MedCruise Port Finance Study Cruise Management Consulting & - - PowerPoint PPT Presentation

MedCruise Port Finance Study

Cruise Management Consulting & David Wignall Associates Alanya, 14 November 2013

• Port of Barcelona
• Port of Batumi
• Port of Cyprus
• Port of Cagliari
• Port of Dubrovnik
• Port of Genoa
• Port of Malaga
• Port of Monaco
• Port of Mykonos
• Port of Piraeus
• Port of Trieste

Many thanks,

• Club de la Croisière de Marseille
• Chamber of Commerce of Nice Côte

d’Azur

• Chamber of Commerce of Corse du Sud
• Chamber of Commerce du Var
• Global Port Holding
• Aloschi & Bassani
• Baleares Consignatarios
• Cambiaso & Risso
• Inflot
• Istanbul Shipping
• Mantovani Navigation
• Mediport
• SNEAL Greece,

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The study has been possible with the collaboration of:

I. Presentation of the Study

• II. Financing Sources
• III. Private Public Partnerships
• IV. Conclusion

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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
• wnership and management of cruise

infrastructures within MedCruise members,

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Cruise traffic in the different ports studied

• 500.000

1.000.000 1.500.000 2.000.000 2.500.000

Ownerships situation

Public 41% Private- Public 27% Private 32%

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Why should a port invest?

• 100.000

200.000 300.000 400.000 500.000 600.000 700.000 800.000 900.000 1.000.000

Cruise ships are of larger size and capacity

• One port has been

investing 17.5 € in 2008 in new berthing facilities able to accommodate vessels

• ver 250m alongside,
• The other one has not been

able to invest for adapting its cruise infrastructures for accommodating cruise ships over 190m LOA.

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I. Presentation of the Study

• II. Financing Sources
• III. Private Public Partnerships
• IV. Conclusion

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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

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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.

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Bonds

• US ports are mostly public
• wned - 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

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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

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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%

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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

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$0,00 $200,00 $400,00 $600,00 $800,00 $1.000,00 $1.200,00 $1.400,00 $1.600,00 2006 2007 2008 2009 2010 2011 2012 Pax ticket Revenues Onboard Revenues Shorex Revenues Fuel cost

Source: Carnival PLC Revenues are calculated per passenger carried Fuel is the average cost paid by MT

• Passenger revenues are not increasing when
• perational expenses are increasing. Does the

development of tailor made destinations permit to increase cruise lines profit?

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Infrastructures investors

Company Port Date – Investment Shareholding Global Port Holding Antalya 2008 - 22 million US$ 100% Bodrum 2008 - 5.3 million US$ 60% Kusadasi 2003 - 18.5 million US$ 72.5% 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

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Mediterranean terminal operators

Company Port Creuers del Port de Barcelona Barcelona Terminals WTC, A, B & C on joint venture with the port of Barcelona (20%) Malaga Joint venture with port Authority of Malaga (20%) Singapore Marina Bay and SCC on joint venture with SATS Stazioni Marittima Genova Genoa 100% Messina Joint venture RCCL Venezia Terminal Passeggeri Catania Joint venture with MSC Cruises, RCCL and Aloschi & Bassani Cagliari Joint venture RCCL Ravenna Joint venture with RCCL and Aloschi & Bassani Venezia 100%

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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.

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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.

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I. Presentation of the Study

• II. Financing Sources
• III. Private Public Partnerships
• IV. Conclusion

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State 40% Region 3% Province 2% Municipality 35% Private (Industry) 1% Private (Logistic) 1%

Source: EPSO

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European ports ownership

Public ports

Advantage

• Tariff can be controlled and used to

provide economic advantage to the local community,

• Developments that stimulate the

economy can be encouraged,

• Funding can be on Government basis

(lower cost and risk),

• Easier interfaces with Customs and

Immigration (all work for same Government),

• Depending of the country, easier

project approvals.

Disadvantages

• Development driven by politics as much

as economics,

• EU competition rules on state aid may

conflict with commercial development depending on structures used,

• Bureaucratic structures become

inefficient and ineffective,

• Structures become resistant to change,
• Port run for the benefit of the employees

and powerful (long standing) users rather than the broader economy,

• Corruption can become endemic (and

invisible),

• Lack of competition,
• Lack of innovation.

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Public Private Partnership

• Public management, the ownership being

exclusively public

• Public and Private, the ownership being

mostly public

• Private and Public, the ownership being

mostly private

• And Private management the ownership

being totally private.

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• 1987: Genoa
• 1997: Venice
• 1999: Naples
• 2000: Barcelona (Terminals WTC, A, B & C)
• 2003: Savona, Kusadasi
• 2004: Bari
• 2006: Civitavecchia
• 2007: Barcelona (Palacruceros), Trieste
• 2008: Antalya, Bodrum
• 2009: Marseille (MPCT)
• 2010: Malaga, Ravenna
• 2011: Catania
• 2012: Cagliari, Messina
• 2013: Barcelona (Terminal E)

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Privatization of Cruise Infrastructures is a general trend in Mediterranean

Public Private & Public Private

Malaga (20% port of Malaga) Barcelona - WTC, A, B & C (20% port of Barcelona) Barcelona D & E Marseille Joliette Marseille 2 & 3 (management agreement) Marseille MPCT Cannes Genoa (21,85% Port of Genoa) Savona Nice Napoli (5% port of Naples) Portofino Monaco Cagliari Civitavecchia Ajaccio Bari (30% port of Bari + 5% Chamber of Commerce) Messina Livorno Venice (2,64% Chamber of Commerce) Catania Limassol Trieste (40% port of Trieste) Ravenna Batumi Piraeus Kusadasi Bodrum Antalya

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Port Traffic Management Antalya 159,759 Private Barcelona 2,408,634 Private - Public Bari 620,000 Private - Public Bodrum 53,480 Private Cagliari (2011) 237,000 Private – Public Cannes 318,000 Public Catania (Est) 200,000 Private – Public Civitavecchia (Est) 2,500,000 Private Dubrovnik 950,791 Public Genoa 797,239 Private – Public Kusadasi 623,535 Private Limassol 205,750 Public Livorno 1,039,000 Public Malaga 651,517 Private – Public Marseille 890,000 Private Messina 438,879 Private Monaco 232,921 Public Naples 1,228,651 Private – Public Nice 29,652 Public Piraeus (2011) 1,485,828 Private Ravenna 100,987 Private Toulon 311,000 Public Trieste 70,807 Private – Public Venice 1,775,944 Private – Public Villefranche-sur-Mer 355,545 Private Other members 7,298,831 Total MedCruise 24,983,750

Public 16% Public - Private 32% Private 25% Other 27%

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Private and private-public managed cruise in infrastructures operate about 57% of the MedCruise members cruise traffic.

0 € 2.000 € 4.000 € 6.000 € 8.000 € 10.000 € 12.000 € 14.000 € 16.000 € 18.000 €

Private - Public Private

30, 000 Tons GT 700 pax

Public

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I. Presentation of the Study

• II. Financing Sources
• III. Private Public Partnerships
• IV. Conclusion

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Conclusion

• Investments in cruise infrastructures are

necessary to accompany cruise development,

• These investments need:

– Take into account Cruise market overview and trends, – To be adapted to cruise lines requirements, – And the financing of the investment should permit to keep port dues to levels acceptable to cruise lines.

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Pilotage 5% Towage 6% Mooring 1% Government fees 9% Terminal fees 79% Pilotage 21% Towage 16% Mooring 2% Government Fees 26% Passenger Taxes 29% Security Taxes 6% Terminal Operator 35%

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