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THE CONTRIBUTION OF THE

INTERNATIONAL CRUISE INDUSTRYTO THE U.S. ECONOMY IN

P U B L I S H E D O C T O B E R 2 0 1 5C R U I S E L I N E S I N T E R N A T I O N A L A S S O C I A T I O N

TABLE OF CONTENTS

EXECUTIVE SUMMARY

THE CONTRIBUTION OF THE INTERNATIONAL CRUISE INDUSTRY TO THE UNITED STATES ECONOMY

FIVE YEAR TREND: 2009 – 2014

THE CONTRIBUTION OF THE INTERNATIONAL CRUISE INDUSTRY TO INDIVIDUAL STATE ECONOMIES

I. IMPACT OF THE INTERNATIONAL CRUISE INDUSTRY ON THE U.S. ECONOMY IN 2014

U.S. CRUISE PASSENGERS

SPENDING IN THE U.S. ECONOMY GENERATED BY THE CRUISE INDUSTRY

DIRECT ECONOMIC IMPACTS IN THE UNITED STATES DURING 2014

INDIRECT AND INDUCED ECONOMIC IMPACTS IN THE UNITED STATES DURING 2014

TOTAL ECONOMIC IMPACTS IN THE UNITED STATES DURING 2014

II. THE CONTRIBUTION OF THE CRUISE INDUSTRY TO THE U.S. ECONOMY

BY STATE IN 2014

ECONOMIC IMPACTS IN THE TOP TEN STATES

FLORIDA

CALIFORNIA

TEXAS

NEW YORK

ALASKA

WASHINGTON

GEORGIA

ILLINOIS

MASSACHUSETTS

NEW JERSEY

ECONOMIC IMPACTS IN THE REMAINING STATES

APPENDIX I – STATE IMPACT METHODOLOGY

APPENDIX II – INDIVIDUAL STATE TABLES

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THIS STUDY HAS BEEN PREPARED BY:BUSINESS RESEARCH AND ECONOMIC ADVISORS | P.O. BOX 955 | EXTON, PA 19341

EXECUTIVE SUMMARY

Both passengers sourced from the United States and those embarking from U.S. ports rose sharply in 2014. Passengers sourced from the U.S., including Puerto Rico, totaled 11.33 million in 2014, another record for the United States (see Table ES-1). The increase of 5.8 percent from 2013 is the highest rate of growth since 2010 and U.S.-sourced passengers now stands 12 percent higher than in 2010. Cruise passengerembarkations at U.S. ports increased by 11 percent in 2014 to 11.06 million. Once again, this was new high for passenger embarkations from U.S. ports. It was also the highest increase since 2004 when embarkations at U.S. ports rose by 13.9 percent. This increase was primarily the result of a redeployment of capacity from Europe, especially the Mediterranean, to North America by the international cruise lines in response to the stronger economic conditions in North America vis-à-vis Europe.

THE CONTRIBUTION OF THE INTERNATIONAL CRUISE INDUSTRY TO THE UNITED STATES ECONOMY

Given the strong growth in passenger embarkations, the growth in direct spending by the international cruise industry in the United States also increased. Spending by the cruise lines and their passengers and crew in the United States rose by 4.6 percent to $21 billion in 2014, 16.4 percent higher than in 2010. Again, this represented a new peak in cruise industry expenditures in the United States. The $15.63 billion in expenditures by the cruise lines for goods and services, including capital expenditures, accounted for74 percent of the direct spending and was a 3.6 percent increase from 2013. Cruise lines’ direct expenditures for wages for U.S. employees and taxes paid to U.S. federal, state and local tax jurisdictions increased by 2.4 percent to $1.43 billion, accounting for 7 percent of total direct expenditures. The $3.96 billion in passenger and crew spending for transportation, accommodations, food and other retail goods accounted for the remaining 19 percent of direct cruise industry spending. Given the robust growth in passenger embarkations at U.S. ports, passenger and crew spending increased by 8.9 percent, the sharpest increase since 2005. Since 2010, passenger and crew spending has increased by 16 percent.

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Table ES-1 – Expenditures of the International Cruise Industry in the United States, 2011 – 2014Source: Business Research & Economic Advisors and Cruise Lines International Association

As indicated in Table ES-2, the growth in the economic benefits increased in tandem with the growth of passengers sourced from the United States. After increasing by 2.4 percent in 2013, direct cruise industry expenditures in the U.S. rose by 4.6 percent in 2014 to a new peak of $21 billion.

Table ES-2 – Economic Contribution of the International Cruise Industry, 2011 - 2014* Includes wages and salaries paid to U.S. employees of the cruise linesSource: Business Research & Economic Advisors and Cruise Lines International Association

The $21 billion in direct cruise industry expenditures generated an estimated 152,272 direct jobs throughout the U.S. economy, paying $7.02 billion in wages and salaries during 2014. Driven by the 4.4 percent increase in direct expenditures, the employment impact rose by 3.0 percent while the income impact rose by 5.9 percent.

As indicated in Table ES-3, the direct employment and wage income impacts were spread among virtually all industries in the U.S. economy. The core cruise travel sector in the United States, which consists of the cruise lines, airlines, travel agents, port service providers and local businesses, such as hotels and restaurants that are directly impacted by passenger and crew spending, accounted for 71 percent and 63 percent ofthe total direct employment and wage income impacts, respectively. Led by direct employment by the cruise lines and other impacts in the transportation sector, businesses in the core cruise travel sector benefitted from over 107,700 U.S. jobs paying $4.42 billion in wages and salaries.

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The cruise lines also purchased a variety of goods and services, such as food and beverages, fuel, insurance, financial and businesses services and entertainment among others, in support of their cruise operations. These expenditures generated another 44,527 jobs paying $2.6 billion in wages and salaries during 2014. As indicated in Table ES-3, these jobs were spread throughout the manufacturing and service sectors.

Table ES-3 –Direct Economic Contribution of the International Cruise Industry in 2014Source: Business Research & Economic Advisors.

The total economic impacts of the international cruise industry are the sum of the direct, indirect and induced impacts. The direct impacts discussed above generate additional, indirect and induced, impactsas the directly impacted businesses and their employees purchase goods and services from other business-to-business and business-to-consumer enterprises. As a result of these expenditures, the total economic impacts of the cruise industry generated $46.09 billion in total output throughout the U.S.economy. The production of these goods and services generated 373,738 jobs paying $19.43 billion in wages and salaries. The total output impact rose by 4.5 percent in 2014 while the employment and income impacts rose by 2.9 percent and 6.3 percent, respectively (see Table ES-4).

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On an industry basis, the services and government sector accounted for the largest proportion of thetotal economic impacts with $15.42 billion in output generating 206,026 jobs paying $9.61 billion inwages and salaries. Thus the services and government sector accounted for one-third of the national output impacts, 55 percent of the total employment impacts and 49 percent of the total income impacts.

Table ES-4 –Total Economic Contribution of the International Cruise Industry in 2014 Source: Business Research & Economic Advisors.

The manufacturing sector, with $10.79 billion in output generated by cruise industry expenditures, accounted for nearly one-fourth of the total output impact. The 31,719 manufacturing jobs paying $2.22 billion in wages accounted for 8 percent and 11 percent of the total employment and wage income impacts, respectively.

The transportation sector, which includes cruise lines and ports, benefited from $7.18 billion in output,76,225 jobs and $3.51 billion in wages and salaries. This sector accounted for more than 15 percent of the total economic impacts of the cruise industry in the United States.

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The following are the major conclusions of the analysis of the Cruise Industry

operations and impacts in the United States:

• An estimated 11.33 million cruise passengers were sourced from the United States.

• A total of 11.06 million cruise passengers embarked on their cruises at U.S. ports during 2014.

Florida, whose ports handled 6.89 million embarkations, accounted for 62 percent of all U.S.

cruise embarkations.

• The cruise lines and their passengers and crew directly spent $21 billion on goods and services

in the United States, a 4.4 percent increase from 2013 and a 16.6 percent increase from 2010.

The cruise lines spent $17.04 billion while passengers and crew spent $3.96 billion.

• Within the U.S., spending by the cruise lines with their direct suppliers was up from $10.71

million in 2013 to $10.77 in 2014.

• Including the indirect economic impacts, the spending of the cruise lines and their crew and

passengers was responsible for the generation of 373,738 American jobs throughout the

country. This represents a 2.9 percent increase over 2013.

• Total wages and salaries paid to these workers was $19.42 billion, an increase of 6.3 percent

over 2013.

• The cruise industry generated the direct employment of an estimated 152,272 workers with

U.S. businesses, who received $7.02 billion in wages and salaries during 2014.

• Including the indirect economic impacts, the spending of the cruise lines and their crew and

passengers was responsible for the generation of $46.09 billion in gross output in the United

States, a 4.5 percent increase from 2013.

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FIVE YEAR TREND: 2009 – 2014

In 2009, 9.5 million cruise passengers were sourced from the United States. As shown in Figure ES-1, U.S.-sourced cruise passengers have been steadily increasing with an average annual growth rate of3.6 percent over the 2009-2014 period. Throughout this five year period, each year a new high in passengers was reached. As discussed previously the 5.8 percent increased experienced during 2014 was the highest percentage increase since the 6.2 percent increase in 2010.

Figure ES-1 – U.S. Cruise Passenger Statistics, 2009 – 2014 Source: CLIA and BREA

Embarkations at U.S. ports have been generally increasing over the five year period with an average annual increase of 4.4 percent. In 2014, embarkations rose by 11 percent which was the highest annual increase since 2004. Thus more and more passengers are being sourced by the international cruise industry from the United States for cruises around the globe. At the same time more and more passengers from the U.S. and elsewhere are beginning their cruises from ports in the United States. As a result of these cruises, the cruise lines and their passengers and crew purchase goods and services, such as food andbeverages, hotel supplies and equipment to name a few, from businesses around the world and the United States, in particular. In 2009, U.S. businesses received an estimated $17.2 billion (see Figure ES-2).

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By 2014 these direct expenditures had increased by 22 percent to $21 billion. Thus, as the numberof passengers sourced from the United States and embarking on cruises from U.S. ports has increased so too has the industry’s expenditures with U.S. businesses. Over the five year period, these direct expenditures increased at an average annual rate of 4.1 percent.

Figure ES-2 – Direct Cruise Industry Expenditures in the United States, 2009 – 2014 Source: BREA

As the direct expenditures of the international cruise industry with U.S. businesses has grown over thepast five years so has the industry’s economic impact on the U.S. economy. As discussed previously, thetotal economic impacts are the sum of the direct, indirect and induced impacts that result from the direct expenditures. The total impact on cruise-induced output in the United States reached a pre-recession peak of $40.2 billion in 2008. As shown in Figure ES-3, the impact declined by 12.7 percent in 2009 to $35.1 billion due to the global recession and then began to recover in 2010. Since 2009, the total economic impact of the cruise industry has increased each year, growing from $35.1 billion in 2009 to $46.1 billion by 2014. Thus, over the past five years the total output that has resulted from cruise-related spending inthe U.S. has increased by 31 percent or at an average annual rate of 5.6 percent.1

1 These figures are not adjusted for inflation. Using the implicit deflator for gross domestic product (GDP) the average annual growth in inflation-adjusted total output is 4.0 percent.

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The total employment impact of the international cruise industry has also followed the same recovery pattern, increasing from 313,998 jobs in 2009 to 373,738 jobs by 2014. Thus, the total employment impact of cruise industry expenditures in the United States has increased by 19 percent over the past five years, or 3.5 percent per year.

Figure ES-3 – Total Economic Impact of the International Cruise Industry, 2009 - 2014 Source: Business Research & Economic Advisors

The Contribution of the International Cruise Industry to Individual State Economies

The U.S. economic impact of the International cruise industry spread into every state economy. Cruise passengers came from every state and the cruise lines made purchases in support of their operations in just about every state. The principal location factors that influenced the economic impacts by state were:

• CRUISE LINES HEADQUARTERS AND OTHER FACILITIES

• PORTS-OF-EMBARKATION AND PORTS-OF-CALL

• PLACE OF RESIDENCE OF CRUISE PASSENGERS

• PLACE OF BUSINESS OF CRUISE INDUSTRY VENDORS

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As shown in Table ES-5 and Figure ES-4, 11.06 million cruise passengers embarked on their cruises from U.S. ports in 2014. The top ten U.S. cruise ports accounted for 87.5 percent of 2014 embarkations, the highest percentage since 2003.

Florida remains the center of cruising in the United States, accounting for more than 62 percent ofall U.S. embarkations. Passenger embarkations in Florida increased by 12 percent in 2014 to 6.89 million. Miami led the Florida ports with a 26 percent increase, adding 534,000 embarkations in 2014. Port Everglades experienced a growth of 5.1 percent adding 95,000 embarkations. Since 2010, Florida ports have experienced a 19 percent increase in passenger embarkations.

Table ES-5 – U.S. Embarkations by Port, 2010 - 2014 Source: U.S. Cruise Ports and BREA

Embarkations in California’s ports (Los Angeles, Long Beach, San Diego, and San Francisco) totaled 984,000 in 2014. The 49 percent increase during 2014 was primarily driven by a rebound in cruisesoriginating in Los Angeles and Long Beach. Combined these two ports experienced a 64 percent increase in embarkations as more 3 and 4 day cruises were offered. Embarkations declined in San Diego, whileSan Francisco experienced a 30 percent increase as capacity in the Alaska market has continued to increase.While cruise activity in the remaining states is not as large, there were significant developments among these smaller ports which include the following. New York embarkations at its two cruise terminals in Manhattan and Brooklyn decreased by 4.0 percent to 576,000. After experiencing 30+ percent growth in 2012, embarkations at both Galveston and New Orleans remained virtually unchanged in

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2013 with both ports reporting a 0.2. percent increase. In 2014, however, embarkations rose by 6.1 percent in Galveston and 2.7 percent in New Orleans.

Figure ES-4– U.S. Embarkations by Port, 2013 and 2014Source: U.S. Cruise Ports

The major economic impacts of the international cruise industry by state during 2014 as shown in Table ES-6 were as follows:

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• The economic impacts were concentrated in 10 states. These states accounted for 78 percent of the cruise industry’s direct purchases in the United States, 80 percent of the total employment impact and 82 percent of the income impact.

Table ES-6 – Total Economic Impact of the International Cruise Industry by State, 2014Source: Business Research & Economic Advisors

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• Total cruise passenger and crew visits2 to Florida totaled 10.5 million in 2014, accounting for 45 percent of all passenger and crew visits in the U.S. with an 11 percent increase from 2013. Combined, passengers, crew and cruise lines directly spent $7.95 billion in the state, accounting for 38 percent of the industry’s direct expenditures and an 8.4 percent increase over 2013. This spending generated 146,401 jobs paying $6.82 billion in income. In addition, the state of Florida, the home of corporate or administrative offices for many cruise lines, accounted for about two-thirds of the cruise lines’ U.S.-based employment during 2014.

• California, like Florida, hosts both cruise line headquarters and ports-of-embarkation. During 2014, cruise passenger and crew visits totaled 2.01 million. Passenger and crew visits increased for the first time in five years, by nearly 50 percent in 2014. This dramatic increase was the result of a combination of increased deployment in the Mexico West market and a shift from 7-day cruises to shorter 3- and 4-day cruises. With 10.6 percent of the industry’s direct expenditures, California businesses received $2.22 billion in direct industry spending which in turn generated 44,369 jobs paying $2.73 billion in wage income.

• An estimated 1.07 million passengers and crew visited Texas during 2014, 4.6 percent of all passenger and crew visits at U.S. ports and a 19 percent increase from 2013. This increase was primarily the result of a quadrupling of visits at the Port of Houston as both Princess Cruises and Norwegian Cruise Line expanded operations at the port. With $1.33 billion in direct spending and 22,689 jobs paying $1.42 billion in income, Texas accounted for 6.3 percent of the industry’s direct expenditures, 6.1 percent of the industry’s total employment impact and 7.3 percent of the income impact.

• In 2014, an estimated 853,000 passengers and crew visited New York, 3.7 percent of total passenger and crew visits in the U.S. and a 2.85 percent decrease from 2013. New York accounted for 5.9 percent of the industry’s direct expenditures with $1.24 billion in 2014. This spending generated an estimated 15,890 jobs paying $971 million in income. New York maintained its fourth place ranking among all states.

• Alaska benefits from the cruise industry primarily as a destination market. During 2014, the cruise industry produced 4.7 million passenger and crew visits to Alaska destinations., The state primarily benefits from cruise passenger spending for shore excursions, pre- and post-cruise stays, food and beverages and general retail. Because of this spending, Alaska accounted for 4.5 percent of the industry’s direct spending with $953 million in expenditures generating 18,583 full- and part-time jobs paying just over $924 million in wage income.

• The state of Washington is the location of the Holland America Line Group, cruise industry administrative facilities, and a port-of-embarkation in Seattle. During 2014 an estimated 599,000 passengers and crew visited Seattle. With$743 million in direct spending and 17,362 jobs paying $918 million in income, Washington accounted for just under five percent of the industry’s national economic impact.

2 Since individual passengers will make several port-of-call visits on any itinerary, passenger visits are approximately three times greater than the number of passengers taking cruises to U.S. ports-of-call.

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• While Georgia has no direct cruise operations, it is a major source market for cruise passengers, making it a net exporter of cruise passengers, and also supports the industry with a wide range of goods and services. During 2014, 245,000 residents of Georgia cruised. This represented 2.2 percent of U.S. resident passengers. As a result of the activity of the cruise industry, Georgia businesses received $666 million, or 3.2 percent of the direct expenditures generated by the cruise industry in the United States. These direct expenditures generated total economic impacts of 12,442 jobs and $665 million in income throughout the Georgia economy during 2014.

• Like Georgia, Illinois has no direct cruise operations. The state is a net exporter of cruise passengers. It also supports the industry with a wide range of goods and services. Resident cruise passengers in Illinois totaled 144,000 during 2014 and accounted for 1.3 percent of U.S. resident passengers. As a result of the activity of the cruise industry, Illinois businesses received $509 million, or 2.4 percent of the direct expenditures generated by the cruise industry in the United States. These direct expenditures generated total economic impacts of 7,799 jobs and $475 million in income throughout the Illinois economy during 2014.

• The Boston cruise port in Massachusetts is both a port-of-embarkation and a port-of-call for cruises to Canada and Bermuda. An estimated 295,000 passengers and crew visited Massachusetts during 2014. Massachusetts accounted for 2.1 percent of the industry’s direct expenditures with $438 million in direct spending. These expenditures generated an estimated 6,825 jobs paying $447 million in income.

• In 2014, an estimated 324,000 passengers and crew visited New Jersey, 1.4 percent of total passenger and crew visits in the U.S. and a 6.1 percent decrease from 2013. New Jersey accounted for 2.0 percent of the industry’s direct expenditures with $412 million. This spending generated an estimated 7,721 jobs paying $451 million in income.

• The impacts in the remaining states were primarily generated by cruise passenger spending for air travel and cruise line purchases from vendors located in each of the state.

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ABOUT THE CLIA 2014 ECONOMIC IMPACT ANALYSIS

The CLIA 2014 Economic Impact Analysis is an independent study conducted by BREA and commissioned by CLIA. Spending estimates were compiled based on surveys of cruise lines, passengers and crew. Economic impacts of cruise lines, passengers and crew spending were generated using generally accepted input/output methodology. Detailed methodology is outlined in the full report

THE FULL REPORT CAN BE VIEWED AThttp://cruising.org/docs/default-source/market-research/us-economic-impact-study-2014.pdf

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FOR MORE INFORMATION PLEASE CONTACT:

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