Cruise ship leaves behind unknown economic impact in its wake

[CruiseNews]

MOBILE, Alabama -- When Carnival’s Elation leaves the Alabama Cruise Terminal today, on the way to its new home in New Orleans, it will leave in its wake an economic impact in the millions of dollars.

The most obvious victim is the city of Mobile. The city owns the cruise terminal and uses proceeds from passenger parking to pay $2 million a year in debt service.

Hotels will also feel an immediate impact. Cruise passengers booked 15,000 room nights a year, according to tourism officials.

Some passengers and crew members also ate at restaurants, shopped at stores and visited attractions in Mobile, but how much money they spent is harder to know.

Elation will head to New Orleans, where it replaces a sister ship, Ecstasy, that Carnival will move to Port Canaveral on Florida’s Atlantic Coast.

Carnival announced in March that it would leave the Mobile market, saying fuel costs for Gulf of Mexico cruises were more expensive than for Caribbean cruises and that trips from Mobile commanded below-average rates compared to other Gulf ports.

Alabama Real Estate Holdings, an arm of the Retirement Systems of Alabama, borrowed $20 million to build the cruise terminal south of downtown Mobile in 2004 after Carnival announced it would home port a ship here.

In 2008, the city borrowed $18.6 million to buy the terminal, then the next year paid $2.6 million to build a new gangway for the terminal to allow a larger ship to dock there. Last year it paid $970,000 for a pie-shaped parcel of land, about the size of a football field, at the corner of Government and Water streets for overflow parking from cruises.

City spokeswoman Barbara Drummond said the city will slash operating costs at the terminal when the cruise ship leaves, only spending as much as necessary to maintain the facility.

Mobile Mayor Sam Jones has lobbied other cruise companies to use the terminal, but so far has had no success. Drummond said that until another cruise ship comes to Mobile, the city may try to lease parking space to downtown businesses or use it for big events like Mardi Gras.

Parking revenue from the past year will cover the debt payment this fiscal year, she said. But if the city can’t find new revenue streams from the terminal before next October, she said, it will have to dip into its general fund to pay off the building.

"It’s 2013 when we’ll be impacted financially," she said.

The impact will be more sudden for area hotels. David Randel, president of the Mobile Bay Convention & Visitors Bureau, said 15 hotels offer a stay-and-cruise package that lets customers leave their cars at the hotel during the cruise provided they stay the night before. The package gets about 15,000 takers a year, he said, and it was gaining in popularity.

"That’s what personally hurts me the most," he said. "People were coming in a day early and starting to enjoy this great city."

Randel said many of the 900 crew members on board the ship also ventured into the city on the five-hour breaks they had between trips. Most of them took a bus out to Bel Air Mall, he said.

"They’d come back filled with packages," he said.

David Rasp, who owns the Royal Scam, the restaurant closest to the Cruise Terminal, said cruise customers had only a modest impact on his business.

"I’m not saying it’s not going to have an effect," he said of the cruise ship departing, "I just don’t know how measurable it’s going to be."

The impact on other local attractions is similarly murky. According to data from University of South Alabama economics professor Semoon Chang, attendance is up by nearly 3,000 a month at the Gulf Coast Exploreum since Carnival arrived in October 2004, but it has dropped at both the USS Alabama Battleship Park and at Bellingrath Gardens.

Gretchen Faust Jaspering, who took over as executive director at the Exploreum earlier this month, said she hadn’t been there long enough to have a definitive view on the cruise ship’s impact.

She did note, though, that when the Exploreum opened its Kangaroo Kraze exhibit last week, a few of the cruise ship employees decided to check it out.

"A couple of Australian dancers came over to get a taste of their home," she said.

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