demystifying cruise port development in southeast asia · 1970 1980 1990 2000 2005 2010 2018 2020p...
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DEMYSTIFYING CRUISE PORT DEVELOPMENT IN SOUTHEAST ASIA
Presented by NV Terminals Sdn Bhd for IAPH Regional Meeting 2019
CRUISE INDUSTRY GROWTH TO CONTINUE
0
10
20
30
40
50
60
1970 1980 1990 2000 2005 2010 2018 2020p 2025p 2030p
Global Cruise Passenger Volume (Million)
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Sources: Cruise Industry News with projections from industry
ORDERBOOKS SHOW TRENDS FOR MEGA CRUISE SHIPSPreviously mega-cruise ships were limited to a few players with only one player for 5000k pax Oasis-class. These ships were made for NA/EU market.
Now, multiple lines building up towards ships with 4.5k – 5.4k pax (160k – 230k GT) and many designated for Asia.
Are Asian ports ready for size of ships and industry growth ?
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Source: Cruise Industry News
CRUISE NUMBERS
40%
15%
11%
6%
5%
4.4%
4%
2018 Global Cruise Deployment by Region
CaribbeanAsia & ChinaCentral & Western Med.Northern EuropeSouth PacNA West CoastEastern MedAlaskaSouth America
Source: CLIA Research Reports
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DEPLOYMENT BY REGION
Sources: Cruise Industry News and Moffatt & Nichol, 2019
Cruise Industry Capacity Placement by Primary Deployment Region, 2018
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OVERVIEW OF CRUISE FACILITIES IN SOUTHEAST ASIA
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Cruise DestinationsEstablished Mass Market Call
Established Niche/Minor Call
Dedicated Facilities
Cargo Terminal
Tender
Established routes
Note the gaps in port-of-calls, let alone dedicated facilities, as you head to eastern region.
21 August 2019
THE STRUGGLE TO MEET DEMAND FOR MORE DESTINATIONS
• Facility cost and sources of finance a significant obstacle.• Not enough understanding of the industry.• Increased need for collaborative working groups to
address destination wide issues, including destination carrying capacity.
Ports & Destinations responding, however…
• Lines often work independently and focus on destinations considered most strategic.
• Not always ready with assurances.• Lines now learning to be more proactive in comprehensive
destination planning.
Cruise lines responding, however…
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DO YOU EVEN KNOW YOUR CUSTOMERS?
Cruise Segmentation Factors Into
Port Feasibility & Development
Itinerary Length
Itinerary Cost
Source Market
Destination Types
Homeport v Port of
Call
Ship Sizes
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Disconnects:• Traditional port
operators treating cruise like cargo.
• Tourism bodies treating cruise like ferries / planes.
Any aspiring destination must understand what cruises are and what they do.
DESTINATION PLANNING APPROACH
ANALYSIS IDEATION DESIGN IMPLEMENTATION
Financial Options
Market Context
Tourism Products
Site Technical
Community Framework
Business Model
Facility Concept
Community Engagement
Community Rollout
Financial ModelFacility Design
Operations Design
Branding
Operations Rollout
Facility Rollout
Marketing Rollout
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HOW SUCCESSFUL PORTS OF CALL ARE DEVELOPED
A Successful Port of Call
ITINERARIES- Identify and assist in developing supporting local destinations- Use regional reach to influence development of ports outside the country- Promote to cruise lines based on complete itineraries and not purely destination based.
FACILITIES- Ensure facilities match the right market segments.- Design terminals which are fit-for-purpose i.e. optimizes capacity and utility vs cost.- Future-proof designs.
EXCURSIONS- Work with local operators to develop tourist sites at different distances from the port.- Develop proper transport staging areas.- Improve port area experience through waterfront developments
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IMPORTANCE OF DEVELOPING EXCURSIONS
Penang
Klang / Kuala Lumpur
Walk from Port 30 min 60 min 90+ min
George Town Heritage City
Shopping, Food tourism, Bazaars
Penang Hill,Butterfly & Insect park, Beach
Turtle sanctuaryFar side villages
???? Shopping, Cultural village,Royal Klang Town
Kuala Lumpur City Centre,Putrajaya,Theme Park
Batu Caves,Royal Selangor
Good destinations have a mix of excursions and on-shore activities to fill up a cruise visitor’s day. Where gaps appear at certain distances, especially at close distances, they should be filled up by developing new sites. Transport options are also key.
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CASE STUDY:THE STRAITS ITINERARY
The Straits of Melaka is currently Southeast Asia’s regular itinerary.
• Overnight sailing between stops.
• Mix of natural, historic and urban attractions.
• 3 UNESCO World Heritage sites – George Town, Melaka and Singapore Botanic Gardens
• Strong brands: UNESCO sites, Petronas Twin Towers, Batu Caves, Marina Bay, Langkawi
• Malaysia: Successfully built and cruise initiated dedicated piers in Klang, Langkawi & Penang
• Singapore – successful example of government developed iconic projects with concession awarded for management & operations
• Belawan – Dedicated facility built but issues remain with channel & turning basin. Inability to berth large cruise vessels
• Potential for docks in other destinations, however the correct privatisation models and funding issues remain
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Cruise DestinationsEstablished Mass Market Call
Established Niche/Minor Call
Dedicated Facilities
Cargo Terminal
Tender
PhuketKrabi
Langkawi
Penang
Pangkor
Belawan / Medan
Port Klang / Kuala Lumpur
Melaka
Singapore
21 August 2019
SG & HK - SUCCESSFUL GOVERNMENT CRUISE PROJECTS
Marina Bay Cruise Centre Singapore
Kai Tak Cruise Terminal Hong Kong
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Main homeport for SE Asia. Major capex (SGD500mil) risky but SG knew what they were doing by learning the market. Coordinated approach to cruise lines, structured policies. SG currently highest volume Asian port with 990k PDD (MBCC + Harbourfront).
Main homeport South China. Massive brownfield development cost close to USD1b. Successful despite significant local skepticism. Currently fourth highest Asian volume overcoming China geopolitical issues, with 606k PDD
Yes, both had high capex, but the key is both understood operations and how to approach market.
CASE STUDY PHILIPPINES: MEETING CRUISE CHALLENGESPhilippines lacked the facilities necessary to address HK source market demands.
• No dedicated facility for key Manila port of call.
• No noteworthy intermediating call between Manila and HK. Cruise have to do two sea days every round trip to Manila, whereas 2 calls + sea day is preferred.
• No other locations aside from Boracay (currently issues) to expand itinerary.
Solution: Development of Manila and Salomague facilities. Next step is to assess additional locations.
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Manila(complete 2021, currently cargo terminal)
Hong Kong
Salomague(complete end 2019)
Puerto Princessa
Kota KinabaluSandakan
Muara
* Locations marked grey under assessment.
21 August 2019
MANILA – LAUNCHING THE FUTURE FOR CRUISE IN THE PHILIPPINES
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Solaire Cruise Center, a greenfield pier at an Integrated resort within Entertainment City, Manila
21 August 2019
ADDRESSING FUNDING
Not many players willing to take a fully private development risk.
Cruise terminals cannot be comfortably sustained from tariffs alone, unless volumes are >500k.
Not easy to have commercially attractive volumes so what models work?
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• In theory good but what model of partnership? Tendency for public sector to ask for too much.
• Future Penang development one good example but built off fully public facility.
PPP
• Where governments are not ready or unwilling. E.gStar Cruise (Klang, Langkawi) when cruise was new.
• Will not go to destinations out of their strategic scope.
Cruise Line
• Great risk, difficult to establish feasibility unless site is high demand or can tap into ‘downstream’.
• Possible as value add to existing development e.g. Manila
Fully Private
• Massive concerted educated effort – SG & HK• How to establish sustainable model? How to fund?• Private partnerships via terminal management
model.
Fully Public
21 August 2019
ADDRESSING THE ENVIRONMENT
Emissions• Emissions abatement tech – scrubbers, catalytic reactors• New fuels - LNG
Water• Desalination / production through waste heat recovery• Wastewater, ballast and bilge water treatment beyond Marpol requirements.
Waste• Active sorting / recycling• Hazardous / chemical waste - qualified handling. Inventorising of chemical use.
Energy• Efficient hull design• ‘Air lubrication’ – use air to make ships go through water easier.• Energy efficient lighting & electrical appliances.
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Cruise Environmental / Sustainability Tech
CONCLUDING POINTS TO PONDER
Successes of SG / HK due to massive concerted and educated effort led by government. Educated meaning an understanding of how cruise tourism works
Many other governments do not recognise benefits of cruise tourism where opax arrivals match 10+ airplanes, opax are referred to as the ”super tourist” with ability to spend USD100 within a port of call / 8-10 hours and o a % of cruise pax will return to a specific destination.
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