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Billion Dollar Cruise Terminal on West Coast Discussed

July 14, 2009 By: Brittany Wallace Travel Agent

Although the cruise industry is still feeling the repercussions of the recent recession, Los Angeles officials are contemplating building a $1 billion terminal to accommodate large numbers of people expected to be sailing away on cruises in the next few years.

According to new reports, San Pedro Bay has emerged as one of the nation’s fastest growing ports of call. The report goes on to explain that with billions in wages, tax revenue and profits at stake, now is the time for the Port of Los Angeles to consider its cruise ship terminals.

"I think we're looking at an industry that despite some short-term challenges will continue exceeding growth in most areas areas of the travel industry and will play a growing role in total economic impact to not only port communities, but the region as a whole," said Mike Keenan, a cruise industry analysis with the Port of Los Angeles, according to Press-Telegram. "The fundamentals are strong, and are likely to remain so for years to come."

With popular destinations, Mazatlan, Puerto Vallarta and Ensenada, for short-term trips near by, Los Angeles and Long Beach have seen an increase in the amount of cruises visiting their ports.

The study by Menlo Consulting Group, a California-based travel and tourism industry research firm, found that though cruise travel around Europe and the Caribbean has flattened in recent years, growth here could average between 3 and 4 percent annually through 2020, according to Press-Telegram.

This will represent 1 million new passengers, 100,000 annually, between 2012 and 2022 at the Port of Los Angeles.

Port authorities see dollar signs when reviewing the building of the new port as each ship will generate nearly $700,000 in economic output to the city when ships restock on fuel, food, alcohol, disposable dishware and other supplies. The supplies along with the nearly $300,000 passengers will be spending when they get off the ship, will bring a great deal of revenue to the port city.

If projections of three to four percent growth are on target, that could mean about 1.6 million passengers aboard 241 ships will depart from Los Angeles by 2022, good numbers for San Pedro businesses.

Carnival Cruise Lines began docking in Long Beach in 2003. Carnival now departs on three weekly Mexican cruises from Long Beach.

Exceeding an estimated 250,000 passengers, Carnival handles 400,000 guests annually in the past few years as its three and four day voyages to Mexico’s Baja Coast have proven popular among vacationers looking for short trips.

The growth encouraged Carnival to spend $8 million last year, upgrading its terminal as it made plans to welcome the Carnival Splendor, which it expects will boost annual bookings by at least 50,000 guests, said Remco Buis, Carnival’s West Coast port development manager, according to Press-Telegram.

A study conducted by Cal State Long Beach in late 2008 reported that Carnival passengers spent at least $20 million annually here on services such as hotels, food, parking and transportation.

The city collects about $950,000 in sales tax and another $400,000 each year on hotel bed tax. Those figures are expected to grow by about $150,000 with the additional passengers and recent sales tax increases.

With competitive terminals in San Diego and Long Beach, Los Angeles port officials are eager to start the building of the $1 billion terminal.

"If nothing else, the report shows that it's a highly competitive atmosphere, and unlike other hospitality industries, cruise-ship companies are unique in that they can get up and go where they feel they're going to best succeed," Keenan said, according to Press-Telegram. "The study shows the demand in here, we'd like to ensure it remains that way."

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