1 st Posidonia Sea Tourism Forum Panel 2 The Economics of Sea - - PowerPoint PPT Presentation

1st Posidonia Sea Tourism Forum

Panel 2 – The Economics of Sea Tourism Athens, June 21st – 22nd 2011

Giovanni Spadoni President of MedCruise Port of Livorno 2000 srl Technical & Commercial Director

West Med/ Atlantic Adriatic East Med Black Sea MedCruise keeps the Med together

MedCruise Ports (2010)

• ver

Industry trends – growth!

• Construction of megaships – and the need to expand port

infrastructure

• More ships, bigger ships – multiple ships at one port
• Opportunities to expand marketing to new niches
• New itineraries needed – growth in new regions
• New ports needed – marketing opportunities
• Increased fuel costs – itinerary modifications, new
• pportunities

Cruise: a good investment choice

• Average annual traffic growth of more than 10% in Europe

and the Mediterranean over the last 10 years.

• High levels of optimism in the industry
• High levels of passenger satisfaction

– Product considered superior & better value than other tourism products – Repeat customers

• Immense potential for growth (latent demand)

Cruise Industry Model : the Players

CRUISE LINES SHIPS SHIPYARDS TOURS & VENUES HOTELS/RETAIL DESTINATION PORTS

AIRPORTS

PORT AGENTS

RECEPTIVE AGENTS

PASSENGERS

TRAVEL AGENTS

Why would a port want cruises?

• Requires a separation of uses at the port
• Requires expensive new port infrastructure
• Requires qualified personnel
• Requires state-of-the-art security systems
• Requires building new relationships with local tourism,

city officials and the cruise industry community

The benefits

• Prestige

The benefits

• The development of a passenger port

… the main benefit

• Tourism – local industry with local profit
• Cruise tourism doesn’t compete with other land-

based tourist products

• Cruise ship passengers aren’t always the same

tourists that would visit your destination on their own

• Cruise passengers can experience your destination

and decide to return to spend more time, and money

… the main benefit

• Cruise for local economic development

– Example: Expenditures at Destination

• Excluding airfares, cruise passengers spent an

average of nearly €70 at embarkation port cities.

• On average, cruise passengers then spent

another €61 at each port visit on their cruise itinerary.

– Source – GP Wild Intl, Ltd and BREA

PORT PRODUCTS MARKET COMPETITION Port Infrastructure

€

Financing

Indirect/Induced Impacts

Private and/or Public Investors

€

Cruise Industry Model : Port Finance

DIRECT FOREIGN TRADE TOURISM

Port Infrastructure

National Debt Accounts Balance

Goal: Increase Foreign Revenue

Foreign Investments Privatisation Public Entities Cruise-related Businesses Greek Services Greek Supplies International Payments Provisions sold to Cruise Lines Passenger and Crew Purchases

Governance of Cruise Terminals

• Partnerships between Port Authorities, Cruise

Terminals and Cruise Companies play a significant role in investment and management decisions of every shipping player;

• Cruise lines are faced with decisions to directly

control some specific operations and to obtain preferential port spaces in order to gain competitive advantage over cruise competitors.

Governance of the Cruise terminals

Italy and Europe:

• Different forms of terminal governance with

combined public and private sector involvement:

– Barcelona Palacruceros = public-private partnership – Marseille MPCT approved by European Commission

• perated by Costa, MSC and Louis Cruises.
• Partnerships between the public and private sector

are increasingly being preferred as a tool to attract capital for infrastructure investment and as a way to distribute the cruise management risks between the public and private sectors.

Governance of the Cruise terminals The Italian Model:

• Port Authority = Landlord.
• Concession = Long term Instrument to commit the

management of the Passenger Port and the Cruise Terminal to a Private/Public Company.

• The P.A.:

– Fixes the objectives to be reached; – Approves the Business Plan; – Controls its achievement.

GOVERNANCE AND EFFICIENCY OF ITALIAN CRUISE TERMINALS

Research presented at 2010 Annual Conference of the International Association of Maritime Economists, Lisbon 7-9 July 2010 Professor Assunta Di Vaio Business Administration Department, University of Naples “Parthenope” Via Medina, 40 – 80132 – Naples, Italy Email: susy.divaio@uniparthenope.it Telephone: +39.0815474766 Fax: +39. 0815522313

Governance of the Cruise terminals

Port Name Type Property Shares 1 Savona Palacrociere Savona S.P.A. Private 100% Costa Crociere 2 Genoa Stazioni Marittime spa S.P.A. Private/Public 10,22% P.A. 23,85% Finporto (P.A.) 5% Genoa Municipality 32,01% G.N.V. 5,91% Costa Crociere 13,24% Marinvest (MSC) 7,33% Moby Lines 2,44% Tirrenia 3 Livorno Porto di Livorno 2000 srl S.R.L. Public/Private 72% P.A. 28% Chamber of Commerce 4 Cagliari Cagliari Port Authority Institution Public N.A. 5 Portoferraio Piombino&Portoferraio Port Authority Institution Public N.A. 6 Civitavecchia Roma Cruise Terminal S.R.L. Private 33,33% Costa Crociere s.p.a. 33,33% Royal Caribbean Cruises Ltd. 33,33% Marinvest s.r.l.(MSC)

Governance of the Cruise terminals

Port Name Type Property Shares 7Napoli Terminal Napoli spa S.p.A. Private/Public 5% A.P. 20% Royal Caribbean 20% Costa Crociere 20% Marinvest(MSC) 20% Terminal Trade 10% Intership srl 5% MSC crociere 8Messina ATI Comet SRL-Messina Sea Terminal Consortium Private N.A. 9Palermo Palermo Port Authority Institution Public N.A. 10Bari Bari Porto Mediterraneo S.R.L. Private-Public 5% Banca Popolare Bari In 2010 the concession expired and Port Authority assumed the commercial and marketing management of the cruise terminal. The Terminal services were assigned by an international bid to a private Company. 30% Consorzio del Porto di Bari 5% Venezia Terminal Passeggeri 10% Fin.Mil. Bari 10% M.P.M.S.R.L. Bari 15% Iniziative Portuali & Partecip. S.R.L.BA 15% Impresa Logistica Portuale SRL BA 5% Servizi Integrati di Logistica SRL BA 5% Camera di Commercio BA

Governance of the Cruise terminals

Port Name Type Property Shares 11 Venezia Venezia Terminal Passeggeri S.p.A. Public-Private 35,5% APV INVESTIMENTI SPA. 22,18% Finpax srl 22,18% Aeroporto di Venezia SAVE spa 17,5% VENETO SVILUPPO S.P.A. 2,5% Camera di Commercio Venezia 12 Trieste Trieste Terminal Passeggeri S.p.A. Public 100% P.A. Fully privatized in 2010

Governance of the Cruise terminals

Port Regimen Covered Pier Length Future 1 Savona Concession 2003-2023 4800 sq.mt 450 m. 2 Genoa Concession 1987-2040 5 Terminals 3000 m. 3 Livorno Concession 1997-2029 2 Terminals 1800 m.+commercial Privatization-P.A.minority 2011 4 Cagliari P.A. Direct Management 1 Terminal 350 m.+commercial Privatization 2011 5 Portoferraio P.A. Direct Management Transit 150 m + roads 6 Civitavecchia Concession 2004-2044 3 Terminals 2622 m. 7 Napoli Concession 2005-2035 1100 m.+commercial 8 Messina Concession only for the services 2006-2011 550 sq.m. 800 m. New Terminal-Privatization 2012 9 Palermo P.A. Direct Management 3000 sq.m 700 m. 10 Bari Concession Expired 2009 2370 Sq.m.+ Ferry terminal 300 m. P.A.Direct P.A.Management since 2010-security-safety- cleaning services committed by bid to in 2010 11 Venezia Concession 1999-2025 47.267 sq.m. 2.809 m. 12 Trieste Concession 2008-2023 8.000 sq.m. 480 m. Privatization 60%

Governance of Cruise Terminals

• Direct management: when the cruise terminal is managed by port

authorities (Cagliari,Messina, Palermo, Portoferraio)

• Full public management: when a public company manages the terminal

(Bari Porto Mediterraneo Srl, Trieste Terminal Passeggeri S.p.A., Venezia Terminal Passeggeri S.p.A., Porto di Livorno 2000 Srl)

• Mixed management: when the cruise terminal management is over 50%

private (Terminal Napoli S.p.A., Stazioni Marittime S.p.A.)

• Private management: when the management is entirely privately operated

(ATI Comet Srl – Messina Sea Terminal, Palacrociere of Savona, Roma Cruise Terminal Srl).

Governance of Cruise Terminals

a) Technical efficiency (TE) of cruise terminals improves when the terminals are operated by private companies under a regulatory regimen; b) TE decreases when the terminal management type is public; c) TE increases when the cruise terminals are owned by a combination of public and private actors but predominantly by the private sector.

Conclusions

• Important development: participation of the private sector in

the ownership, operations and management of the cruise terminals;

• The dataset shows how the intervention of the private sector

in the ownership and operation of the terminals increases the efficiency levels;

• The duration of the concession contract, on average 20/30

years, does not allow competitive behavior from the various management operators.

Thanks!

Giovanni Spadoni President of MedCruise Port of Livorno 2000 srl, Technical & Commercial Director

1st Posidonia Sea Tourism Forum

Panel 2 – The Economics of Sea Tourism Athens, June 21st – 22nd 2011