MedCruise Port Finance Study Cruise Management Consulting & David Wignall Associates Alanya, 14 November 2013
The study has been possible with the collaboration of: • Port of Barcelona • Club de la Croisière de Marseille • Chamber of Commerce of Nice Côte • Port of Batumi d’Azur • Port of Cyprus • Chamber of Commerce of Corse du Sud • • Port of Cagliari Chamber of Commerce du Var • Global Port Holding • Port of Dubrovnik • Aloschi & Bassani • Port of Genoa • Baleares Consignatarios • • Port of Malaga Cambiaso & Risso • Inflot • Port of Monaco • Istanbul Shipping • Port of Mykonos • Mantovani Navigation • • Port of Piraeus Mediport • SNEAL Greece, • Port of Trieste Many thanks, Cruise Management Consulting & David Wignall Associates 2/30
I. Presentation of the Study II. Financing Sources III. Private Public Partnerships IV. Conclusion Cruise Management Consulting & David Wignall Associates 3/30
Scope of the study • Provide MedCruise members available ways for financing cruise infrastructures, • Present examples of financing of cruise infrastructures within MedCruise members, • Analyze the best practice in terms of ownership and management of cruise infrastructures within MedCruise members, Cruise Management Consulting & David Wignall Associates 4/30
Cruise traffic in the different Ownerships situation ports studied 2.500.000 2.000.000 Private Public 32% 41% 1.500.000 1.000.000 500.000 Private- - Public 27% 5/30 Cruise Management Consulting & David Wignall Associates
Why should a port invest? Cruise ships are of larger 1.000.000 size and capacity 900.000 • One port has been 800.000 investing 17.5 € in 2008 in 700.000 new berthing facilities able 600.000 to accommodate vessels 500.000 over 250m alongside, 400.000 • The other one has not been 300.000 able to invest for adapting 200.000 its cruise infrastructures for 100.000 accommodating cruise - ships over 190m LOA. 6/30 Cruise Management Consulting & David Wignall Associates
I. Presentation of the Study II. Financing Sources III. Private Public Partnerships IV. Conclusion Cruise Management Consulting & David Wignall Associates 7/30
Financing sources • Port authorities cash flow • Capital market – Banks – Bonds – Investors • Cruise lines • Cruise terminal operators • Multi-Lateral Institutions – European Bank for Reconstruction & Development (EBRD) – European Regional Development Fund (ERDF) – World Bank – Islamic Bank • Government – European Union – National – Regional – Local 8/30 Cruise Management Consulting & David Wignall Associates
Commercial loans • Terminal operators may guarantee the loans to commercial banks with commitments from cruise lines. – In 2010, Port Canaveral upgraded the 4 of its cruise Terminals based on a commitment from Carnival Plc to bring a minimum of 1.7 million passengers annually over 15 years. 9/30 Cruise Management Consulting & David Wignall Associates
Bonds • US ports are mostly public owned - 40% of the US port finance are coming from bonds. – Port Everglades – Terminal 18: 75 millions investments financed with bonds granted by the County of Broward and RCCL – New York - Cape Liberty terminal: 70 millions investments financed with bonds granted by the City of Bayonne and RCCL 10/30 Cruise Management Consulting & David Wignall Associates
Cruise lines • The scope is to support the cruise development. Together with the other land assets, port facilities investments represent limited shares in companies properties: – Carnival: 2,8% – RCCL: 1,8% • Invest in ports situated in strategic destinations – Homeports operations: • Fort Lauderdale, Cape Liberty • Barcelona, Civitavecchia, Genoa Marseille, Naples, Savona – Development of new destinations close to important source markets – Caribbean’s – And support the development of new source markets - Asia 11/30 Cruise Management Consulting & David Wignall Associates
Port Cruise Line Investment Barcelona (Palacruceros) Carnival 100% Catania MSC & RCCL Not communicated Civitavecchia Carnival, MSC & RCCL 100% Genoa Carnival& MSC 31.37% Kusadasi RCCL 27.5% Marseille Carnival, MSC & Louis 100% Messina MSC Not communicated Naples Carnival, MSC & RCCL 100% Ravenna RCCL Not communicated Savona Carnival 100% 12/30 Cruise Management Consulting & David Wignall Associates
Destination Cruise Line Year Great Stirrup Cay / Bahamas NCL 1977 Labadee / Haiti RCCL 1986 Half Moon Cay / Bahamas Carnival 1977 by HAL Princess Cay Carnival Late ’90 by Princess Isla Catalina / Santo Domingo Carnival Late ’90 by Costa Castaway Cay / Bahamas Disney 1998 Coxen Hole / Roatan Island / Honduras RCCL 2008 Mahogany Bay / Roatan Island / Honduras Carnival 2010 Harvest Caye / Belize NCL MOU 2013 13/30 Cruise Management Consulting & David Wignall Associates
• Passenger revenues are not increasing when operational expenses are increasing. Does the development of tailor made destinations permit to increase cruise lines profit? Source: Carnival PLC $1.600,00 $1.400,00 $1.200,00 $1.000,00 Revenues are calculated per passenger carried $800,00 Fuel is the average cost paid by MT $600,00 $400,00 $200,00 $0,00 2006 2007 2008 2009 2010 2011 2012 Pax ticket Revenues Onboard Revenues Shorex Revenues Fuel cost Cruise Management Consulting & David Wignall Associates 14/30
Infrastructures investors In general infrastructure investors in the port sector fall into three categories: Terminal operators, Port operators, Financial investors. Terminal investors are most active in the container sector. This is because the returns have been attractive for a sustained period of time and the users of terminals are a relatively small and well identified group.. So far they are not looking into cruise activities: – Limited size compared with other cargo or container operations – New activity Date – Investment Company Port Shareholding 2008 - 22 million US$ Antalya 100% 2008 - 5.3 million US$ Global Port Holding Bodrum 60% 2003 - 18.5 million US$ Kusadasi 72.5% 15/30 Cruise Management Consulting & David Wignall Associates
Mediterranean terminal operators Company Port Terminals WTC, A, B & C on joint venture with Barcelona the port of Barcelona (20%) Malaga Joint venture with port Authority of Malaga Creuers del Port de (20%) Barcelona Marina Bay and SCC on joint venture with Singapore SATS 100% Genoa Stazioni Marittima Genova Joint venture RCCL Messina Joint venture with MSC Cruises, RCCL and Catania Aloschi & Bassani Joint venture RCCL Cagliari Venezia Terminal Passeggeri Joint venture with RCCL and Ravenna Aloschi & Bassani 100% Venezia 16/30 Cruise Management Consulting & David Wignall Associates
Multilateral institutions • European Bank for Reconstruction & Development (EBDR): Dubrovnik and Split have been using EBDR funds for financing their cruise infrastructures. • European Regional Development Fund (ERDF). Ajaccio & Malaga have been using ERDF funds for financing their cruise infrastructures. • The following institutions which are part of the World Bank organization: – International Development Association (IDA) – International Bank for Reconstruction and Development (IBRD) – International Finance Corporation (IFC) – Multilateral Investment Guarantee Agency (MIGA) • And the Islamic Development Bank . 17/30 Cruise Management Consulting & David Wignall Associates
European Union EU has just approved the extension of the cruise port of Piraeus. The total investment which represents a total of 120 million Euros is financed as follow: – 96.6 million Euros will come from EU structural funds, – Some 12 million will come from Greek structural funds, – And some 5 million will come from the Port of Piraeus. 18/30 Cruise Management Consulting & David Wignall Associates
I. Presentation of the Study II. Financing Sources III. Private Public Partnerships IV. Conclusion Cruise Management Consulting & David Wignall Associates 19/30
European ports ownership Private Private (Industry) (Logistic) 1% 1% State Municipality 40% 35% Province Region 2% 3% Source: EPSO 20/30 Cruise Management Consulting & David Wignall Associates
Public ports Disadvantages • Development driven by politics as much as economics, Advantage • EU competition rules on state aid may • Tariff can be controlled and used to conflict with commercial development provide economic advantage to the depending on structures used, local community, • Bureaucratic structures become • Developments that stimulate the inefficient and ineffective, economy can be encouraged, • Structures become resistant to change, • Funding can be on Government basis • Port run for the benefit of the employees (lower cost and risk), and powerful (long standing) users • Easier interfaces with Customs and rather than the broader economy, Immigration (all work for same • Corruption can become endemic (and Government), invisible), • Depending of the country, easier • Lack of competition, project approvals. • Lack of innovation. 21/30 Cruise Management Consulting & David Wignall Associates
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