Friday, February 26, 1999

By Ken Sakamoto, Star-Bulletin
Cruise liner Queen Elizabeth 2 sits at the pier alongside Aloha
Tower in a 1997 photo. An industry study recommends the state
spend $97.1 million for port improvements during the next 20 years.

It’s full speed
ahead for isle
cruise lines

A study shows the industry will bring
$1.6 billion a year and 10,500 jobs
to the state's economy by 2020

By Jerry Tune


Hawaii's cruise ship industry contributed more than $300 million to the local economy and provided almost 2,900 jobs last year, according to a study by the consulting firm Leo A. Daly.

Economic benefits from cruise ships are projected to increase to more than $1.6 billion annually and 10,500 jobs by 2020, the company said in a study for the state Department of Transportation.

Info Box To support this growth, the Daly study recommends $97.1 million of port improvements in the next 20 years.

"While this projected growth represents only a small increment of the state's total tourism market, the cruise industry is also expected to attract thousands of repeat tourists to the Islands," the study said.

"Research consistently shows that the vast majority of cruise passengers (85 percent) use cruises to investigate a new geographical area and more than half report that they will return after sampling an area. Thus, the cruise industry not only contributes to Hawaii's current economy, it also generates future tourist arrivals."

Bill Anonsen, director of marine operations at American Hawaii Cruises, said the company is encouraged the state undertook a study of this scope, the first comprehensive look at Hawaii cruise industry economics.

"This couldn't come at a better time, and it will educate our policy makers," Anonsen said.

Bill Thayer, president of Waldron Steamship Co., an agent representing several foreign ships, said the Daly study is an important document that shows the increasing cruise ship business and need for facilities.


Hawaii captures only 2 percent of North American cruise traffic. The most popular destinations are: Caribbean, 46 percent; Europe, 20 percent; Alaska, 8 percent; Panama canal, 6 percent; and Mexico, 5 percent.

"The state of Hawaii competes with popular destinations in the Caribbean, Mexico, the South Pacific, Alaska and the U.S. West Coast," the study said. "Each of these destinations is aggressively marketing to increase its market share. Research shows that cruise lines and destination ports are in a bidding war; the former seeking popular new destinations and the latter seeking increased tourist numbers. While passenger demands for specific destinations are generally paramount, the cruise lines are also susceptible to local incentives, cooperative marketing programs and safe and efficient passenger facilities."

The Daly study recommends that Hawaii spend $33.5 million for a new cruise ship terminal at Pier 2 in the next five years; and $8.7 million for a terminal at Piers 19-20 in the next six to 20 years.

Other improvements are recommended for neighbor island ports, in either a five-year or 20-year-timetable. On Maui, the study recommends $14 million in improvements at Kahului and $2.5 million at Lahaina. On Kauai: Nawiliwili, $8.4 million; Port Allen, $2.8 million; and Kikiaola, $3.5 million. On the Big Island: Hilo, $19.7 million, and Kailua-Kona, $4 million.

"The cost-benefit analysis confirms that any investment made by the state in facilities and infrastructure improvements requires additional revenues beyond the current harbor fees to yield a positive position," the study said.

Several potential sources of funds include increased harbor fees, lease rents, tax set-asides, additional business income taxes or the development of facilities by a third party. The report has been given to key state legislators as they consider harbor bills this session. Temporary terminal improvements are planned this year.

Tom Fujikawa, state harbors division administrator, said the state will be using $3 million in federal money to improve the Pier 19-20 area in Honolulu Harbor as a terminal for cruise ships and a ferry service on Oahu. The vacant warehouse building will be improved with restrooms, telephones, a baggage handling area and a passenger ramp. The building also will get a new ceiling, partitions, paint and possibly an art display, Fujikawa said.

The current state budget includes an additional $750,000 for the improvements, which he expects to be completed this year.

Piers 19-20 are used for cruise ships when several liners come into port on the same day, and all of them can't be handled at Piers 10-11 and Pier 2. House bill 100 requests $3.75 million for design and construction of improvements at Piers 19-20 on Oahu, $3.5 million for Hilo, and $1.75 million for Port Allen on Kauai. Other bills request an unspecified amount from a harbor special fund for work at Pier 2.

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