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The Honolulu Advertiser
Posted on: Tuesday, April 10, 2001

Study details cruise industry's economic impact

By Frank Cho
Advertiser Staff Writer

Amid questions about how much the state should spend to upgrade its harbors and passenger-ship terminals, a cruise industry association yesterday released one of the most-detailed studies yet of the industry's economic impact in Hawai'i.

According to the study commissioned by the North West CruiseShip Association and prepared by the state Department of Business, Economic Development & Tourism, direct spending by passengers averaged $83 a day per person, half of what the average visitor arriving by air is estimated to spend.

But cruise visitors in the Oct. 9 to Nov. 28 survey stayed an average 9.8 days — a day longer than visitors who arrived by air.

"Hawai'i is becoming a very popular destination for cruising. As more cruise ships visit Hawai'i ports, it will be important to monitor the spending patterns by continuing to survey passengers so we can measure the positive impact of this industry in relationship to the economy," said John Hansen, president of the North West CruiseShip Association.

Despite some concerns about the cruise industry — that it requires heavy investment in port facilities and can be a drain on a region's airline seat capacity — many have argued that Hawai'i should do more to lure the industry to bolster sagging visitor projections.

Of the nearly 7 million visitors to Hawai'i last year; about 38,640 arrived by cruise ship. This year, experts said total visitor arrivals are expected to be the same or slightly lower. But the popularity of cruises, both to Hawai'i and among its islands, is expected to grow and could top 150,000 passengers by 2010, according to a report by the state Harbors Division.

Right now, foreign ships can stop in multiple U.S. ports as long as they are en route to a foreign destination, but are barred by the federal Passenger Services Act from picking up or dropping passengers off at those stops.

Thirteen cruise ships called on Hawai'i ports during the survey period. Of those, 11 cruises were affiliates of the association, the survey said. About 12,555 passengers were surveyed with 1,854 responding.

Some other survey findings:

• More than half, 62.4 percent, of all cruise passengers were from the eastern United States, compared with just 23.7 percent of airline passengers.

• More than 56 percent of cruise passengers were first-time visitors to the Islands.

• Cruise visitors spent more on food products and souvenirs, while air visitors spent more on fashion and clothing.

Increasing the number of travelers from the eastern United States. and attracting more first-time visitors, both relatively higher-spending demographic groups, has been a goal of the Hawai'i Tourism Authority, which oversees the state's tourism marketing efforts.

"That may all be good, but does the investment the state would have to make in the cruise industry pay off?" David Carey, vice chairman of the tourism authority, said of the survey results.

Carey, who runs the state's biggest hotel chain as president and chief executive officer of Outrigger Enterprises, also questioned how much those passengers would contribute to the local hotel industry.

According to the survey, three out of four cruise ship passengers spent part of their trip in a local hotel. International passengers were the most likely to spend extra nights, at 91.7 percent. More than 87 percent of Canadians and 77 percent of cruise ship passengers from the U.S. East Coast spent extra nights in Hawai'i.

"The study has confirmed things that we have suspected, i.e., cruise passengers' spending on items such as shopping and entertainment is comparable to that of passengers arriving by air," Pearl Imada-Iboshi, chief economist at the department, said yesterday.

But there are other questions the state needs to answer before a clear picture of the industry's impact can be fully gauged, Imada-Iboshi said.

"I think one question we have not asked and gotten an answer for is do cruise passengers return to Hawai'i as noncruise passengers?" Imada-Iboshi said.

She said the state would also like to know whether there are seasonal patterns in the industry and what the differences are between international cruise passengers and those that just cruise among the islands.

Carey said the Hawai'i Tourism Authority, along with the state, is planning another more-detailed survey on the economic impact of the cruise industry on Hawai'i's economy probably starting next year.

Frank Cho can be reached by phone at 525-8088, or by e-mail at fcho@honoluluadvertiser.com.