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The Honolulu Advertiser
Posted on: Sunday, July 17, 2005

New cruise liner lifts economic prospects

By Lynda Arakawa
Advertiser Staff Writer

Tony DeLellis of KapohoKine Adventures takes visitors like Yola Gerwien on Big Island tours. DeLellis, who gets 90 percent of his business from cruise ships, is expanding operations to serve more customers.

Kevin Dayton | The Honolulu Advertiser

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Tony DeLellis plans to hire up to three more drivers and buy more SUVs at his small Hilo tour company as he ramps up for a spike in customers from the Pride of America cruise ship.

The 2,144-passenger ship arrives in Hawai'i tomorrow to join the Pride of Aloha as the second U.S.-flagged vessel dedicated to interisland tours.

DeLellis, working now with a staff of four, gets about 90 percent of his business from cruise ships, which he said have been "awesome for us and for anyone who has a business ... because you have a captive audience of 2,000 people with nothing to do and some bucks in their pocket."

Norwegian Cruise Line will eventually operate three U.S.-flagged ships in the state when the Pride of Hawaii joins the NCL America fleet next year.

The three ships will add more than 10,000 jobs and $270 million in wages and salaries a year to the state's economy by 2007, according to a 2003 PriceWaterhouse Coopers report commissioned by NCL. About 3,000 of those jobs will be aboard NCL's ships and the rest will be on shore, including jobs at small businesses such as DeLellis' tour company.

"The trickle-down effect has been great, especially for a port like Hilo, where there's not necessarily that much in the way of tourism," said DeLellis, 38, a partner in KapohoKine Adventures. "We've been booked solid every time the ships come into port."

State economists estimated that cruise passengers aboard the Pride of Aloha and Pride of America will spend an average of $188.46 per person daily. Of course, most of that goes to NCL, but onshore companies get more than a third, or an estimated $70.96, of the average daily spending. Average daily spending now among all tourists is $164 per person, according to the state.

NCL officials are quick to add that their company buys produce and other goods from local farmers and businesses, including sugar, pineapple, vegetables and ice cream, which further supports the state's economy.

Norwegian also operates the foreign-flagged Norwegian Wind, which runs 10- and 11-day cruises that include a stop at Fanning Island in the Republic of Kiribati.

Doug Smith, who owns Pony Express Tours on Maui with his wife, Kathryn, said cruise ship customers become particularly valuable during the "shoulder seasons" when tourism slows.

"This (summer) being the busi-est time of the year, if all of a sudden the cruise ships just stopped coming in, we would still fill up all these horses," said Doug Smith, who offers horseback riding tours. "But come September, October, when everything begins to slow down a little bit, they come in real handy. ... There are times when you're looking at your booking for the week and you think, 'Oh, thank God for NCL.' "

Cruise ship passengers make up about 15 percent of Pony Express Tours' revenue, he said. And he's looking forward to the arrival of the Pride of America.

"It will be fun," he said. "We've got another block that we've given them, so hopefully they'll be able to fill it."

While some local businesses welcome another cruise ship, others have concerns about the growth of the cruise industry here.

Environmental groups have called for the state to do more to protect Hawai'i waters and regulate wastewater discharges. The industry has a voluntary agreement with the state to refrain from dumping wastewater and chemicals in coastal waters, but environmental advocates say the agreement and a new law passed this year to regulate the industry do not go far enough.

A couple of years ago, a group of Moloka'i residents protested ship stops at their island. Some state residents, particularly on Maui, also question whether their island's infrastructure can handle the tourists coming off the ships.

In addition to questions about environmental impacts, "the bigger concern we hear from the community is just overrunning local spots — they're not used to seeing a big cruise ship in the harbor — and that it's just changing the character of some of the communities," said Jeff Mikulina, director of the Hawai'i chapter of the Sierra Club.

"We have to look at it in the context of tourism growth altogether and how much the Islands can sustain," he said. "Tourism will always be part of our economy and we can do it in a way that it's a healthy mix. But we can't just indiscriminately increase the number of bodies in Hawai'i and hope everything will work out OK."

Critics also question how much money from the cruise ships actually reaches local communities.

Robert Kritzman, executive vice president and managing director of Hawai'i operations for NCL America, defended the cruise industry, saying it brings many economic benefits with relatively small negative impact on the community.

"You can't have any type of economic impact without some impact, but we think that this is a very low-impact form of tourism on a relative basis," he said.

Kritzman said the addition of Pride of America will mean a ship will be in port on more days, rather than having more ships in a single port. He said the ships are self-sufficient, recycle goods and operate their own incinerators.

Some see the growth of the cruise industry as a valuable impetus for Hawai'i's No. 1 industry.

Atlantis Adventures — which operates submarine and ocean tours on O'ahu, the Big Island and Maui — has seen about a 10 percent increase in business from the Pride of Aloha, said president and chief executive officer Ron Williams. Cruise visitors still make up a small share of the company's business, and he said it's still unclear how much of a difference the Pride of America will make.

"It's exciting though," Williams said. "It's more opportunities for businesses to continue to grow, so that's a good thing."

Williams, who is head of the Activities and Attractions Association of Hawaii, said members have had mixed results from the Pride of Aloha.

"The people who are getting the business are really happy, and then there's probably some who wish they had more of it."

The Pride of America has been a long time coming for NCL. The vessel was originally scheduled to start cruises in July last year, but construction was delayed after the ship was damaged in its shipyard in Germany during a January 2004 storm. NCL replaced it with the Pride of Aloha, which was reflagged after previously running as the Norwegian Sky under a Bahamian flag.

The U.S.-flagged ships must employ U.S. workers and follow U.S. labor laws. Without the U.S. flag, cruise ships serving Hawai'i have to add a stop in a foreign port.

NCL officials have said that about 40 percent of the crew members on the Pride of Aloha and Pride of America are from Hawai'i, the largest group from any state or territory.

NCL officials say they've taken steps — including more crew training and recruitment — to avoid the growing pains that the Pride of Aloha endured last year. Passenger complaints about the Pride of Aloha began escalating in August last year, about a month after the ship started its interisland cruises. Complaints mostly centered on cleanliness, quality of food, and long waits for meals.

NCL apologized to passengers, issued $35 refunds, and brought in a senior management team from its headquarters in Miami. The problems were partly attributed to a lack of experience among crew members.

Kritzman said that since then, customer ratings have improved to an average of "between 'very good' and 'excellent.' "

"Having known what we did during that period and when we did run into some service problems (and) how quickly we turned it around, and then seeing where we are today with the number of crew, the training program that we have, the quality of the crew and the experience that we have, I'm actually quite confident," Kritzman said last month, referring to the Pride of America. "I certainly feel much better."

Many local tour businesses are also feeling better.

Doug Arnott, who owns Arnott's Lodge and Hiking Adventures on the Big Island, expects a 50 percent growth in business from the Pride of America. Arnott said that without business from the Wind and the Pride of Aloha, his company would need only about four vans. Now he's about to get his 17th and is looking into getting a larger vehicle.

"Money flows out to our drivers ... it flows out to gas stations, to repair people, to people who paint our vans when they get banged up, we have people who wash vans," Arnott said. "We just built rock walls that we never would have built. It's a never-ending stream of money flowing into the community."