re: independent review of enhanced cruise ship access … · study has been undertaken on behalf of...

27th October 2011

Cruise Ship Access Review Secretariat

R1-4-B163

Russell Offices

Department of Defence

PO Box 7902

CANBERRA BC ACT 2610

Dear Sir

RE: INDEPENDENT REVIEW OF ENHANCED CRUISE SHIP ACCESS TO

GARDEN ISLAND

Thank you for providing the opportunity to provide a submission to the

above review.

It gives me great pleasure to provide a submission on behalf of Cruise

Down Under, Australia’s peak cruise ship marketing organisation.

I have also attached the Economic Impact Assessment of the Cruise

Shipping Industry in Australia, 2010-11 commissioned by Cruise Down

Under on an annual basis. The report provides a detailed analysis of the

economic impact of cruise shipping in Australia.

I would be pleased to provide any further information that you may

require to support our position.

Yours Sincerely

Ms Chris White Chairman Cruise Down Under

CRUISE DOWN UNDER SUBMISSION Background Cruise Down Under (CDU) welcomes the Australian Government ‘Independent Review of Enhanced Cruise Ship Access to Garden Island.’

CDU is the peak cruise industry association growing and developing the Australia Pacific region as one of the world's leading cruise destinations, providing opportunities for ongoing economic, social and environmental sustainability. CDU membership represents state and regional tourism bodies, ports, cruise lines, shipping agents, transport operators and service providers throughout Australia, Indonesia and Papua New Guinea. Our view CDU regularly liaises with global cruise lines. Berthing in Sydney is frequently raised as a significant issue that has the potential to inhibit growth of Australia’s cruise industry. Several large cruise lines have stated that if a berth is not available in Sydney they will not deploy their ships in Australia, as Sydney is a marquee port and an essential inclusion in a cruise itinerary. Sydney has also been clearly identified as the key driver for international cruise passengers selecting an Australia/South Pacific cruise. Cruise ship deployment schedules and itineraries are planned eighteen months to two years in advance and cruise lines require confirmation of berthing facilities at this point. It is essential that the shortage of berthing facilities, during peak periods, east of the Sydney Harbour Bridge, be resolved to ensure that the full growth potential of this valuable tourism market can be fulfilled. Cruise Down Under believes that the shared usage of Garden Island with the Royal Australian Navy provides a positive, medium term solution to the increased demand however, it is our view that further exploration into a long term solution to satisfy the future demands for cruise ship berths east of the harbour bridge is essential. Economic Benefits The 2010-11 Economic Impact Assessment of the Cruise Shipping Industry in Australia revealed that the cruise shipping industry contributes over a billion dollars to the Australian economy and is the fastest growing tourism sector in Australia (reference ICCA). CDU has been the key collector of cruise shipping data for the past 15 years and over the past 7 years has conducted an annual economic assessment of the contribution of the cruise industry to the Australian economy. The initial reports focussed on the contribution by international cruise

visits to the Australian economy. As the domestic cruise sector started to grow dramatically in 2008, the study now includes the impact of both the international and domestic spends. The national economic impact of cruise ship visits to Australia in 2010-11 is the aggregation of all international passenger and crew expenditure, and cruise ship operator expenditure at each port visited by a cruise ship in 2010-11. It should be noted that there are some limitations to the level of data available on cruise line related expenditure and that we consider our findings to be accurate based on the data available and possibly conservative in comparison to other studies. The estimated total expenditure, including direct expenditure of $499.2 million, was $974.7 million in 2010-11. This was an 18.6% increase from 2009-10 when total expenditure was estimated at $822.1 million. When domestic passengers and crew are included, the estimated total expenditure was $1,523.5 million in 2010-11. The total wages income, including $142.0 million in direct income and $112.5 million in indirect or flow on wages income, was $254.5 million. This was an 18.3% increase from 2009-10 when total wages income was estimated at $215.1 million. When domestic passengers and crew are included, the estimated wage income was $410.2 million in 2010-11. The employment impact, including 2,326 direct positions and 1,944 indirect positions, was 4,270 full time equivalent positions (FTEs). This was a 17.6% increase from 2009-10 when total employment was estimated at 3,632 FTEs. In addition to employment generated by onshore spending when at port, it is estimated around 1,500-2,000 Australians are employed on cruise ships, mainly in the ports where cruise ships are based such as Sydney, Melbourne, Brisbane, Perth, Cairns and Darwin. When domestic passengers and crew are included, the estimated employment was 7,379 FTE positions in 2010-11. The estimated total value added impact, including a direct impact of $234.1 million, was $449.1 million. This was a 17.4% increase from 2009-10 when total value added was estimated at $382.6 million. When domestic passengers and crew are included, the estimated value add was $709.2 million in 2010-11. Sector growth The cruise industry in Australian has grown on average 20% per annum over the past five years and industry forecasting suggests that this rate will continue for the next three to five years (CDU Economic Impact Assessment). The industry over the past six months has made deployment announcements that have exceeded all expectations and put the Sydney berthing capacity to the forefront two to three years ahead of all expectations. Of the current ship bookings through to 2014, around 30 percent of ships are not able to access berths west of the Sydney Harbour Bridge. This, coupled with the high demand during the summer months, has caused capacity to be reached at eastern berths during peak times.

The rise in passenger numbers is across both international and domestic markets. Forecasting suggests that more than one million Australians will take a cruise in 2020, by which time the industry could be injecting up to $3 billion annually from local and international cruise ship visits. Conclusion We reiterate that Cruise Down Under believes that the shared usage of Garden Island with the Royal Australian Navy provides a positive step moving forward in the medium term. However, it is our view that there needs to be further exploration into providing a long term solution to satisfy the future growing demands for cruise ship berths east of the Sydney Harbour Bridge and that research needs to be undertaken as soon as possible. Attachment Economic Impact Assessment of the Cruise Shipping Industry in Australia, 2010-11, Cruise Down Under, September, 2011

Economic Impact Assessment of

the Cruise Shipping Industry in

Australia, 2010-11

Cruise Down Under

Final Report

September, 2011

Economic Impact of the Cruise Shipping Industry in Australia, 2010-11 Final Report

i

Document Control

Job ID: 15935

Job Name: Economic Impact of the Cruise Shipping Industry in Australia

Project Director: Simon Smith

Project Manager: Alex Stuart

Company: Cruise Down Under

Job Contact: Jill Abel

Document Name: CDU Cruise Shipping EIA 2010-11 Final

Last Saved: 25/10/2011 9:18 AM

Version Date Reviewed PM Approved PD

Draft v1.0 23/08/2011 AS SS

Draft v2.0 29/08/2011 AS SS

Final 2/09/2011 AS SS

Disclaimer:

Whilst all care and diligence have been exercised in the preparation of this report, the AEC Group Limited does not warrant the accuracy of the information contained within and accepts no liability for any loss or damage that may be suffered as a result of reliance on this information, whether or not there has been any error, omission or negligence on the part of the AEC Group Limited or their employees. Any forecasts or projections used in the analysis can be affected by a number of unforeseen variables, and as such no warranty is given that a particular set of results will in fact be achieved.


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Executive Summary

Purpose of the Study

This study represents an economic impact assessment of the cruise shipping industry in

Australia for the 2010-11 financial year. The information and analysis presented in the report ensures a better understanding of the size, growth and economic significance of the industry to the Australian economy to assist with future planning and strategy. The study has been undertaken on behalf of Cruise Down Under (CDU) and Tourism Australia. The 2010-11 study is the seventh consecutive year that AECgroup has undertaken the economic impact assessment of the cruise shipping industry with slight improvements

being made to the methodology each year. This provides a consistent approach that allows the change in economic impacts to be accurately assessed.

Research Methodology

The 2010-11 economic impact assessment for the cruise shipping industry is an update of

the previous study completed in 2009-10 and assumes a similar methodology as the previous study. Some assumptions in relation to ships that anchor rather than berth (including port expenditure and the proportion of passengers and crew disembarking) have been adjusted for this study based on the availability of new information. The 2009-10 results have been revised accordingly to provide an accurate growth comparison.

A new passenger survey was conducted in Sydney1 by AECgroup with expenditure results included in the model. The most recent survey data from AECgroup‟s Cairns and Brisbane

surveys as well as surveys undertaken by Tourism Victoria, Tourism Tasmania and Tourism NT were adjusted for inflation to 2010-11 prices.

As with previous studies the head office expenditure by cruise operators such as Carnival is not included due to data unavailability.

Size and Growth of the Cruise Shipping Industry

The Australian cruise shipping industry recorded growth in the number of cruise ships visiting or operating in Australia, though the majority of these vessels were international ships that spent limited time in Australia. The north and eastern region of Australia between Darwin and Sydney generally recorded strong growth in port visits at the expense of the remainder of the country that resulted in the total number of port visits declining for the year.

The cruise shipping industry‟s growth trends in 2010-11 are summarised as:

An increase in visiting cruise ships from 34 to 42;

An increase in cruise ship passenger capacity on these ships from 41,803 to 49,254;

An increase in crew capacity on these ships from 18,335 to 21,786;

A decrease in the number of ports recording a cruise ship visit from 30 to 29;

A decrease in cruise ship visits to Australian ports from 582 to 568;

A decrease in total passenger days at port from 1,091,596 to 1,081,665;

An increase in total crew days at port from 235,128 to 237,386;

An increase in total passenger expenditure from $278.4 million to $305.5 million;

An increase in total crew expenditure from $39.7 million to $43.5 million; and

An increase in total port-related expenditure from $364.5 million to $440.6 million.

1 Commissioned by CDU, Commonwealth Department of Resources, Energy and Tourism, Tourism NSW and

Sydney Ports.


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Table E.1: Comparison of Australian Cruise Ship Industry Demand Indicators

2009-10 2010-11 Actual Change

% Change

Number of Australian ports visited by cruise ships 30 29 -1 -3.3%

Cruise Ship Characteristics

Number of visiting cruise ships 34 42 8 23.5%

Passenger capacity of the cruise ships 41,803 49,254 7,451 17.8%

Number of crew on the cruise ships 18,335 21,786 3,451 18.8%

Cruise Ship Visits

Number of cruise ship visits to ports 582 568 -14 -2.4%

Passengers and Crew

Total passenger days at port 1,091,596 1,081,665 -9,931 -0.9%

Total crew days at port 235,128 237,386 2,258 1.0%

Expenditure

Passengers ($m)(a) $278.4 $305.5 $27.0 9.7%

Crew ($m) (a) $39.7 $43.5 $3.8 9.6%

Port-related by operators ($m) $364.5 $440.6 $76.1 20.9%

Note: (a) Includes both domestic and international expenditure. Source: CDU, Individual Ports, AECgroup

Expenditure Associated with the Cruise Shipping Industry

The direct expenditure (including domestic and international passenger and crew and operator expenditure) associated with the cruise shipping industry in Australia in 2010-11 was estimated at $789.6 million, compared with $682.7 million in 2009-10 (see Table

E.2). This equates to a 15.7% increase in the year, with the increase explained by a higher number of base port visits which resulted in higher passenger and crew expenditure as well as significantly higher port related expenditure.

Table E.2: Summary of Direct Expenditure associated with the Cruise Shipping Industry in Australia, 2010-11

Visit Days

Passenger Crew Direct Expenditure ($m)

Port Days At Port

Days At Port

Passengers(a) Crew Operator Total

NSW:

Eden 5 4,811 1,224 $0.4 $0.1 $0.2 $0.7

Newcastle 13 42,893 7,656 $14.4 $1.6 $7.1 $23.2

Sydney Harbour 146 467,826 101,594 $170.7 $24.2 $205.0 $400.0

Total 164 515,529 110,474 $185.6 $25.9 $212.3 $423.9

VIC:

Geelong 2 589 338 $0.1 $0.0 $0.1 $0.2

Melbourne 36 68,302 15,887 $18.8 $2.4 $47.2 $68.5

Phillip Island 1 70 39 $0.0 $0.0 $0.0 $0.0

Total 39 68,961 16,264 19 2 47 69

QLD:

Brisbane 74 203,387 41,239 $64.8 $8.7 $100.1 $173.7

Cairns/Yorkeys Knob 44 41,905 7,337 $3.9 $0.5 $2.0 $6.4

Cooktown 4 1,912 0 $0.2 $0.0 $0.0 $0.2

Mackay/Whitsundays* 41 51,692 13,686 $4.6 $0.9 $1.0 $6.5


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Visit Days


Port Days At Port

Days At Port


Port Douglas 19 24,023 0 $2.0 $0.0 $0.1 $2.1

Thursday Island 4 920 0 $0.1 $0.0 $0.0 $0.1

Townsville 7 5,026 1,682 $0.5 $0.1 $0.5 $1.0

Total 193 328,863 63,944 $76.1 $10.2 $103.7 $190.0

SA:

Adelaide 12 11,954 3,439 $2.1 $0.5 $0.7 $3.3

Kingscote 2 716 309 $0.1 $0.0 $0.0 $0.1

Port Lincoln 2 535 263 $0.0 $0.0 $0.0 $0.1

Total 16 13,205 4,011 $2.2 $0.6 $0.7 $3.5

WA:

Albany 8 6,971 1,928 $0.6 $0.1 $0.4 $1.1

Broome 14 10,288 2,950 $0.9 $0.2 $0.5 $1.6

Bunbury 7 8,015 2,185 $0.7 $0.1 $0.4 $1.3

Esperance 3 1,315 374 $0.1 $0.0 $0.1 $0.2

Exmouth 3 2,327 697 $0.2 $0.0 $0.1 $0.4

Fremantle 29 32,774 9,187 $7.2 $1.7 $28.2 $37.1

Geraldton 4 5,895 1,464 $0.5 $0.1 $0.6 $1.2

Total 68 67,586 18,785 $10.2 $2.3 $30.4 $42.9

TAS:

Burnie 11 16,108 3,843 $1.6 $0.4 $0.6 $2.6

Hobart 26 27,734 7,626 $2.8 $0.8 $1.2 $4.8

Port Arthur 3 1,840 441 $0.2 $0.0 $0.1 $0.3

Total 40 45,681 11,910 $4.6 $1.3 $1.9 $7.8

NT:

Darwin 46 40,056 11,504 $7.7 $0.7 $44.4 $52.8

Total 46 40,056 11,504 $7.7 $0.7 $44.4 $52.8

Territories:

Christmas Island 0 0 0 $0.0 $0.0 $0.0 $0.0

Norfolk Island 2 1,785 494 $0.2 $0.0 $0.0 $0.2

Total 2 1,785 494 $0.2 $0.0 $0.0 $0.2

Total 568 1,081,665 237,386 $305.5 $43.5 $440.6 $789.6

Note: (a) Includes both domestic and international expenditure. * Includes Hamilton Island Source: CDU, Individual Ports, AECgroup

Economic Impact of the Cruise Shipping Industry

Economic impact analysis can be used to trace the flows of spending associated with specific activities in a region to identify changes in output, jobs, income and value added. The economic impact analysis of the cruise shipping industry requires a carefully structured approach. The approach used in this study provides separate estimates of the

direct and indirect impact of the industry. The direct economic impact of the cruise shipping industry includes the output, jobs, income and value added created by operator expenditure, crew expenditure whilst at port and passenger expenditure whilst at base and transit ports, and pre- and post-cruise. On top of this, there is also the direct employment of Australians on cruise ships, primarily those based in Australia.


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The national economic impact of cruise ship visits to Australia in 2010-11 is the

aggregation of all international passenger and crew expenditure, and cruise ship operator expenditure at each port visited by a cruise ship in 2010-11. Expenditure by Australian passengers visiting Australian ports as part of a cruise does not constitute a net impact;

rather the expenditure is a transfer from one part of the economy to another. However estimates for these are also calculated and presented.

Table E.3 below summarises the estimated national economic impacts of the cruise shipping industry in Australia in 2010-11 compared with 2009-10. They are:

Estimated total expenditure of $974.7 million in 2010-11, including direct expenditure of $499.2 million. This was an 18.6% increase from 2009-10 when total expenditure was estimated at $822.1 million. When domestic passengers and crew are included,

the estimated total expenditure is $1,523.5 million in 2010-11.

Estimated total wages income of $254.5 million, including $142.0 million in direct income and $112.5 million in indirect or flow on wages income. This was an 18.3% increase from 2009-10 when total wages income was estimated at $215.1 million.

When domestic passengers and crew are included, the estimated wage income is $410.2 million in 2010-11.

Estimated employment impacts of 4,270 full time equivalent positions (FTEs), including 2,326 direct positions and 1,944 indirect positions. This was a 17.6% increase from 2009-10 when total employment was estimated at 3,632 FTEs. In addition to employment generated by onshore spending when at port, it is estimated around 1,500-2,000 Australians are employed on cruise ships, mainly in the ports where cruise ships are based such as Sydney, Melbourne, Brisbane, Perth, Cairns and Darwin. When domestic passengers and crew are included, the estimated

employment was 7,379 FTE positions in 2010-11.

Estimated total value added impact of $449.1 million, including a direct impact of $234.1 million. This was a 17.4% increase from 2009-10 when total value added was estimated at $382.6 million. When domestic passengers and crew are included, the estimated value add is $709.2 million in 2010-11.

Table E.3: National Economic Impacts of Cruise Shipping in Australia

International only (a) International & Domestic (b)

Impact 2009-10 2010-11 % Change

2009-10 2010-11 % Change

Output ($m)

Direct $424.5 $499.2 17.6% $682.5 $789.5 15.7%

Indirect $397.6 $475.5 19.6% $636.5 $734.0 15.3%

Total $822.1 $974.7 18.6% $1,319.1 $1,523.5 15.5%

Wages Income ($m)

Direct $121.0 $142.0 17.4% $193.6 $238.9 23.4%

Indirect $94.1 $112.5 19.5% $148.9 $171.2 15.0%

Total $215.1 $254.5 18.3% $342.5 $410.2 19.8%

Employment (FTEs)

Direct 2,000 2,326 16.3% 3,313 4,332 30.8%

Indirect 1,632 1,944 19.1% 2,623 3,047 16.1%

Total 3,632 4,270 17.6% 5,937 7,379 24.3%

Value Added ($m)

Direct $202.5 $234.1 15.6% $330.3 $381.1 15.4%

Indirect $180.0 $215.0 19.4% $284.7 $328.1 15.3%

Total $382.6 $449.1 17.4% $615.0 $709.2 15.3%

Notes: (a) International passengers & crew and operators, (b) International & domestic passengers & crew and operators. Source: AECgroup


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If the estimated expenditure of domestic passengers is added back in the economic

impacts of the cruise shipping industry for 2010-11 would be estimated at:

Total expenditure of $1,523.5 million;

Total wage income of $410.2 million;

Total employment impacts of 7,379 FTEs; and

Total value added impact of $709.2 million.

Growth Potential of the Cruise Shipping Industry

After recording a decline in 2010-11, cruise ship visits to Australian ports are expected to

increase by approximately 180 visits to an estimated 740-750 in 2011-12. This projected strong growth for 2011-12 takes the number of port visits back to the historical trend and indicates that 2010-11 is likely to be an isolated year of negative growth.

Growth is projected to be driven by the eastern seaboard capital cities of Sydney (+74

visits), Brisbane (+39 visits) and Melbourne (+20 visits). Other ports expected to record strong increases in 2011-12 include Hobart, Broome, Burnie and Fremantle. This includes 12 new ships expected to visit Australia for the first time including Royal Caribbean

Cruises‟ Radiance of the Seas which will join Rhapsody of the Seas in Sydney from October 2011 for the 2011-12 season and the new Voyager of the Seas in 2012-13 which will become the largest cruise ship ever to base itself in Australia. These developments will likely lead to a significant increase in passenger and crew expenditure in Australia and associated economic impacts.


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Table of Contents

DOCUMENT CONTROL .......................................................................................... I

EXECUTIVE SUMMARY ........................................................................................ II

TABLE OF CONTENTS........................................................................................ VII

1. INTRODUCTION & BACKGROUND ................................................................ 1

1.1 PURPOSE OF THE STUDY ...................................................................................... 1

1.2 RESEARCH METHODOLOGY ................................................................................... 1

1.3 REPORT STRUCTURE ........................................................................................... 1

2. CRUISE SHIPPING: AN INDUSTRY OVERVIEW ............................................ 2

2.1 DEFINITION OF CRUISE SHIPPING ........................................................................... 2

2.2 CRUISE SHIPS VISITING AUSTRALIA ........................................................................ 3

2.3 CRUISE LINES BASED IN AUSTRALIA ........................................................................ 5

2.4 PORTS & DESTINATIONS VISITED BY CRUISE SHIPS ...................................................... 5

2.5 SIZE & GROWTH OF THE INDUSTRY ......................................................................... 7

2.6 GLOBAL TRENDS & CONTEXT .............................................................................. 10

2.7 INDUSTRY REPRESENTATION ............................................................................... 10

3. ECONOMIC IMPACT OF CRUISE SHIPPING ................................................ 11

3.1 METHOD OF ANALYSIS ...................................................................................... 11

3.1.1 AN INTRODUCTION TO ECONOMIC IMPACT ANALYSIS ......................................... 11

3.1.2 AN EXAMPLE INTERPRETATION OF ECONOMIC IMPACT ANALYSIS ............................ 12

3.1.3 DEFINITION OF KEY ECONOMIC IMPACT ANALYSIS TERMS .................................... 12

3.2 EXPENDITURE ASSOCIATED WITH THE CRUISE SHIPPING INDUSTRY IN AUSTRALIA .................. 12

3.2.1 PORT CHARGES & OPERATIONS ................................................................. 13

3.2.2 PASSENGER & CREW EXPENDITURE ............................................................. 13

3.2.3 SUMMARY OF INDUSTRY EXPENDITURE .......................................................... 17

3.2.4 GROWTH IN INDUSTRY EXPENDITURE ........................................................... 19

3.3 NATIONAL ECONOMIC IMPACTS ............................................................................ 21

3.4 STATE/TERRITORY ECONOMIC IMPACTS .................................................................. 24

3.5 REGIONAL ECONOMIC IMPACTS ............................................................................ 27

3.5.1 NEW SOUTH WALES .............................................................................. 27

3.5.2 QUEENSLAND ...................................................................................... 28

3.5.3 VICTORIA ........................................................................................... 31

3.5.4 SOUTH AUSTRALIA ................................................................................ 31

3.5.5 WESTERN AUSTRALIA ............................................................................. 32

3.5.6 TASMANIA .......................................................................................... 35

3.5.7 NORTHERN TERRITORY ............................................................................ 36

3.5.8 OFFSHORE TERRITORIES .......................................................................... 36

4. GROWTH POTENTIAL OF CRUISE SHIPPING ............................................. 38

4.1 PORT DEVELOPMENTS ....................................................................................... 38

4.2 CRUISE SHIP DEVELOPMENTS .............................................................................. 38

4.3 PROJECTED INDUSTRY GROWTH ........................................................................... 39

REFERENCES ..................................................................................................... 40

APPENDIX A: INPUT OUTPUT MODEL ................................................................ 41


1

1. Introduction & Background

1.1 Purpose of the Study

This study represents an economic impact assessment of the cruise shipping industry in

Australia for the 2010-11 financial year. The information and analysis presented in the report ensures a better understanding of the size, growth and economic significance of the industry to the Australian economy to assist with future planning and strategy. The study has been undertaken on behalf of Cruise Down Under (CDU) and Tourism Australia. The 2010-11 study is the seventh consecutive year that AECgroup has undertaken the economic impact assessment of the cruise shipping industry with only slight

improvements being made to the methodology each year. This provides a consistent approach that allows the change in economic impacts to be accurately assessed.

1.2 Research Methodology

The 2010-11 economic impact assessment for the cruise shipping industry is an update of

the previous study completed in 2009-10 and assumes a similar methodology as the previous study. Some assumptions in relation to ships that anchor rather than berth (including port expenditure and the proportion of passengers and crew disembarking) have been adjusted for this study based on the availability of new information. The 2009-10 results have been revised accordingly to provide an accurate growth comparison.

A new passenger survey was conducted in Sydney2 by AECgroup with expenditure results included in the model. The most recent survey data from AECgroup‟s Cairns and Brisbane

surveys as well as surveys undertaken by Tourism Victoria, Tourism Tasmania and Tourism NT were adjusted for inflation to 2010-11 prices.

As with previous studies the head office expenditure by cruise operators such as Carnival is not included due to data unavailability.

1.3 Report Structure

Chapter 1 – Introduction and Background: Overview of the background to the project, the purpose of the study and reporting structure.

Chapter 2 – Cruise Shipping: An Industry Overview: Detailed description and summary of the characteristics of the cruise shipping industry, including industry size and growth, key businesses, global trends, growth potential and industry representation.

Chapter 3 – Economic Impact of Cruise Shipping: Assessment of the direct and

indirect economic significance of the cruise shipping industry nationally, by state/territory and regions of interest based on survey data and input-output modelling.

Chapter 4 – Growth Potential of Cruise Shipping: Projections of industry growth based on anticipated cruise ship visits in 2011-12 and major developments.


Sydney Ports.


2

2. Cruise Shipping: An Industry Overview

2.1 Definition of Cruise Shipping

CDU, the peak industry marketing body for Australia and the Pacific cruise destinations,

defines cruise shipping as:

“A vessel undertaking scheduled deep water cruises of two days or more with a passenger capacity of 100 or more.”

This definition currently serves the industry well, however as differentiation of the cruising product increases it is possible high yielding and exclusive smaller vessel cruises entering the market place may undermine this definition.

Although cruise shipping is an emerging industry segment within the Australian context, it is reasonably mature in a global context with a high level of product differentiation. Cruise ships range from three stars, for example the P&O Pacific Sun, through to six star

vessels such as the Silver Shadow.

Cruise ships can be classified into five broad categories (Tourism Queensland, 2003):

Expedition and adventure cruise ships: (e.g. Orion) characterised by smaller vessels which can access more destinations and because of their size have the lowest

infrastructure demands and impacts. This class is also generally characterised by higher passenger return visits and higher base port spends. In some destinations, such as the Great Barrier Reef, this class competes with day trip tour boats putting downward pressure on the cruise operator‟s yield.

Boutique cruise ships: (e.g. Silver Cloud) characterised by smaller vessels. The product offer is targeted at quality provision of services and experience with according implications for shore facilities. This product is targeted at the high yield

end of the market.

Mid-size cruise ships: (e.g. Pacific Sun) these vessels have greater port infrastructure demands than previous classes requiring greater channel depths and generally

requiring wharf berthing. Their size generates demand for a range of shore tours and facilities.

Mega-cruise ships: (e.g. Sapphire Princess) these vessels are among the largest

cruise vessels and have significant port infrastructure needs including greater channel depth, longer wharfs for side berthing, air space under bridges and high quality terminal facilities with baggage handling and international passenger processing facilities. These vessels generally limit visits to major capital city or tourist destination centres.

Military vessels: visiting military vessels with a „rest and recreation‟ component to their visit can have similar economic impacts to more traditional cruise chips. Some

military vessels have crews in excess of 5,000 and consultations indicate that crew spend can be as high as $400/day per crew member. Military vessels are not included in this study.

Under the Navigation Act 1912, commercial passenger vessels are categorised based on

gross registered tonnage (GRT), the categories are:

Less than 5,000 GRT;

5,000 to 10,000 GRT;

10,000 to 20,000 GRT;

20,000 to 40,000 GRT; and

Greater than 40,000 GRT.

The Orion is under the 5,000 GRT limit though has still been included in the study.

Cruise ships can also be categorised based on their passenger capacity. Although passenger capacity does not necessarily define the cruise vessel, it does provide an

indication of the market segment serviced by the vessel.


3

Passenger capacity categories include:

Niche market – less than 500 passengers;

Lower capacity – 500 to 1,250 passengers;

Medium capacity – 1,250 to 2,000 passengers; and

High capacity – more than 2,000 passengers.

In terms of some of the demand indicators used to analyse the industry, passenger and crew days at port are calculated as the number of cruise ship visits multiplied by passenger/crew numbers. For example, if a cruise ship with 500 passengers visits Sydney Harbour for 1 day, then there have been 500 x 1 = 500 passenger days at port. If there are 200 crew on the ship, then there have been 200 crew days at port. The figure includes both those that stayed on the ship and disembarked the ship.

The expenditure analysis accounts for a percentage of passengers/crew disembarking at each port and the average expenditure of these passengers and crew. The definition is applied to both base and transit port visits. In the case of a base port visit, the passenger

may in fact be away from home for more than 1 day pre- and post-cruise but for the purposes of the analysis are counted as 1 day only. The base port expenditure included in this study includes pre-cruise expenditure for each of these passengers regardless of how

long they stay away from home prior to and after the cruise.

2.2 Cruise Ships Visiting Australia

The number of cruise ships visiting Australian ports in 2010-11 was a record high, reflecting the strong growth in the industry. In 2010-11, there were 42 cruise ships that

visited at least one Australian port, eight more than in 2009-10. This included eleven ships that were based out of an Australian port(s) at some stage during the year, a 10% increase from 2009-10. During the season, the location of base ports changed for several ships as new ships entered the market and schedules changed.

In 2010-11, 18 cruise ships visiting Australian ports had passenger capacities of more than 1,000, with seven having passenger capacities over 2,000. This was also a record

and slightly higher than the 17 ships that visited in 2008-09. The Queen Mary 2 with a

capacity of 3,090 passengers was the largest cruise ship to visit Australia. In 2010-11, the total passenger capacity of the cruise ships visiting Australia was 49,254 compared with 41,803 in 2009-10, a 17.8% decrease.

There were 15 cruise ships visiting Australian shores in 2010-11 that did not visit in 2009-10 including:

Nippon Yusen Kaisha‟s Asuka II;

Classic International Cruises‟ Athena;

Transocean Tours‟ C Columbus;

Crystal Cruises‟ Crystal Serenity;

Peter Deilmann Cruises‟ Deutschland;

Quark Expeditions‟ Kapitan Khlebnikov;

P&O Cruises‟ Oriana;

P&O Cruises‟ Pacific Pearl;

Cunard‟s Queen Elizabeth;

Princess Cruises‟ Sapphire Princess;

Seabourn Cruise Line‟s Seabourn Sojourn;

Seabourn Cruise Line‟s Seabourn Spirit;

Regent Seven Seas Cruises‟ Seven Seas Navigator;

Silversea Cruises‟ Silver Shadow; and

Silversea Cruises‟ Silver Spirit.


4

Table 2.1: Cruise Liners Visiting Australian Ports, 2010-11

Cruise Ship Cruise Line Length (m) Tonnage Passenger Crew

Albatros Phoenix Reisen 185 24,724 940 330

Amadea Phoenix Reisen 193 29,000 600 280

Amsterdam Holland America 238 61,000 1,380 600

Arcadia P&O Cruises 290 86,799 1,952 976

Astor Transocean Tours 176 20,158 590 300

Asuka II NYK Cruises 241 48,621 940 540

Athena(a) Classic International Cruises 160 16,144 439 238

Aurora P&O Cruises 270 76,000 1,870 850

Balmoral Fred Olsen Cruise Lines 218 43,537 1,778 471

C Columbus Transocean Tours 144 14,000 420 170

Crystal Serenity Crystal Cruises 250 68,000 1,080 655

Crystal Symphony Crystal Cruises 238 51,044 940 545

Dawn Princess(a) Princess Cruises 261 77,000 1,950 925

Deutschland Peter Deilmann Cruises 173 22,400 520 260

Diamond Princess(a) Princess Cruises 290 113,000 2,600 1,238

Europa Hapag Lloyd Cruises 197 28,437 408 264

Kapitan Khlebnikov Quark Expeditions 132 12,288 114 70

Nautica Oceania Cruises 181 30,277 684 400

Oriana P&O Cruises 260 69,153 1,822 794

Orion(a) Orion Expedition Cruises 103 4,050 104 70

Pacific Dawn(a) P&O Cruises 245 70,000 2,050 696

Pacific Jewel(a) P&O Cruises 245 70,285 2,014 621

Pacific Pearl(a) P&O Cruises 247 63,500 1,800 514

Pacific Princess P&O Cruises 181 30,277 686 373

Pacific Sun(a) P&O Cruises 223 47,000 1,896 670

Pacific Venus Japan Cruise Line 183 26,518 720 180

Princess Danae Classic International Cruises 162 17,074 560 240

Queen Elizabeth Cunard 294 90,900 2,547 996

Queen Mary 2 Cunard 345 151,400 3,090 1,253

Rhapsody of the Seas(a) Royal Caribbean 279 78,491 2,435 765

Saga Ruby Saga 191 24,492 655 380

Sapphire Princess Princess Cruises 290 113,000 2,670 1,099

Seabourn Odyssey Seabourn Cruise Lines 200 32,000 450 335

Seabourn Sojourn Seabourn Cruise Lines 198 32,000 450 335

Seabourn Spirit Seabourn Cruise Lines 134 9,975 204 150

Seven Seas Navigator Regent Seven Seas Cruises 172 28,550 490 340

Seven Seas Voyager Regent Seven Seas Cruises 204 42,363 700 447

Silver Shadow Silversea Cruises 186 28,258 388 295

Silver Spirit Silversea Cruises 196 36,000 540 376

Silver Whisper Silversea Cruises 185 28,258 388 295

Sun Princess(a) Princess Cruises 270 77,000 1,950 850

Volendam(a) Holland America 238 63,000 1,440 600

2010-11 Total (42) 42 9,068 2,055,973 49,254 21,786

2009-10 Total (34) 34 7,440 1,744,433 41,803 18,335

% growth in 2010-11 21.9% 17.9% 17.8% 18.8%

Note: (a) Vessels based in Australia at some stage of the season

Source: Various industry sources


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2.3 Cruise Lines Based in Australia

Eleven of the 42 cruise ships visiting Australia in 2010-11 were based at an Australian port(s) at some stage of the season (in either Brisbane, Cairns, Darwin, Melbourne, Perth or Sydney). Some were based out of more than one domestic port in the year for different cruises as follows:

Classic International Cruises‟ Athena out of Fremantle;

Princess Cruises‟ Dawn Princess out of Sydney and Melbourne;

Princess Cruises‟ Diamond Princess out of Sydney;

Orion Expedition Cruises‟ Orion out of Darwin and Cairns;

P&O Cruises‟ Pacific Dawn out of Brisbane;

P&O Cruises‟ Pacific Jewel out of Sydney;

P&O Cruises‟ Pacific Pearl out of Sydney;

P&O Cruises‟ Pacific Sun out of Sydney, Brisbane and Newcastle;

Royal Caribbean‟s Rhapsody of the Seas out of Sydney;

Princess Cruises‟ Sun Princess out of Sydney and Fremantle; and

Holland America‟s Volendam out of Sydney.

These ships and some cruise lines have support operations located in Australia, including

corporate offices, advertising and marketing operations, and logistics operations. Carnival Australia has the most significant support infrastructure in Australia with their head office located in Sydney. Carnival Australia, through its subsidiary P&O, owns an Australian shipping agent, Oceania Maritime Services. Other cruise lines have more modest infrastructure limited to a small number of personnel to support the cruise lines‟ operations in Australia.

It is difficult to estimate the impact of cruise line support operations given the

confidential nature of such information. However, with the exception of the support operations of Carnival Australia, the economic impact of cruise line support infrastructure is considered to be modest and is most likely a flow on impact generated by cruise visits. The relatively small size of the cruise shipping industry in Australia suggests that the

economic impacts of shipping agent activities related to the industry would be insignificant, because cruise shipping accounts for only a small proportion of their

business activities.

2.4 Ports & Destinations Visited by Cruise Ships

The map below highlights each of the Australian ports capable of handling cruise ships. In 2010-11, 29 Australian ports recorded a cruise ship visit, compared with 30 in 2009-10.

Christmas Island was scheduled to receive cruise visits in 2010-11 though bad weather led to the cancellation of the visit. For the purpose of the analysis in the report, Mackay/Whitsundays as been combined with Hamilton Island to form one area of analysis. Figure 2.1 summarises Australia‟s cruise shipping ports as at 2010-11.


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Figure 2.1: Graph Major Australian Ports/Destinations Visited by Cruise Ships, 2010-11

Source: AECgroup

Overall, there were 568 cruise ship visits to Australian ports in 2010-11, a slight decrease of 14, or 2.4%, from the 2009-10 total of 582 (see Table 2.2). Sydney, Brisbane and Darwin are the most frequented ports. Ports reporting strong growth were Sydney (+30),

Darwin (+13), Newcastle (+9) and Cairns (+8). Geelong was the only port to record cruise ships in 2010-11 after recording none in 2009-10. Ports recording the biggest declines in the number of cruise ship visits were in Geraldton (-14), Melbourne (-12), Fremantle (-10) and Adelaide (-9).

Table 2.2: Number of Cruise Ship Visits to Australian Ports

Port 2009-10 2010-11 Actual Change % Change

NSW:

Eden 4 5 1 25.0%

Newcastle 4 13 9 225.0%

Sydney Harbour 116 146 30 25.9%

Total 124 164 40 32.3%

VIC:

Geelong 0 2 2 N.a

Melbourne 48 36 -12 -25.0%

Phillip Island 1 1 0 0.0%

Total 49 39 -10 -20.4%

QLD:


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Port 2009-10 2010-11 Actual Change % Change

Brisbane 69 74 5 7.2%

Cairns/Yorkeys Knob 36 44 8 22.2%

Cooktown 3 4 1 33.3%

Mackay/Whitsundays* 35 41 6 17.1%

Port Douglas 19 19 0 0.0%

Thursday Island 8 4 -4 -50.0%

Townsville 12 7 -5 -41.7%

Total 182 193 11 6.0%

SA:

Adelaide 21 12 -9 -42.9%

Kingscote 3 2 -1 -33.3%

Port Lincoln 3 2 -1 -33.3%

Total 27 16 -11 -40.7%

WA:

Albany 11 8 -3 -27.3%

Broome 19 14 -5 -26.3%

Bunbury 9 7 -2 -22.2%

Esperance 4 3 -1 -25.0%

Exmouth 6 3 -3 -50.0%

Fremantle 39 29 -10 -25.6%

Geraldton 18 4 -14 -77.8%

Total 106 68 -38 -35.8%

TAS:

Burnie 18 11 -7 -38.9%

Coles Bay 2 0 -2 -100.0%

Hobart 29 26 -3 -10.3%

Port Arthur 6 3 -3 -50.0%

Total 55 40 -15 -27.3%

NT:

Darwin 33 46 13 39.4%

Total 33 46 13 39.4%

Offshore Territories

Norfolk Island 1 0 -1 -100.0%

Christmas Island 5 2 -3 -60.0%

Total 6 2 -4 -66.7%

Total 582 568 -14 -2.4%

Note: * Includes Hamilton Island Source: CDU, Individual Ports, AECgroup

2.5 Size & Growth of the Industry

The Australian cruise shipping industry recorded growth in the number of cruise ships visiting, though the majority of these vessels were international ships that spent limited

time in Australia. The north and eastern region of Australia between Darwin and Sydney generally recorded strong growth in port visits at the expense of the remainder of the country that resulted in the total number of port visits declining for the year.


8

The cruise shipping industry‟s growth trends in 2010-11 year are summarised as:

An increase in visiting cruise ships from 34 to 42;

An increase in cruise ship passenger capacity on these ships from 41,803 to 49,254;

An increase in crew capacity on these ships from 18,335to 21,786;

A decrease in cruise ship visits to Australian ports from 582 to 568;

A decrease in the number of ports recording a cruise ship visit from 30 to 29;

A decrease in total passenger days at port from 1,091,596 to 1,081,665;

An increase in total crew days at port from 235,128 to 237,386;

An increase in total passenger expenditure from $278.4 million to $305.5 million;

An increase in total crew expenditure from $39.7 million to $43.5 million; and

An increase in total port-related expenditure from $364.5 million to $440.6 million.

Table 2.3: Comparison of Australian Cruise Ship Industry Demand Indicators

2009-10 2010-11 Actual Change

% Change

Number of Australian ports visited by cruise ships 30 29 -1 -3.3%

Cruise Ship Characteristics

Number of visiting cruise ships 34 42 8 23.5%

Passenger capacity of the cruise ships 41,803 49,254 7,451 17.8%

Number of crew on the cruise ships 18,335 21,786 3,451 18.8%

Cruise Ship Visits

Number of cruise ship visits to ports 582 568 -14 -2.4%

Passengers and Crew

Total passenger days at port 1,091,596 1,081,665 -9,931 -0.9%

Total crew days at port 235,128 237,386 2,258 1.0%

Expenditure

Passengers ($m)(a) $278.4 $305.5 $27.0 9.7%

Crew ($m) (a) $39.7 $43.5 $3.8 9.6%

Port-related by operators ($m) $364.5 $440.6 $76.1 20.9%

Note: (a) Includes both domestic and international expenditure. Source: CDU, Individual Ports, AECgroup

A comparison of demand indicators for each port between 2009-10 and 2010-11 is presented in Table 2.4. The following is noted:

The capital cities including Sydney, Brisbane and Darwin recorded an increase in the number of passenger and crew days spent at port;

The capital cities of Melbourne, Adelaide, Fremantle and Hobart recorded a decline in the number of passenger and crew days spent at port;

Regional cities north of Sydney including Newcastle, Cairns and Mackay/Whitsundays, recorded significant growth in passenger and crew days spent at port; and

The majority of cities in regional Western Australia and Tasmania recorded a decline.

Table 2.4: Comparison of Australian Cruise Ship Industry Demand Indicators by Port

2009-10 2010-11

Port Cruise Visit Days

Passenger Crew Days at Port

Cruise Visit Days


NSW:

Eden 4 2,949 821 5 4,811 1,224

Newcastle 4 6,446 1,560 13 42,893 7,656

Sydney Harbour 116 375,211 75,637 146 467,826 101,594

Total 124 384,606 78,018 164 515,529 110,474


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2009-10 2010-11

Port Cruise Visit Days


Cruise Visit Days


VIC:

Geelong 0 0 0 2 589 338

Melbourne 48 107,975 24,671 36 68,302 15,887

Phillip Island 1 2,545 540 1 70 39

Total 49 110,521 25,211 39 68,961 16,264

QLD:

Brisbane 69 193,023 38,072 74 203,387 41,239

Cairns/Yorkeys Knob 36 37,075 7,517 44 41,905 7,337

Cooktown 3 3,450 43 4 1,912 0

Mackay/Whitsundays* 35 47,101 11,724 41 51,692 13,686

Port Douglas 19 26,860 0 19 24,023 0

Thursday Island 8 1,790 140 4 920 0

Townsville 12 10,463 3,319 7 5,026 1,682

Total 182 319,761 60,815 193 328,863 63,944

SA:

Adelaide 21 24,829 7,030 12 11,954 3,439

Kingscote 3 797 364 2 716 309

Port Lincoln 3 1,175 358 2 535 263

Total 27 26,800 7,752 16 13,205 4,011

WA:

Albany 11 12,262 3,537 8 6,971 1,928

Broome 19 25,474 5,739 14 10,288 2,950

Bunbury 9 11,014 2,972 7 8,015 2,185

Esperance 4 2,438 660 3 1,315 374

Exmouth 6 6,208 1,793 3 2,327 697

Fremantle 39 52,586 13,043 29 32,774 9,187

Geraldton 18 28,714 6,618 4 5,895 1,464

Total 106 138,695 34,362 68 67,586 18,785

TAS:

Burnie 18 23,939 6,073 11 16,108 3,843

Coles Bay 2 3,298 726 0 0 0

Hobart 29 36,598 9,811 26 27,734 7,626

Port Arthur 6 4,676 1,600 3 1,840 441

Total 55 68,511 18,210 40 45,681 11,910

NT:

Darwin 33 33,854 9,018 46 40,056 11,504

Total 33 33,854 9,018 46 40,056 11,504

Offshore Territories:

Norfolk Island 1 1,640 352 0 0 0

Christmas Island 5 7,209 1,390 2 1,785 494

Total 6 8,849 1,742 2 1,785 494

Total 582 1,091,596 235,128 568 1,081,665 237,386

Source: CDU, AECgroup


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2.6 Global Trends & Context

The international cruise industry continues to grow with the Cruise Lines International Association (CLIA) estimating that major lines carried 15.0 million passengers in 2010, a 12.0% rise from 2009. CLIA forecasts a total of 16.0 million passengers in 2011, representing a total increase of passengers of 1 million or 6.6% growth.

CLIA reports that 12 new vessels joined the fleet in 2010 with an additional 10 refurbished ships added to the North American fleet. This included several large ships such as Royal Caribbean's record-setting, 5,400-passenger Allure of the Seas and

Norwegian Cruise Line‟s 4,200-passenger Norwegian Epic. An additional 14 ships are expected to be completed in 2011, totalling $4.6 billion. Of the new ships being built, the vast majority are either smaller expedition ships with passenger capacity under 400 passengers or mega ships with a passenger capacity of over 2,000 passengers.

The anticipated top cruise destinations for 2011, according to CLIA member agents, are the Caribbean/Bahamas, followed by Alaska, Mediterranean, Europe, Hawaii, Panama Canal, European rivers, Bermuda, Canada/New England, Mexico and the US West Coast.

Global trends in the cruise industry include:

Continued growth in demand for family and multigenerational cruises which is reflected by the continued growth in the mega cruise sector that allows for the inclusion of an extensive range of facilities and activities on each ship that cater for all ages.

Continued growth in the small and luxury cruise sectors as some older passengers

and couples look for cruises with a higher focus on luxury and privacy and less children. This includes significant growth in river cruises especially along European waterways.

Increased demand for greater choice of dining which includes the inclusion of more speciality restaurants and cruises advertising guest chefs aboard some cruises.

With the continued growth in the cruise industry, cruise operators are looking to develop themed cruises to differentiate themselves from the competition. An example

of themed cruises include music (with several singers/bands/groups performing onboard), food and wine cruises, culture and art.

Cruise ships are looking to expand the availability of onboard spa and fitness facilities to meet greater demand from passengers for these services.

2.7 Industry Representation

CDU is the peak industry marketing brand for Australia and the Pacific. In 2010-11, CDU recorded 63 members representing ports, national and state tourism agencies, shipping agents, inbound tour operators and companies associated with the cruise shipping industry in Australia and the South Pacific. CDU‟s mission is to act as the peak cruise industry association growing and developing the Australia Pacific region as the world‟s leading cruise destination providing economic, social and environmental benefits with the

vision to make the Australian, Asian and South Pacific region a major world class base and destination for cruise ships.


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3. Economic Impact of Cruise Shipping

3.1 Method of Analysis

3.1.1 An Introduction to Economic Impact Analysis

Economic impact analysis can be used to trace the flows of spending associated with specific activities in a region to identify changes in output, jobs, income and value added.

The economic impact analysis of the cruise shipping industry requires a carefully structured approach. As a result, the AECgroup designed a customised expenditure-based approach that considers the categories of spending associated with the industry, and uses the appropriate methods to estimate the economic impact of each type of spending.

The approach used in this study provides separate estimates of the direct and indirect impact of the industry. This distinction is typically used in economic impact analysis to

separate the first round effects supported by an activity from its secondary effects. The distinction between direct and indirect effects used in this study follows similar approaches for other industry studies.

The economic impacts of the cruise shipping industry occur when vessels visit Australian ports. Port visits stimulate a range of economic activity, including passenger, crew and

cruise line expenditure. On top of this, there is also the direct employment of Australians on cruise ships, primarily those based in Australia.

The direct economic impact of the cruise shipping industry includes the output, jobs, income and value added created by cruise liner, crew and passenger expenditure. Cruise lines create economic impacts through vessel related expenditure. Crew economic impacts are generated by expenditure while at port. Passenger economic impacts are generated by expenditure at base and transit ports, and pre- and post-cruise. Figure 3.1

below illustrates the economic impact framework used for this study.

Figure 3.1: Cruise Shipping Economic Impact Framework

The following expenditures are not considered in the analysis:

Cruise line support costs - due to unavailability of data regarding these costs;

Base port capital expenses - treated as a capital expenditure item so outside scope; and

Cruise ship refurbishments - treated as a capital expenditure item so outside scope.


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In addition to the direct economic impacts, the Australian employees in the cruise

shipping industry spend a portion of their income on goods and services in other sectors of the economy. Additionally, the businesses that provide goods and services to the cruise shipping industry and visitors spend a portion of their revenue on purchases from

other sectors of the economy. This spending typically supports additional output, employment, income and value add, known as the indirect economic impact. In turn, a portion of this indirect spending causes further spending by suppliers and their employees. This cycle is referred to as the multiplier process, or “multiplier effect”.

AECgroup quantified the economic impact using the 2006-07 National Input-Output (I/O) economic modelling system (see Appendix A for more details). I/O modelling is nationally respected as an economic impact analysis tool. The study area considered in

the national study was Australia. Additionally, each State and Territory, and specific cruise shipping regional areas, were also analysed separately.

3.1.2 An Example Interpretation of Economic Impact Analysis

As a simple example, consider a cruise ship that carries 500 passengers at a time and

stops at three ports in Australia. Assume the ship has 100 employees. From the most straightforward perspective outlined in this example, the cruise ship supports 100 jobs.

But, in addition, the cruise ship also supports other jobs in the economy due to the spending by crew and passengers when in port, and also the cruise ship operator. For example, the cruise ship purchases items from a food distributor that operates a warehouse, and purchases repair and maintenance services from suppliers. Additionally, while visiting the ports and local areas, the cruise ship passengers and crew spend money at businesses, including restaurants and visitor attractions. By considering these categories of spending, one quickly realises that the cruise ship and its visitors support

more than just 100 jobs.

3.1.3 Definition of Key Economic Impact Analysis Terms

Terms used in the economic significance analysis are defined below:

Output: The dollar volume of goods and services produced or sold, also referred to as

gross output or sales.

Income: Refers to the employee compensation which includes total payroll costs, including wages and salary payments, as well as sales commissions and any other

non-cash compensation.

Employment: The number of full-time equivalent jobs (FTEs).

Value add: The change in consumption, investment and government expenditure, plus exports of goods and services, minus imports of goods and services due to the industry. It is the preferred measure for the assessment and contribution of a stimulus to the economy.

More detail regarding each of these terms is provided in Appendix A.

3.2 Expenditure associated with the Cruise Shipping Industry in Australia

The first step in estimating the direct economic impact of the cruise shipping industry in Australia is to estimate the purchases or expenditures generated by cruise shipping activity. The following end user categories of purchases have been identified:

Passenger expenditure at base and transit ports;

Crew expenditure at base and transit ports; and

Cruise line operators expenditure on port charges and operations.

These expenditures (or purchases) represent the direct output associated with the cruise shipping industry and are presented in the following sections.


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3.2.1 Port Charges & Operations

Port operators and service providers levy a range of charges on visiting cruise ships for seaside activities. These charges generally include:

Navigation service charge – a charge to cover the cost of maintaining channels and

navigation aids throughout the port and harbour area. The charge is generally levied based on the gross registered tonnage (GRT) of the vessel (this charge sometimes includes pilotage);

Berthing charge – a charge for the use of a port berth, which is generally levied according to a daily rate;

Pilotage – a charge for the piloting of the vessel to a berth from the entrance of the harbour or start of the harbour channel, which is generally levied according to a

vessel‟s GRT; and

Towage – a charge for the use of tug boats to position the vessel at a berth or to assist a vessel departing a berth. Towage is generally provided by a third party

service provider independent of the port and is generally levied according to a vessel‟s GRT.

Port operators and service providers offer a range of landside services for cruise lines,

including:

Supplies:

o Fuel – fuel bunkering services;

o Stores – food and beverage provisioning3; and

o Water – supply of potable water.

Vessel services:

o Wastewater collection; and

o Garbage collection.

Port operators and service providers frequently provide passenger related services to cruise lines, including:

Security – baggage and passenger screening at embarkation/disembarkation; and

Baggage handling – loading and unloading of passenger baggage.

Where possible expenditure relating to the above services and activities were based upon individual port and port service provider charges. Charges from similar sized ports were

applied in the absence of individual port specific information.

In terms of capital and construction expenditure by the cruise shipping industry, it is noted that there are a number of current cruise ship terminal developments in Australia, including those at Sydney and Townsville. The economic impact of capital expenditure from these projects on the cruise ship terminal component has not been directly assessed as part of this study.

3.2.2 Passenger & Crew Expenditure

Expenditure by passengers and crew at ports of call is a major component of the

economic impact of Australia‟s cruise shipping industry. AECgroup developed expenditure estimates for passengers and crew in 2006-07 based on 840 surveys that AECgroup completed in 2005-06 and 2006-07. During 2011, AECgroup undertook additional surveys of over 700 passengers in Sydney4. Surveys have also been undertaken by Tourism Tasmania, Tourism NT and Tourism Victoria/Port of Melbourne to estimate

expenditure in Tasmania, Darwin and at the Port of Melbourne respectively. For the 2010-11 update, new survey results from Sydney have been used with previous survey

3 Consultations revealed that frequently cruise lines pre-arrange the delivery of stores and supplies. Approximately

50% of stores are imported to any given port and simply transferred from port to vessel during a port call.


Sydney Ports.


14

results from AECgroup, Tourism Victoria/Port of Melbourne, Tourism Tasmania and

Tourism NT indexed to the Consumer Price Index (CPI).

The expenditure levels from the survey are a sample and should therefore be interpreted with caution and considered indicative only. However, at the same time, the survey

provides the most accurate, targeted and up-to-date information on passenger and crew expenditure levels.

It should be noted the differential in transit and base port expenditure means base port visits are a key driver of the economic impact of the industry in Australia. It is those ships that are based at an Australian port and begin/end their tours from Australia that generate significant pre- and post-cruise expenditure for regional economies when their passengers and crew are away from home for the purposes of the cruise.

Tourism Tasmania undertook a visitor expenditure survey in 2009-10 involving 23 ships. The survey found that average expenditure by passengers increased by over 20% while average crew expenditure declined by almost 50% from 2008-09. Survey results have been adjusted by CPI for 2010-11 and are outlined in Table 3.1.

Table 3.1: Average Cruise Ship Expenditure by Visitor Type, Tasmania

Visitor Australian Overseas

Passenger $97.13 $118.25

Crew $107.69 $107.69

Source: Tourism Tasmania (2010), AECgroup

The Tourism Victoria/Port of Melbourne visitor expenditure survey results from 2009-10 for the Port of Melbourne found that average expenditure had remained relatively stable since the previous survey in 2007-08. The results have been adjusted by CPI for 2010-11

and are outlined in Table 3.2.

Table 3.2: Average Cruise Ship Expenditure by Nationality, Melbourne

Australian Overseas

Passenger $149.83 $192.41

Crew $65.00 $83.47

Source: Tourism Victoria/Port of Melbourne (2010)

The Tourism NT visitor expenditure survey results for Darwin in 2009-10 been adjusted by CPI for 2010-11 and are outlined in Table 3.3.

Table 3.3: Average Cruise Ship Expenditure by Nationality, Darwin

Australian Overseas Crew

Food and Drink $18.7 $29.8 $20.1

Organised Tours $56.4 $35.4 $1.4

Entertainment $3.9 $4.2 $3.6

Shopping $73.5 $93.1 $30.7

Transport $14.7 $13.7 $1.4

Other $6.3 $14.2 $2.1

Total $173.6 $190.3 $59.3

Source: Tourism NT (2010)

The following tables provide a breakdown of the passenger and crew expenditure surveys results for capital city and regional base and transit ports from AECgroup‟s Sydney and Queensland (Brisbane and Cairns) surveys.


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Table 3.4: Avg Cruise Ship Passenger Expenditure by Nationality, Capital City Base Port

(Sydney)

Australian Overseas

Pre-paid Spent Total Pre-paid Spent Total

Accommodation, Food and Drink $45.38 $196.22 $241.60 $120.76 $143.16 $263.92

Organised Tours $36.52 $54.22 $90.74 $41.67 $28.58 $70.25

Entertainment $22.67 $106.32 $128.98 $20.00 $57.43 $77.43

Shopping $1.65 $56.88 $58.53 $21.67 $43.57 $65.23

Transport $1.62 $48.41 $50.03 $8.26 $169.46 $177.72

Other $52.06 $134.13 $186.19 $0.00 $10.00 $10.00

Total $159.90 $596.17 $756.07 $212.35 $452.20 $664.55

Source: AECgroup Passenger Survey (2011)

Table 3.5: Avg Cruise Ship Passenger Expenditure by Nationality, Capital City Base Port (Brisbane)

Australian Overseas


Accommodation, Food and Drink $79.65 $17.71 $97.36 $366.99 $54.37 $421.36

Organised Tours $521.64 $3.26 $524.90 $116.11 $0.00 $116.11

Entertainment $1.60 $1.29 $2.89 $0.00 $6.75 $6.75

Shopping $46.50 $38.85 $85.34 $0.00 $31.96 $31.96

Transport $12.46 $18.10 $30.56 $42.63 $81.25 $123.88

Other $0.00 $2.96 $2.96 $0.00 $0.00 $0.00

Total $661.85 $82.15 $744.00 $525.72 $174.34 $700.06

Source: AECgroup Passenger & Crew Survey (2007)

Table 3.6: Avg Cruise Ship Passenger Expenditure by Nationality, Capital City Transit

(Sydney)

Australian Overseas


Food and Drink $15.66 $14.36 $30.01 $10.36 $20.03 $30.39

Organised Tours $0.00 $0.00 $0.00 $7.31 $29.42 $36.73

Entertainment $0.00 $40.00 $40.00 $3.57 $44.64 $48.21

Shopping $0.00 $10.33 $10.33 $17.02 $36.85 $53.87

Transport $7.75 $10.52 $18.27 $3.33 $15.06 $18.39

Other $0.00 $1.00 $1.00 $0.00 $8.33 $8.33

Total $23.41 $76.21 $99.62 $41.59 $154.34 $195.93

Source: AECgroup Passenger Survey (2011)

Table 3.7: Avg Cruise Ship Passenger Expenditure by Nationality, Capital City Transit (Brisbane)

Australian Overseas


Food and Drink $13.27 $26.63 $39.90 $0.00 $26.86 $26.86

Organised Tours $29.06 $5.44 $34.50 $28.23 $175.42 $203.66

Entertainment $0.00 $1.69 $1.69 $2.34 $3.23 $5.57

Shopping $0.00 $15.25 $15.25 $3.46 $48.68 $52.14

Transport $0.69 $4.34 $5.03 $0.69 $7.19 $7.88

Other $0.00 $1.40 $1.40 $0.13 $0.03 $0.16

Total $43.01 $54.75 $97.77 $34.85 $261.41 $296.26



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Table 3.8: Avg Cruise Ship Passenger Expenditure by Nationality, Regional Centre Transit

(Cairns)

Australian Overseas


Food and Drink $0.63 $11.50 $12.13 $0.00 $7.99 $7.99

Organised Tours $19.11 $14.06 $33.17 $14.74 $33.43 $48.17

Entertainment $1.01 $2.17 $3.18 $0.00 $5.39 $5.39

Shopping $0.00 $20.56 $20.56 $0.00 $47.38 $47.38

Transport $2.58 $5.72 $8.31 $0.69 $6.90 $7.59

Other $0.00 $0.66 $0.66 $0.00 $1.72 $1.72

Total $23.34 $54.68 $78.02 $15.43 $102.81 $118.24


Table 3.9: Avg Cruise Ship Crew Expenditure by Nationality, Capital City Base Port (Sydney)

Australian Overseas


Food and Drink $68.31 $120.86 $189.17 $10.51 $43.30 $53.81

Organised Tours $37.83 $69.36 $107.20 $0.00 $0.00 $0.00

Entertainment $0.00 $0.00 $0.00 $0.00 $10.11 $10.11

Shopping $6.22 $11.40 $17.61 $0.00 $71.48 $71.48

Transport $11.31 $13.57 $24.88 $0.00 $1.70 $1.70

Other $0.00 $0.00 $0.00 $0.00 $0.17 $0.17

Total $123.67 $215.19 $338.86 $10.51 $126.75 $137.26


Table 3.10: Avg Cruise Ship Crew Expenditure by Nationality, Capital City Base Port (Brisbane)

Australian Overseas


Food and Drink $66.11 $116.96 $183.06 N/a N/a N/a

Organised Tours $36.61 $67.12 $103.73 N/a N/a N/a

Entertainment $0.00 $0.00 $0.00 N/a N/a N/a

Shopping $6.09 $11.17 $17.26 N/a N/a N/a

Transport $13.82 $16.58 $30.40 N/a N/a N/a

Other $0.00 $0.00 $0.00 N/a N/a N/a

Total $122.63 $211.83 $334.46 N/a N/a N/a


Table 3.11: Avg Cruise Ship Crew Expenditure by Nationality, Capital City Transit (Sydney)

Australian Overseas


Food and Drink $0.00 $33.63 $33.63 $0.00 $96.91 $96.91

Organised Tours $0.00 $0.00 $0.00 $0.60 $2.10 $2.70

Entertainment $0.00 $0.00 $0.00 $4.51 $18.94 $23.45

Shopping $0.00 $137.79 $137.79 $0.00 $61.68 $61.68

Transport $0.00 $2.26 $2.26 $0.00 $10.36 $10.36

Other $0.00 $0.00 $0.00 $0.00 $12.81 $12.81

Total $0.00 $173.68 $173.68 $5.11 $202.80 $207.91



17

Table 3.12: Avg Cruise Ship Crew Expenditure by Nationality, Capital City Transit

(Brisbane)

Australian Overseas


Food and Drink $0.00 $32.54 $32.54 $0.00 $73.91 $73.91

Organised Tours $0.00 $0.00 $0.00 $5.55 $2.03 $7.59

Entertainment $0.00 $0.00 $0.00 $0.00 $9.64 $9.64

Shopping $0.00 $135.06 $135.06 $2.11 $39.44 $41.55

Transport $0.00 $2.76 $2.76 $0.65 $9.72 $10.36

Other $0.00 $0.00 $0.00 $0.00 $4.83 $4.83

Total $0.00 $170.37 $170.37 $8.31 $139.56 $147.88


Table 3.13: Avg Cruise Ship Crew Expenditure by Nationality, Regional Centre Transit (Cairns)

Australian Overseas


Food and Drink N/a N/a N/a $0.00 $19.77 $19.77

Organised Tours N/a N/a N/a $0.00 $3.05 $3.05

Entertainment N/a N/a N/a $0.00 $3.94 $3.94

Shopping N/a N/a N/a $0.00 $30.47 $30.47

Transport N/a N/a N/a $0.69 $2.76 $3.45

Other N/a N/a N/a $0.00 $3.63 $3.63

Total N/a N/a N/a $0.69 $63.62 $64.31


In terms of economic impact, it is important to note that only international passengers

and crew generate economic impacts at a national level. Expenditure made by Australians on cruises visiting Australian ports represents a transfer of expenditure from one region to another. Therefore, it is not reasonable to include Australian expenditure at

the national level. However, Australian passenger and crew expenditure can be considered in terms of estimating state and regional impacts.

To net out Australian passenger expenditure it is necessary to estimate the number of Australian passengers and crew on vessels visiting Australia. For the purposes of this

economic impact assessment, it is assumed that 85% of international transit cruise ship passengers are international passengers, and 98% of cruise ship crew members are international crew. This ratio of international passengers on Australian based ships is assumed at 10% for Australian based ships and 50% for crew members.

Assumptions regarding the proportion of passengers and crew disembarking at ports of call have also been used and include:

90% of passengers for transit ports (berthing);

70% of passengers for transit ports (anchoring);

100% of passengers for base ports;

50% of crew for transit ports; and

100% of crew for base ports.

3.2.3 Summary of Industry Expenditure

The direct expenditure (including domestic and international passenger and crew and

operator expenditure) by the cruise shipping industry in Australia in 2010-11 was estimated at $789.6 million, compared with $682.7 million in 2009-10 (see Table 3.14). This equates to a 15.7% increase in the year, with the increase explained by a higher number of base port visits which resulted in higher passenger and crew expenditure as well as significantly higher port related expenditure. A breakdown of the expenditure is as follows:


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Total passenger expenditure of $305.5 million, a 9.7% increase;

Total crew expenditure of $43.5 million, a 9.6% increase; and

Total operator port-related expenditure of $440.6 million, a 20.9% increase.

Table 3.14: Summary of Direct Expenditure Associated with the Cruise Shipping Industry in Australia, 2010-11

Visit Days


Port Days At Port

Days At Port


NSW:

Eden 5 4,811 1,224 $0.4 $0.1 $0.2 $0.7

Newcastle 13 42,893 7,656 $14.4 $1.6 $7.1 $23.2

Sydney Harbour 146 467,826 101,594 $170.7 $24.2 $205.0 $400.0

Total 164 515,529 110,474 $185.6 $25.9 $212.3 $423.9

VIC:

Geelong 2 589 338 $0.1 $0.0 $0.1 $0.2

Melbourne 36 68,302 15,887 $18.8 $2.4 $47.2 $68.5

Phillip Island 1 70 39 $0.0 $0.0 $0.0 $0.0

Total 39 68,961 16,264 $18.9 $2.5 $47.3 $68.7

QLD:

Brisbane 74 203,387 41,239 $64.8 $8.7 $100.1 $173.7

Cairns/Yorkeys Knob 44 41,905 7,337 $3.9 $0.5 $2.0 $6.4

Cooktown 4 1,912 0 $0.2 $0.0 $0.0 $0.2

Mackay/Whitsundays* 41 51,692 13,686 $4.6 $0.9 $1.0 $6.5

Port Douglas 19 24,023 0 $2.0 $0.0 $0.1 $2.1

Thursday Island 4 920 0 $0.1 $0.0 $0.0 $0.1

Townsville 7 5,026 1,682 $0.5 $0.1 $0.5 $1.0

Total 193 328,863 63,944 $76.1 $10.2 $103.7 $190.0

SA:

Adelaide 12 11,954 3,439 $2.1 $0.5 $0.7 $3.3

Kingscote 2 716 309 $0.1 $0.0 $0.0 $0.1

Port Lincoln 2 535 263 $0.0 $0.0 $0.0 $0.1

Total 16 13,205 4,011 $2.2 $0.6 $0.7 $3.5

WA:

Albany 8 6,971 1,928 $0.6 $0.1 $0.4 $1.1

Broome 14 10,288 2,950 $0.9 $0.2 $0.5 $1.6

Bunbury 7 8,015 2,185 $0.7 $0.1 $0.4 $1.3

Esperance 3 1,315 374 $0.1 $0.0 $0.1 $0.2

Exmouth 3 2,327 697 $0.2 $0.0 $0.1 $0.4

Fremantle 29 32,774 9,187 $7.2 $1.7 $28.2 $37.1

Geraldton 4 5,895 1,464 $0.5 $0.1 $0.6 $1.2

Total 68 67,586 18,785 $10.2 $2.3 $30.4 $42.9

TAS:

Burnie 11 16,108 3,843 $1.6 $0.4 $0.6 $2.6

Hobart 26 27,734 7,626 $2.8 $0.8 $1.2 $4.8

Port Arthur 3 1,840 441 $0.2 $0.0 $0.1 $0.3

Total 40 45,681 11,910 $4.6 $1.3 $1.9 $7.8


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Visit Days


Port Days At Port

Days At Port


NT:

Darwin 46 40,056 11,504 $7.7 $0.7 $44.4 $52.8

Total 46 40,056 11,504 $7.7 $0.7 $44.4 $52.8

Territories:

Christmas Island 0 0 0 $0.0 $0.0 $0.0 $0.0

Norfolk Island 2 1,785 494 $0.2 $0.0 $0.0 $0.2

Total 2 1,785 494 $0.2 $0.0 $0.0 $0.2

Total 568 1,081,665 237,386 $305.5 $43.5 $440.6 $789.6

Note: (a) Includes both domestic and international expenditure. * Includes Hamilton Island Source: CDU, Individual Ports, AECgroup

3.2.4 Growth in Industry Expenditure

There has been an increase recorded in the cruise shipping industry‟s expenditure in Australia (see Table 3.15). There are a number of reasons for this change, namely:

19.9% increase in number of base port visits; and

20.9% increase in port-related expenditure by operators.

Table 3.15: Comparison of Expenditure Associated with the Cruise Shipping Industry in Australia

Expenditure ($m), 2009-10 Expenditure ($m), 2010-11

Port Passengers(a)

Crew Operator

Total Passengers (a)

Crew Operator

Total

NSW:

Eden $0.3 $0.1 $0.4 $0.8 $0.4 $0.1 $0.2 $0.7

Newcastle $0.5 $0.1 $0.6 $1.2 $14.4 $1.6 $7.1 $23.2

Sydney Harbour $133.6 $17.9 $144.4 $295.9 $170.7 $24.2 $205.0 $400.0

Total $134.4 $18.0 $145.4 $297.9 $185.6 $25.9 $212.3 $423.9

VIC:

Geelong $0.0 $0.0 $0.0 $0.0 $0.1 $0.0 $0.1 $0.2

Melbourne $32.5 $4.4 $56.9 $93.8 $18.8 $2.4 $47.2 $68.5

Port Phillip $0.2 $0.0 $0.1 $0.3 $0.0 $0.0 $0.0 $0.0

Total $32.8 $4.4 $57.0 $94.2 $18.9 $2.5 $47.3 $68.7

QLD:

Brisbane $63.6 $8.2 $77.1 $149.0 $64.8 $8.7 $100.1 $173.7

Cairns/Yorkeys Knob $3.5 $0.5 $2.2 $6.2 $3.9 $0.5 $2.0 $6.4

Cooktown $0.3 $0.0 $0.1 $0.4 $0.2 $0.0 $0.0 $0.2

Mackay/ Whitsundays* $4.2 $0.8 $3.0 $8.0 $4.6 $0.9 $1.0 $6.5

Port Douglas $2.2 $0.0 $1.8 $4.0 $2.0 $0.0 $0.1 $2.1

Thursday Island $0.2 $0.0 $0.3 $0.5 $0.1 $0.0 $0.0 $0.1

Townsville $1.0 $0.2 $0.9 $2.1 $0.5 $0.1 $0.5 $1.0

Total $75.0 $9.7 $85.5 $170.2 $76.1 $10.2 $103.7 $190.0

SA:


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Expenditure ($m), 2009-10 Expenditure ($m), 2010-11

Port Passengers(a)

Crew Operator

Total Passengers (a)

Crew Operator

Total

Adelaide $5.2 $1.2 $2.7 $9.1 $2.1 $0.5 $0.7 $3.3

Kingscote $0.0 $0.0 $0.1 $0.1 $0.1 $0.0 $0.0 $0.1

Port Lincoln $0.0 $0.0 $0.1 $0.1 $0.0 $0.0 $0.0 $0.1

Total $5.2 $1.3 $2.9 $9.4 $2.2 $0.6 $0.7 $3.5

WA:

Albany $1.1 $0.2 $0.6 $2.0 $0.6 $0.1 $0.4 $1.1

Broome $2.3 $0.4 $1.1 $3.7 $0.9 $0.2 $0.5 $1.6

Bunbury $0.9 $0.2 $0.6 $1.7 $0.7 $0.1 $0.4 $1.3

Esperance $0.2 $0.0 $0.7 $0.9 $0.1 $0.0 $0.1 $0.2

Exmouth $0.5 $0.1 $0.3 $1.0 $0.2 $0.0 $0.1 $0.4

Fremantle $9.4 $2.3 $36.9 $48.5 $7.2 $1.7 $28.2 $37.1

Geraldton $2.4 $0.4 $2.8 $5.7 $0.5 $0.1 $0.6 $1.2

Total $16.9 $3.6 $43.0 $63.5 $10.2 $2.3 $30.4 $42.9

TAS:

Burnie $2.3 $0.6 $1.0 $4.0 $1.6 $0.4 $0.6 $2.6

Coles Bay $0.3 $0.1 $0.1 $0.5 $0.0 $0.0 $0.0 $0.0

Hobart $3.6 $1.0 $2.1 $6.7 $2.8 $0.8 $1.2 $4.8

Port Arthur $0.5 $0.2 $0.3 $0.9 $0.2 $0.0 $0.1 $0.3

Total $6.7 $1.9 $3.5 $12.2 $4.6 $1.3 $1.9 $7.8

NT:

Darwin $6.6 $0.6 $27.1 $34.3 $7.7 $0.7 $44.4 $52.8

Total $6.6 $0.6 $27.1 $34.3 $7.7 $0.7 $44.4 $52.8

Territories:

Christmas Island $0.1 $0.0 $0.1 $0.2 $0.0 $0.0 $0.0 $0.0

Norfolk Island $0.6 $0.1 $0.1 $0.7 $0.2 $0.0 $0.0 $0.2

Total $0.7 $0.1 $0.1 $1.0 $0.2 $0.0 $0.0 $0.2

Total $278.4 $39.7 $364.5 $682.7 $305.5 $43.5 $440.6 $789.6

Note: (a) Includes both domestic and international expenditure. * Includes Hamilton Island

Source: CDU, Individual Ports, AECgroup

The change in the proportion of ships based at a port has a significant impact on expenditure. Ships based in Australia result in significantly higher economic impacts through port related expenditure and passengers spending time in Australia before and after their cruise. Table 3.16 outlines the breakdown of base port visits versus transit

port visits for select ports across Australia. The data indicates that several ports, such as

Sydney, Newcastle and Perth, recorded an increase in the number of base port visits while the number of transit visits declined. Adelaide recorded no ships based there during 2010-11 after recording 6 base visits in 2009-10.


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Table 3.16: Passenger / Crew Expenditure Broken Down by Base vs Transit Port Visits

2009-10 2010-11

Base Transit Total Base Transit Total

Sydney

Number of visiting cruise ship visits 90 26 116 119 27 146

Number of passenger days at port 350,720 24,491 375,211 447,144 20,682 467,826

Number of crew days at port 69,444 6,193 75,637 94,747 94,747 189,494

Passenger expenditure ($m)(a) $128.8 $4.9 $133.6 $167.0 $3.8 $170.7

Crew expenditure ($m) (a) $16.6 $1.3 $17.9 $22.8 $1.4 $24.2

Brisbane






Perth/Fremantle






Cairns


Number of passenger days at port 600 36,475 37,075 672 41,233 41,905

Number of crew days at port 234 7,283 7,517 308 7,029 7,337



Melbourne






Adelaide


Number of passenger days at port 4,860 19,969 24,829 0 11,954 11,954

Number of crew days at port 1,428 5,602 7,030 0 3,439 3,439



Darwin



Number of crew days at port 595 8,423 9,018 693 10,811 11,504



Source: CDU, Individual Ports, AECgroup

3.3 National Economic Impacts

The national economic impact of cruise ship visits to Australia in 2010-11 is the aggregation of all international passenger and crew expenditure, and cruise ship operator

expenditure at each port visited by a cruise ship in 2010-11. Expenditure by Australian passengers visiting Australian ports as part of a cruise does not constitute a net impact;


22

rather the expenditure is a transfer from one part of the economy to another. However

estimates for these are also calculated and presented.

It is estimated that the net total expenditure by international passengers and crew and cruise lines generated by cruise ship visits to Australia was approximately $499.3 million

in 2010-11, an increase from $424.7 million in 2009-10. Expenditure from international passengers was estimated at $42.6 million in 2010-11, which represented a 3.6% decline from 2009-10. When domestic passengers are included, passenger expenditure recorded strong growth from $278.4 million in 2009-10 to $305.5 million in 2010-11. International crew members are estimated to account for an additional $16.0 million, with domestic crew expenditure accounting for an additional $27.5 million.

Cruise lines were estimated to have spent approximately $22.9 million in port charges,

such as navigation service fees, berthage charges, pilotage fees and towages charges. Cruise lines were estimated to have spent approximately $407.8 million on supplies, such as fuel bunkers, food, beverages and potable water, and services, such as waste water and garbage collection. Passenger related services were estimated at approximately $10.0 million, with services such as security and baggage handling.

To apply the Input-Output approach, cruise shipping related expenditure must be

allocated to an industry category for which there is a corresponding Input-Output multiplier. Table 3.17 below summarises the cruise shipping expenditure categories and their corresponding industry categories.

Table 3.17: Total Direct National Expenditure Associated with the Cruise Shipping Industry in Australia

Expenditure Categories

Industry Category International International & Domestic

09-10 10-11 09-10 10-11

Passenger Expenditure

Accommodation, Food and Drink

Accommodation, cafes and restaurants $14.5 $12.7 $44.0 $81.2

Organised Tours Rail, pipeline and other transport $14.7 $11.8 $170.6 $89.7

Entertainment Accommodation, cafes and restaurants $1.1 $3.3 $3.0 $32.6

Shopping Retail trade $9.7 $7.7 $44.7 $37.2

Transport Road transport $4.0 $6.7 $14.6 $22.7

Other Other services $0.2 $0.5 $1.5 $42.1

Subtotal $44.2 $42.6 $278.4 $305.5

Crew Expenditure

Accommodation, Food and Drink

Accommodation, cafes and restaurants $6.4 $6.5 $18.2 $20.6

Organised Tours Rail, pipeline and other transport $0.3 $0.2 $6.5 $7.9

Entertainment Accommodation, cafes and restaurants $1.2 $1.2 $1.2 $1.2

Shopping Retail trade $7.1 $7.3 $11.3 $11.0

Transport Road transport $0.5 $0.5 $2.1 $2.5

Other Other services $0.3 $0.3 $0.4 $0.3

Subtotal $15.9 $16.0 $39.7 $43.5

Port & Port Related Charges

Port & Port Related Charges

Services to transport; storage $28.0 $22.9 $28.0 $22.9

Supplies & Services

Bunkers Wholesale trade $314.0 $397.0 $314.0 $397.0

Stores Services to transport; storage $9.4 $7.7 $9.4 $7.7

Water Water supply; sewerage and drainage services $0.6 $0.4 $0.6 $0.4


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Expenditure Categories

Industry Category International International & Domestic

09-10 10-11 09-10 10-11

Waste water Water supply; sewerage and drainage services $1.9 $1.5 $1.9 $1.5

Garbage Other services $1.5 $1.2 $1.5 $1.2

Subtotal $327.5 $407.8 $327.5 $407.8

Passenger related services

Security charges Other business services $4.9 $5.4 $4.9 $5.4

Baggage handling charges

Services to transport; storage $4.1 $4.5 $4.1 $4.5

Subtotal $9.1 $10.0 $9.1 $10.0

Total $424.7 $499.3 $682.7 $789.6

Source: AECgroup

Table 3.18 below summarises the estimated national economic impacts of the cruise shipping industry in Australia in 2010-11 compared with 2009-10. They are:

Estimated total expenditure of $974.7 million in 2010-11, including direct expenditure of $49.2 million. This was a 18.6% increase from 2009-10 when total expenditure

was estimated at $822.1 million. When domestic passengers and crew are included, the estimated total expenditure is $1,523.5 million in 2010-11.

Estimated total wages income of $254.5 million, including $142.0 million in direct income and $112.5 million in indirect or flow on wages income. This was an 18.3% increase from 2009-10 when total wages income was estimated at $215.1 million. When domestic passengers and crew are included, the estimated wage income is $410.2 million in 2010-11.

Estimated employment impacts of 4,270 full time equivalent positions (FTEs), including 2,326 direct positions and 1,944 indirect positions. This was a 17.6%

increase from 2009-10 when total employment was estimated at 3,632 FTEs. In addition to employment generated by onshore spending when at port, it is estimated around 1,500-2,000 Australians are employed on cruise ships, mainly in the ports where cruise ships are based such as Sydney, Melbourne, Brisbane, Perth, Cairns and Darwin. When domestic passengers and crew are included, the estimated

employment is 7,379 FTE positions in 2009-10.

Estimated total value added impact of $449.1 million, including a direct impact of $234.1 million. This was a 17.4% increase from 2009-10 when total value added was estimated at $382.6 million. When domestic passengers and crew are included, the estimated value add is $709.2 million in 2010-11.


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Table 3.18: National Economic Impacts of Cruise Shipping in Australia

International only (a) International & Domestic (b)

Impact 2009-10 2010-11 % Change

2009-10 2010-11 % Change

Output ($m)

Direct $424.5 $499.2 17.6% $682.5 $789.5 15.7%

Indirect $397.6 $475.5 19.6% $636.5 $734.0 15.3%

Total $822.1 $974.7 18.6% $1,319.1 $1,523.5 15.5%

Wages Income ($m)

Direct $121.0 $142.0 17.4% $193.6 $238.9 23.4%

Indirect $94.1 $112.5 19.5% $148.9 $171.2 15.0%

Total $215.1 $254.5 18.3% $342.5 $410.2 19.8%

Employment (FTEs)

Direct 2,000 2,326 16.3% 3,313 4,332 30.8%

Indirect 1,632 1,944 19.1% 2,623 3,047 16.1%

Total 3,632 4,270 17.6% 5,937 7,379 24.3%

Value Added ($m)

Direct $202.5 $234.1 15.6% $330.3 $381.1 15.4%

Indirect $180.0 $215.0 19.4% $284.7 $328.1 15.3%

Total $382.6 $449.1 17.4% $615.0 $709.2 15.3%

Notes: (a) International passengers & crew and operator, (b) International & domestic passengers & crew and operator.

Source: AECgroup

If the estimated expenditure of domestic passengers is added back in the economic impacts of the cruise shipping industry for 2010-11 would be estimated at:

Total expenditure of $1,523.5 million;

Total wage income of $410.2 million;

Total employment impacts of 7,379 FTEs; and

Total value added impact of $709.2 million.

3.4 State/Territory Economic Impacts

State and regional impacts for the cruise shipping industry in Australia are calculated differently to national impacts. State and regional impacts relate to those impacts generated within state and regional economies. Expenditure by Australians, while split out in the national economic impact analysis, is included in the economic impact analysis for each state and region. While it is anticipated that the state and regional impact analysis may include transfers (e.g. expenditure by residents within a state or region within their resident state or region) rather than real impacts, it is considered that at a

state or regional level, transfers will be insignificant. However, state and regional impacts

should not be considered additive, rather indicative of the relative economic impact of the cruise shipping industry in each state and region.

Table 3.19 below summarises the estimated state and territory economic impacts of the cruise shipping industry in Australia in 2010-11 compared with 2009-10.

New South Wales remains the state with the largest economic impact resulting from

the cruise shipping industry in 2010-11, more than double all other states. New South Wales was the base port for eight major cruise vessels and is home to the most significant cruise shipping destination in Australia (Sydney Harbour). Total output (or expenditure) in New South Wales was estimated at approximately $814.0 million in 2010-11, higher than the $577.8 million estimated in 2009-10. This expenditure resulted in an additional $380.1 million in value added in 2010-11.


25

The second largest impact is recorded in Queensland. Queensland boasts a number of

major tourist destinations and is the gateway to several South Pacific destinations serviced by cruise ships deployed in the region. Queensland recorded positive growth in 2010-11 despite the negative impacts of the floods and cyclone, which lifted the State‟s

value added to $171.0 million from an output of $368.2 million.

In 2010-11, cruise ships visited the Victorian ports of Melbourne, Geelong and Phillip Island. The cruise shipping industry generated approximately $134.0 million in expenditure in Victoria, which resulted in approximately $61.6 million in value added.

South Australia recorded a decline in 2010-11 as a result of no base visits during the year. The cruise shipping industry generated approximately $6.4 million of expenditure and $3.1 million in value added in 2010-11.

In 2010-11, the industry in Western Australia recorded a decline with a significant fall in the number of port visits. The industry generated approximately $83.2 million of expenditure, which resulted in an additional $38.6 million in value added. A major contributor to expenditure growth was from the Athena and Sun Princess being based out

of Fremantle for numerous trips.

Tasmania recorded a significant decline in 2010-11, with the industry generating

approximately $14.2 million in expenditure, which resulted in an additional $7.0 million in value added.

In 2010-11, it was estimated that the Northern Territory received approximately $103.0 million of cruise shipping related expenditure. The cruise shipping industry‟s contribution to Northern Territory value added was estimated at approximately $47.5 million, representing strong growth when compared with 2009-10.

Norfolk Island, one of Australia‟s Offshore Territories recorded cruise ship visits in

2010-11, with Christmas Island having had visits cancelled due to bad weather. The industry generated approximately $0.4 million in expenditure, which resulted in an additional $0.2 million in value added.


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Table 3.19: State/Territory Economic Impacts of Cruise Shipping in Australia

Impact NSW QLD VIC SA WA TAS NT Offshore Territories

09-10 10-11 09-10 10-11 09-10 10-11 09-10 10-11 09-10 10-11 09-10 10-11 09-10 10-11 09-10 10-11

Output ($m)

Direct $297.9 $423.9 $170.1 $189.9 $94.2 $68.7 $9.4 $3.5 $63.5 $42.9 $12.2 $7.8 $34.3 $52.8 $1.0 $0.2

Indirect $279.9 $390.1 $156.7 $178.3 $89.9 $65.3 $8.4 $3.0 $58.3 $40.3 $10.0 $6.6 $32.5 $50.2 $0.9 $0.2

Total $577.8 $814.0 $326.8 $368.2 $184.1 $134.0 $17.8 $6.4 $121.8 $83.2 $22.2 $14.3 $66.8 $103.0 $1.8 $0.4

Wages Income ($m)

Direct $84.2 $133.9 $48.2 $53.7 $26.7 $20.7 $2.7 $1.0 $18.1 $12.2 $3.5 $2.3 $9.9 $15.1 $0.3 $0.1

Indirect $65.3 $90.6 $36.6 $41.7 $21.1 $15.3 $1.9 $0.7 $13.7 $9.5 $2.3 $1.5 $7.7 $11.9 $0.2 $0.0

Total $149.5 $224.5 $84.8 $95.4 $47.8 $36.0 $4.6 $1.7 $31.9 $21.7 $5.9 $3.8 $17.6 $27.0 $0.5 $0.1

Employment (FTEs)

Direct 1,420 2,518 827 916 453 371 50 20 314 206 73 47 170 253 6 1

Indirect 1,150 1,630 647 734 369 269 35 13 242 166 43 28 134 206 4 1

Total 2,570 4,148 1,474 1,650 822 640 85 32 555 372 116 76 304 459 10 2

Value Added ($m)

Direct $143.4 $206.2 $83.3 $91.3 $44.5 $32.4 $4.8 $1.8 $31.1 $20.5 $6.5 $4.1 $16.3 $24.8 $0.5 $0.1

Indirect $124.8 $174.0 $70.1 $79.7 $40.2 $29.3 $3.7 $1.3 $26.3 $18.1 $4.5 $2.9 $14.7 $22.7 $0.4 $0.1

Total $268.2 $380.1 $153.4 $171.0 $84.7 $61.6 $8.5 $3.1 $57.4 $38.6 $11.0 $7.0 $30.9 $47.5 $0.9 $0.2

Source: AECgroup


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3.5 Regional Economic Impacts

Regional boundaries have been based on Statistical Division (SD) boundaries, which are generally used as regional economic boundaries. Figure 3.2 below illustrates ports and the corresponding regions impacted by the cruise shipping industry in 2010-11.

Figure 3.2: Regions Impacted by the Cruise Shipping Industry in Australia, 2010-11

Source: AECgroup

3.5.1 New South Wales

New South Wales, particularly Sydney, has benefited greatly from the cruise shipping industry and continues to grow as a major international cruise destination. In 2010-11, there was a significant increase in cruise ship visits and passenger and crew days at port.

In 2010-11, expenditure resulting from the cruise shipping industry was approximately $814.0 million, of which $768.3 million occurred within the Sydney SD. Newcastle (Hunter) and Eden (South Eastern) were also visited by cruise ships in 2010-11. The New South Wales cruise shipping industry recorded growth in 2010-11, with a total of 164 cruise ship visit days compared with 124 in 2009-10. Sydney recorded an increase of 30 visits (from 116 to 146), while Newcastle recorded 13 visits in 2009-10 after recording 4 visits in 2009-10 and Eden recorded 5 visits in 2010-11 after recording 4 in 2009-10. The

total passenger days from cruise ships visiting New South Wales in 2009-10 was 515,529, significantly higher than the 384,606 recorded in 2009-10.

Table 3.20 summarises the New South Wales regional economic impact of the cruise shipping industry in 2010-11 compared with 2009-10. The impacts are:

The Sydney SD hosted the majority of cruise ship visits to New South Wales, where approximately $768.3 million of cruise shipping related expenditure occurred. The


28

cruise shipping industry generated approximately $212.7 million in wages income,

3,940 FTEs and contributed approximately $358.6 million to value added.

The Hunter SD (Port of Newcastle) received approximately $44.4 million in cruise ship related expenditure in 2010-11, which generated wages income impacts of $11.5

million, an additional 201 FTEs and value added to the regional economy of $20.9 million.

The South-Eastern SD (Port of Eden) received approximately $1.3 million in cruise ship related expenditure in 2010-11, which generated wages income impacts of $0.3 million, an additional 7 FTEs and value added to the regional economy of $0.6 million.

Table 3.20: NSW Regional Economic Impacts of Cruise Shipping

Impact NSW Sydney Hunter South-Eastern

09-10 10-11 09-10 10-11 09-10 10-11 09-10 10-11

Output ($m)

Direct $297.9 $423.9 $295.9 $400.0 $1.2 $23.2 $0.8 $0.7

Indirect $279.9 $390.1 $278.4 $368.3 $0.9 $21.3 $0.5 $0.6

Total $577.8 $814.0 $574.3 $768.3 $2.1 $44.4 $1.3 $1.3

Wages Income ($m)

Direct $84.2 $133.9 $83.6 $127.2 $0.4 $6.5 $0.2 $0.2

Indirect $65.3 $90.6 $64.9 $85.5 $0.2 $4.9 $0.1 $0.1

Total $149.5 $224.5 $148.6 $212.7 $0.6 $11.5 $0.4 $0.3

Employment (FTEs)

Direct 1,420 2,518 1,409 2,400 7 113 4 4

Indirect 1,150 1,630 1,143 1,540 4 88 2 3

Total 2,570 4,148 2,552 3,940 11 201 6 7

Value Added ($m)

Direct $143.4 $206.2 $142.3 $194.3 $0.7 $11.5 $0.4 $0.4

Indirect $124.8 $174.0 $124.1 $164.3 $0.4 $9.4 $0.3 $0.3

Total $268.2 $380.1 $266.4 $358.6 $1.1 $20.9 $0.7 $0.6

Source: AECgroup

3.5.2 Queensland

Queensland is the second largest Australian cruise shipping market in terms of activity and industry expenditure. The cruise shipping industry generated an estimated $368.2 million in Queensland in 2010-11 including $189.9 million in direct expenditure.

The major cruise ship destinations and regions within Queensland are:

Port of Brisbane, located within the Brisbane SD;

Mackay/Whitsundays, located within the Mackay SD;

Townsville, located within the Northern SD;

Cairns/Yorkeys Knob, located within the Far Northern SD;

Cooktown, located within the Far Northern SD;

Port Douglas, located within the Far Northern SD; and

Thursday Island, located within the Far Northern SD.

The Queensland industry recorded strong growth in 2010-11, despite the negative

impacts of the floods and cyclone on the tourism sector. Overall, there was a strong increase in the number of cruise ships (193 compared with 182) with only Townsville and Thursday Island recording slight declines. Total passengers on the cruise ships in 2010-11 amounted to 328,863 up from the 319,761 recorded in 2009-10.


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Table 3.21 summarises the Queensland regional economic impact of the cruise shipping

industry in 2010-11 compared with 2009-10. The impacts are:

The Brisbane cruise shipping industry recorded economic impacts as follows: $338.1 million in total expenditure from the industry in 2010-11, providing the stimulus for

$87.5 million in wages income, 1,491 FTEs and value added of $156.2 million to the regional economy. Around 500 further employees living in Brisbane are estimated to be employed on cruise ships.

Mackay/Whitsundays and Hamilton Island, located in the Mackay SD, recorded $12.15 million in total expenditure from the industry in 2010-11, providing the stimulus for $3.2 million in wages income, 66 FTEs and value added of $5.9 million to the regional economy.

Townsville, located in the Northern SD, recorded $1.8 million in total expenditure from the industry in 2010-11, providing the stimulus for $0.5 million in wages income, 9 FTEs and value added of $0.9 million to the regional economy.

Cairns, Cooktown, Port Douglas and Thursday Island, located in the Far North SD,

recorded $16.2 million in total expenditure from the industry in 2010-11, providing the stimulus for $4.3 million in wages income, 84 FTEs and value added of $7.9

million to the regional economy.


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Table 3.21: QLD Regional Economic Impacts of Cruise Shipping

Impact QLD Brisbane Mackay/Whitsundays Northern Far North

09-10 10-11 09-10 10-11 09-10 10-11 09-10 10-11 09-10 10-11

Output ($m)

Direct $170.1 $189.9 $149.0 $173.7 $8.0 $6.5 $2.1 $1.0 $11.1 $8.7

Indirect $156.7 $178.3 $140.2 $164.4 $6.2 $5.6 $1.6 $0.8 $8.7 $7.5

Total $326.8 $368.2 $289.2 $338.1 $14.2 $12.1 $3.7 $1.8 $19.8 $16.2

Wages Income ($m)

Direct $48.2 $53.7 $42.1 $49.1 $2.3 $1.9 $0.6 $0.3 $3.2 $2.5

Indirect $36.6 $41.7 $32.7 $38.4 $1.5 $1.3 $0.4 $0.2 $2.1 $1.8

Total $84.8 $95.4 $74.8 $87.5 $3.8 $3.2 $1.0 $0.5 $5.3 $4.3

Employment (FTEs)

Direct 827 916 707 818 46 41 12 6 62 52

Indirect 647 734 575 673 27 25 7 3 38 32

Total 1,474 1,650 1,282 1,491 73 66 19 9 100 84

Value Added ($m)

Direct $83.3 $91.3 $71.5 $82.8 $4.4 $3.4 $1.2 $0.6 $6.1 $4.6

Indirect $70.1 $79.7 $62.6 $73.5 $2.8 $2.5 $0.7 $0.4 $4.0 $3.4

Total $153.4 $171.0 $134.1 $156.2 $7.3 $5.9 $1.9 $0.9 $10.1 $7.9

Source: AECgroup


31

3.5.3 Victoria

The Victorian cruise shipping industry recorded a decline in 2010-11, with a total of 39 cruise ship visit days compared with 49 in 2009-10. The total passenger numbers from cruise ships visiting Victoria in 2010-11 was 68,961, down from the 110,521 recorded in

2009-10.

Table 3.22 summarises the Victorian regional economic impact of the cruise shipping industry in 2010-11 compared with 2009-10. The impacts are:

The Melbourne SD, which includes the Port of Melbourne, received approximately $133.6 million in cruise shipping related expenditure in 2010-11, which generated wages income impacts of $35.9 million and an additional 638 FTEs. The cruise shipping industry is estimated to have value added $61.5 million to the Melbourne

regional economy.

The Gippsland SD (Phillip Island) received approximately $0.03 million in cruise ship related expenditure in 2010-11, which generated wages income impacts of $0.02

million and value added to the regional economy of $0.03 million.

The Barwon SD (Geelong) recorded 2 visits in 2010-11 which resulted in expenditure of $0.3 million, which generated wages income impacts of $0.3 million and an

additional $0.1 million in value add.

Table 3.22: VIC Regional Economic Impacts of Cruise Shipping

Impact VIC Melbourne Gippsland Barwon

09-10 10-11 09-10 10-11 09-10 10-11 09-10 10-11

Output ($m)

Direct $94.2 $68.7 $93.8 $68.5 $0.3 $0.0 $0.0 $0.2

Indirect $89.9 $65.3 $89.7 $65.2 $0.3 $0.0 $0.0 $0.1

Total $184.1 $134.0 $183.5 $133.6 $0.6 $0.0 $0.0 $0.3

Wages Income ($m)

Direct $26.7 $20.7 $26.6 $20.6 $0.1 $0.0 $0.0 $0.0

Indirect $21.1 $15.3 $21.0 $15.3 $0.1 $0.0 $0.0 $0.0

Total $47.8 $36.0 $47.6 $35.9 $0.2 $0.0 $0.0 $0.1

Employment (FTEs)

Direct 453 371 451 370 2 0 0 1

Indirect 369 269 367 269 1 0 0 1

Total 822 640 819 638 3 0 0 1

Value Added ($m)

Direct $44.5 $32.4 $44.3 $32.3 $0.2 $0.0 $0.0 $0.1

Indirect $40.2 $29.3 $40.1 $29.2 $0.1 $0.0 $0.0 $0.1

Total $84.7 $61.6 $84.4 $61.5 $0.3 $0.0 $0.0 $0.1

Source: AECgroup

3.5.4 South Australia

In 2010-11, the regional impacts of the cruise shipping industry in South Australia included Adelaide, Kingscote (Outer Adelaide SD) and Port Lincoln (Eyre SD). Adelaide recorded a decline in cruise ship visits in 2010-11 (12) compared with 2009-10 (21). The total passenger numbers on visiting cruise ships to South Australia in 2009-10 was 13,205, compared to 26,800 recorded in 2009-10.

Table 3.23 summarises the regional impacts of the cruise shipping industry in South Australia. The impacts are:

The cruise shipping industry is estimated to have generated approximately $6.1 million of expenditure in Adelaide in 2010-11, down significantly from the total


32

expenditure of $17.3 million recorded in 2009-10. This generated wages income

impacts of approximately $1.6 million and 30 FTEs in 2010-11, with a contribution to regional value added estimated at $3.0 million.

Kingscote in the Outer Adelaide region recorded 2 ship visits in 2010-11, 2 less than

in 2009-10. The Cruise ships generated approximately $0.2 million in expenditure resulting in employment of 1 FTE.

Port Lincoln in the Eyre region received approximately $0.1 million in cruise ship related expenditure in 2010-11, which generated an additional 1 FTE and value added to the regional economy of $0.1 million.

Table 3.23: SA Regional Economic Impacts of Cruise Shipping

Impact SA Adelaide Outer Adelaide Eyre

09-10 10-11 09-10 10-11 09-10 10-11 09-10 10-11

Output ($m)

Direct $9.4 $3.5 $9.1 $3.3 $0.1 $0.1 $0.1 $0.1

Indirect $8.4 $3.0 $8.2 $2.8 $0.1 $0.1 $0.1 $0.1

Total $17.8 $6.4 $17.3 $6.1 $0.2 $0.2 $0.2 $0.1

Wages Income ($m)

Direct $2.7 $1.0 $2.6 $0.9 $0.0 $0.0 $0.0 $0.0

Indirect $1.9 $0.7 $1.9 $0.6 $0.0 $0.0 $0.0 $0.0

Total $4.6 $1.7 $4.5 $1.6 $0.1 $0.1 $0.1 $0.0

Employment (FTEs)

Direct 50 20 49 18 1 1 1 0

Indirect 35 13 34 12 0 0 0 0

Total 85 32 83 30 1 1 1 1

Value Added ($m)

Direct $4.8 $1.8 $4.6 $1.7 $0.1 $0.1 $0.1 $0.0

Indirect $3.7 $1.3 $3.6 $1.2 $0.0 $0.0 $0.0 $0.0

Total $8.5 $3.1 $8.2 $3.0 $0.1 $0.1 $0.1 $0.1

Source: AECgroup

3.5.5 Western Australia

In 2010-11, cruise ships made visits to the following major destinations and regions:

Port of Fremantle, located within the Perth SD;

Exmouth, located within the Central SD;

Geraldton, located within the Central SD;

Broome, located within the Kimberley SD;

Esperance, located in the South Eastern SD;

Bunbury, located in the South Western SD; and

Albany, located within the Lower Great Southern SD.

The Western Australian cruise shipping industry recorded a total of 68 cruise ship visit days in 2010-11, a significant decrease from 106 in 2009-10. All ports recorded a decline with Fremantle and Geraldton recording the largest falls. Overall, the total passengers aboard the ships visiting Western Australia increased from 138,695 to 67,586.

Table 3.24 summarises the regional economic impact of the cruise shipping industry in Western Australia. The impacts are:

The most significant region within Western Australia in terms of cruise shipping impacts was Perth serviced by the Port of Fremantle. In 2010-11, the cruise shipping


33

industry generated approximately $72.0 million of expenditure within Perth, down

significantly from $95.2 million in 2009-10. This stimulus generated additional wages income of approximately $18.9 million and 318 FTEs. The industry contributed approximately $33.4 million to Perth‟s value added, a significant economic

contribution.

Exmouth and Geraldton in the Central SD recorded $2.8 million in total expenditure from the industry in 2010-11, providing the stimulus for $0.7 million in wages income, 14 FTEs and value added of $1.5 million to the regional economy. These results were all well above 2009-10.

Broome in the Kimberley SD recorded $2.8million in total expenditure from the industry in 2010-11, providing the stimulus for $0.8 million in wages income, 15 FTEs

and value added of $1.4 million to the regional economy.

Bunbury in the South-Western SD recorded $2.3 million in total expenditure from the industry in 2010-11, providing the stimulus for $0.6 million in wages income, 12 FTE and value added of $1.2 million to the regional economy.

Albany in the Lower Great Southern SD recorded $2.0 million in total expenditure from the industry in 2010-11, providing the stimulus for $0.5 million in wages

income, 10 FTEs and value added of $1.0 million to the regional economy.

Esperance in the South Eastern SD recorded $0.4 million in total expenditure from the industry in 2010-11, providing the stimulus for $0.1 million in wages income, 2 FTEs and value added of $0.2 million to the regional economy.


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Table 3.24: WA Regional Economic Impacts of Cruise Shipping

Impact WA Perth/Fremantle South-Eastern Central Kimberley South-Western Lower Great Southern

09-10 10-11 09-10 10-11 09-10 10-11 09-10 10-11 09-10 10-11 09-10 10-11 09-10 10-11

Output ($m)

Direct $63.5 $42.9 $48.5 $37.1 $0.9 $0.2 $6.6 $1.6 $3.7 $1.6 $1.7 $1.3 $2.0 $1.1

Indirect $58.3 $40.3 $46.7 $35.8 $0.6 $0.2 $5.0 $1.2 $3.1 $1.3 $1.4 $1.0 $1.6 $0.9

Total $121.8 $83.2 $95.2 $72.9 $1.5 $0.4 $11.6 $2.8 $6.8 $2.8 $3.0 $2.3 $3.6 $2.0

Wages Income ($m)

Direct $18.1 $12.2 $13.8 $10.5 $0.3 $0.1 $1.9 $0.5 $1.1 $0.5 $0.5 $0.4 $0.6 $0.3

Indirect $13.7 $9.5 $11.0 $8.4 $0.1 $0.0 $1.2 $0.3 $0.7 $0.3 $0.3 $0.2 $0.4 $0.2

Total $31.9 $21.7 $24.8 $18.9 $0.4 $0.1 $3.1 $0.7 $1.8 $0.8 $0.8 $0.6 $1.0 $0.5

Employment (FTEs)

Direct 314 206 229 173 5 1 37 9 22 9 10 7 12 7

Indirect 242 166 190 146 3 1 22 5 13 6 6 5 7 4

Total 555 372 419 318 7 2 59 14 36 15 16 12 19 10

Value Added ($m)

Direct $31.1 $20.5 $22.6 $17.3 $0.6 $0.1 $3.8 $0.9 $2.0 $0.9 $0.9 $0.7 $1.1 $0.6

Indirect $26.3 $18.1 $21.0 $16.1 $0.3 $0.1 $2.3 $0.5 $1.4 $0.6 $0.6 $0.5 $0.7 $0.4

Total $57.4 $38.6 $43.6 $33.4 $0.9 $0.2 $6.1 $1.5 $3.4 $1.4 $1.5 $1.2 $1.8 $1.0

Source: AECgroup


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3.5.6 Tasmania

In 2010-11, cruise ships made visits to the following destinations in Tasmania:

Hobart, located within the Greater Hobart SD;

Burnie, located within the Mersey-Lyell SD; and

Port Arthur, located in the Southern SD.

Tourism Tasmania develops their own estimates of expenditure in Tasmania each year by cruise ship passengers and crew. At the time of publication, Tourism Tasmania had not released their estimates for 2010-11 though the methodology used by Tourism Tasmania differs from the methodology in this study.

The Tasmanian cruise shipping industry recorded a decline in 2010-11, with a total of 40 cruise ship visit days compared with 55 in 2009-10. Hobart recorded 26 visits, while

Burnie recorded 11 in 2010-11 and Port Arthur recorded 3 visits. The total passenger numbers from cruise ships visiting Tasmania in 2010-11 was 45,681, well below the

68,511 recorded in 2009-10.

Table 3.25 summarises the Tasmanian regional economic impact of the cruise shipping industry in 2010-11 compared with 2009-10. The impacts are:

The Greater Hobart region hosted the majority of cruise ship visits to Tasmania,

where approximately $8.9 million of cruise shipping related expenditure occurred. The cruise shipping industry generated approximately $2.3 million in wages income, 47 FTEs and contributed approximately $4.4 million to regional value added.

The Mersey–Lyell region, which includes the port of Burnie, received approximately $4.9 million in cruise shipping related expenditure in 2010-11, which generated wages income impacts of $1.3 million and an additional 26 FTEs. The cruise shipping industry is estimated to have contributed $2.4 million to value added.

The Southern Tasmania region, which includes Port Arthur, received approximately $0.6 million in cruise shipping related expenditure in 2010-11, which generated wages income for 3 additional FTEs. The cruise shipping industry is estimated to have

contributed $0.3 million to regional value added.

Table 3.25: TAS Regional Economic Impacts of Cruise Shipping

Impact TAS Greater Hobart Mersey-Lyell Southern

09-10 10-11 09-10 10-11 09-10 10-11 09-10 10-11

Output ($m)

Direct $12.2 $7.8 $6.7 $4.8 $4.0 $2.6 $1.4 $0.3

Indirect $10.0 $6.6 $5.5 $4.1 $3.4 $2.2 $1.2 $0.3

Total $22.2 $14.3 $12.2 $8.9 $7.4 $4.9 $2.6 $0.6

Wages Income ($m)

Direct $3.5 $2.3 $1.9 $1.4 $1.2 $0.8 $0.4 $0.1

Indirect $2.3 $1.5 $1.3 $0.9 $0.8 $0.5 $0.3 $0.1

Total $5.9 $3.8 $3.2 $2.3 $1.9 $1.3 $0.7 $0.1

Employment (FTEs)

Direct 73 47 40 29 24 16 9 2

Indirect 43 28 24 18 15 10 5 1

Total 116 76 63 47 39 26 14 3

Value Added ($m)

Direct $6.5 $4.1 $3.6 $2.5 $2.1 $1.4 $0.8 $0.2

Indirect $4.5 $2.9 $2.5 $1.8 $1.5 $1.0 $0.5 $0.1

Total $11.0 $7.0 $6.1 $4.4 $3.6 $2.4 $1.3 $0.3

Source: AECgroup


36

3.5.7 Northern Territory

In 2010-11, the regional impacts of the cruise shipping industry in the Northern Territory were largely limited to Darwin, which is the only significant port in the Northern Territory. Cruise vessels do visit some destinations within the Northern Territory outside Darwin

although these destinations are typically remote and undeveloped, which limits the extent of impacts possible at those locations. There are regional tourism benefits from pre- and post-cruise travel in other areas such as Alice Springs and Kakadu.

The Port of Darwin recorded 46 cruise ship visit days in 2010-11, an increase from 33 in the previous year. The total passenger numbers at port from these ships reached 40,056 above the 33,854 from a year earlier.

Table 3.26 summarises the Northern Territory regional economic impact of the cruise

shipping industry in 2010-11 compared with 2009-10. The impacts are:

The cruise shipping industry is estimated to have generated approximately $103.0 million of expenditure in Darwin in 2010-11, including approximately $52.8 million in direct expenditure. This was an increase from the direct expenditure of $34.3 million

in 2009-10.

The cruise shipping industry was estimated to have generated wages income impacts

of approximately $27.0 million and 459 FTEs in 2010-11, above the $17.6 million and 304 FTEs recorded in 2009-10.

The industry‟s contribution to Darwin‟s value added was estimated at approximately $47.5 million in 2010-11, higher than the $30.9 million in 2009-10.

Table 3.26: NT Regional Economic Impacts of Cruise Shipping

Impact NT/Darwin

09-10 10-11

Output ($m)

Direct $34.3 $52.8

Indirect $32.5 $50.2

Total $66.8 $103.0

Wages Income ($m)

Direct $9.9 $15.1

Indirect $7.7 $11.9

Total $17.6 $27.0

Employment (FTEs)

Direct 170 253

Indirect 134 206

Total 304 459

Value Added ($m)

Direct $16.3 $24.8

Indirect $14.7 $22.7

Total $30.9 $47.5

Source: AECgroup

3.5.8 Offshore Territories

The Offshore Australian territory of Norfolk Island recorded cruise ship visits in 2010-11, while Christmas Island was scheduled to record cruise ships though were cancelled due to bad weather. The total passenger numbers at port from cruise ships visiting external territories in 2010-11 was 1,785.


37

Table 3.27 summarises the external territory regional economic impact of the cruise

shipping industry in 2010-11. Norfolk Island received approximately $0.4 million in cruise shipping related expenditure in 2010-11, which generated wages income impacts of $0.1 million and an additional 2 FTEs. The cruise shipping industry is estimated to have value

added $0.2 million to the Norfolk Island regional economy.

Table 3.27: Offshore Territories Regional Economic Impacts of Cruise Shipping

Impact Offshore Territories Christmas Island Norfolk Island

09-10 10-11 09-10 10-11 09-10 10-11

Output ($m)

Direct $1.0 $0.2 $0.2 $0.0 $0.7 $0.2

Indirect $0.9 $0.2 $0.2 $0.0 $0.7 $0.2

Total $1.8 $0.4 $0.4 $0.0 $1.4 $0.4

Wages Income ($m)

Direct $0.3 $0.1 $0.1 $0.0 $0.2 $0.1

Indirect $0.2 $0.0 $0.0 $0.0 $0.2 $0.0

Total $0.5 $0.1 $0.1 $0.0 $0.4 $0.1

Employment (FTEs)

Direct 6 1 1 0 5 1

Indirect 4 1 1 0 3 1

Total 10 2 2 0 8 2

Value Added ($m)

Direct $0.5 $0.1 $0.1 $0.0 $0.4 $0.1

Indirect $0.4 $0.1 $0.1 $0.0 $0.3 $0.1

Total $0.9 $0.2 $0.2 $0.0 $0.7 $0.2

Source: AECgroup


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4. Growth Potential of Cruise Shipping

4.1 Port Developments

The NSW State Government approved the development of a new $57 million cruise

passenger terminal at White Bay. The old industrial area will include new cruise ship terminal buildings at White Bay Wharf No.5, to cater for up to 170 ships per year and provision for the erection of a temporary passenger terminal at Wharf No.4 as required, to cater for a second cruise ship approximately 10 times per year. The new terminal will replace the existing terminal at Barangaroo with construction expected to be completed in 2012.

Queensland Premier Anna Bligh opened the new $13.6 million Cairns Cruise Liner Terminal in November 2010. The new terminal includes a new check-in area and gangway, cafes, and bus and taxi-drop off zones. The terminal is able to accommodate two large cruise ships carrying up to 1,800 passengers and will create opportunities for

more ships to base themselves in Cairns. The terminal is also a multi-use building that can be used for major functions and as an extension of the convention centre.

Planning is continuing for the development of a new cruise ship terminal in Townsville.

The project involves the reconstruction and extension of the Port of Townsville‟s existing Berth 10 to accommodate military, cruise, and commercial shipping and the construction of a multi-purpose passenger terminal building adjacent to Ross Creek. This facility will allow Townsville to accommodate the current and next generation of passenger and military vessels and position the city to take advantage of the growing cruise market. Artist‟s impressions of the $85 million Cruise Terminal were released in June 2011.

TasPorts continues to plan to turn the waterfront Macquarie Wharf No.2 shed into a

terminal for cruise ships and Antarctic vessels. TasPorts envisages the potential for a facility to house the polar-gateway activities and Antarctic division and a facility which can better handle cruise ship passengers. The State Government is currently looking to source Australian Government funding for the project.

The development of a new cruise terminal is being considered in Newcastle to make the city more attractive to visiting ships. A report commissioned by the state government and

an industry reference group outlined that Dyke Point could be upgraded to a cruise terminal at a cost of approximately $8 million. Additional planning would be required, including the preparation of a business case, to determine the viability of the project.

4.2 Cruise Ship Developments

There is continual change and improvement to Australia‟s cruise shipping itinerary. This includes operators looking to base additional and larger ships in Australia during the Australian summer. Royal Caribbean Cruises‟ Radiance of the Seas will join Rhapsody of the Seas in Sydney from October 2011 for the 2011-12 season. In the following season, Royal Caribbean Cruises plans to bring out the $500 million Voyager of the Seas which will become the largest cruise ship ever to base itself in Australia. The 138,000 tonne megaliner carries up to 3,840 guests and will embark on a five-month season from

Sydney after it reaches the east coast in November 2012. The five-month season will

include 12 itineraries across Australia, New Zealand and the South Pacific.

The 2011-12 season will see the arrival of a Costa Cruises ship for the first time. Costa Cruises is a large European cruise brand owned by Carnival and is bringing their flagship mega cruise ship The Costa Deliziosa to Australia.

Cruise ships expected to visit Australia in the future for the first time include:

Costa Cruises‟ Costa Deliziosa with a passenger capacity of 2,828;

Compagnie du Ponant‟s L’Austral with a passenger capacity of 264;

Cruise West‟s Spirit of Oceanus with a passenger capacity of 120;

Holland America Line‟s Zaandam with a passenger capacity of 1,432;

Oceania Cruises‟ Regatta with a passenger capacity of 824;

Princess Cruises‟ Ocean Princess with a passenger capacity of 826;


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Royal Caribbean Cruises‟ Radiance of the Seas with a passenger capacity of 2,112;

Royal Caribbean Cruises‟ Voyager of the Seas with a passenger capacity of 3,840;

Royal Caribbean Cruises‟ Celebrity Century with a passenger capacity of 1,814;

Seabourn Cruise Lines‟ Seabourn Pride with a passenger capacity of 208;

Spirit of Adventure Cruises‟ Spirit of Adventure with a passenger capacity of 348; and

Voyages of Discovery‟s Discovery with a passenger capacity of 698.

4.3 Projected Industry Growth

After recording a decline in 2010-11, cruise ship visits to Australian ports are expected to increase by approximately 180 visits to an estimated 740-750 in 2011-12. The projected strong growth in 2011-12 takes the number of port visits back to the historical trend and indicates that 2010-11 is likely to be an isolated year of negative growth.

Growth is projected to be driven by the Eastern Seaboard capital cities of Sydney (+74

visits), Brisbane (+39 visits) and Melbourne (+20 visits). Other ports expected to record strong increases in 2011-12 include Hobart, Broome, Burnie and Fremantle. As previously

mentioned, several of the cruise ships will be based in Australia either permanently or for part of the year. This expected increase will likely lead to a significant increase in passenger and crew expenditure in Australia and associated economic impact.

Figure 4.1: Historic and Forecast Cruise Ship Visits to Australian Ports

Source: CDU, AECgroup

0

100

200

300

400

500

600

700

800

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12


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References

AEC Group Ltd (2006). Economic Impact of the Cruise Shipping Industry in Australia, 2004-05, February 2006.

AEC Group Ltd (2007). Market Research Report, Prepared for the Economic Impact of the Cruise Shipping Industry in Australia, 2006-07, May 2007.

AEC Group Ltd (2011). Sydney Cruise Ship Passenger Survey Report, 2011.

Australian Bureau of Statistics (2001). Australian National Accounts: Input Output Tables, Cat No. 5209.0. ABS: Canberra.

Tourism Queensland (2003). Queensland Cruise Shipping Plan, Queensland Government: Brisbane.

Tourism Tasmania (2010). 2009-10 Tasmanian Cruise Ship Survey Results, Hobart.

Tourism Victoria (2010). Victorian Cruise Ship Passenger Survey 2009-10 Season,

Melbourne.


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Appendix A: Input Output Model

This report outlines the economic impact of the cruise shipping industry on the Australia, state/territory and select regional economies. The analysis undertaken employs an input-output (IO) methodology.

Economic Impact Model

IO analysis provides an accurate/detailed “picture” of the structure of an economy as it includes all transactions (purchases and sales), which occur throughout the economy being examined. This allows for the analysis/measurement of intersectoral relationships and interrelationships within the economy.

The IO analysis measures economic significance in different ways, which are commonly measured and discussed as the first and second round effects5. Specifically the measures that are examined within an IO analysis include:

Output.

Income.

Employment.

Value added.

Input Output Measures

Output

The output impact measures the increase in gross sales throughout the whole economy by summing all the individual transactions resulting, directly and indirectly, to the

economic stimulus. The output impact is also useful in providing an indication of the degree of structural dependence between sectors of the economy. The output impacts, are however, regarded as overstating the impact on the economy as they count all goods

and services used in one stage of production as an input to later stages of production, hence counting their contribution more than once.

Income

The wages income impact measures the additional amount of wages and salaries paid to

employees of the industry under consideration and to other industries benefiting from the stimulus to the economy.

Employment

The employment impact measures the number of jobs created by the stimulus, both directly and indirectly. It should be noted that the short-term response to increased demand may be for employers to ask existing staff to work overtime. As a consequence

lower employment than the level indicated by the economic impact of the stimulus will result. This short-term scenario is particularly true where the demand stimulus is seen as

temporary or where there is spare capacity in the economy (i.e. unemployment). In the case of cruise ship visits the impact is acute, therefore the situation described above where employers ask employees to work overtime or extra shifts is considered most likely.

Value Added

The value added impact measures only the net activity at each stage of production. GRP is defined as the addition of consumption, investment and government expenditure, plus

5 First round or direct effects are those from the expenditure by the industry purchasing additional goods from other industries, where as second round effects are those from the supplying industries increasing their purchases to meet the additional demand. The second and subsequent rounds of purchasing are termed the indirect effects.


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exports of goods and services, minus imports of goods and services for a region. An

alternative measure can be determined from the income side and is calculated as wages, salaries and supplements plus gross operating surplus plus indirect taxes less subsidies. The GRP impacts are the preferred measure for the assessment and contribution of a

stimulus to the economy.

Limitations of Input-Output Analysis

Limitations or qualifiers that should be raised when using input-output analysis include:

The inputs purchased by each industry are a function of the level of output of that

industry. The input function is generally assumed linear and homogenous of degree one (which implies constant returns to scale and no substitution between inputs).

Each commodity (or group of commodities) is supplied by a single industry or sector of production. This implies that there is only one method used to produce each commodity and that each sector has only a single primary output.

The total effect of carrying on several types of production is the sum of the separate effects. This rules out external economies and diseconomies and is known simply as

the additivity assumption. This generally does not reflect real world operations.

The system is in equilibrium at given prices. This is obviously not the case in an economic system subject to external influences.

In the static input-output model, there are no capacity constraints so that the supply of each good is perfectly elastic. Each industry can supply whatever quantity is demanded of it and there are no capital restrictions. This assumption would come into

play depending upon the magnitude of the changes in quantities demanded.

The input-output model is an optimisation model that allocates resources between sectors to their most efficient use. This is not expected to happen all of the time in the “real world” and as such results from the input output analysis may overestimate the actual impact delivered on ground.

Input-output techniques provide a solid and well-accepted approach for taking

account of the inter-relationships between the various sectors of the economy in the

short-term and hence are an appropriate tool for determining the direct and indirect economic impact of the Australian cruise shipping industry.


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