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Economic Impact of the New Zealand Cruise Sector Prepared for: Cruise New Zealand Date: August 2013 Status: Final
Economic Impact of the New Zealand
Cruise Sector
Cruise New Zealand
Document reference: CNZ008.13
Date of this version: August 2013
Report authors: Thomas Worley, Greg Akehurst
Disclaimer
Although every effort has been made to ensure accuracy and reliability of the information contained in this report,
neither Market Economics Limited nor any of its employees shall be held liable for the information, opinions and
forecasts expressed in this report.
Market Economics Limited
Level 5, 507 Lake Road
www.me.co.nz PO Box 331 297, Takapuna
Auckland 0740, NZ
P 09 915 5510Contents 1 EXECUTIVE SUMMARY ............................................................................... 1 2 INTRODUCTION ......................................................................................... 3 2.1 BACKGROUND AND SCOPE .................................................................................... 3 2.2 OBJECTIVES ....................................................................................................... 4 2.3 REPORT STRUCTURE ............................................................................................ 4 3 METHODOLOGY ......................................................................................... 6 3.1 CRUISE DATA COLLECTION .................................................................................... 6 3.2 SHIP, CREW AND PASSENGER EXPENDITURE .............................................................. 7 3.3 THE ECONOMIC MODEL ..................................................................................... 14 4 CRUISE SECTOR ACTIVITY ..........................................................................16 4.1 NATIONAL SUMMARY FOR 2012-13 SEASON.......................................................... 16 4.2 REGIONAL SUMMARY FOR 2012-13 SEASON .......................................................... 18 4.3 2013-14 CRUISE SEASON .................................................................................. 19 4.4 REGIONAL SUMMARY FOR 2013-14 SEASON .......................................................... 21 4.5 2014-15 SEASON OUTLOOK .............................................................................. 22 5 ECONOMIC IMPACT ANALYSIS ..................................................................23 5.1 ECONOMIC IMPACTS FOR THE 2012-13 SEASON ..................................................... 23 5.2 ECONOMIC IMPACTS FOR THE 2013-14 SEASON ..................................................... 27 6 ANNUAL TREND OF ECONOMIC IMPACTS .................................................30 7 GAPS AND FURTHER WORK ......................................................................31 7.1 CRUISE VESSEL ................................................................................................. 31 7.2 PASSENGER BEHAVIOUR ..................................................................................... 32
7.3 CREW BEHAVIOUR ............................................................................................ 32 8 CONCLUSIONS ..........................................................................................33 APPENDIX 1: ECONOMIC MODELS AND MULTIPLIER ANALYSIS ............................... 34 Figures FIGURE 4.1: CRUISE ACTIVITY FOR 2012-13................................................................................................ 16 FIGURE 4.2: NATIONAL PASSENGER ACTIVITY FOR 2012-13 ........................................................................... 16 FIGURE 4.3: CRUISE PASSENGER SOURCE MARKETS FOR 2012-13 .................................................................. 17 FIGURE 4.4: CREW ACTIVITY FOR 2012-13 ................................................................................................. 17 FIGURE 4.5: REGIONAL CRUISE ACTIVITY FOR 2012-13 ................................................................................. 18 FIGURE 4.6: CRUISE ACTIVITY FOR 2013-14................................................................................................ 19 FIGURE 4.7: NATIONAL PASSENGER ACTIVITY FOR 2013-14 ........................................................................... 19 FIGURE 4.8: CRUISE PASSENGER SOURCE MARKETS FOR 2013-14 .................................................................. 20 FIGURE 4.9: CREW ACTIVITY FOR 2012-13 ................................................................................................. 20 FIGURE 4.10: REGIONAL CRUISE ACTIVITY FOR 2013-14 ............................................................................... 21 FIGURE 5.1: TOTAL EXPENDITURE FOR 2012-13 .......................................................................................... 23 FIGURE 5.2: TOTAL NET EXPENDITURE FOR 2012-13 .................................................................................... 24 FIGURE 5.3: VALUE ADDED FOR 2012-13 .................................................................................................. 25 FIGURE 5.4: TOTAL EMPLOYMENT SUPPORTED BY CRUISE FOR 2012-13 .......................................................... 26 FIGURE 5.5: TOTAL EXPENDITURE FORECAST FOR 2013-14............................................................................ 27 FIGURE 5.6: TOTAL NET EXPENDITURE FORECAST FOR 2013-14 ..................................................................... 28 FIGURE 5.7: VALUE ADDED FORECAST FOR 2013-14 .................................................................................... 29 FIGURE 5.8: TOTAL EMPLOYMENT FORECAST FOR 2013-14 ........................................................................... 29 FIGURE 6.1: HISTORICAL COMPARISON OF CRUISE INDUSTRY IMPACTS .............................................................. 30
1 Executive Summary
The cruise industry has firmly established itself in New Zealand as a major
component of the tourism sector and contributor of economic value. More
than just floating hotels, cruise ships have the unique ability to provide a town
or city with anything from 100 to over 3,500 new tourists for a day (or more)
in one visit. Many of these visitors come ashore with the intent to explore and
experience the attractions, shopping and culture of that town, city or region,
and are prepared to pay well to do so. This report discusses these economic
impacts of the cruise industry on New Zealand regions for the recent 2012-13
season and provides estimates for the upcoming 2013-14 season. The key
economic measure of concern is the industry’s contribution to value added
(synonymous with GDP). Expenditure and total employment are also covered.
This report also provides the base data and analysis for the separate
“Economic Impact of the New Zealand Cruise Sector: Report Summary”.
The recent 2012-13 season saw 129 cruises bring 211,400 visitors to New Zealand. This
resulted in over 1.14 million passenger port days across the country and 68,200 exchanges. It
is also important to recognise that over 82,400 crew toured the country while working on-
board the cruise ships, spending 437,000 port days here. The total value added by the
industry across all New Zealand regions was $310m. Passenger related spend contributed
over $212m (68%), crew related spend contributed over $26m (9%) and vessel related spend
contributed almost $72m (23%).
Auckland had the largest value added component with over $116m. This was made up by
$66m from passengers related spend (including the majority of passenger exchanges), $7m
from crew related spend and $43m from vessel related spend. Auckland received over 60%
of the country’s value added from vessel related spend. Bay of Plenty ($37.4m), Wellington
($39.5m), Canterbury ($32.7m), Otago ($31.5m) and Hawke’s Bay ($22.2m) also generated
significant levels of value added. Northland and Southland both had value added from
cruises of over $12m. For all of these regions (excluding Auckland and Southland) passenger
related spend made up around 75% of each region’s total value added. This shows the
importance of making sure passenger demands are well catered for in each region, as this is
primarily where the value of the industry is coming from. For Auckland in particular, this also
means providing adequate infrastructure so that vessels are able to operate with easy access
to all the services required.
For the upcoming season, bookings indicate that 121 cruises will bring 200,000 passengers,
spending just over 1.1 million port days and 81,900 exchanges. There are also expected to be
79,100 crew coming into New Zealand during the season. Although passenger numbers and
cruise numbers are down slightly on the previous season, the total value added is expected
to rise by $1m to $311m. This is primarily due to an increase in the number of both
passenger and crew exchanges.
1Auckland will see the largest value added impact with an expected $115m (down only $1m
from 2012-13). A decrease in vessel and crew related spend is likely to be almost completely
offset by an increase in passenger related spend, particularly during exchanges. Wellington
($36.1m), Marlborough ($4.2m) and Canterbury ($29.9m) are all expected to see a slight
decrease in activity of $2-3m each, although the value added from cruise remains significant.
Bay of Plenty ($37.0m) and Otago ($32.0m) remain at similar levels to 2012-13. Northland is
expected to see the biggest gain in value added, rising by $5m from last season to $17.1m
for the upcoming season, with a large increase in cruise visits and passenger and crew port
days contributing to this. Gisborne ($2.4m) and Southland ($14.2m) will also see a value
added increase of approximately $2m each.
Knowledge gaps identified in previous studies remain, with uncertainty in a few key areas,
particularly:
Crew spend while in port;
Pre- and post-cruise spend and behaviour by passengers;
Pre- and post-cruise spend and behaviour by crew;
Variance in passenger spend between regions.
These areas should form the focus of future research into the industry, so that the economic
impacts of the cruise industry can be better understood.
22 Introduction
Globally the cruise industry is experiencing huge growth, with the amount of
passengers carried more than doubling in the last decade to over 20 million in
2012. At present there are no signs of this growth slowing down. New ships
being built have passenger capacities of over 4,000 and are now more like
small cities than hotels, with a wide range of facilities and activities on board.
This means the industry is able to cater for a diverse range of tourists on a
range of budgets, and taking them around the world to visit different ports
and cities.
Understanding the impacts of this developing industry is imperative to helping New Zealand
not only ensure the needs of the cruise industry are met, but also to maximise the value of
this unique form of tourism. The most recent cruise season in New Zealand saw 129 different
cruises bring 211,400 passengers, adding a total of $310m of value to the regional
economies.
As the industry grows in New Zealand, new activity and initiatives are constantly stimulated.
For example, some ports around the country are improving their facilities to handle cruise
ships such as the development of Shed 10 at the heart of Auckland’s waterfront on Queens
Wharf is currently undergoing extensive redevelopment in order to better handle cruise
ships visiting the city. Many businesses (more than just coach lines, airports and hotels) are
benefitting both directly and indirectly from the cruise industry, with space in and around
ports going for a premium, particularly during the summer months of the cruise season.
2.1 Background and Scope
The economic impact of the New Zealand cruise ship season has been assessed every year or
every second year since its inception in 1997. The first study involved an in-depth
investigation of the structure of the industry and the expenditure in the New Zealand
economy resulting from cruise ship activity. This enabled the development of a set of spend
ratios and economic multipliers that reflected the nature of the industry at that time. Those
ratios and multipliers were subsequently applied each year since 1997 – inflation adjusted –
to new cruise and passenger numbers.
In 2003, the ratios and multipliers were updated to reflect changes in the global cruise
industry (namely advancements in ship operation, ship capacity, ship technology and how
ships are serviced locally and globally), changes in the scale of the industry in New Zealand
(over time the number of cruises have increased but also the number and variety of
businesses involved with and servicing the cruise ships whilst in New Zealand ports has
increased), and as more up to date economic input-output tables became available from
Statistics New Zealand. This 2003 base model (with inflation adjustments) was applied up
until the 2007-08 update.
3The 2011-12 study presented the first look at the regional impacts of the cruise sector across
New Zealand. The study involved in-depth investigation of the structure of the industry and
the expenditure in the New Zealand economy resulting from the cruise ship activity. Many
of the key players in the industry, including providores, ground handlers, air services (airport
and airlines), marine engineers and shipping agents contributed to this study. These
companies provided both financial (actual) and anecdotal (based on experience) data for the
2011-12 cruise season. The data collected in this study (updated where possible) and other
relevant data have been used in the economic modelling of this study to determine the value
of the cruise industry to New Zealand’s regions for the past 2012-13 season and to provide
estimates for the upcoming 2013-14 season.
2.2 Objectives
This report has two main objectives and a number of related secondary objectives. The first
is to establish the size and nature of the cruise industry in New Zealand for the 2012-13
season by collating the number of passengers, ships, and cruises that visited New Zealand,
and to estimate the economic impact the industry has on New Zealand’s regional economies.
This has involved the following:
Estimating the total direct spend generated by ship visits;
Calculating the value added (synonymous with GDP);
Estimating the effective employment generated, as employment counts (ECs);
A second key objective involves providing some estimates of economic impact for the
upcoming 2013-14 season based on pre-bookings and current expenditure ratios. This is to
provide guidance and information to port authorities, local authorities and Cruise New
Zealand who are seeking to secure cooperation and consideration of the needs of this sector
of the tourism industry.
This analysis will be based on the models developed and data gathered for the 2011-12
study, and updated where possible and/or appropriate to do so.
2.3 Report Structure
Section 3 of the report details the methodology used, data collection, industry direct
spend and economic impact.
Section 4 reports on the cruise industry activity for the recent 2012-13 season and
expected activity for the upcoming 2013-14 season. Expectations for the 2014-15
season are also mentioned.
Section 5 presents the economic impact analysis at a regional level for the past
2012-13 season and estimates the economic impact of the upcoming 2013-14
season
Section 6 compares the economic impact results with previous seasons
4 Section 7 discusses the strengths and weaknesses of data used and makes
suggestions on how the modelling can be improved
Section 8 provides a brief summary of the findings of this study.
53 Methodology
An economic model was specifically developed for this study to measure the
impact of the industry on the New Zealand national and regional economies
for the past and coming season. The model relies on the Cruise New Zealand
industry activity dataset which records passenger numbers, crew, voyages and
port calls (see subsection 3.1) for the past seasons. The future season is
estimated using future bookings and average occupancy rates from the 2012-
13 season.
There are two main steps in assessing the economic impacts. First the direct
expenditure is estimated by applying industry expenditure data ratios from
2011-12 season (see subsection 3.2) to activity levels recorded in the past
season and forecast activity levels. The second step takes this direct
expenditure and applies an Economic Input Output model (2007, inflation
adjusted) that calculates the flow on effects of direct expenditure generated
by the cruise lines, their passengers and crew whilst in New Zealand. The
model is generated at both national and regional level and therefore
generates estimates for New Zealand as a whole, as well as for each cruise
region.
3.1 Cruise Data Collection
A schedule of all port arrivals by date and vessel was provided by Cruise New Zealand for the
2012-13 season. This dataset includes port visits, ship size, ship class, passenger numbers by
country of origin, crew numbers and exchange numbers (embarking/disembarking and
crew/passengers). Cruise New Zealand was also able to provide detailed forward bookings
for the next season and a directory of the ships which includes vital characteristics (i.e.
Gross Registered Tonnage, passenger capacity, crew capacity). The future season forecast is
determined by combining the passenger and crew capacity per ship from the 2012-13 season
with the forward bookings schedule and the directory of the future ships’ characteristics.
This data provides us with the following information, which feeds into the modelling of
economic impacts:
Passenger port days: This data is split by each port by class of ship and country of
origin. The data is used to estimate passenger spend during a voyage.
Passenger Exchange: This data is used to estimate pre- and post-cruise spend. The
data provides an estimate of the passenger exchanges in each port by class of ship
and country of origin. It also allows an estimate of the current and future demand
for air travel by origin.
Crew port days: This data provides a count of the number of crew days in each port.
Nearly all crew are internationals.
6 Crew exchange by port: This data provides a count of the number of crew
exchanges in each port.
Ship Visits: This data shows the number of ship visits to each port. The data is used
to estimate vessel related spend in each port.
The cruise data described above represents the general activity measures, or the scale of the
industry.
3.2 Ship, Crew and Passenger Expenditure
Having established the scale of the industry in terms of numbers of vessels, cruises, crew and
passengers, the next step is to quantify their impacts on New Zealand’s economy.
Direct expenditure from the cruise industry has been classified into its component parts:
Cruise Vessel related: This covers all expenditure related to the cruise and the
operation of the cruise vessel. It includes ship specific expenses such as; port costs,
marine expenses, bunkering and maintenance, re-provisioning costs, and various
crew related expenses such as crew exchanges, crew accommodation and re-
positioning flights.
Cruise Passenger related: This covers all incidental expenditure that occurs as a
result of a cruise but is not necessarily part of the cruise itself. It includes items such
as; all retail expenditure on shore, all café and restaurant expenditure on shore,
sightseeing day trips (excursions) whilst in port (booked through the ship and
independently) and other services such as visits to doctors. Also included are
expenses relating to passenger flights to join the cruise, pre- and post-cruise
packages booked with the cruise.
Cruise Crew related: This includes all staff spending whilst in port – except that
related to crew changes that are paid for by the cruise lines. It includes spend on:
food, retail goods, personal services, casinos, recreational activities and transport.
Cruise vessels, their crews and passengers spend money on a wide range of goods and
services in the New Zealand economy. It is beyond the scope of this report to investigate the
details of every transaction that has occurred. By necessity averages have been applied and
the spend data has been combined with the activity data to establish per unit average spend.
These averages vary depending on the costs which are measured. The averages used in this
study include per season, per cruise, per port, per GRT, per crew, per passenger, per
exchange and combinations (i.e. average per port by GRT).
The modelling also excludes some ports and stops in the estimation of certain spend types
because these activities cannot occur at the port or stop. As an example, each of the ports
and stops are coded as either having retail opportunity (shopping available) or not, this
avoids impossible outcomes such as passengers or crew spending in stops such as Fiordland,
Kawau Island or Mercury Island where no retail exists. This method also applies to some
cruise related spend which will only occur in certain ports.
7All the averages are then combined with forward bookings for the next two seasons to
forecast industry activity and output.
3.2.1 Cruise Vessel Related Data
The majority of cruise vessel related spend is well known and robust. Most of the spend by
vessels is recorded directly in financial accounts of shipping agents, bunkering companies,
providores, marine engineers and container handlers.
During the course of this research access was given to financial accounts and data which
records in detail the amount of spend by port and ship for the 2011-12 season. In the
following section four spend categories were defined, Bunkering, Providoring, Crew
Exchange and Other Vessel Spend.
Bunkering
The largest single expenditure by vessels is the associated spend on fuel and bunkering. For
this study a bi-weekly US dollar price per tonne for IFO180 and AGO at Auckland and
Tauranga (April 2009 to April 2010) was used. Cruise New Zealand conducted an email
survey of fuel tonnage taken on board by port for the 2009-10 season. Combining the
tonnage of fuel with the known ship it was possible to estimate the average fuel per GRT by
port. The average price over the season allows an estimation of the fuel value taken on
board per ship per port. This has been adjusted to reflect the current value.
In the modelling, the portion of bunkering expenditure that is related to imports was
removed. Previous work and interviews of bunkering companies have been used to identify
a breakdown of expenditure between domestic products, company margins, operating costs
(wages) and the imported component – i.e. the fuel itself. The money spent on imports was
excluded from the analysis as this money flows offshore resulting in no impact on the New
Zealand economy. As is common in the petrochemical industry, the majority of the sales
value is used to purchase imports (fuel) from overseas. The interviews indicate that a small
proportion of the bunkering (around 10%) stays within the New Zealand economy in the
form of domestic products, company margins and operating costs.
This spend category is significant in terms of the analysis which means that the results from
the model will be sensitive to this data. Around 17% of industry spend is related to
bunkering. While the estimate is based on robust data it is noted that past Cruise New
Zealand data indicates that bunkering expenditure was significantly higher in previous
seasons.
It is likely that bunkering expenditure varies significantly from year to year depending on
where the Australian (swing) and round the world voyages choose to bunker. It is suggested
that further analysis of this spend category be undertaken. As the industry grows and the
type of cruises change, the amount of bunkering in New Zealand is also likely to chang. The
2009-10 report suggested that the global economic recession resulted in altered cruise
itineraries, the outcome of which was a reduced bunkering requirement in New Zealand.
8Providoring
The centralised global buying policies of cruise lines and the relatively high New Zealand
dollar in relation to the US dollar restricts the ability of New Zealand to supply a wider range
of goods to cruise lines. The majority of food stuffs are freighted into New Zealand in
climate controlled containers and loaded aboard straight off the wharf. This ensures
consistency of product and often ensures that the tastes of passengers are met.
Given that cruise lines are extremely price conscious they are often buying product globally
at specific price points. For example, many are reluctant to pay more than $US3-$US5 for a
bottle of wine. They, in some instances, also require the wine to be available globally. Many
New Zealand suppliers simply cannot meet these requirements and therefore do not get the
opportunity to supply the sector. Often the only time significant volumes of product is used
is when a ship has a specific “New Zealand” night in the dining halls. The value of the New
Zealand dollar also has a significant impact on demand for products through New Zealand
providores, as a higher dollar means it is cheaper to buy product elsewhere.
This has led to a reduction in the volume of product sourced locally and intense pressure on
New Zealand based suppliers to offer the most cost effective options. The economic impact
of this is a reduction overall in the amounts being spent locally and an increase in the
amount of product shipped into New Zealand to meet the needs of cruise passengers and
ships.
The New Zealand providores are primarily asked to provide fresh fruit and vegetables as well
as some dairy and meat products for cruise vessels rather than providing a comprehensive
range of food lines, although any product can be sourced if required. New Zealand
providores also transfer food to cruise ships up in the Pacific Islands. However, these are
supplied to vessels internationally through New Zealand exporters’ distribution channels and
are not included in this study.
This study has used a range of data collected from financial records and anecdotal evidence
from providores and ground handlers from this and previous reports. This data indicates
that providoring is a relatively minor part of the industry within New Zealand. The modelling
shows that providoring makes up less than 1.2% of expenditure in the industry. It would be
desirable to undertake further analysis of providoring activity to confirm and update these
figures with some accuracy. Almost all those interviewed with regards to providoring noted
that the volumes and types of product lines can change drastically from season to season
and is very hard to predict.
Crew Exchange
The exchange of crew occurs predominantly in Auckland with 4,300 crew exchanging during
the 2012-13 season. The spend surrounding this activity includes accommodation, flights,
transport and meals. There is no hard data to establish the exact nature and quantity of this
spend. In this study we have used average airline ticket prices, room prices and average
food and transport expenditure (assuming one night stayed). The model predicts that the
cruise industry will be paying around $1,850 per crew personnel exchanged. The majority of
9the crew exchange expenditure flows directly offshore as it is associated with airline
transport. It is also worth noting that some crew members undertake pre- and post-cruise
holidays. This additional spend is discussed in the crew spend category (see page 13).
Other Vessel Spend
This category of spend includes most of the spend which is undertaken on behalf of the
cruise vessels by shipping agents and represents about 10% of cruise industry spend in any
one year. This study draws heavily from a large financial data set from the main shipping
agent in New Zealand. The dataset is a financial record of actual spend by cruise ships in
New Zealand waters, which covers over 90 spend categories and over 5,000 data points. The
data is a reasonable sample from which to estimate Other Vessel related spend as it covered
the vast majority of cruise ships. The data set covered berth hire, customs, towage, utilities,
vessel survey, government fees, transport of crew and passengers, baggage handling,
communications and security.
We note that there are three issues with this dataset with respect to coverage. First the
data set does not cover or capture the full spend with respect to repairs, ship equipment and
container handling. Additional meetings were undertaken with some of the businesses
involved, to attempt to fill this gap as detailed below.
The repairs and ship equipment spend was estimated using data from the shipping agent
and anecdotal information from marine engineers. The repairs and ship equipment spend is
an estimate only. As this spend is only a small fraction of overall activity in the industry
(around 0.5%) inaccuracies in the data are unlikely to impact significantly on the results from
the model.
The second data issue relates to container handling, the shipping agents believe that around
75% of handling is managed by the ship. Investigation and interviews of container handlers
confirms this belief and the modelling has been modified to include this accordingly. The
expenditure on container handling is very small relative to the total spend by the industry
(only 0.2%). There is little need to study this spend in detail as it will have little to no impact
on the final result.
The third data issue relates to maintenance expenditures which occur infrequently between
the seasons. Discussions with shipping agents and marine engineers indicates that this could
be up to one million dollars per season or as little as a few hundred thousand dollars. For
the purposes of this study the spend has been estimated using the shipping agent data and
marine engineers anecdotal information. The maintenance spend represents a small
proportion of total spend (only 0.1%).
3.2.2 Cruise Passenger Related Data
Cruise passenger related expenditure is that spent directly by the passenger whilst in port or
on shore based excursions. This covers the excursions themselves and retail expenditure by
passengers on food, entertainment and souvenirs. It also includes spend by passengers or
on their behalf on pre and post cruise activities, which includes exchange activity.
10 Passenger Spend in Port and Pre/Post Cruise: Passenger spend is the most
significant spend category, in the 2012-13 season 51% of total industry direct
expenditure was related to passenger activity in ports or pre/post cruise. This
means that assumptions surrounding passenger spend are critical to the modelling.
The best method of estimation would be to undertake a comprehensive regional
survey of passenger spend behaviour. As this is beyond the scope of this study,
three sources of information have been relied upon to estimate the passenger
spend; New Zealand survey data, international survey data and information from
ground handlers.
New Zealand Survey data: There have been four surveys of cruise passenger
behaviour conducted in New Zealand. The most recent survey was “Cruise Ship
Tourism in Akaroa” run by Lincoln University and published in May 2013. The study
conducted interviews with 433 passengers and local businesses and asked questions
about passenger and crew behaviour and expenditure while in Akaroa Port during
the 2012-13 season. Another significant survey was conducted during the 2006-07
season by Tourism New Zealand. This survey asked a range of questions relating to
activity, experiences and satisfaction whilst cruising in New Zealand and questions
about expenditure. The survey represented a snapshot of a portion of the industry,
as the majority of respondents originated from two vessels (Statendam and the
Sapphire Princess made up around 92% of the 550 responses). The survey,
‘Understanding the Value Created by Cruise Tourism’ (Covec 2012), was conducted
as part of the Economic Value of Tourism (EVT) project for the Ministry of Business,
Innovation and Employment. This surveyed 703 passengers about their spend while
travelling on cruise ships in New Zealand. Spend was reported for different
categories for transit and exchange passengers. The fourth survey of cruise
passengers was conducted for Auckland Regional Council in 2008-09 season. This
survey covered five ships, Aurora, Millennium, Volendam, Seven Seas Mariner and
Silver Shadow which accounts for about 35% of passengers in the season. This
survey was focused on the need for a cruise ship terminal and questioned some 241
passengers. While all of these surveys are useful they do not present a full picture of
the passenger spend geographically or by ship type, and the sample sizes may result
in biased results. This data, along with anecdotal evidence from industry operators
has been used to estimate the length of stay pre- and post-cruise by international
passengers and crew, although this is still an area of reasonable uncertainty for the
industry. It is estimated that the majority of overnight stays between seaport and
airport exchanges are spent in Auckland hotels.
International Surveys: In addition to these domestic surveys there have been many
studies overseas. As many of these studies as possible has been used in this study to
allow better understanding of passenger activity and spend behaviour. The
international studies used in this research include studies from most of the large
cruise markets, including Australia, Florida-Caribbean, Mediterranean, North
America, Pacific Islands and South East Asia cruise markets (see references).
Ground Handlers: Previous studies’ interviews with the main ground handlers
provided information about excursion expenditure. The ground handlers are the
11largest suppliers of shore excursions to passengers. In the past nearly all passengers
undertook tours from the ground handlers. Over the last few seasons the passenger
behaviour changed markedly. There has since been a large increase in Free
Independent Travellers (FIT). While the ground handlers are the single largest
supplier of shore excursions for cruise passengers, in total, FITs make up slightly
more than two thirds, at present. This change in behaviour creates issues for
suppliers as demand has become less predictable. From the researchers’ point of
view the increase in FIT cruise passengers means that data from the ground handlers
has become less useful for assessing passenger activity and it is anticipated that i-
SITES will become more important as a source of data. However, there is anecdotal
evidence that passenger behaviour varies in each port. The ground handlers believe
that in some ports the majority of passengers undertake organised activities, while
in other ports such as Auckland the majority undertake activities independent of the
cruise or ground handlers. Estimates on organised excursions are robust as they are
based on strong financial data provided by ground handlers.
The model relies on spend assumptions drawn from all three sources and applies different
spend averages by origin of passenger and class of cruise. The model applies spend
behaviour for passengers by seven countries of origin, Australia, Canada, Japan, Germany,
United Kingdom, America and Other (rest of the world). Spend by passengers is then split by
class of ship, where higher class ship passengers are assumed to spend more on average
than passengers of the same origin on a lower class ship. Average spend for the 2012-13
season is estimated at around $130 per port day, which includes retail spend, transport,
café/restaurant, excursion spend and a small amount of overland tours. This spend is
consistent across recent domestic survey data and comparable to international surveys
which indicates that spend per passenger port day is around $168.
It is noted that as this is the most significant spend category the robustness and reliability of
the results could be greatly improved if research time was invested in a survey of passenger
spend and behaviour, particularly between regions.
Passenger Exchange
The passenger exchange spend is predominantly air transport with small spend on land
based exchange (transport, hospitality and other). The passenger exchange spend category
is around 22% of total industry spend in the 2012-13 season although most of the spend
does not stay within the New Zealand economy, because a large proportion of international
airfares flow offshore.
In studies prior to 2009 the flights associated with passenger exchanges had been coded as
industry related spend. The shift in passenger behaviour from organised tours to FIT
behaviour has meant that the majority of flights are now booked independently of the cruise
booking. To reflect the reality of this change in passenger behaviour half of this spend has
been re-coded to cruise passenger expenditure, while the remaining half is accounted for in
the cruise industry expenditure, staying consistent with the past reports.
12The passenger exchange spend category relies directly on assumptions about spend per
passenger. The ground handlers recently provided some financial and anecdotal information
about the land side exchange costs. Ground handlers suggest that land exchange costs are
around $65 per passenger (transport, hospitality and other costs). As this spend represents
less than 0.2% of total industry spend (when grossed up) there is little chance that these
assumptions will reduce the robustness of the model and the results. The cruise passengers
also spend money on retail, day trips, food and accommodation during the period between
the voyage and entering/leaving the country. This spend is estimated in the model and is
defined as pre/post-cruise expenditure (see page 11).
The cruise passenger expenditure on international airfares was calculated using airline
expenditure, average airfares and market share data collected directly from one of the major
airline operators for previous reports. This data indicates average ticket price by route and
expenditure by route. Combined with the market share it was possible to estimate the
amount of spend that stays in New Zealand. The process required two steps.
First, the proportion of each expenditure type likely to be spent in New Zealand was
estimated for the national flag carrier and overseas airlines, with most expenditure
categories having the opposite assumption for the national flag carrier when
compared to overseas airlines. For example, it was assumed that all airline ticket
value that relates to maintenance, crew wages and overheads is spent in the home
country of each airline. This means that 100% of spend (in these categories) by the
national flag carrier stays within New Zealand, while none of the overseas carriers
spend stays in New Zealand (0%). Fuel spend is the only category where this method
is not applied. It was also assumed that all of the fuel expenditure by airlines is
either spent overseas or flows offshore to purchase imports (0% stays in the New
Zealand economy).
The second step is applying the market share by route to establish the proportion of
tickets purchased on international carriers and domestic carriers that stays in New
Zealand. The proportion of expenditure that stays in New Zealand varies by route
and by the airline home country (i.e. New Zealand national flag carrier and overseas
airlines).
3.2.3 Cruise Crew Related Data
Crew related expenditure is spent directly by the crew whilst in port or on shore based
excursions. This covers the excursions themselves and retail expenditure on food,
entertainment and souvenirs. It also includes crew spend on pre and post cruise activities.
The New Zealand crew related expenditure and activity has not been investigated with great
detail. The crew related expenditure figures reported are estimates and do not have the
rigour that would come from a structured survey of spending habits.
Crew Port Spend
International literature indicates that crew spend anything up to $200 per port day,
averaging around $100. We note that crew may tend to spend more in major ports which
13means that the average spend in New Zealand is likely to be lower than that shown in the
international studies. The expenditure patterns applied are based on the AEC survey (2007)
and Lincoln University study (2013) and local anecdotal evidence, as these are believed to
provide the closest approximation of the New Zealand situation. The average spend per
crew port day is $57 for the 2012-13 season which represents 5% of total industry spend.
Crew spend estimation is the least robust section of the model, a more accurate result would
be obtained if a survey was undertaken. The decrease in average crew spend from the
previous report (2011-12) is the main reason that the results for the 2012-13 season do not
match the forecasts from that report.
It is also important to note that crew spend averages used in this study may result in an
undercount when measuring the impact in Auckland. The ground handlers and shipping
agents have indicated that much of the crew spend is focused on Auckland, as this port has
retail and shopping facilities that are close to the port as well as a major casino.
Crew Pre and Post Cruise Activities
Crew also undertake pre and post tours around New Zealand. Cruise New Zealand has
previously provided estimates of this spend which is still applied in this study. The model
may be underestimating the size of the pre and post tours as the number of exchanging crew
that undertake these tours may be significantly larger. Currently it is assumed that 3% of
exchanging crew undertake pre and post tours, it is conceivable that the rate could be
significantly higher. In the 2012-13 season 129 crew are assumed to undertake pre or post
cruise tours. These crew members spend on average almost $1,900, which includes spend
on flights, land transport, accommodation, food and retail. The pre and post cruise activity
by crew represents a small fraction of the total spend by the industry (industry spend. See Appendix 1 for the details of the model used to calculate the flow on
effects of the cruise industry.
154 Cruise Sector Activity
This chapter provides an analysis of the cruise sector activity for the previous
2012-13 season and upcoming 2013-14 season. The outlook for the 2014-15
season is also briefly discussed. This chapter covers all information on vessels,
passengers and crew.
4.1 National Summary for 2012-13 Season
4.1.1 National Cruise Activity
The 2012-13 cruise season saw 37 different ships visit New Zealand over 129 different
cruises. There were a total of 763 port days across New Zealand, see Figure 4.1.
Figure 4.1: Cruise Activity for 2012-13
Port Days
Season Cruises Unique Ships
(Vessel)
2012-13 129 37 763
4.1.2 National Passenger Activity
During the 2012-13 season there were a total of 194,000 international passengers on tour
and 17,400 domestic passengers, making up a total of 211,400 passengers. International
passengers spent over 1.1 million port days1 in New Zealand with domestic passengers
spending over 42,000 port days while on tour. This season saw a total of 68,200 passenger
exchanges, most of which were in Auckland, although other regions, such as Southland, saw
a number of exchanges take place. In total, 39,000 passengers embarked on a cruise from
New Zealand, 29,400 disembarked and 143,000 passengers went through New Zealand by
transit, see Figure 4.2.
Figure 4.2: National Passenger Activity for 2012-13
Passenger Total Total Port
Embark Disembark Transit Exchange
Origin Passengers Days
International 194,000 26,500 26,100 141,400 52,400 1,101,000
Domestic 17,400 12,500 3,300 1,600 15,800 42,000
Total 211,400 39,000 29,400 143,000 68,000 1,143,000
1
A port day is counts individual passenger port day visits, e.g. one passenger that visits 7 ports over 7 days will
count as 7 port days.
16Australia continues to be the largest source market for cruise passengers visiting New
Zealand, making up 112,500 (or 53%) of total passengers. This is followed by the USA with
17% and the UK making up 8% of passengers. Domestic passengers also make up 8% of the
total, see Figure 4.3.
Figure 4.3: Cruise Passenger Source Markets for 2012-13
Passenger
Proportion of
Country of Number
Total
Origin
Australia 112,500 53%
Canada 8,100 4%
Germany 4,400 2%
UK 16,800 8%
Japan 1,400 1%
New Zealand 17,400 8%
USA 36,500 17%
Others 14,300 7%
Total 211,400 100%
4.1.3 Crew Activity for 2012-13
There were 82,400 crew in total during the 2012-13 season, resulting in 437,000 crew port
days. Most crew members were on transit while on tour through the country. However there
were 4,300 crew exchanges during the season. See Figure 4.4.
Figure 4.4: Crew Activity for 2012-13
Total Port
Season Total Crew Embark Disembark Transit Exchange
Days
2012-13 82,400 2,100 2,200 78,100 4,300 437,000
174.2 Regional Summary for 2012-13 Season
At a regional level Auckland saw the most cruises (102) and vessel, passenger and crew port
days for the 2012-13 season. Southland, Wellington, Canterbury, Bay of Plenty and Otago all
had between 82 and 88 cruises visit during the season. This resulted in each of these regions
accommodating between 149,000-165,000 passenger port days and 54,000-61,000 crew
port days. Hawke’s Bay also had a significant level of cruise activity with 61 cruises visiting
the region, leading to just under 100,000 passenger port days and 40,000 crew port days.
There were also several cruises that incorporated Sub-Antarctic islands into their voyage,
while Gisborne and Nelson both received a small number of cruise visits. See Figure 4.5.
Figure 4.5: Regional Cruise Activity for 2012-13
Region Cruises Unique Ships Vessel Port Days Passenger Port Days Crew Port Days
Northland 36 21 38 52,600 23,400
Auckland 102 37 117 179,800 67,900
Bay of Plenty 87 26 93 160,600 59,900
Gisborne 4 1 4 200 100
Hawke's Bay 61 21 62 97,200 40,200
Wellington 88 29 90 164,000 60,900
Nelson 2 2 2 500 400
Marlborough 25 14 31 32,000 11,400
Canterbury 87 24 104 150,200 57,700
Otago 82 24 83 148,800 54,200
Southland 88 26 124 156,000 60,000
Other 6 3 14 1,100 700
184.3 2013-14 Cruise Season
4.3.1 National Cruise Activity
The current forecast for the 2013-14 cruise season anticipates that 33 ships will make 121
cruise voyages to and/or around New Zealand. This is expected to result in 739 vessel port
days, see Figure 4.6. This is slightly less than the 129 cruises and 763 vessel port days in New
Zealand that occurred in the 2012-13 season.
Figure 4.6: Cruise Activity for 2013-14
Port Days
Season Cruises Unique Ships
(Vessel)
2013-14f 121 33 739
4.3.2 National Passenger Activity
For the 2013-14 season there are expected to be 184,300 international passengers on tour
and 15,700 domestic passengers, making up a total of 200,000 passengers. This is
approximately 11,000 less than the past 2012-13 season, and most of this difference comes
from a decrease in international visitor numbers. However, the number of passenger
exchanges is expected to increase by 14,000 to 81,900 total exchanges, with international
visitors accounting for 12,000 of these. International passengers will spend 1.06 million port
days in New Zealand and domestic passengers will spend over 49,000 port days on tour here
in 2013-14. See Figure 4.7.
Figure 4.7: National Passenger Activity for 2013-14
Passenger Total Port
Total Passengers Embark Disembark Transit Exchange
Origin Days
International 184,300 30,500 32,800 121,000 63,300 1,056,000
Domestic* 15,700* 11,100 7,400 2,700 18,600 49,000
Total 200,000 41,600 40,200 123,700 81,900 1,105,000
*Represents NZ passengers that actually cruise around NZ. Does not equal the sum of exchange and transit as some NZ
passengers embark or disembark international cruises from/to NZ without travelling around NZ
For the upcoming season American passengers are expected to increase both by total
number and by proportion of visitors from 36,500 (17%) last season to over 38,000 (19%) for
the 2013-14 season. Although there are expected to be less Australian cruise visitors, they
will still account for over half of all cruise passengers with 101,200. The United Kingdom also
continues to be an important source market with 16,900 visitors expected, see Figure 4.8.
19Figure 4.8: Cruise Passenger Source Markets for 2013-14
Passenger
Proportion of
Country of Number
Total
Origin
Australia 101,200 51%
Canada 8,200 4%
Germany 4,300 2%
UK 16,900 9%
Japan 700 0.4%
New Zealand 15,700 8%
USA 37,700 19%
Others 15,200 8%
Total 200,000 100%
4.3.3 Crew Activity for 2013-14
It is anticipated that there will be 79,100 crew visit (while working) during the 2013-14 cruise
season, resulting in 444,000 crew port days. Like last season, most crew members will be on
transit during their cruise through the country. It is expected however that there will be
4,500 crew exchanges during the season, which is slightly up on the 2012-13 season. See
Figure 4.9.
Figure 4.9: Crew Activity for 2012-13
Total Port
Season Total Crew Embark Disembark Transit Exchange
Days
2013-14f 79,100 2,100 2,400 74,600 4,500 444,000
204.4 Regional Summary for 2013-14 Season
Although Auckland is expected to see less cruise activity for the upcoming season than it did
last season, it is still the busiest region for cruise activity. There are currently a total of 89
cruise visits booked to come into Auckland (down 13) and this will result in 162,000
passenger port days and 62,000 crew port days, down by 18,000 and 6,000 each
respectively. Southland is expected to be the next busiest region for cruise, also with 89
cruise visits (up one from the past season). This will bring an expected 157,000 passenger
port days and 63,000 passenger days, both of which are up from the previous season.
Compared to last season Northland can expect to see the largest increase in activity of all the
regions, as eight extra cruises will visit the region. This will bring in over 24,000 extra
passenger port days and 8,600 extra crew port days. Bay of Plenty, Wellington, Canterbury
and Otago all remain important destinations for cruise ships and passengers. However, with
the exception of Otago, these regions (along with Hawke’s Bay) will see a slight decrease in
cruise activity from last season. The addition of five extra cruises to Gisborne will result in a
jump in cruise activity for the region. See Figure 4.10.
Figure 4.10: Regional Cruise Activity for 2013-14
Vessel Port Passenger Port Crew Port
Region Cruises Unique Ships
Days Days Days
Northland 44 21 46 77,000 32,000
Auckland 89 33 102 162,000 62,000
Bay of Plenty 82 25 84 153,000 60,000
Gisborne 9 2 9 13,000 4,000
Hawke's Bay 53 18 55 97,000 44,000
Wellington 78 22 80 143,000 59,000
Nelson 2 2 3 1,200 1,000
Marlborough 23 10 29 19,000 8,000
Canterbury 78 22 96 134,000 53,000
Otago 87 24 88 147,000 58,000
Southland 89 25 127 157,000 63,000
Other 9 3 20 1,500 800
214.5 2014-15 Season Outlook
Cruise industry sources indicate that the outlook for 2014-15 currently is similar to that of
the upcoming 2013-14 season. Early cruise booking information suggests that New Zealand
can expect over 200,000 visitors during the season. It is interesting to note continued growth
of the American passenger market (who are regarded as large spenders while on tour
compared to other source markets) with close to 40,000 expected for the season, almost
15,000 more than the 2011-12 season.
With a significant period of time between now and when the 2014-15 season begins and the
uncertainty around final booking numbers, a full economic impact assessment is not
considered to be of great value at this stage. However, based on early signs, the industry
shows no sign of slowing down and is expected to continue at a similar activity level to what
we are currently seeing. With this in mind, we can expect similar economic benefits that
New Zealand is currently seeing to continue in the short-term. The challenge of growing the
industry becomes about maximising the passenger and crew experience while they are here
and understanding the different demographics of visitors.
225 Economic Impact Analysis
This chapter presents finding of key economic measures 2 for the 2012-13 and
2013-14 cruise seasons, at the regional level. These are expenditure, value
added, and GDP.
5.1 Economic Impacts for the 2012-13 Season
5.1.1 Expenditure
Expenditure data is reported in two parts, firstly as ‘Total Expenditure’ which incorporates
the total amount spent on ship fuel and international airfares. The expenditure on airfares,
fuel and imorts is then removed as the money typically does not stick to the New Zealand
economy and goes straight overseas. The expenditure that sticks to New Zealand is then
presented as ‘Total Net Expenditure’ and is the more relevant measure in terms of impact on
New Zealand and its regions.
Total expenditure for 2012-13 was $550.7m. This was comprised of $283.1m from passenger
spend, $24.1m from crew spend and $243.5m from vessel spend. At the regional level
Auckland was responsible for $369.7m of this direct spend with $153m related to passenger
spend, $6.8m related to crew spend and $209.9m related to vessel spend. The majority of
vessel spend occurred in Auckland. Bay of Plenty accounted for the second highest total
direct expenditure with $42.7m ($24.7m passenger related, $3.3m crew related and $14.6
vessel related). For the remaining regions (with Southland being an exception) passenger
spend contributed the vast majority of total expenditure. See Figure 5.1.
Figure 5.1: Total Expenditure for 2012-13
Cruise Vessel
Total Expenditure* Passenger Related Crew Related Total
Related
Northland $ 8.7 $ 1.3 $ 0.7 $ 10.7
Auckland $ 153.0 $ 6.8 $ 209.9 $ 369.7
Bay of Plenty $ 24.7 $ 3.3 $ 14.6 $ 42.7
Gisborne $ 0.0 $ 0.0 $ 0.0 $ 0.0
Hawke’s Bay $ 15.0 $ 2.3 $ 2.5 $ 19.8
Wellington $ 27.4 $ 3.5 $ 4.0 $ 35.0
Nelson $ 0.1 $ 0.0 $ 0.0 $ 0.1
Marlborough $ 3.9 $ 0.6 $ 0.9 $ 5.5
Canterbury $ 23.1 $ 3.3 $ 2.4 $ 28.8
Otago $ 20.6 $ 3.1 $ 3.9 $ 27.6
Southland $ 6.6 -$ 0.2 $ 4.5 $ 10.8
Total $ 283.1 $ 24.1 $ 243.5 $ 550.7
*Incorporates total amount spent on ship fuel and International airfares
2
Values reported in $2007, as per the latest available regional Input-Output economic data from Statistics NZ.
23The total net expenditure for the 2012-13 season was $273.8m. This was made up of
$185.2m of passenger spend, $22.3m of crew spend and $66.13m of vessel spend. Auckland
region accounted for $110.5m of this, over 3 times the amount of any other region. This is
due to Auckland not only having the highest level of passenger and vessel visits, but also
where the most exchanges and vessel related purchasing takes place. Auckland’s total
passenger related net expenditure was $61.5m (56% of net expenditure in the region), crew
related net expenditure totalled $6.6m (6% of net expenditure in the region) and vessel
related net expenditure came to $42.4m (38% of expenditure in the region). Bay of Plenty,
Wellington, Canterbury and Otago all have total net expenditure of between $26m and
$32m. Passenger related net expenditure typically accounted for around 75% of the
expenditure in these regions. See Figure 5.2.
Figure 5.2: Total Net Expenditure for 2012-13
Total Net Cruise Vessel
Passenger Related Crew Related Total
Expenditure* Related
Northland $ 8.2 $ 1.2 $ 0.7 $ 10.1
Auckland $ 61.5 $ 6.6 $ 42.4 $ 110.5
Bay of Plenty $ 23.5 $ 3.0 $ 5.3 $ 31.9
Gisborne $ 0.0 $ 0.0 $ 0.0 $ 0.0
Hawke's Bay $ 14.2 $ 2.1 $ 2.5 $ 18.8
Wellington $ 26.1 $ 3.2 $ 4.0 $ 33.3
Nelson $ 0.1 $ 0.0 $ 0.0 $ 0.1
Marlborough $ 3.7 $ 0.6 $ 0.9 $ 5.2
Canterbury $ 21.9 $ 3.0 $ 2.4 $ 27.3
Otago $ 19.5 $ 2.8 $ 3.9 $ 26.2
Southland $ 6.5 -$ 0.3 $ 4.1 $ 10.4
Total $ 185.2 $ 22.3 $ 66.3 $ 273.8
*For the purposes of an Economic Impact Assessment the majority of direct expenditure on airfares and ship fuel are excluded.
5.1.2 Value Added
The total value added3 to the economy (synonymous with GDP contribution) by the cruise
industry for the 2012-13 season was over $310m. Passenger spend contributed over $212m
(68%), crew spend over $26m (9%) and vessel spend contributing almost $72m (23%).
Auckland had a total value added component of $116m, made up by $66m from passenger
related spend, $7m from crew related spend and almost $43m from vessel related spend.
Wellington and Bay of Plenty were the next largest regions with a value added total of $39m
and $37m each respectively. Passenger related spend contributed almost $31m for
Wellington and $28m for Bay of Plenty. Crew related spend contributed just under $4m for
each region and Vessel related spend contributed $6m in Bay of Plenty and $5m in
3
The national total presented is the sum of the regional totals. In some instances this may lead to double
counting of impacts due to shared services between regions. However we estimate the difference to beWellington. Canterbury and Otago both had total value added of over $30m and Hawke’s
Bay had over $22m. Passenger spend was the most important factor for these regions.
Southland and Northland both had value added of over $12m, however Southland had a
much higher component of vessel related spend with $5m, compared to Northland’s $0.8m.
This is due to the number of turnarounds that happen in Southland, with several ships
loading supplies before heading on to sub-Antarctic islands. See Figure 5.3.
Figure 5.3: Value Added for 2012-13
Cruise Vessel
Value Added Passenger Related Crew Related Total
Related
Northland $ 9.8 $ 1.5 $ 0.8 $ 12.1
Auckland $ 66.3 $ 7.3 $ 42.7 $ 116.3
Bay of Plenty $ 27.7 $ 3.7 $ 6.1 $ 37.4
Gisborne $ 0.0 $ 0.0 $ 0.0 $ 0.1
Hawke's Bay $ 16.6 $ 2.5 $ 3.1 $ 22.2
Wellington $ 30.7 $ 3.9 $ 5.0 $ 39.5
Nelson $ 0.1 $ 0.0 $ 0.0 $ 0.1
Marlborough $ 4.3 $ 0.7 $ 1.1 $ 6.1
Canterbury $ 26.1 $ 3.7 $ 3.0 $ 32.7
Otago $ 23.3 $ 3.5 $ 4.8 $ 31.5
Southland $ 7.6 -$ 0.3 $ 5.0 $ 12.3
Total $ 212.4 $ 26.3 $ 71.6 $ 310.3
*For the purposes of an Economic Impact Assessment the majority of direct expenditure on airfares and ship fuel are excluded.
5.1.3 Total Employment
The total direct and indirect employment supported by the cruise industry for the 2012-13
season was 5,330 jobs. As Auckland had the highest spend, it too had the most jobs
supported with 1,7234. Wellington was next with 737, followed by Bay of Plenty (684),
Canterbury (614) and Otago (614). Northland, Hawke’s Bay, Marlborough and Southland all
had over 100 jobs supported by the cruise industry. See Figure 5.4.
4
This figure is lower than that forecast in the 2012 report, that although value added was slightly higher (by
approx. $1m), it was across different spend structures, where spend in different industries have different impacts
on the level of supported employment.
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