BREA Business Research Economic Advisors Contribution of Cruise Tourism To the Economies of Europe 2009 Country Report Prepared for The European Cruise Council Euroyards September 2009
With more than fifteen cruise ports, is the largest destination market for cruise tourism in northern Europe with around 1.7 cruise passengers having visited Norwegian ports in 2009, a 15% increase over the 1.5 million passenger visits in 2008. The country also participates in other aspects of the industry including crewing and providing shipbuilding and maintenance and repair services. Combined, shipbuilding and other expenditures by cruise lines for equipment and services account for nearly two-thirds of the cruise industry s direct expenditures in. As a major seafaring country, the income earned by Norwegian residents serving as crew aboard cruise ships accounts for 18% of the cruise industry s direct impact in. Quick Facts Major cruise ports: Bergen, Oslo, Geirangerfjorden, Flam and Nordkapp. Global cruise passengers sourced from the : 2005: 14,500; 2006: 12,000; 2007: 17,800; 2008: 23,100; 2009: 32,700. Cruise passengers embarking on cruises from Norwegian ports: 2005: 7,500; 2006: 8,200; 2007: 17,800; 2008: 19,950; 2009: 27,800. Cruise passenger visits to Norwegian ports-of-call: 2005: 691,000; 2006: 1,138,000; 2007: 1,201,000; 2008: 1,459,000; 2009: 1,672,000. Cruise industry expenditures in : 2005: 276 million; 2006: 316 million; 2007: 426 million; 2008: 477 million; 2009: 417 million. employment generated by the cruise industry: 2005: 8,168; 2006: 9,086; 2007: 12,778; 2008: 13,274; 2009: 10,897. employee compensation generated by the cruise industry: 2005: 322 million; 2006: 367 million; 2007: 501 million; 2008: 526 million; 2009: 406 million. Cruise Expenditures Cruise tourism generated 417 million in direct expenditures in in 2009, amounting to 3% of the industry s direct expenditures throughout Europe. As indicated in the following figure, these expenditures were fairly evenly distributed across the four major segments: passengers, shipbuilding, cruise line purchases and compensation of cruise line employees. Despite the increase in cruise passenger visits in, total direct expenditures declined by 13% from 2008 as a result of falling expenditures for shipbuilding and maintenance and overall spending by cruise lines. Cruise Expenditures in the, 2009 417 Million Cruise Line Purchases 212 51% Cruise Line Purchases Passengers 65 16% Emp. Comp. 76 18% Shipbuilding 64 15% Cruise lines spent an estimated 212 million, 51% of the total, with Norwegian businesses in support of their administrative and operating activities. As indicated in the following table expenditures by the cruise lines in 2009 declined by nearly 4% from 2008. Cruise Line Expenditures by, 2008 and 2009 (Excluding Ship Repair) Expenditures Share of 2009 110 64 30.2% Petrochemicals 9 7 3.3% Other Nondurable Goods 24 20 9.4% Metals Machinery 57 17 8.1% Other Durable Goods 20 20 9.4% Wholesale Trade 14 9 4.2% Transportation Utilities 45 71 33.5% Financial Business Services 37 54 25.5% Personal Services Gov t 14 14 6.6% 220 212 100% These purchases included a broad range of products and services and impacted most major industries in the country. Among the major industries that were impacted by cruise lines' expenditures were: Businesses supplying the cruise lines with petrochemicals, including bunker fuels and solvents and other chemical products, which received 7 million in direct spending. An estimated 20 million was spent on other nondurable goods, primarily provisions, apparel and paper products. G. P. Wild (international) Ltd. Page 1 Business Research Economic Advisors
Another 17 million was spent on metal products and machinery such as fabricated structural metal products and machinery and equipment used onboard cruise ships. An estimated 71 million was paid by the cruise lines to businesses in the transportation and utilities industry, including payments for port fees, stevedoring and other port services such as landside transportation and warehousing services. The cruise industry spent 54 million on financial and business services in, including: insurance, advertising, engineering and other professional services. Cruise Tourists Passengers spent an estimated 65 million at Norwegian portsof-call, accounting for 16% of total cruise industry expenditures in. This amounted to a 20% increase in cruise tourism expenditures over 2008. Around 1.7 million cruise tourists visited ports-of-call in during 2009. The top five Norwegian ports accounted for almost two-thirds of cruise passenger visits. These are: Bergen: 282,000; Oslo: 253,000; Geirangerfjorden: 218,100; Flam: 142,600; Stavanger: 147,000. Other important ports included: Nordkapp: 95,000; Tromso: 78,000; Molde/ Andalsnes: 67,000; Aalesund: 66,000; Trondheim: 52,000. These port-of-call visits generated an estimated 58 million on shore excursions, food and beverages, clothing and souvenirs. While neither a major source market nor an embarkation centre, was the source of an estimated 32,700 cruise tourists while just over 27,800 passengers did embark on their cruises from Norwegian ports in 2009. Combined, these cruise tourists generated an additional 7 million in expenditures for transportation to and from ports, lodging, food and beverages and other expenditures. Compensation of Cruise Line Employees Cruise lines spent an estimated 76 million on compensation for employees who resided in during 2009. These expenditures accounted for 18% of total cruise industry expenditures in the country. The cruise lines employed more than 3,500 residents of as crew onboard their ships. Shipbuilding The cruise industry spent an estimated 64 million with Norwegian companies for equipment and services in support of newbuildings and the maintenance and refurbishment of existing cruise ships, 15% of total cruise industry expenditures in and a 16% decrease from 2008. The Economic Benefits of Cruise Tourism The 417 million in direct cruise tourism expenditures in during 2009 generated an estimated 10,897 jobs (direct, indirect and induced). This was an 18% decline from 2008. Employment Impact in, 2009 10,897 3,865 35% Economic Impacts 1,062 10% 5,970 55% The direct economic impacts of the cruise industry in are derived from a broad range of activities but the major sources include: Cruise line payments for port services and Norwegian crewmembers; Passenger spending for shore excursions and retail goods in Norwegian port cities; and Purchases of operating and newbuilding supplies by the cruise lines from Norwegian businesses. The 5,970 direct jobs that were generated by cruise-related expenditures paid 168 million in employee compensation. These jobs included the employees of the cruise lines, the direct suppliers to the cruise lines and the employees of those establishments that provide goods and services to cruise passengers. Relative to 2008 the direct employment impact decreased by 13% and the wage impact fell by 18%. The direct jobs generated by the cruise industry are located on cruise ships, at manufacturing plants that provide goods consumed by passengers and crew on cruise ships and structural metal products and machinery used in ship building and repair, and tour operators that provide shore excursions purchased by cruise passengers. As indicated in the following table the direct employment impacts are broadly based and include the following. Cruise Economic Impacts by, 2008 and 2009 1,078 50 827 34 Petrochemicals 30 1 25 1 Other Nondurable Gds. 112 5 101 4 Metals Machinery 287 16 123 5 Shipbuilding Repair 515 22 449 18 Other Durable Goods 134 6 129 6 G. P. Wild (international) Ltd. Page 2 Business Research Economic Advisors
Wholesale Retail Trd. 200 5 221 6 Transport Util. 5,111 127 4,171 100 120 3 119 3 Finance Business Ser. 246 14 544 22 All Other Sectors 141 5 88 3 6,896 204 5,970 168 Includes the Norwegian employees of the cruise lines and their compensation. 119 2% 544 9% 88 1% 4,171 70% 827 221 4% Wholesale Retail Trade Transportation Utilities During 2009, Norwegian manufacturers employed an estimated 827 workers, of the direct jobs, to provide the cruise industry with a wide range of goods. These workers were paid 34 million in compensation which accounted for 20% of the direct compensation impacts. 126 jobs were generated among the nondurable goods industries which, in turn, produced over 5 million in employee income. These workers produced food and beverage items consumed on cruise ships, bunker fuels and chemical products, and other soft goods used in the hotel operations of cruise ships. An estimated 701 workers were employed in the durable goods industries to produce structural fabricated metal products, material handling equipment, engine parts, environmental and sanitation equipment and communication equipment used on cruise ships. Combined, the workers in these industries received $28 million in compensation and accounted for more than 80% of the employment and compensation impacts in the manufacturing sector. The Wholesale and Retail Trade sector employed an estimated 221 workers, 4% of the direct employment impacts. These employees were paid wages and benefits of 6 million. The Transportation and Utilities sector employed an estimated 4,171 workers, 70% of the total direct jobs, in support of the cruise industry. These included employees of the cruise lines, truckers who deliver goods to cruise ships, and tour operators that provide onshore excursions for cruise tourists. Also included are employees in the power generation and communication industries. In aggregate these workers received 100 million in compensation, 60% of the direct compensation impacts in. An estimated 544 persons were employed by financial and business service providers. These included employees of insurance companies and agencies, advertising and market research firms, computer programming companies, engineering and management consulting firms, law firms and accounting agencies. Their compensation totaled an estimated 22 million. Nearly 120 workers were employed in hotels, restaurants and amusement enterprises as a direct result of passenger spending as part of their cruise vacations. These workers were paid an estimated 3 million in wages and benefits. Employment by Sector, 2009 5,970 Financial Business Services Personal Services Govt Finally, 88 jobs were generated elsewhere in the Norwegian economy, principally personal services and government, which yielded 3 million in income. These included photographers, health care employees and social service providers among others. and Economic Impacts The indirect economic benefits derived from the cruise industry result in part from the additional spending by the suppliers to the cruise industry. For example, food processors must purchase raw foodstuffs for processing; utility services, such as electricity and water, to run equipment and process raw materials; transportation services to deliver finished products to the cruise lines or wholesalers and insurance for property and employees. Consequently, the indirect jobs are generated in virtually every industry with a concentration in those industries that produce goods and services for business enterprises. The induced economic benefits are derived from the spending activities of those directly and indirectly employed as a result of the European cruise industry. This spending supports jobs in retailing, the production of consumer goods, residential housing and personal and health services. As indicated in the table below, an estimated 4,927 indirect and induced jobs were generated throughout by the cruise industry in 2009. These jobs generated 238 million in employee compensation. Relative to 2008, the indirect and induced employment and compensation impacts declined by more than 20%. and Economic Impacts by, 2009 1,277 55 708 31 Nondurable Gds. 333 15 189 9 Metals Machinery 547 25 262 12 Transportation Eq. 250 10 144 6 Other Durable Goods 147 5 113 4 Wholesale Retail 1,008 41 916 25 Trd. Transport Utilities 878 45 930 47 374 14 155 6 Finance Business Ser. 1,711 100 1,476 86 All Other Sectors 1,130 67 742 43 6,378 322 4,927 238 Transportation equipment includes shipbuilding, but also the manufacture of other transportation equipment, such as automobiles, buses, trucks, airplanes, railroad stock and so on. G. P. Wild (international) Ltd. Page 3 Business Research Economic Advisors
The indirect and induced impacts of cruise industry spending generated just over 700 jobs within the sector during 2009, of the total indirect and induced employment impacts. Nearly three-quarters of these jobs were in the durable goods industries, highlighting the importance of the indirect demand for durable goods generated by s shipbuilding industry. Impacted manufacturing employees were paid an estimated 31 million in compensation. The Finance and Business Services sector accounted for 30% of the indirect and induced employment impacts and 36% of the compensation impacts with 1,476 jobs and 86 million in wages and benefits. The indirect impacts measured in this sector are primarily concentrated in the insurance, legal, accounting and professional services industries. The Transportation Utilities sector in benefited from 930 indirect and induced jobs, of the total indirect and induced employment impacts. This reflects the strong inter-industry linkages within the transportation sector, as well as, the heavy usage of a variety of transportation services to supply businesses with their inputs and to deliver consumer goods to retail outlets. These workers were paid an estimated 47 million in compensation. and Employment by Sector, 2009 4,927 1,476 30% 742 15% 155 3% 708 930 916 Wholesale Retail Trade Transportation Utilities Financial Business Services All Other Sectors Transport Utilities 5,989 172 5,101 147 494 17 274 9 Finance Business 1,957 114 2,020 108 Ser. All Other Sectors 1,271 72 830 46 13,274 526 10,897 406 Includes the Norwegian employees of the cruise lines and their compensation. Transportation equipment includes shipbuilding, but also the manufacture of other transportation equipment, such as automobiles, buses, trucks, airplanes, railroad stock, etc. As indicated in the above table an estimated 10,897 total jobs, comprising direct, indirect and induced employment, were generated throughout by the cruise industry in 2009. The workers who held these jobs earned 406 million in employee compensation. The total employment and compensation impacts in in 2009 declined by approximately 20% from 2008. Norwegian manufacturers employed an estimated 1,535 workers, of the total jobs, and paid them 65 million in wages and benefits. Financial and Business Services accounted for of the total employment impacts with an estimated 2,020 jobs and 108 million in compensation. Combined, the Trade and sectors accounted for 13% of the total employment impacts with more than 1,400 total jobs and 40 in employee income. Transportation Utilities accounted for 47% of the total employment impacts with an estimated 5,101 jobs, including the Norwegian crew of the cruise lines. These workers received 147 million in remuneration. An estimated 830 total jobs, amounting to 8% of the total employment impacts, were generated in the remaining sectors of the Norwegian economy. These jobs were concentrated in the personal services and construction industries. These workers were paid 46 million in wages and benefits. Combined, the Trade and sectors benefited from nearly 1,100 indirect and induced jobs, 21% of the indirect and induced employment impacts. The trade jobs were primarily among wholesale trade establishments, while the hospitality jobs were concentrated among hotels and eating and drinking establishments. Compensation of these workers totaled 31 million. The remaining industries, which include Agriculture, Mining, Construction, Personal Services and Government benefited with 742 jobs and 43 million in employee compensation. 274 2% 2,020 Employment by Sector, 2009 10,897 830 8% 1,535 5,101 47% 1,137 10% Wholesale Retail Trade Transportation Utilities Financial Business Services All Other Sectors Employment Impacts Cruise Economic Impacts by, 2009 ) 2,355 105 1,535 65 Other Nondurable Gds. 475 21 315 14 Metals Machinery 834 41 385 17 Transportation Eq. 765 32 593 24 Other Durable Goods 281 11 242 10 Wholesale Retail Trd. 1,208 46 1,137 31 Thus, in nearly 26 jobs were generated for every 1 million in direct cruise industry expenditures. Furthermore, the average job generated by the cruise industry paid more than 37,000 in employee compensation. Given the direct employment and compensation impacts of 5,970 jobs and 168 million in employee compensation, the effective economic multipliers for the cruise industry in were 1.8 for employment and 2.4 for compensation. G. P. Wild (international) Ltd. Page 4 Business Research Economic Advisors