010
to a high of 1,498,000. By 2020 this approach produces approximately 2,040,000
revenue passengers (1,020,000-actual passengers) under the mid-point scenario.
Figure 28: Approach B - Prospective Future Growth of Cruise Vessel Throughput for
the Port of Los Angeles 2006 to 2020
Source: B&A, 2006
450
Vessels
400
350
300
250
200
150
314
274
333
363
100
06* 07* 08* 09* 10* 11* 12* 13* 14* 15* 16* 17* 18* 19* 20*
Year
99

Table 37: Approach B - Prospective Future Growth of Cruise Passenger Throughput for the Port of Los Angeles 2006 to 2020
Source: B&A, 2006
06 07 08 09 10 11 12 13 14 15 16 17 18 19 20
Est. Pax.
Throughput
Revenue (Low)
1,150,960 1,214,470 1,259,144 1,288,034 1,309,211 1,330,600 1,352,202 1,374,020 1,396,057 1,418,314 1,440,793 1,463,498 1,486,429 1,509,590 1,532,982
Est. Pax.
Throughput
Revenue (Midpoint)
1,150,960 1,214,470 1,296,223 1,362,191 1,420,817 1,480,029 1,539,834 1,600,236 1,661,243 1,722,859 1,785,092 1,847,947 1,911,430 1,975,549 2,040,308
Est. Pax.
Throughput
Revenue (High)
1,150,960 1,214,470 1,322,045 1,413,837 1,498,544 1,584,098 1,670,507 1,757,781 1,845,927 1,934,955 2,024,873 2,115,690 2,207,416 2,300,058 2,393,628
Est. Pax.
Throughput
Actual (Low)
575,480 607,235 629,572 644,017 654,606 665,300 676,101 687,010 698,028 709,157 720,397 731,749 743,215 754,795 766,491
Est. Pax.
Throughput
Actual (Mid-point)
575,480 607.,235 648,111 681,096 710,049 740,015 769,917 800,118 830,621 861,430 892,546 923,973 955,715 987,774 1,020,154
Est. Pax.
Throughput
Actual (High)
575,480 607,235 661,023 706,918 749,272 792,049 835,254 878,890 922,964 967,477 1,012,436 1,057,845 1,103,708 1,150,029 1,196,814
Est. Vessel
Throughput
(Low)
258 267 273 274 274 274 274 274 274 274 274 274 273 273 273
Est. Vessel
Throughput (Midpoint)
258 267 281 290 298 305 312 319 326 333 339 345 351 357 363
Est. Vessel
Throughput
(High)
258 267 286 301 314 327 339 351 362 374 385 395 406 416 426
100

By 2015 under this mid-point scenario the POLA is capturing approximately 333-
cruise vessels per annum with a 2.5% growth annually. In 2020 the POLA may see
more than 360-cruise calls at the mid-point of this Approach.
• Approach C – Scenario based projection. Under this growth scenario, we
look at actual future cruise ship deployment additions and replacements over the
projection range based on market information and cruise line feedback. Scenarios
include Disney year-round vessel deployment; RCI deployment of a Voyager-class
ship in the POLA on seasonal cruises, upgrading the Baja ship with a larger vessel
and another upgrade in capacity to the West Coast fleet; MSC becoming
seasonally active in the region; NCL initiating semi-annual long-haul Hawaiian
sailings; Princess Cruises replacing its mid-size ships with Grand-class vessels over
time and adding an additional seasonal vessel; and HAL increasing capacity on
ships in their present West Coast fleet.
The net increase is calculated for ship size replacements and the remaining
passengers are assumed to fall within the base passenger levels grown at 1% per
annum in this projection scenario. Annual growth in this scenario is
approximately 4.7% over the period.
Approach C1 is conservative in its approach to POLA’s growth. Under this
scenario we see ships being deployed to the area later than anticipated through
the cruise line interview process. This is a subtle delay, but there are some
impacts to the growth of the POLA. These projections fall into the range
associated with both Approach A and B.
Figure 29: Approach C1 - Prospective Future Growth of Cruise Passenger
Throughput for the Port of Los Angeles 2006 to 2020
Source: B&A, 2006
Revenue Pax
2,500,000
2,000,000
1,500,000
1,000,000
1,150,960
1,694,894
1,840,988
2,061,199
500,000
-
06* 07* 08* 09* 10* 11* 12* 13* 14* 15* 16* 17* 18* 19* 20*
Year
101

Growth under Approach C1 – Scenario based indicate revenue passenger
throughput ranging from 1,694,000 in 2010 to more than 2-million passengers in
2020. Over the period this is an approximate 79% growth rate. These appear to be
reasonable growth rates in this scenario process.
Figure 30: Approach C1 - Prospective Future Growth of Cruise Vessel Throughput
for the Port of Los Angeles 2006 to 2020
Source: B&A, 2006
450
400
350
355
356
367
Vessels
300
250
200
150
258
100
50
0
06* 07* 08* 09* 10* 11* 12* 13* 14* 15* 16* 17* 18* 19* 20*
Year
Figure 30 shows vessel cruise calls increasing for the POLA from the present 258 in
2006 to a high of 367 calls in 2020. Based on the projection scenarios indicated
vessel and passenger increases occur in a saw-tooth natural pattern based on the
deployment and withdrawal of vessels over the time period.
Approach C2 is much more aggressive in that we are basically tending the growth of
the region slightly faster than anticipated and also stimulating vessel growth in the
region through the deployment of the newer ships at a faster pace. In addition,
seasonal calls are extended and year-round ships increased in size. Under this
Approach C2 cruise revenue passengers grow from 1,150,960 in 2006 with 258
vessel calls to approximately 2,235,599-passengers with 398 calls in 2020. However,
this Approach also illustrates the overall opportunities for the POLA and the region
overall. While this Approach is aggressive in nature we believe it reflects a very real
option for POLA over the long-term. The average annual passenger growth is 4.86%
under this scenario. Under C1 the growth rate is 4.25%.
Figure 31 below provides a look at the growth of the Approach over time for both
cruise passengers and vessels.
102

Figure 31: Approach C2 - Prospective Future Growth of Cruise Passenger and Vessel
Throughput for the Port of Los Angeles 2006 to 2020
Source: B&A, 2006
2,500,000
2,250,000
2,000,000
1,750,000
1,500,000
1,250,000
1,000,000
750,000
500,000
250,000
-
00 01 02 03 04 05 06* 07 08 09 10 11 12 13 14 15 16 17 18 19 20
Est. Passenger Throughput (Revenue) (D1)
Est. Vessel Throughput
450
400
350
300
250
200
150
100
50
0
5.3 Forecasts of cruise passenger and vessels
A. Projection Assumptions
We will outline several overarching assumptions and qualifications for each of the
growth scenarios discussed in Section 6.2.
• Our forecast methods and the various assumptions inherent in each incorporate
our best interpretation of demand and supply conditions present in the
marketplace as of the date of this report.
• The three Approaches used for the POLA projections include a baseline
trend/regression analysis; POLA target cruise sector capture rate assessment;
and 2 separate scenario-based projections based on cruise line feedback.
• POLA projections are divided into three specific ranges: short-term (2006 –
2010), mid-term (2011- 2015) and long-term (2016-2020).
• Passenger throughput is reflected in revenue passengers (basically doubling the
total passenger throughput of the POLA) over time. Cruise calls are then
determined based on the revenue throughput first.
• The cruise industry is inherently mobile. With the exception of a handful of key
regions and ports, the industry rarely makes decisions and long range
103

commitments beyond six years. Without long-term commitments by cruise lines
for deployment to the U.S. West Coast region and to the POLA, our projections
rely on a number of assumptions on reasonable deployment possibilities under
each of the three growth approaches. These assumptions are less reliable as we
approach the 2020 planning horizon of this study effort.
• All Approaches assume cruise infrastructure supply keeps pace with market
growth.
• Projections are in throughput passengers and follow the equation: Homeport
Inbound Passengers + Homeport Outbound Passengers + Port-of-Call (in transit)
Passengers = Total Passenger Throughput. For the POLA almost 100% is
dedicated to homeport calls.
• A high, medium, and low forecast was developed under Approach B with
Approach A and C1, C2 reflecting actual anticipated mid-range projections; actual
passenger and vessel throughputs are anticipated to be recorded within this
range overall.
• Our projections represent aggregates of all conventional cruise passenger traffic
and do not include vessel operations in the cruise-to-nowhere (one-day)
segment.
• Tariff and general destination service levels are assumed to remain constant with
those presently observed in the POLA.
• Despite major disruptions in global and regional cruise activities due to world
affairs, terrorism and health issues, our projections anticipate the cruise industry
will continue to be able to overcome these challenges and grow for the
foreseeable future. While unfortunate, unforeseen events could again bring
about disorder in global and regional cruise deployments, including in the U.S.
West Coast region and the POLA. Due to the uncertain nature and timing of
these issues, their potential impact is not factored into the growth scenarios. 16
• Our forecast methods and the various assumptions inherent in each incorporate
our best interpretation of demand and supply conditions present in the
marketplace as of the date of this report.
16 The cruise industry has shown tremendous resilience in dealing with the variety of economic, security, and health events that
have made an appearance of the past three decades.
104

Chapter
6
POLA Facilities Demand
6.1 Monthly Traffic Analysis and Seasonality
Part of the process in accurately identifying long-term berth demand is to develop an
understanding of the traffic patterns to the port or facilities in question. In the case
of the POLA there is a well defined monthly traffic pattern that emerges through
analyzing the historical traffic data. The drivers associated with the POLA traffic
patterns are inclusive of regional cruise market sector seasonality, profitability and
competition from cruise regions throughout the year based on the same factors.
Figure 32 provides a snapshot of the monthly passenger traffic for the POLA from
2002 – 2006. Typically, the peak months for the POLA are November through
February. There is a transitional period during the months of April/May and
September/October when cruise ships are repositioning to/from the Alaska cruise
sector and moving to the Caribbean or Mexican Riviera winter cruise markets. The
low period for the POLA is June through August when the only traffic sustaining
berth use is the short Mexican Baja itineraries with Royal Caribbean International.
This is essential traffic to maintain and build into the future so facilities have continual
use and provide some level of revenue production year-round. In 2005, an anomaly
was provided by the deployment of the Disney Magic to the region during the low
summer months providing a solid boost to cruise traffic numbers. Overall, it would
be in POLA’s best interest to level out these seasonal patterns. For the most part
these are outside market influences that POLA cannot control. See Figure 33.
Figure 32: POLA Monthly Passenger Traffic, 2002 - 2006
Source: POLA and B&A, 2006
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
2002 2003 2004 2005 2006
105

Figure 33: POLA Monthly Passenger Traffic, 2002 - 2006
Source: B&A, 2006
20.00%
18.00%
16.00%
14.00%
12.00%
10.00%
8.00%
6.00%
REPOSITIONING
ALASKA
SEASON
REPOSITIONING
4.00%
2.00%
0.00%
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
2002 2003 2004 2005 2006
Based on historical data from 2002 – 2006 a monthly passenger model has been
assembled as shown in Figure 34 based on percentage of overall traffic to the POLA
on monthly basis. This pattern accurately reflects the seasonality of the POLA cruise
market over the time period. Based on this model and the overall passenger
projections developed for the Market Study (primarily projection scenarios A, B and
D) in Figures 35 through 37 monthly passenger projections are extrapolated for the
years 2010, 2015 and 2020.
Figure 34: POLA Monthly Passenger Model, 2002 - 2006
Source: B&A, 2006
20.00%
18.00%
16.00%
14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
2002 2003 2004 2005 2006 MODEL
106

Overall, most growth is envisioned to occur during the peak Mexican Riviera cruise
months from November through March with little aggressive growth envisioned for
the summer months. This is primarily due to the competition from Alaska and other
summer destinations whereby the revenues will continue to draw traffic out of the
POLA cruise market catchments over the study period. All of the models envision
some level of growth over the period with ranges from 150,000 to 200,000-revenue
passengers in the peak months in 2010; 180,000 to 260,000-revenue passengers in
the peak months in 2015; and a leveling off in 2020 at between 210,000 to 270,000-
revenue passengers during the peak months. Overall, on a percentage basis,
December and January continue to be the peak months for the POLA over time.
Figure 35: POLA Monthly Projected Passenger Traffic - 2010
Source: B&A, 2006
300000
250000
200000
150000
100000
50000
0
JAN FEB MAR APR MAY JUN JUL AUG SEP OCY NOV DEC
2006 A B D
Figure 36: POLA Monthly Projected Passenger Traffic - 2015
Source: B&A, 2006
300000
250000
200000
150000
100000
50000
0
JAN FEB MAR APR MAY JUN JUL AUG SEP OCY NOV DEC
2006 A B D
107

Figure 37: POLA Monthly Projected Passenger Traffic - 2020
Source: B&A, 2006
300000
250000
200000
150000
100000
50000
0
JAN FEB MAR APR MAY JUN JUL AUG SEP OCY NOV DEC
2006 A B D
Figure 38 below refers back to the passenger projections with an illustration of the
overall growth from 2006 to 2020 on a peak month basis.
Figure 38: POLA Peak Month Passenger Traffic, 2006 - 2020
Source: B&A, 2006
300000
250000
200000
150000
100000
50000
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
A B MID D
108

Figure 39 illustrates the peak month cruise traffic in terms of vessel calls. Under the
medium and high projection scenarios 35 to 40 peak month calls are envisioned as
early as 2009 / 2010.
Figure 39: POLA Peak Month Cruise Ship Calls, 2006 - 2020
Source: B&A, 2006
60
50
40
30
20
10
PLANNING HORIZON
CONSTRUCTION HORIZON
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
A B MID D
6.2 Daily Traffic Analysis and Peaking Periods
Figure 40 shows the POLA daily passenger traffic comparison from 2002 through
2006. Monday/Friday has consistently been the busiest cruise days for the POLA,
primarily due to the short cruise Baja Mexico traffic. Over the past two years this
traffic has seen a slight decrease. Over the 2002 – 2005 years the Sunday traffic has
dropped consistently, but in 2006 a marked increase has occurred primarily due to
the addition of Princess Cruises Mexican Riviera ships into this slot. Saturday has
also seen a good increase in traffic over the past two years. Weekday cruise traffic is
weak overall on Tuesday through Thursday with these days seeing limited growth
over the past two years. Due to vacation travel patterns of the North American
consumer, preferring weekend travel, it is unlikely that the POLA can grow the
weekday calls significantly over time unless consumer vacation patterns change
substantially over time.
109

Figure 40: POLA Daily Passenger Traffic Comparison (,000), 2002 – 2006
Source: B&A, 2006
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
SUN MON TUE WED THU FRI SAT
2002 2003 2004 2005 2006
Figure 41 provides a daily passenger traffic comparison in terms of percentage. As
illustrated, Monday and Friday see roughly 24% of the cruise passenger throughput,
while Saturday has 21% and Sunday provides approximately 18% in 2006. Midweekday
traffic is less than 5% per day overall.
Figure 41: POLA Daily Passenger Traffic Comparison (%), 2002 – 2006
Source: B&A, 2006
40%
35%
30%
25%
20%
15%
10%
5%
0%
SUN MON TUE WED THU FRI SAT
2002 2003 2004 2005 2006
110

Figure 42 below shows POLA traffic for Saturday and Sunday for the years 2002 –
2006 in terms of passenger counts. Despite a dip in traffic from 2002 to 2004, there
has been steady improvement the past two years.
Figure 42: POLA Saturday/Sunday passenger traffic comparison, 2002 – 2006
Source: B&A, 2006
300,000
250,000
200,000
150,000
100,000
50,000
0
2002 2003 2004 2005 2006
Figure 43 provides the same detail based on percentage of traffic overall. From this
analysis the port continues to handle approximately 40% of its traffic in the
weekends.
Figure 43: POLA Saturday/Sunday passenger traffic comparison (%), 2002 – 2006
Source: B&A, 2006
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
2002 2003 2004 2005 2006
111

Figure 44: POLA Friday/Monday Passenger Traffic Comparison (%), 2002 – 2006
Source: B&A, 2006
70%
60%
50%
40%
30%
20%
10%
0%
2002 2003 2004 2005 2006
Figure 44 above illustrates the percentage of passenger throughput from 2002 – 2006
for cruise traffic on Friday/Monday. Over the historical timeframe daily traffic on
these days has averaged approximately 54% with a peak of 63% in 2004. In 2006
traffic is approximately 48% of overall capacity for these days.
Figure 45: POLA Friday/Monday Passenger traffic comparison, 2002 – 2006
Source: B&A, 2006
400,000
350,000
300,000
250,000
MARKET WINDOW
200,000
150,000
100,000
50,000
0
2002 2003 2004 2005 2006
112

Figure 45 provides a view of the potential market window, or average passenger
throughput over the time period that the POLA has seen for Friday/Monday traffic
based on the premise that a most of the cruise passenger throughput is generated by
the short Mexican Baja cruise sector with the remainder being the extended winter
seasonal Mexican Riviera cruise sector. This range is from 260,000 to 280,000-
revenue passengers.
Figure 46 below illustrates the relationship between cruise passenger throughputs on
the days shown over time. Monday/Friday has consistently driven the most cruise
passenger traffic on a percentage basis. However, this gap between Monday/Friday
and Saturday/Sunday departures has consistently narrowed after a wide gap in 2004.
This was mainly due to the movement of Princess and Carnival ships to Long Beach.
Princess moved its fleet back to the POLA in 2005 and added an additional Saturday
departure effectively moving the POLA from 15 departures on Saturday to 47 year
over year. There is a continued positive trend, albeit minor, for other weekday calls
to the POLA with a leveling off at approximately 10% of traffic.
Figure 46: POLA Passenger Traffic Comparison - Sat/Sun; Mon/Fri; and Other, 2006
Source: B&A, 2006
70%
60%
50%
40%
30%
20%
10%
0%
2002 2003 2004 2005 2006
SAT/SUN MON/FRI OTHER
Much of the positive influence on Saturday/Sunday cruise traffic is generated by
increased revenues on sailings of more than 5-days as illustrated in Figure 54. All
POLA Mexican Baja short cruises depart on Monday/Friday, while the typical 8-day
Mexican Riviera cruise pattern begins more typically on a Saturday/Sunday.
113

Figures 47 and 48 provide an illustration of peak month and day passenger
throughput for the POLA over the projection period. Non Monday/Friday traffic will
grow from approximately 100,000-revenue passenger per month in 2007 to between
160,000- and 220,000-revenue passengers per month in 2020. Peak day passengers
will be between 18,000- and 24,000-revenue passengers.
Figure 47: POLA peak month passengers (non Monday/Friday), 2006 - 2020
Source: B&A, 2006
300,000
250,000
200,000
150,000
100,000
50,000
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
A B MID D
Figure 48: POLA peak day passengers, 2006 - 2020
Source: B&A, 2006
25,000
20,000
15,000
10,000
5,000
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
A B MID D
114

Chapter
7
Facility Demand
7.1 Facility demand assessment
Translating cruise passenger traffic into berth or facility demand over the projection
period is an essential element in the overall planning for the POLA. This process
looks to provide the facility berth need over time and more specifically to focus on
the timing of the facilities needed by the POLA to accommodate the future traffic to
the port.
Figure 49 provides an overview of cruise calls per day per annum from 2002 through
2006. Overall there are no ships in port for approximately 166-days per year which
has been consistent overall. Taking into consideration the anomalies of 2003, the
average number of days in a year with 1 ship in port is 155.5. There are 41 days with
2 cruise ships calling and another 8 days that POLA has 3 ships calling in port in 2006.
Figure 49: POLA Cruise Calls Per Day, 2002 - 2006
Source: B&A, 2006
300
250
200
150
163
157
175
184
151
168 167
160
148
0
1
2
3
4
109
100
77
50
0
40
41
29
34
5
10
4 3
8
0 3 0 0 0
2002 2003 2004 2005 2006
115

Over the projection period we envision that the peak month berth demand with 3
berths required will in 2009 under the high scenario and 2012 in the mid-range
projection. This is shown in Figure 50 below. Under the low projection scenario
POLA would not require additional berths through the period. However, this low
range is unlikely based on our research and interviews conducted with the cruise line
industry and other sources.
Figure 50: POLA peak month berth demand, 2007 - 2020
Source: B&A, 2006
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
A B MID D
Figure 51 provides a snapshot of the facility demand required during the average for
the peak winter months.
Figure 51: POLA average winter berth demand, 2007 - 2020
Source: B&A, 2006
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
116
A B MID D

Figures 52 through 54 below reflect the POLA berth demand based on the projected
volumes of cruise passenger vessel calls for each scenario from 2007 to 2020.
Under the low scenario (Figure 52) a total of three berths would be
required throughout the projection period.
Figure 52: POLA Berths vs. Volumes – Low Projection, 2007 - 2020
Source: B&A, 2006
6
2,500,000
5
2,000,000
Number of berths
4
3
2
1,500,000
1,000,000
Passengers
1
500,000
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
PEAK MONTH WINTER PASSENGERS
0
Figure 53: POLA Berths vs. Volumes – Mid Projection, 2007 - 2020
Source: B&A, 2006
6
2,500,000
5
2,000,000
Number of berths
4
3
2
1,500,000
1,000,000
Passengers
1
500,000
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
PEAK MONTH WINTER PASSENGERS
0
117

Figure 53 shows under the mid-range projection that during the peak month
4 berths are required from 2011. Figure 54 illustrates the need for four
berths in 2010 and an additional berth in 2013 to accommodate the cruise
passenger growth for the POLA.
Figure 54: POLA Berths vs. Volumes – High Projection, 2007 - 2020
Source: B&A, 2006
6
2,500,000
5
2,000,000
Number of berths
4
3
2
1,500,000
1,000,000
Passengers
1
500,000
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
PEAK MONTH WINTER PASSENGERS
0
A test of the berth demand can be further be seen by comparing the per berth
passenger throughput as a metric, the different scenarios are shown in Figure 55. In
general, POLA performs better than most US ports with passenger
counts of between 350,000 to 600,000 per berth.
Figure 55: POLA Metric Passenger Use Year Round Ports, 2000 - 2020
Source: B&A, 2006
950,000
850,000
750,000
650,000
550,000
450,000
CURRENT THRESHOLD (YEAR ROUND PORTS)
350,000
250,000
150,000
50,000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
HISTORICAL LOW LOW MID MID HIGH HIGH
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7.2 Facility Demand Conclusions
Based on the Facilities Demand Analysis the following conclusions have been
formulated:
• POLA will have the cruise demand for 4 terminals/berths over the mid-term (3 –
5 years) and potentially a 5 th berth in the outer planning horizon if the cruise
projection models reach the higher levels of passenger throughput;
• Thus, the 4 th berth will be needed after 2010 to meet the needs of the POLA’s
cruise growth. If a 4 th berth is not put into place for the POLA this would cap
cruise growth to approximately 1.8 Million annual revenue passengers; and
• Within a few years all three US West Coast Southern California homeports will
be at full capacity.
One of the major keys to growth for the region and ports along the US West Coast
is who has the capacity to expand cruise facilities. Thus, the POLA has an
opportunity to capture any new additional deployments with new cruise
terminals/berths in place.
119

Chapter
8
Financial Model
8.1 Section Summary
The purpose of this Chapter is the following:
• Provide an analysis of the current cruise-related rate structure and assist the
POLA to establish a competitive rate structure if this is already not in place;
• Provide POLA with a series of potential income scenarios based on cruise
operations over the next 15-year period. (through 2020); and
• Provide POLA with calculations to determine net-net revenues available for
capital (debt service) investment into new cruise or other port-related facilities.
9.2 Tariff Analysis
One of the most critical issues that cruise lines and ports are dealing with worldwide
is that of cruise vessel tariffs. Cruise lines are increasingly sensitive to port charges.
Increases in tariff fees must be justified and explained to the cruise line industry in
terms of product enhancement, port expansion, facilities upgrades, and other
infrastructure development that has a direct or indirect benefit to the cruise lines.
Over the past ten years fee structures have experienced a period of volatility due to
the rapid growth of the cruise industry into markets and destinations that were not
prepared to deal with the influx of cruise tourism.
For the most part, cruise lines see tariffs in a negative light and fight hard to prevent
increases. They believe small increases add up quickly over time, and they are
concerned that other ports may follow suit with further increases. In addition, cruise
lines have looked to bundle tariffs into those areas that can be passed through to the
consumer. By example, this would be including dockage fees, for instance, in the
passenger head tax portion of the total amount of charges by a port.
9.3 Passenger Fees
Fees and taxes vary considerably from port to port. Cruise vessel tariffs are charges
levied against cruise ship operators for berthing, loading and unloading of passengers,
entrance and exit of a harbor, line-handling/mooring, pilotage, tugs, and other
services. These charges are pivotal for a cruise line in determining their operational
costs in a region. Port tariffs associated with port-of-call/homeport operations
include:
120

• Dockage: Cruise ships are assessed dockage charges for berthing or making
fast to a wharf, pier or other bulkhead structure. These fees are typically
calculated on a per gross ton (GT.), or (LOA) length overall of the vessel over a
24-hour period.
• Wharfage: Commonly referred to as “passenger head tax” are charges levied
against cruise ships for the manifested number of passengers onboard the ship at
the time of arrival in a transit port. Homeports may charge a fee for passengers
embarking/debarking due to a potential difference in the overall passenger count.
• Harbor Dues: These fees are typically assessed vessels entering a port for
maintenance of channels and other navigational aids. Harbor fees are either fixed
or calculated on a mill rate multiplied by the GT, LOA, or volume of a cruise
ship.
• Pilotage, tug and line handling: These and other charges associated with the
guidance of a cruise ship in and out of a berth are present at most ports. These
charges vary considerably due to local customs, provider of the services, and
other factors such as onboard equipment, maneuvering capabilities, waterway
and berthing access requirements, and distance from an ocean sea buoy.
• Other Charges: These may include lightering for anchored ships, stevedoring
charges for the movement of baggage or other supplies, security, water,
electricity, garbage disposal, environmental fees based on local regulations,
gangway fees, etc.
Figure 56 illustrates the current 2006 published passenger fees for the major North
American ports. Published rates are standard rates applied to most cruise ships
calling at a port. However, it is most likely that the major cruise lines have contracts
with most of the ports identified below to provide “discounted” fees based on
annualized passenger or ship volumes. The contract rates (as identified in Figure 57)
are normally lower and may include additional provisions for other services,
marketing dollars or other items beneficial to the cruise line.
121

Figure 56: Passenger Fees (published rates), 2006
Source: B&A, 2006
$20
$18
$16
$14
$12
$10
$8
$6
$4
$2
$0
LAX
SFO
SD
SEA
VAN
JAX
MIA
NO
NY
PHI
CAN
PE
TMP
KW
KET
JUNEAU
As can be seen above New York has the highest published passenger fees at $15.64
(per passenger) and New Orleans the lowest at $4.00 per passenger. Within the US
West Coast Region the major ports with published tariffs are fairly consistent. These
include POLA at $10.31; San Francisco at $10.50; San Diego at $8.10; Seattle at
$7.50; and Vancouver (BC) at $9.95USD. What is actually paid is normally different
dependent on the number of cruise calls to a port, passenger volume and other
factors. Based on the information we have Figure 72 provides insight into the actual
rates paid at several of the key ports by the major cruise lines of NCL, Princess
Cruises and Royal Caribbean International.
For the POLA, negotiated contract fees range as follows: NCL - $7.00 per passenger;
Princess Cruises - $6.25 per passenger; and RCI is at $4.00 per passenger. These
rates are mainly based on passenger traffic throughput and seasonality of the ship –
particularly as it relates to the RCI contract (Monarch of the Seas) on the year-round
Mexican Baja itinerary. Each of the associated negotiated fees is between 32.1% and
61.1% lower than the published tariff. In addition, the contracts provide for
additional benefits inclusive of marketing dollars to be spent by the individual cruise
line for the promotion of cruise products from POLA. Rates from the Port of Long
Beach facility are not known, but estimated to range at approximately $14.00 for
actual rates.
122

Figure 57: Passenger Fees (actual rates), 2006
Source: B&A, 2006
$20
$18
$16
$14
$12
$10
$8
$6
$4
$2
$0
LAX
SFO
SD
SEA
VAN
JAX
MIA
NO
NY
PHI
CAN
PE
TMP
KW
KET
JUNEAU
published ncl princess rci
Based on our analysis of the ports within POLA’s competitive sphere
along the US West Coast Region it is envisioned that a rate structure
range from $7.00 to $9.00 per passenger would provide the POLA with a
competitive cruise passenger tariff. Figure 58 illustrates this point. The main
competition for the POLA is the Port of San Diego from a homeport perspective.
Their current rate is at $8.10 per passenger.
Figure 58: Passenger Fees Competitive Sphere (actual rates), 2006
Source: B&A, 2006
$20
$18
$16
$14
$12
$10
$8
COMPETITIVE RANGE $7 TO $9
$6
$4
$2
$0
LAX SFO SD SEA VAN LB
published ncl princess rci
123

Figure 59 provides a view of the total revenues per passenger by US West Coast
Port based on the current rates and estimated passenger throughput per port in
2006. This is inclusive of all fees and services provided to the cruise line. These
figures have been broken down into a per passenger revenue from both the marine
service fees and a total fee per passenger inclusive of security, terminal operations,
parking and other line items. Based on our analysis the POLA (without the
PCST) is at $6.11 for marine revenues per passenger and a total $11.20
with all services and costs associated with each homeport call. With the
PCST’s additional revenues the marine portion is $8.04 and the total
revenues per passenger are at $13.10. As a comparison, the Port of San Diego
is at $10.80 per passenger for marine revenues and $13.53 for total revenues per
passenger for 2006. This is a difference of more $2.76 per passenger (marine) and
$.43 more total. This would be somewhat different if the Port of San Diego did not
run its own terminal operations.
Figure 59: Total Revenues Per Passenger, 2006
Source: B&A, 2006
$30
$25
$20
$15
$10
$5
$0
LAX LAX+PCST SFO SD SEA VAN NY
MARINE
TOTAL
These are competitive regional ports that conduct similar cruise ship operations as
that of the POLA. Passenger charges, dockage, and water were the main price
components, along with lightering charges, harbor dues, transfer fees and other
minor charges were observed.
The goal of the tariff structure for a port should be to attract, cultivate
and maintain cruise ship traffic to the port and community, while also
being able to develop those areas of importance in the port area and
providing for local infrastructure use. Beyond cruise port charges, cruise lines
124

look to other ways operational costs can be reduced as part of a cruise port-of-call
and homeport deployment. Savings can be achieved from lower costs associated
with labor required to work the ship while in port (stevedores, line handlers,
security, and other positions), and better prices associated with the availability of
certain provisions.
Providing for additional dollars as part of a revised tariff structure would
increase overall Port revenues and allow the POLA to actively pursue
cruise infrastructure development with a larger fund. This approach is not
without difficulties in terms of appraising the cruise lines of a rate increase.
However, if explained in terms of facilities enhancements this would likely be easier
for the cruise lines to understand.
125

Chapter
9
Cruise Tariff Economics
9.1 Section summary
As part of this work several tariff scenarios (or runs) were made to determine the
potential of each to generate funds that can be used to fund a capital program. This
chapter outlines potential tariff scenarios for the POLA.
9.2 Tariff scenarios
Two primary scenarios were run as part of the study. Subsequently two
additional scenarios were also studied and outlined in chapter 12. The first two
scenarios fell between the competitive tariffs conclusions described in the
previous chapter.
• Run 1 – No rate increase throughout the period;
• Run 2 –
o Passenger fee:
o Dockage:
o PCST:
o Costs:
• Equalize all contracts to the level of NCL in 2010 +
3% escalator; and
• 2011 - $7.21 passenger fee.
• 1% escalator starting 2010;
• 2% escalator: and
• 2% escalator starting now.
Collectively the total charges per passenger for each of the two runs over the
planning horizon are shown in Figure 60. Under run 1 POLA’s passenger charges
range from the current $6.14 in 2006 to $6.46 in 2020, while the PCST’s range from
$1.91 today to $1.51 in 2020. Run 2 provides for $11.01 for POLA in 2020 and
126

$1.95 for the PCST in 2020. The separate charges are shown for POLA and the
stand-alone charges by PCST as the operator.
Figure 60: POLA Port Marine Revenues Scenarios, 2006 - 2020
Source: B&A, 2006
$14.00
$12.00
$ per passenger
$10.00
$8.00
$6.00
$4.00
$2.00
$0.00
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
POLA 1 PCST 1 POLA 2 PCST 2
Based on these charges the gross revenues for each scenario are shown in Figures 61
and 62. Under Run 1 POLA gross revenues range from approximately $7.0 Million in
2006 to $13.17 Million in 2020.
Figure 61: POLA Total Revenues (Run 1– no fee increase), 2006 - 2020
Source: B&A, 2006
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$0
200620072008200920102011201220132014201520162017201820192020
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
POLA
PCST
127

Run 2 provides for approximately $22.45 Million in gross revenues for POLA in
2020, while the PCST grows from $2.19 Million to $3.96 Million over the period.
Figure 62: POLA Total Revenues (Run 2– with fee increase), 2006 - 2020
Source: B&A, 2006
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
POLA
PCST
Figure 63 illustrates the projected terminal operating costs under each of the runs
presented above. Under Run 1 terminal operating expenses climb from $2.07 Million
in 2006 to approximately $2.55 Million in 2020. Run 2 provides for an expense
increase from $2.20 Million in 2006 to $3.97 Million in 2020.
Figure 63: POLA Total Terminal Operating Expenses, 2006 - 2020
Source: B&A, 2006
$5,000,000
$4,500,000
$4,000,000
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
RUN 1 RUN 2
128

These costs compare very favorably to industry comparables. In fact the terminal is
operated extremely efficient, allowing POLA to capture the majority of revenues as
excess capital. Figure 64 shows the expenses as a percent of revenues at
approximately 20%, whereby comparable ports are running anywhere from 55% to
100% of revenues being used as operating costs.
It is important to note that no overhead expenses from POLA itself are assigned as a
cost of the facility as directed by POLA staff. Only costs actually charged by the
operator, contractors, or subcontractors are included in these figures.
Figure 64: Terminal Operating Expenses as Percentage of Total
Source: B&A, 2006
100.00%
90.00%
80.00%
70.00%
60.00%
50.00%
RANGE OF EXPENSES – LARGE PORTS
40.00%
30.00%
20.00%
10.00%
0.00%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
RUN 1 RUN 2 NY SD MIA
Based on the above, the net marine revenues available from cruise operations to
POLA are shown in Figure 65. POLA net marine revenues in 2020 are $13.68
Million under Run 1 and $23.11 Million under Run 2.
129

Figure 65: POLA Net Marine Revenues, 2006 - 2020
Source: B&A, 2006
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$0
200620072008200920102011201220132014201520162017201820192020
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
RUN 1 RUN 2
In addition, parking revenues were calculated using the rates shown in Figure 66.
Under Run 1 parking rates stay level throughout the period at $12.00, while under
Run 2 from 2012 there is a 3% escalator which provides for parking rates at $15.66
in 2020.
Figure 66: POLA Daily Parking Rates, 2006 - 2020
Source: B&A, 2006
$20.00
$18.00
$16.00
$14.00
$12.00
$10.00
$8.00
$6.00
$4.00
$2.00
$0.00
2006 2006 2006
2007 2007 2007
2008 2008 2008
2009 2009 2009
2010 2010 2010
2011 2011 2011
2012 2012 2012
2013 2013 2013
2014 2014 2014
2015 2015 2015
2016 2016 2016
2017 2017 2017
2018 2018 2018
2019 2019 2019
2020 2020 2020
RUN 1 RUN 2
130

The total parking revenues also compared favorably against those calculated by
an independent study commissioned by POLA and shown in Figure 67 below.
Under both Run 1 and 2 parking revenues continue to escalate throughout the
study period from approximately $6.0 Million in 2006 to $14 Million (Run 2) and
$10 Million (Run 1). These forecasts fall in line similarly with the parking
revenue study.
Figure 67: POLA Parking Revenues, 2006 - 2020
Source: B&A, 2006
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
Phase 1
Walker
Phase 2
Walker
Phase 3
Walker
$0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
RUN 1 RUN 2
Adding the marine and parking yields the total net revenues associated with cruise
operations as shown in Figure 68 for the period ending in 2020 are $21.54 Million
under Run 1 and $33.99 Million under Run 2.
131

Figure 68: POLA Total Net Revenues, 2006 - 2020
Source: B&A, 2006
$40,000,000
$35,000,000
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
RUN 1 RUN 2
9.3 Conclusions
Based on the Runs presented and studied the following conclusions were surmised:
• The current approximately $11 million in net revenues could grow to $21 million
under the no tariff increase scenario by 2020; and
• Under the Run 2 scenario these revenues could increase to approximately $35
million for the POLA.
132

Chapter
10
Capital Program
10.1 Capital Program Analysis
Based on the net revenue analysis, the potential capital program that such a cash flow
stream could support was calculated. This was based on utilizing a project financing
scheme using tax exempt bonds as follows:
• 6% interest;
• 30 years maturity; and
• A 1.25 coverage obtained.
In addition, the following stipulations would also apply:
• Two bond issues would be done in 2007 and 2015;
• Plus cash accumulations;
• Have not built in issuance costs, reserves; and
• No debt structuring.
The results of this analysis are shown in Figure 69.
Figure 69: POLA Potential Revenue Based Capital Program, 2006 - 2020
Source: B&A, 2006
$500,000,000
$450,000,000
$400,000,000
Bond issue
2
$350,000,000
$300,000,000
$250,000,000
Bond issue
1
$200,000,000
$150,000,000
$100,000,000
$50,000,000
$0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
133
RUN 1 RUN 2

Under Run 1, the first bond is issued in 2007 for a total revenue based program at
$145.09 Million, expanding to $245.51 Million in 2015 with a second bond issue and
then climbing to $273.42 Million. Run 2 provides for $144.61 Million when the first
bond is issued, $344.05 Million in 2015 with a second bond issue and then climbing in
2020 to $394.98 Million.
As briefly introduced in chapter 11, two additional tariff runs were completed to test
the flexibility to raise additional capital if higher tariffs were imposed. These runs had
the following factors:
• Run 3
o $8.00 passenger fee in 2010;
o 3% escalator;
o Dockage escalates at 2% starting 2010; and
o 3% cost escalation for all expenses and PCST revenues.
• Run 4
o $10.00 passenger fee in 2010; and
o All other factors as per Run 3.
The net results of the Net Revenues generated by all four runs are shown in Figure
70, and the equivalent bond programs are illustrated in Figure 71.
POLA net revenues over the study period show marked increases under Runs 2
through 4, mainly due in part to the escalation factors provided. Run 1 shows a
steady increase in net revenues over the time period. In 2020, Runs 2 through 4
ranges from approximately $34 Million (Run 2), $36 Million (Run 3) to $41.7 Million
(Run 4). Run 1 grows from $11.6 Million in 2006 to $21.5 Million in 2020.
Under Figure 71 the capital programs illustrated show growth for all Runs from
approximately $144 Million in 2007 to a range of between $245 Million (Run 1) to
$427 Million (Run 4) in 2015, and between $273 Million (Run 1) and $490 Million
(Run 4) in 2020.
134

Figure 70: POLA Total Net Revenues, 2006 - 2020
Source: B&A, 2006
$50,000,000
$45,000,000
$40,000,000
$35,000,000
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
RUN 1 RUN 2 RUN 3 RUN 4
Figure 71: POLA Potential Revenue Based Capital Program, 2006 - 2020
Source: B&A, 2006
$500,000,000
$450,000,000
$400,000,000
$350,000,000
$300,000,000
$250,000,000
$200,000,000
$150,000,000
$100,000,000
$50,000,000
$0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
RUN 1 RUN 2 RUN 3 RUN 4
135

10.2 Revenue Program Conclusions
Based on the mid-growth projection and other assumptions described within this
study, POLA could support the following general ranges of investments based on the
cash flow produced by each RUN:
• Run 1 - $273 million (no increase)
• Run 2 – $394 million ($7 pax fee);
• Run 3 – $425 million ($8 pax fee); or
• Run 4 - $490 million ($10 pax fee).
This of course assumes that all of the funds are reinvested in facilities and that POLA
will not have any profit on the operations over the immediate term.
The Runs also show that higher immediate tariffs do not translate into a
proportionate amount of additional capital program. Thus there is a
limit as to the amount that can be feasibly gained from the operation.
All of the capital will also not be available immediately, but will have to be
phased into the program to coincide with passenger volumes.
In addition, without long term contracts POLA will be absorbing the risk of
long term investments. These can be the subject of further analysis to reach a
level of risk that is equitable and manageable.
There are also some additional challenges which should be considered as outlined
below:
• Any encumbrances on the existing revenue stream;
• Impact on the shorter cruise of equalization of tariffs;
• How to eliminate the existing discounts;
• Maintaining lean operations; and
• Overhead allocation to the revenue stream.
There are also several opportunities for other revenue streams that may enhance
the overall financial picture for the POLA as illustrated below:
• Water sales;
• Electric sales;
• Ground transportation charges;
• Concessions and licenses; and
136

• Off season parking uses.
10.3 Financing Strategies
In order to determine the best financial strategy, there are a number of policy
questions which POLA must address:
• Is the project to be financially self-sufficient?;
• When - from day 1?;
• Is there an expectation of a Return on Investment (ROI)?;
• Is there an investment strategy based on economic impact to the community?;
and
• Is there potential gap financing or funding?
These should all be part of a thoughtful discussion that balances the positive impact of
cruise and the need to make intelligent investment decisions.
Among some of the most important decisions are:
• How will the investment be financed?; and
• How is the risk going to be mitigated or shared?
The most typical method used by other ports is the issuance of bonds either wholly
or partly supported by the project revenues. This will need to be carefully studied as
part of a commercial strategy to determine the level of guarantees required.
137

Chapter
11
Business Models
11.1 Section Summary
As part of the study, the basic terminal operations model was looked at to determine
if there is other more profitable or better ways to achieve the results. The goals of
the study are:
• Maximize return on investment;
• Maintain a competitive environment; and,
• Meet passenger service metrics.
11.2 Terminal Operating Models
There are three basic models in use today in the United States:
1. Port Operated Model: Most east coast cruise terminals are directly operated
by the Port themselves;
2. Privatization of the operations to a Terminal Operator Model: This is
currently how POLA is conducting business and how other west coast ports
operate; and
3. Mixed Model: Where the different components of terminal operations are
privatized separately. These include:
• Parking;
• Housekeeping;
• Maintenance; and
• Security.
Figure 72 identifies terminal operating models with the U.S. cruise ports.
138

Figure 72: U.S. Terminal Operating Models
Source: B&A, 2006
terminal operator
mixed
port operator
What model works the best? What is found is that this is subject to many factors,
among them:
• Total number of passengers;
• Age of facilities;
• Efficiency of piers; and
• Traditional labor practices.
A comparison of several ports shows as illustrated in Figure 73 shows the cost of
operations per passenger for ports with similar volumes. Both New York and
Seattle, which have terminal operators, are more expensive to operate than Miami,
Tampa or San Diego. These later facilities are operated by the port directly.
However, the figures also show that the POLA terminal is the cheapest of all to
operate.
139

Figure 73: Operational Costs ($ per passenger) by Selected Ports
Source: B&A, 2006
$16.00
$14.00
terminal operator
$12.00
$10.00
$8.00
$6.00
port operator
$4.00
$2.00
$0.00
mixed
NY SEA MIA* TMP* SD LAX
In addition, a subjective analysis of costs vs. passenger satisfaction (Figure 74) shows
that there is no correlation between spending more money and the level of
satisfaction of a passenger. This is a very subjective chart and compares experiences
at terminals based on personal visitations and anecdotal review. The chart shows
that in some instances, terminals that have higher spending are also the same
terminals with the least satisfaction. In many cases this is also a reflection that the
terminals cited have constraints that cause operational problems which require more
money to keep them operating to cruise line standards.
Figure 74: Operational Costs ($ per passenger) by Selected Ports
Source: B&A, 2006
$16.00
$14.00
$12.00
Expenses
$10.00
$8.00
$6.00
$4.00
$2.00
$0.00
0 1 2 3 4 5
Passenger satisfaction
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11.3 Operational Conclusions
Based on our analysis the following terminal operations conclusions can be drawn:
• The current operational cost structure of POLA is one if not the lowest in the
country;
• The current system allows the separation of stevedoring from terminal
operations;
o Allowing competition.
• The system maximizes profits;
• Additional net revenues will not come from less expenses, only from; and
o Modest tariff increases (previously shown);
o New revenue sources; and
o Less long-term maintenance.
• Link costs to level of service.
11.4 Study Conclusions
Based on the study the following conclusions can be drawn:
• POLA should continue to work with the current operational scheme;
• Consider one of the financial runs as the best for POLA and use it to base a
capital program on for development;
• Look for opportunities for additional revenue sources;
• Identify financing schemes accessing public tax exempt capital; and
• Private development opportunities should be carved out and separated.
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11.5 Strategies Moving Forward
• POLA needs to determine its capital needs;
• POLA should develop a plan of finance to establish the following:
o Financing capacity;
o Flow of funds; and
o Funding gaps (if any).
• POLA should match the capital and revenues;
• POLA should determine the need for underlying cruise line guarantees; and
o Or determine if the existing contracts are sufficient.
• If guarantees will be needed, establish a detailed strategy.
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