Seattle: Alaska Drives Demand

Seattle

Quantum of the Seas in Seattle.

 While moving ahead with plans to build a third terminal, the Port of Seattle set another record last year with 1,210,000 passengers on 211 calls and is forecasting a further increase this year to 1,380,000 passengers on 225 calls.

“We are also extending our season starting as early as April 1 with the Grand Princess and closing on Oct. 19 with the Ruby Princess,” said Michael McLaughlin, director of cruise and maritime operations. “Norwegian Cruise Line will also bring a third ship, the Norwegian Sun, joining the Bliss and the Encore at Pier 66. The Sun will sail 11-day Alaska cruises.

“Next year, the new Norwegian Encore will replace the Joy,” he continued. “It is a good example of how Norwegian is keeping their newest and best products in the market.

“Also in 2021, Carnival will replace the Spirit with the larger Freedom.”

Last year marked Seattle’s 20th year as a cruise port, during which it has seen nearly 14 million passengers.

“What stands out over those two decades,” said McLaughlin, “is that even during the recession we continued to grow our market share year-over-year. There was some flattening out in Alaska when that head tax was put into place, but it had less effect on Seattle in that we had entered into berthing agreements with the brands where they needed to meet their annual guarantees. So when they decided to pull ships out of the market as a result of the taxation in Alaska, it had less effect on Seattle.

“Over the long run, the growth trend has been really positive.”

Having released a Request for Proposals (RFP) for a new terminal last summer, the port has announced three groups that were shortlisted. They were the so-called Cruise Industry Leaders Group, with Royal Caribbean, MSC Cruises, Carnival Corporation and SSA Marine, a Seattle-based stevedoring company; Global Ports Holding and Miami-based Civil & Building North America; and Ports America, teaming up with Jacobs Engineering Group, headquartered in Dallas.

With the goal of having the new terminal ready for the 2023 season, it means Seattle will have three cruise terminals and four berths: Terminal 46 with one berth; the Bell Street Terminal at Pier 66 with one berth, and the Smith Cove Terminal at Pier 91 with two berths.

Norwegian Strategic on Alaska

Norwegian Bliss

Norwegian Cruise Line Holdings (NCLH) President and CEO Frank Del Rio underscored his enthusiasm for Alaska on the company’s third-quarter earnings call.

He said the company will continue to make investments and cultivate partnerships in the region, noting the new pier NCLH has agreed to build in Ketchikan, its $20 million purchase of 2.9 acres of waterfront property in Juneau, and the construction of a second pier at Icy Point Strait.

“We are investing in port facilities and guest experiences,” he said. “Alaska is destination-centric and you much have the land capabilities in place. We have almost doubled our capacity in Alaska over the past three years and will be even stronger as we finalize our investments.”

NCLH’s Q3 Alaska capacity was up 17 per cent over the same period last year.

In Ketchikan, NCLH has entered into a 30-year preferential berthing agreement with Ward Cove Dock Group, which allows for the construction of a new double ship pier in Ward Cove.

Meanwhile, current zoning laws are said to prevent a pier from being built on the property in Juneau.

The pier will be built to simultaneously accommodate two of Norwegian Cruise Line’s 4,200-passenger Breakaway-Plus class ships and is expected to be ready for the summer 2020 season.

NCLH partnered with the Port of Seattle in 2015 on the renovation and expansion of the Bell Street Terminal at Pier 66 which was ready for the 2018 season and the 4,000-berth Norwegian Bliss.

NCLH and the port entered into a 15-year lease agreement providing its ships priority berth space in Seattle for the full term of the lease in return for passenger volume guarantees. NCLH manages the cruise operations at Pier 66, while the port operates the facilities outside the cruise season.

Next year, the Norwegian brand will have three ships in Alaska, with the Norwegian Bliss, Joy and Sun will be from Seattle. In 2021, the new Encore will take over for the Joy. Oceania and Regent will each have one ship in the Alaska market, with the Regatta and the Seven Seas Mariner from Seattle, Vancouver and Seward.

Del Rio cited what he called “incredibly strong ticket pricing and onboard spend” in the Alaska market and also noted the lengthening of the season, which now runs all the way from April to October.

“In the coming years, we will further bolster our presence and commitment to the region,” Del Rio noted.

Norwegian has big plans for Juneau, But is the city ready?

With its legacy of gold mining and the majestic Mendenhall Glacier just outside of town, Juneau has long been a crown jewel among Alaska cruise itineraries. But as demand has grown, so have congestion and concerns among residents about the quality of life during the all-too-brief summer months.
Now, an effort by Norwegian Cruise Line Holdings (NCLH) to buy a key parcel of land along the downtown waterfront could bring those issues into high relief as citizens debate how much cruise tourism they want.
NCLH’s bid to buy the 2.9-acre site known as the Subport comes as the number of cruise passengers arriving in Juneau has grown from 1 million to 1.5 million in the past four years and as NCLH has embraced an ambitious plan to beef up its shore facilities throughout southeast Alaska. 
But Juneau could test Alaska’s appetite for hosting more and bigger cruise ships with each passing season.
Rorie Watt, manager of the city and borough of Juneau, said, “The growth has been climbing pretty steeply. We’re starting to see quite a bit of pushback from the community.”
Vacant since 2006, the Subport property is controlled by a state trust that provides services to Alaska’s disabled population. Juneau has been urging the trust to sell the land and had a proposal of its own for the site.
When the parcel came up for auction, NCLH was the high bidder. At $20 million, its offer was nearly double the next highest bid, from Royal Caribbean Cruises Ltd., and more than quadruple the $4.3 million tendered by the city.

Image result for juneau subport property

The sum was all the more impressive because, according to Watt, current zoning would not permit the company to build a pier at the site. 
“It is true the property is not currently zoned for a cruise ship dock, and it is true that our waterfront plan does not call for a dock in that area,” Watt said.
After the bids were opened, NCLH said in a statement that it was “thrilled to be the winning bidder,” adding, “We look forward to engaging with the city of Juneau to work together on a plan for the land that will greatly benefit both Juneau and our company.”
The company declined to comment further about its plans for the site.
The zoning of the Subport land emerged from a debate in the early 2000s among Juneau residents over cruise-related congestion that had resulted from a previous cruise line growth spurt in the 1990s, Watt said.
At that time, a consensus emerged that the Subport was not an appropriate site for a cruise pier, so the zoning was changed and a long-range waterfront land-use document was adopted to reflect that.
In addition, Watt said the city owns the tidal lands in front of the parcel, and NCLH would either have to buy those or work out a lease in order to put its ships there.
Both changes would require more than obtaining a variance from a zoning board. The decision would almost surely be made by elected officials, Watt said. 
“There would likely be a substantial amount of public process if they were to do that,” he said.
Juneau is one of several ports in Alaska where NCLH is seeking to build its own infrastructure. In Hoonah, it is partnering with the Alaska Native tribe that owns the Icy Strait Point cruise port to build a second pier for its use.
In Ketchikan, NCLH has agreed to be the first tenant at a pier being developed north of town at an abandoned paper mill. The site at Ward Cove would give it preferential berthing rights. The site was developed by the local Ward Cove Group and a tour operator, Godspeed of Fairbanks.
The $50 million pier proposal is in the permitting process, and the partners hope to have it open for the 2020 cruise season.
NCLH also joined with the Port of Seattle in 2015 to redevelop the Bell Street Terminal at Pier 66 in downtown Seattle, where its Alaska-bound ships also have secured preferential berthing rights following the $30 million upgrade.
Angie Ryan, a Travel Leaders agent in Frisco, Texas, said the investments would make NCLH cruises more attractive to clients. 
“I think that by using their own facilities and their own dock, it can keep the standard they’re trying to present across the board,” Ryan said. “Like they built their own dock in Roatan, [Honduras], and it’s a much nicer pier than the one Carnival uses,” she said. “And I think that’s a draw.”

Homeport capacity drives upgrades

NCLH isn’t the only cruise company upgrading its Alaska shore product. In 2018, Carnival Corp. spent $290 million in Skagway to acquire a scenic railway and related port facilities, and it formed a joint venture to manage the business.
Since then, the venture has added a berthing dolphin (an above-water marine structure that is not connected to the shore) at the end of the railroad dock complex. The dolphin now enables the berthing of two large ships there, according to Carnival Corp. chief communications officer Roger Frizzell.
The moves are part of a larger expansion of cruise infrastructure in Alaska, driven by increased homeport capacity.

Image result for Vancouver's Canada Place terminal

From Seattle and Vancouver, cruise lines now have the ability to launch six ships simultaneously: three from Vancouver’s Canada Place terminal, two from Pier 91 at Seattle’s Smith Cove and one from the Bell Street terminal.
“I think the way to look at southeast Alaska is that most of the cruise ship visitation is predicated on weeklong cruises that initiate out of Seattle or Vancouver,” Watt said. “And berth capacity has been added in Seattle and Vancouver, so there’s going to be capacity for six ships leaving there.”
That enhanced capacity will have a domino effect on port capacity in Alaska. With the addition of Ward Cove, Ketchikan would have berths for six ships a day, including Norwegian Cruise Line’s two 4,000-passenger ships, the Norwegian Bliss and the Norwegian Joy.
Watt said the question for Juneau, which currently has four berths, is whether it wants to keep pace.
The addition of 500,000 cruise visitors since 2015 has meant a lot of perceived change for residents, Watt said. 
“It’s a lot of economic opportunities, but it’s also that your quiet neighbourhood may be less quiet,” he said.
He added: “On Juneau’s side, I would imagine we’re going to go through a period of high-level community vision-type exercises. What kind of town do we want to be, and where are we headed, and how do we plan appropriately for that? My guess is that Norwegian has jumped into the middle of that conversation, and realistically, we’re probably not going to be moving very fast. I think it will take us a while.”