The Economic Contribution of Cruise Tourism to the Southeast Asia Region in Prepared for: CLIA SE Asia. September 2015

Transcription

1 BREA Business Research & Economic Advisors The Economic Contribution of Cruise Tourism to the Southeast Asia Region in 2014 Prepared for: CLIA SE Asia September 2015 Business Research & Economic Advisors P.O. Box 955 Exton, PA 19341

2 Table of Contents EXECUTIVE SUMMARY... 2 INTRODUCTION... 7 THE STATE OF THE SE ASIA CRUISE INDUSTRY IN DIRECT EXPENDITURES GENERATED BY CRUISE TOURISM IN SE ASIA... 9 Passenger Expenditures Crew Expenditures Expenditures by Cruise Lines THE ECONOMIC CONTRIBUTION GENERATED BY CRUISE TOURISM IN SE ASIA Direct Economic Contribution Indirect and Induced Economic Contribution Economic Contribution COUNTRY ANALYSIS OF DIRECT EXPENDITURES AND ECONOMIC CONTRIBUTION Indonesia Malaysia Singapore Thailand Vietnam Business Research and Economic Advisors Page 1 September 2015

3 Executive Summary The objective of this research project was to estimate the economic contribution of cruises originating in and visiting cruise ports in five Southeast Asia (SE Asia) countries: Indonesia, Malaysia, Singapore, Thailand and Vietnam. The information and data included in this report is presented, in part, to provide an understanding of the channels through which the cruise industry impacts the national economies and the breadth of industries that are impacted by cruise tourism. This study has been funded by CLIA SE Asia and its member lines. The research methodology employed in this study is similar to that used by BREA in cruise tourism impact studies for the United States, Europe, Australia, Canada and the Caribbean. As such, the impacts of cruise tourism measured for the SE Asia region can be compared to those impacts in other cruise markets. Data on cruise calls and passenger arrivals by country were provided by Chart Management Consultants under a separate engagement with CLIA SE Asia. Operating and administrative expenses of the cruise lines in SE Asia were provided by the member lines of CLIA SE Asia and included spending for key expense categories, such as food and beverages, fuel, port fees, administrative salaries, advertising and marketing and others. In addition, surveys of passengers and crew were conducted on board cruise ships following calls at selected ports. The surveys were designed to collect passenger and crew data for onshore spending by category, visit attributes and satisfaction and demographic characteristics. Finally, economic data for the five countries, including consumer prices, employment and wages by industry and the input/output accounts, were obtained from the various statistical agencies in each country and the Asian Development Bank. During 2014 there were a total of 1,672 cruise ship calls at the ports of the five SE Asia countries. Twenty-five percent (25%) of these were turnaround port calls while 75% were transit and overnight port calls. On a country basis, Malaysia had the highest number of transit and total calls, accounting for 35% of transit port calls and 30% of total cruise ship calls in the region. Singapore had the highest volume of turnaround calls, accounting for 63% of all turnaround calls in the region. These port calls generated 3.43 million passenger and crew onshore visit days during Fortyfour percent (44%) of these visit days were generated by turnaround passengers. Transit passengers also accounted for 44% of the total with crew onshore visits accounting for the remaining 12%. As shown in Table ES-1, the key impacts of cruise tourism in SE Asia during 2014 are as follows: The 1,672 cruise ship calls at SE Asia ports generated just over 3.0 million passenger visit days and just over 422,000 crew visit days. Visit days generated by turnaround passengers embarking on their cruises at SE Asia cruise ports totaled 1.51 million days, half of total passenger visit days. Cruise ports in Malaysia and Singapore generated over one million passenger and crew visit days. Singapore was the principal turnaround port generating 1.03 million turnaround passenger visit days, accounting for 68% of total turnaround passenger visit days in the SE Asia Business Research and Economic Advisors Page 2 September 2015

4 region. Malaysia led the region with just over 500,000 transit and overnight visit days which accounted for one-third of transit and overnight passenger visit days throughout SE Asia. Direct expenditures generated by cruise lines and their passengers and crew totaled $1.66 billion across all cruise destinations in the five SE Asia countries. 1 Table ES-1: Cruise Ship Calls and Expenditures SE Asia Region Indonesia Malaysia Singapore Thailand Vietnam Cruise Calls Transit 1, Turnaround Overnight , Passenger and Crew Visit Days Turnaround Passengers 1,512,934 11, ,630 1,031,553 34, Transit/Overnight Passengers 1,498, , ,841 84, , ,720 Crew 422,598 28, , ,883 75,918 78,480 3,433, ,116 1,077,120 1,216, , ,794 Direct Expenditures ($US Million) Turnaround Passengers $ 1, $ 8.54 $ $ $ $ 0.43 Transit/Overnight Passengers $ $ $ $ $ $ Crew $ $ 1.89 $ 8.47 $ 5.64 $ 4.00 $ 2.90 Cruise Lines $ $ 5.94 $ 5.05 $ $ 3.39 $ 3.25 $ 1, $ $ $1, $ $ Excludes passenger international airfares. Excludes the wages and landside and crew employees with permanent residence in SE Asia. Source: Chart Management Consultants and BREA. Cruise passengers spent a total of $1.47 billion, 89% of total direct expenditures, at SE Asia cruise ports. Turnaround passengers spent an estimated $1.27 billion, 87% of total passenger expenditures, with transit and overnight passengers spending $198 million. Turnaround passengers spent an average of $842 per visit day 2 while transit passengers spent an average of $132 per visit day. Three categories, accommodations, food and beverages and shore excursions, accounted for 54% of total passenger onshore expenditures and totaled $791 million. Crew spent $22.9 million at SE Asia cruise ports with an average expenditure of $54 per crew visit. Cruise lines spent $166 million in operating and administrative expenses (excluding wages and salaries of resident cruise line employees), 10% of direct cruise tourism expenditures in SE Asia. 1 All dollar ($) denominated figures are in U.S. dollars unless noted otherwise. 2 Includes pre-paid expenditures primarily for accommodations. Business Research and Economic Advisors Page 3 September 2015

5 Operating expenses accounted for about 70% of cruise line expenditures. The major categories included: vessel maintenance, food and beverages and other supplies and port charges and fees. The $1.66 billion in direct cruise tourism expenditures made a significant contribution to the economies of the SE Asia countries during These impacts are shown in Table ES-2 and are as follows: Table ES-2: Economic Contribution of Cruise Tourism in SE Asia by Country, 2014 Sector Output ($ Mil) Value-Added ($US Mil) Compensation ($ Mil) Employment Indonesia Direct $ 36.9 $ 18.8 $ Indirect and Induced $ 40.9 $ 17.0 $ $ 77.8 $ 35.8 $ Malaysia Direct $ $ $ ,313 Indirect and Induced $ $ $ ,622 $ $ $ ,935 Singapore Direct $ 1,091.7 $ $ ,063 Indirect and Induced $ $ $ ,216 $ 1,969.1 $ 1,279.7 $ ,279 Thailand Direct $ $ 43.1 $ ,512 Indirect and Induced $ $ 48.7 $ $ $ 91.8 $ ,214 Vietnam Direct $ 64.5 $ 29.0 $ Indirect and Induced $ 78.7 $ 21.5 $ $ $ 50.5 $ ,542 SE Asia Region Direct $ 1,661.1 $ $ ,396 Indirect and Induced $ 1,690.8 $ $ ,522 $ 3,351.9 $ 1,777.0 $ ,918 Excludes the wages and landside and crew employees with permanent residence in SE Asia. The direct economic contribution of cruise tourism in SE Asia consisted of the $1.66 billion in direct expenditures, $844 million in value added and 19,396 full- and part-time jobs paying $294 million in employee compensation. Business Research and Economic Advisors Page 4 September 2015

6 Three sectors of the economies of the five SE Asia countries, wholesale and retail trade, lodging and food services and transport, were the primary direct beneficiaries of cruise tourism spending. Combined, these three sectors accounted for approximately 75% of the regional direct impacts with $1.24 billion in direct expenditures, $704 million in value-added and 14,476 full- and part-time jobs paying $223 million in employee compensation. The indirect and induced economic contribution is generated by the spending of the directly impacted businesses and their employees. Thus, these impacts spread throughout the corporate and consumer sectors of the each economy. These impacts totaled $1.69 billion in output, $933 million in value-added and 14,522 full- and part-time jobs paying $346 million in employee compensation. The indirect and induced economic contribution is more diverse than the direct contribution. The top three sectors consisted of financial and business services, manufacturing and transport. These three sectors accounted for approximately 50% of the total indirect and induced impacts with $1.27 billion in output, $616 million in value-added and 6,757 full- and part-time jobs paying $199 million in employee compensation. Combining the direct, indirect and induced contributions, the total economic contribution of cruise tourism in the five SE Asia economies amounted to $3.35 billion in output, $1.78 billion in value-added and 33,918 full- and part-time jobs paying $639 million in employee compensation. On a regional basis, the economic contribution of cruise tourism varied across the five SE Asia economies. These individual country impacts reflected the volume of cruise ship calls, passenger and crew visit days and the variation in the average passenger and crew expenditures across countries. The key regional findings are as follows: Singapore with the principal cruise home port in the region accounted for approximately 60% of the regional total economic contribution with $1.97 billion in output, $1.28 billion in value-added and 21,279 full- and part-time jobs paying $507 million in employee compensation. Malaysia, as the largest transit destination in the region, accounted for about 25% of the regional economic contribution. The economic contribution of Malaysia totaled $926 million in total output, $319 million in value-added and 7,935 full- and part-time jobs paying $73 million in employee compensation. The principal cruise destinations in Malaysia were Penang, Kuala Lumpur and Langkawi. Penang is primarily a turnaround port while the other ports are transit ports. Thailand benefited from $236 million in total output, $92 million in value-added and 2,214 full- and part-time jobs paying $26 million in employee compensation. These impacts accounted for about 7% of the regional contribution. Phuket and Bangkok were the largest destinations in Thailand. Bangkok featured as both a turnaround and transit port while Phuket was a transit port. Vietnam benefited from $143 million in total output, $50 million in value-added and 1,542 full- and part-time jobs paying $17 million in employee compensation. These impacts accounted for about 4% of the regional contribution. The principal cruise destinations in Vietnam were Hanoi, Ho Chi Minh City and Da Nang. All ports in Vietnam featured primarily as transit destinations. Business Research and Economic Advisors Page 5 September 2015

7 Finally, Indonesia benefited from $78 million in total output, $36 million in value-added and 948 full- and part-time jobs paying $16 million in employee compensation. These impacts accounted for about 3% of the regional contribution. The principal cruise destinations in Indonesia were Bali, Komodo, Semarang, Lombok and Jakarta. All ports in Indonesia featured primarily as transit destinations. The economic impacts discussed above are generated by cruise ship calls throughout SE Asia and the associated spending by the cruise lines and their passengers and crew. The CLIA member cruise lines also employ shoreside staff and crew that are residents of the five SE Asia countries. Data collected from the CLIA member lines show that they employ significant numbers of residents either as shoreside staff or crew. The shoreside staff reside and work in the SE Asia countries while the crew work onboard cruise ships around the world. Table ES-3: Contribution of Cruise Tourism in SE Asia by Country and Category, 2014 Category Indonesia Malaysia Singapore Thailand Vietnam SE Asia Employment 948 7,935 21,279 2,214 1,542 33,918 Compensation $ 16.3 $ 73.2 $ $ 25.7 $ 16.6 $ Landside Staff & Crew 15, ,508 Landside Staff & Crew Compensation $ $ 1.1 $ 4.0 $ 2.5 $ 3.3 $ Combined Employment 16,480 8,016 21,348 2,818 1,764 50,426 Combined Compensation $ $ 74.3 $ $ 28.2 $ 19.9 $ As shown in Table ES-3, CLIA member cruise lines reported that they employed a total of 16,508 residents of SE Asia as shoreside staff or crew. Indonesia, alone accounts for 94% of the total with 15,532 employees. Virtually all of these residents of Indonesia work as crew onboard cruise ships. While the employment figures are lower for the other SE Asia countries they too are primarily crew with the exception of Singapore. With Singapore being a source market and a point for cruise originations, about two-thirds of the resident cruise line employees are shoreside staff that reside and work in Singapore. Thus, including these cruise line employees and staff, the total employment impact increases to 50,426 jobs paying $780 million in compensation across the five SE Asia countries. Business Research and Economic Advisors Page 6 September 2015

8 Introduction The objective of this research project was to estimate the economic contribution of cruises originating in and visiting cruise ports in five Southeast Asia (SE Asia) countries: Indonesia, Malaysia, Singapore, Thailand and Vietnam. The information and data included in this report is presented, in part, to provide an understanding of the channels through which the cruise industry impacts the national economies and the breadth of industries that are impacted by cruise tourism. This study has been funded by CLIA SE Asia and its member lines. The research methodology employed in this study is similar to that used by BREA in cruise tourism impact studies for the United States, Europe, Australia, Canada and the Caribbean. As such, the impacts of cruise tourism measured for the SE Asia region can be compared to those impacts in other cruise markets. Data on cruise calls and passenger arrivals by country were provided by Chart Management Consultants under a separate engagement with CLIA SE Asia. Operating and administrative expenses of the cruise lines in SE Asia were provided by the member lines of CLIA SE Asia and included spending for key expense categories, such as food and beverages, fuel, port fees, administrative salaries, advertising and marketing and others. In addition, surveys of passengers and crew were conducted on board cruise ships following calls at selected ports. The surveys were designed to collect passenger and crew data for onshore spending by category, visit attributes and satisfaction and demographic characteristics. Finally, economic data for the five countries, including consumer prices, employment and wages by industry and the input/output accounts, were obtained from the various statistical agencies in each country and the Asian Development Bank. Estimates of passenger and crew visit days are based upon the number of passengers and crew onboard the cruise ships calling at SE Asia cruise ports and the percentage of passengers and crew that actually disembark and visit the port cities. BREA maintains data of the size of crew for all cruise ships which was used to determine the number of crew members that arrived on cruise ship calls. The number of passengers was estimated from the published capacity of each ship multiplied by the average vessel occupancy rates. For this project an average of 100% occupancy was assumed. Based upon the passenger surveys that were conducted as part of this project, it was estimated that between 90% and 95% of transit and overnight passengers disembark on port calls. The average across all surveyed ports was 92%. By definition 100% of turnaround cruise passengers are assumed to visit the base port city, although only a proportion stay overnight either prior to or following their cruise. The percentage of those passengers with overnight stays are based upon the passenger surveys. The survey of embarking passengers indicated that nearly 80% of embarking passengers spent an average of 2.8 nights in the embarkation port prior to and/or following their cruise. Finally, 45% of crew are assumed to visit the transit and turnaround port cities. Again, this average is based upon our global research. Business Research and Economic Advisors Page 7 September 2015

9 Table 1: Underlying Pass2nger and Crew Visitation Assumptions Category Percentages Notes Passenger Onshore Visitation Rates Transit & Overnight Calls 90% - 95% BREA visitation rates based upon passenger surveys at SE Asia portsof-call. Turnaround Calls 100% All passengers ashore by definition. % with Overnight Stays 80% Based upon survey of embarking passengers. Crew Onshore Visitation Rates Transit & Overnight Calls 45% BREA global analysis shows an average of 45% of crew disembark on Turnaround Calls 45% any call. There is no difference between turnaround and transit ports. The State of the SE Asia Cruise Industry in 2014 As shown in Table 2, there were a total of 1,672 cruise ship calls at the ports of the five SE Asia countries during Twenty-five percent (25%) of these were turnaround port calls while 75% were transit and overnight port calls. These port calls generated 3.43 million passenger and crew onshore visit days during Forty-four percent (44%) of these visit days were generated by turnaround passengers. Transit passengers also accounted for 44% of the total with crew onshore visits accounting for the remaining 12%. On a regional basis, cruise calls and passenger and crew visit days were concentrated in Malaysia and Singapore which combined accounted for 50% of cruise calls and 67% of passenger and crew visit days throughout SE Asia. Singapore s cruise port is the principal turnaround port in SE Asia. With 267 turnaround calls and just over one million turnaround passengers, it accounted for 63% of all turnaround calls in Se Asia and 69% of all turnaround passengers. Overall, Singapore accounted for 20% of all SE Asia cruise calls and 35% of all passenger and crew visit days. Table 2: Cruise Ship Calls and Visit Days in SE Asia, 2014 Region Indonesia Malaysia Singapore Thailand Vietnam Cruise Calls Transit 1, Turnaround Overnight , Passenger and Crew Visit Days Turnaround Passengers 1,512,934 11, ,630 1,031,553 34, Transit/Overnight Passengers 1,498, , ,841 84, , ,720 Crew 422,598 28, , ,883 75,918 78,480 3,433, ,116 1,077,120 1,216, , ,794 Source: Chart Management Consultants and BREA. Business Research and Economic Advisors Page 8 September 2015

10 While Singapore was the principal turnaround destination, Malaysia was the largest transit/overnight destination with 373 transit and overnight calls and over 500,000 transit and overnight passenger visit days, 30% of total transit and overnight calls and 34% of all transit and overnight visit days in SE Asia. But, Malaysia was also a major turnaround destination accounting for 31% of the region s turnaround calls and 29% of SE Asia s turnaround passenger visit days. Overall, Malaysia accounted for 30% of all SE Asia cruise calls and 31% of all passenger and crew visit days. The principal cruise destinations in Malaysia were Penang, Kuala Lumpur and Langkawi. Penang is primarily a turnaround port while the other ports are transit ports. The remaining three countries are primarily transit destinations. Of these three, Vietnam had the largest number of cruise calls but Thailand and the largest number of passenger and crew visit days. The principal cruise destinations in Vietnam were Hanoi, Ho Chi Minh City and Da Nang. All ports in Vietnam featured primarily as transit destinations. Vietnam ports accounted for 22% of SE Asia s cruise calls and 14% of its passenger and crew visit days. Phuket and Bangkok were the largest destinations in Thailand. Bangkok featured as both a turnaround and transit port while Phuket was a transit port. Overall, Thailand s ports accounted for 18% of the region s cruise calls and 14% of its passenger and crew visit days. Finally, Indonesia accounted for 11% of SE Asia s cruise calls and 5% of its passenger and crew visit days. The principal cruise destinations in Indonesia were Bali, Komodo, Semarang, Lombok and Jakarta. All ports in Indonesia featured primarily as transit destinations. Direct Expenditures Generated by Cruise Tourism in SE Asia The direct expenditures generated by cruise tourism were analyzed for three segments: i) cruise lines; ii) cruise passengers and iii) crew members. As discussed in the previous section, cruise lines purchased a variety of goods and services in support of their cruises, including food and beverages, hotel supplies, bunker fuels, and utilities while in port. In addition, cruise lines made payments for a variety of services in support of their SE Asian cruise operations, including travel agent commissions, expenditures for advertising and promotion and other professional and business services. Passengers purchased pre- and post-cruise vacations, shore excursions, souvenirs and other retail goods while crew purchased a similar set of goods and services with a heavier concentration on retail goods. As shown in Table 3, the direct spending by cruise lines, passengers and crew in SE Asia totaled $1.66 billion during Passengers spent an estimated $1.47 billion during turnaround, transit and overnight port calls in SE Asia, accounting for 89% of total cruise tourism expenditures. As will be shown later in the report, passenger expenditures for organized tours, accommodations and food and beverages accounted for more than half of the total. Crew spent another $22.9 million, about 1.0% of the total. More than 60% 3 All currency denominated figures are in U.S. dollars when SE Asia totals are included. Local currency data is reported in the individual country reports. Business Research and Economic Advisors Page 9 September 2015

11 of crew spending was for food and beverages and retail goods. Finally, cruise lines spent $166.3 million on cruise operations in SE Asia, 10% of the total. Cruise line expenditures were dominated by operational expenditures for vessel maintenance, food and beverages and other supplies and port charges and fees. These categories alone accounted for about half of the expenditures of cruise lines with SE Asia-based businesses. On a regional basis, the direct expenditures were concentrated in two countries, Singapore and Malaysia, which accounted for 88% of total direct expenditures throughout SE Asia with $1.45 billion in direct spending. Table 3: Direct Cruise Tourism Expenditures in SE Asia by Source and Country, 2014 Country Cruise Calls Passenger and Crew Visit Days Turnaround Passengers Direct Expenditures Millions US$ Transit & Overnight Passengers Crew Cruise Lines Indonesia ,116 $ $ 8.54 $ $ 1.89 $ 5.94 Malaysia 505 1,077,120 $ $ $ $ 8.47 $ 5.05 Singapore 335 1,216,593 $ 1, $ $ $ 5.64 $ Thailand ,047 $ $ $ $ 4.00 $ 3.39 Vietnam ,794 $ $ 0.43 $ $ 3.39 $ 3.25 Grand 1,672 3,433,670 $ 1, $ 1, $ $ $ Passenger Expenditures Estimates of passenger spending by port and expenditure category were derived from surveys of passengers following their visit in port cities. (The results of these surveys are discussed in the following country analysis section.) These expenditure rates (average spending per passenger) were multiplied by the passenger visit days to generate estimates of passenger spending by turnaround and transit and overnight passengers by category and by destination. As shown in Table 4, passengers spent an average of $489 per passenger visit day across all ports in As noted previously, this resulted in $1.47 billion in total expenditures by cruise passengers throughout SE Asia. Expenditures by turnaround passengers totaled $1.27 billion. Expenditures for accommodations, transportation and food and beverages accounted for 67% of the total spending of turnaround passengers. Transportation expenditures include the cost of domestic travel to the port city, as well as local transportation in the port city. Spending by transit and overnight passengers totaled $198.1 million. On average transit and overnight passengers spent $132 per visit day. Thus, transit passengers accounted for 13% of total passenger expenditures and 50% of the total passenger visit days and during Business Research and Economic Advisors Page 10 September 2015

12 Table 4: Cruise Passenger Expenditures in SE Asia by Category, 2014 Passenger Expenditures ($ Mil.) Expenditure Category Turnaround Calls Transit & Overnight Calls Passenger Visit Days 1,512,934 1,498,138 3,011,072 Share Accommodations $ $ % Food & Beverages $ $ 13.2 $ % Shore Excursions $ 72.9 $ 78.9 $ % Entertainment $ 15.0 $ 2.7 $ % Retail Shopping $ $ 59.4 $ % Transportation $ $ 10.9 $ % Other Purchases $ $ 33.0 $ % $ 1,273.8 $ $ 1,471.9 Avg. Spend per Day $ 842 $ 132 $ 489 Does not include international airfares. Crew Expenditures As with the passenger expenditures, data on crew spending by port and expenditure category were derived from the crew surveys. (The results of these surveys are discussed in the following country analysis section.) These expenditure rates were multiplied by the crew visit days to generate estimates of crew spending by destination and category. The 45% of crew onboard the turnaround and transit cruise ship calls that disembarked and visited the destination cities generated 422,958 crew visit days. Table 5: Expenditures by Crew in SE Asia by Category, 2014 Expenditure Category Crew Expenditures (Millions) Share Crew Visit Days = 422,958 Food & Beverages $ % Shore Excursions $ % Entertainment $ % Retail Shopping $ % Transportation $ % Other Purchases $ % $ 22.9 Avg. Spend per Day $54 Business Research and Economic Advisors Page 11 September 2015

13 As shown in Table 5, these visits, in turn, generated $22.9 million in crew spending among all SE Asian cruise ports. Two categories, Food & Beverages and Retail Shopping, accounted for 62% of all crew expenditures at SE Asian cruise ports. Thus, crew spent an average of nearly $54 per visit day across all destinations in Expenditures by Cruise Lines BREA, with the cooperation and assistance of the member cruise lines of the Cruise Lines International Association (CLIA), collected data on cruise line expenditures in SE Asia. These expenditures covered administrative and operational expenses. In addition, employment and compensation data for their SE Asian-based employees was collected. As shown in Table 6, Administrative and Professional Services accounted for 31% of total SE Asian-based expenses by the CLIA member cruise lines and totaled $52 million. These included expenditures for advertising and promotion ($26.5 million) and other administrative expenses ($25.5 million) which include rent, utilities, legal, accounting and other professional consulting services. Operating expenses accounted for nearly 70% of the spending by cruise lines in SE Asia. The top three expense categories, vessel maintenance, travel agent commissions and equipment and supplies accounted for 38% of total expenditures by cruise lines in SE Asia and totaled $63 million. Table 6: Cruise Lines Expenditures by Major Expenses Category in SE Asia, 2014 Category Expenditures (Millions) Share of Administrative & Professional Expenses $ % Advertising & Promotion $ % Other Administrative Expenses $ % Operating Expenses $ % Food & Beverages $ % Travel Agent Commissions $ % Port Charges & Fees $ % Equipment & Supplies $ % Vessel Maintenance $ % Other Operating Expenses $ % $ Vessel maintenance was the largest component of operating expenses totaling $29.2 million and accounting for 18% of total cruise line expenditures. This was followed by $19.2 million in spending for travel agent commissions. Cruise lines spent another $14.6 million for equipment and other supplies used on ships and in administrative offices. Finally, another $13.5 million was spent at SE Asian cruise ports for port charges, including berthing and navigation fees. Business Research and Economic Advisors Page 12 September 2015

14 The cruise line expenditures by expense category that were shown in Table 5 were then converted to an industry basis as shown in Table 7. The $29.2 million in vessel maintenance and $14.6 million in equipment expenses have been allocated to the two manufacturing industries, Shipbuilding & Repair and Specialized Machinery Manufacturing. The $26.3 million allocated to the Wholesale Trade industry primarily consists of expenses for food and beverages. Table 7: Expenditures by Cruise Lines in SE Asia by Industry, 2014 Industry Expenditures ($ Mil.) Share Shipbuilding and Repair $ % Specialized Machinery Manufacturing $ % Wholesale Trade $ % Water & Other Transport $ % Professional, Scientific and Technical Services $ % Travel Agency & Other Administrative Services $ % Other Services $ % $ The $13.5 million in port charges paid by the cruise lines were allocated to the Water & Other Transport industry. The $26.5 million in expenses assigned to Professional, Scientific and Technical Services primarily consist of payments for advertising and promotional services. The $19.2 million in travel agent commissions and $11.5 million in payments to administrative support services were allotted to the Travel Agency & Other Administrative Services industry. Finally, the $25.5 million in expenditures in the Other Services industry is comprised of other administrative expenses. The Economic Contribution Generated by Cruise Tourism in SE Asia As noted previously, the objective of this analysis is to quantify the contribution of the spending generated by cruise tourism to the SE Asia economy during The quantification consists of the measurement of the direct expenditures, as discussed above, and the resulting impacts on output, value-added, employment and compensation. The contribution analysis consists of three elements: i) the direct expenditures, ii) the indirect economic contribution and the iii) the induced economic contribution. The direct expenditures generated by the cruise industry and its passengers and crew that were quantified and discussed in the previous section, are the driving force of the industry s contribution to the national and regional economies of SE Asia. These expenditures generate direct employment and employee compensation in support of providing the goods and services purchased by the cruise lines and their passengers and crew. Business Research and Economic Advisors Page 13 September 2015

15 The indirect contribution results from the subsequent demand for goods and services generated by the directly impacted businesses. 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. The input/output tables for each country and multipliers were used to estimate the indirect contribution. The input/output tables reflects the inter-industry linkages among industries in each of the five countries. As a result, the use of the input/output tables permits the estimation of the additional economic impacts that the direct spending by the cruise industry, its passengers and crew and its suppliers has on all other industries in each economy. Thus, the indirect contribution is concentrated in those sectors that provide intermediate goods to the business sector. The induced contribution is generated by the spending of the employees of the cruise lines and their suppliers. The income of these employees is used to purchase a broad range of consumer goods and services including such goods as autos, food, clothing, furniture, health care and so forth. As a consequence, the induced contribution is concentrated in the final demand for final goods produced for the household sector. Direct Economic Contribution The $1.66 billion in direct cruise tourism expenditures by themselves generated a significant contribution to the SE Asian economy. As shown in Table 8, these direct expenditures generated 19,396 full- and part-time jobs paying $293.5 million in employee compensation. These figures exclude the employees of cruise lines residing in SE Asia and their compensation which will be discussed later in this report. In addition, these workers produced $843.7 million in value-added goods and services. The table also shows the breadth of the economic sectors that are impacted by cruise tourism. The Wholesale and Retail Trade sector benefitted from the highest level of direct expenditures, $872 million. This sector, also had the highest employment and compensation impacts, 12,857 jobs and $185 million in employee compensation. This was followed by the Transport sector, which includes the cruise ports, passenger land and domestic air transportation and tour operators. The $373 million in direct expenditures generated 1,619 full- and part-time jobs paying $38 million in employee compensation. The Other Services & Government sector, which includes lodging, food and beverage services and other personal services, benefitted from $225 million in direct expenditures. As a result, 4,045 jobs were generated paying $43 million in compensation. Business Research and Economic Advisors Page 14 September 2015

16 The Financial and Business Services sector includes a broad range of services including advertising agencies, travel agents, lawyers and consultants among others. This sector benefitted from $131 million in direct expenditures which resulted in the employment of 607 employees. These workers received nearly $20 million in compensation. Table 8: Direct Contribution of Cruise Tourism in SE Asia by Sector, 2014 Sector Expenditures ($ Mil) Value-Added ($ Mil) Compensation ($ Mil) Employment Manufacturing $ 59.8 $ 29.8 $ Wholesale & Retail Trade $ $ $ ,857 Transport $ $ $ ,619 Financial & Business Services $ $ 38.1 $ Other Services & Government $ $ 71.3 $ ,045 $ 1,661.1 $ $ ,396 Excludes the wages and landside and crew employees with permanent residence in SE Asia. Includes banking, insurance and business professional services. Includes lodging, food and beverage services and other personal services. Finally, the Manufacturing sector received nearly $60 million in direct expenditures. These were primarily expenditures for vessel maintenance and repair and equipment used on ships and in administrative offices. These expenditures generated 268 full- and part-time jobs and $7.5 million in employee compensation. Indirect and Induced Economic Contribution As discussed previously, the indirect and induced contributions are generated by the spending of the directly impacted businesses and their employees. As a consequence, these impacts spread throughout the regional and country economies. As shown in Table 9, the indirect and induced contributions are generated by activity in all sectors of the SE Asia economy. Thus, the $1.66 billion in direct cruise tourism expenditures generated an additional $1.69 billion in output, $933 million in value-added, $346 million in employee compensation and 14,522 full- and part-time jobs. Approximately 75% of these impacts were generated by the indirect spending of the directly impacted businesses and 25% by the induced household spending of the directly impacted employees. While all sectors of the economy participated in the indirect and induced contribution, three sectors, financial and business services, transport and manufacturing, accounted for approximately 70% of the overall SE Asia indirect and induced impacts. The financial and business services sector contributed the most in terms of value-added and compensation. These impacts are primarily generated by indirect business pending for banking, insurance, internet and telecommunications services. The wholesale and retail trade sector supplied the most jobs and second highest level of employee compensation. Again, these impacts were driven by a combination of business and consumer spending. Finally, the indirect and induced contribution of the manufacturing sector, which had the highest Business Research and Economic Advisors Page 15 September 2015

17 output impact, was generated by spending by both businesses and household spending. The spending of the directly impacted businesses mainly impacted the electrical and non-electrical machinery industries while the spending by workers mainly impacted the nondurable goods industries, such as food processing and apparel. Table 9: Indirect and Induced Economic Contribution of Cruise Tourism in SE Asia by Sector, 2014 Sector Output ($ Mil) Value-Added ($ Mil) Compensation ($ Mil) Employment Agriculture & Mining $ $ $ Manufacturing $ $ $ ,357 Utilities & Construction $ 24.7 $ 9.4 $ Wholesale & Retail Trade $ $ $ ,634 Transport $ $ $ ,221 Financial & Business Services $ $ $ ,179 Personal Services & Government $ $ 55.5 $ ,827 $ 1,690.9 $ $ ,522 Economic Contribution Combining the direct, indirect and induced contributions, cruise tourism generated $3.35 billion in total output of goods and services in the SE Asia region during As a result of the production of this output, 33,918 full- and part-time jobs were required. This employment, in turn, generated $1.78 billion in value-added. The workers who were employed in these jobs were paid $639 million in compensation (see Table 10). Table 10: Economic Contribution of Cruise Tourism in SE Asia by Sector, 2014 Sector Output ($ Mil) Value-Added ($ Mil) Compensation ($ Mil) Employment Agriculture & Mining $ $ $ Manufacturing $ $ $ ,625 Utilities & Construction $ 24.7 $ 9.4 $ Wholesale & Retail Trade $ 1,016.3 $ $ ,491 Transport $ $ $ ,840 Financial & Business Services $ $ $ ,786 Personal Services & Government $ $ $ ,872 $ 3,351.9 $ 1,777.0 $ ,918 Excludes the wages and landside and crew employees with permanent residence in SE Asia. The direct contribution accounted for half of the total contribution. As a result, the three largest sectors, Wholesale & Retail Trade, Transport and Other Services & Government, accounted for 88% of Business Research and Economic Advisors Page 16 September 2015

18 the direct contribution and 57% of the total output contribution of cruise tourism to the SE Asia economy in Combined, these three sectors generated $1.47 billion in output, $776 million in value-added, 18,521 full- and part-time jobs and $266 million in employee compensation. The Wholesale & Retail Trade sector was the most significantly impacted sector with $1.02 billion in output, $651 million in value added, 17,491 jobs and $284 million in employee compensation. The impacts in wholesale trade spread beyond the food and equipment distributors to distributors of other consumer and business goods. This sector includes a broad range of personal and business services that are impacted by both consumer and business spending. This was followed by the Financial and Business Services sector which benefitted from $660 million in total output and $357 million in value added. The impacts in this sector spread throughout this sector to include real estate, banking and information services. The total economic contribution included 3,786 full- and part-time jobs and $138 million in employee compensation. The Transport sector benefitted from the fourth highest level of total output and third highest level of value added, $569 and $317 million respectively. As a result, 2,840 full- and part-time jobs were generated among the cruise ports and the other providers of transportation services. These workers received $73 million in compensation. The Manufacturing sector produced $605 million in total output and $214 million of value added as a result of the total impacts of cruise tourism. Virtually every manufacturing industry was impacted to some degree. This output generated 2,625 jobs and $53 million in employee compensation. The remaining sectors, Agriculture and Mining, Utilities and Construction and Other Services & Government, benefitted from a combined impact of $502 million in output and $238 million in value added. This production required 7,176 full- and part-time jobs paying $91 million in employee compensation. Direct Cruise Line Employment The economic impacts discussed above are generated by cruise ship calls throughout SE Asia and the associated spending by the cruise lines and their passengers and crew. The CLIA member cruise lines also employ shoreside staff and crew that are residents of the five SE Asia countries. Data collected from the CLIA member lines show that they employ significant numbers of residents either as shoreside staff or crew. The shoreside staff reside and work in the SE Asia countries while the crew work onboard cruise ships around the world. As shown in Table 11, CLIA member cruise lines reported that they employed a total of 16,508 residents of SE Asia as shoreside staff or crew. More than 99% of these employees work as crew onboard cruise ships and of these 94% are Indonesian nationals. The vast majority of the landside staff are Business Research and Economic Advisors Page 17 September 2015

19 located in Singapore. Thus, including these cruise line employees and staff, the total employment impact increases to 50,426 jobs paying $780 million in compensation across the five SE Asia countries. Table 11: Employment and Compensation with Direct Cruise Line Employment in SE Asia, 2014 Category SE Asia Employment 33,918 Compensation $ Landside Staff & Crew 16,508 Landside Staff & Crew Compensation $ Combined Employment 50,426 Combined Compensation $ Business Research and Economic Advisors Page 18 September 2015

20 Country Analysis of Direct Expenditures and Economic Contribution The SE Asia direct expenditures and economic contribution were estimated for five countries in the region with two countries, Singapore and Malaysia, accounting for 67% of the passenger and crew visit days but more than 85% of the direct expenditures and total economic contribution. The following sections discuss the attributes of cruise tourism in each of the five countries. Indonesia As indicated in Table 12, the ports of Indonesia were visited primarily as transit calls. A total of 176 cruise ship calls were made at 23 Indonesian cruise ports during Five Indonesian destinations, Benoa/Bali, Komodo, Semarang, Lembar/Lombok and Jakarta, accounted for 73% of the total. Of the 176 calls, transit and overnight calls totaled 164 and accounted for 93% of the calls. These calls generated 180,116 passenger and crew visit days. Passenger transit and overnight visit days totaled 139,685 days accounting for 78% of the total. The 11,763 turnaround passenger visit days were located in Benoa/Bali. Crew onboard visiting ships generated an estimated 28,668 onshore visit days, 16% of total passenger and crew visit days. Table 12: Indonesia Cruise Ship Calls and Port Visit Days, 2014 Indonesia Transit 139 Turnaround 12 Overnight Turnaround Passengers 11,763 Transit/Overnight Passengers 139,685 Crew 28, ,116 Passenger and crew surveys were conducted onboard selected cruise ships following their calls in Benoa and Komodo. Based upon these surveys and as shown in Table 13, transit and overnight passengers spent an average of Rp1.89 million during their visit at the destination ports while crew spent an average of nearly Rp988,000 during their onshore visit. Approximately two-thirds of transit and overnight passenger expenditures were accounted for by spending for shore excursions and retail shopping. Finally, 75% of crew expenditures were spent for food and beverages, retail shopping and local transit. Business Research and Economic Advisors Page 19 September 2015

21 Table 13: Average Passenger and Crew Spending in Indonesia Category Transit & Overnight Passengers Crew USD IDR (000s) USD IDR (000s) Food & Beverages $ Rp $ Rp Shore Excursions $ Rp $ 3.24 Rp41.78 Entertainment $ 0.88 Rp Retail Shopping $ Rp $ Rp Local Transit $ Rp $ Rp Other/Unspecified $ Rp $ Rp $ Rp1, $76.60 Rp The 176 cruise calls generated Rp475 trillion (US$36.9 million) in direct cruise tourism expenditures in Indonesia, approximately 3% of total direct expenditures throughout SE Asia. As shown in Table 14, expenditures by transit and overnight passengers reached Rp264 trillion, 56% of total direct expenditures in the country and 10% of total expenditures of transit and overnight passengers throughout SE Asia. Turnaround passengers added another Rp110 trillion and crew more than Rp24 trillion. 4 Thus, passenger and crew onshore spending in Indonesia accounted for 84% of total direct expenditures in the country. Cruise lines added another Rp77 trillion in expenditures for port charges, equipment and other supplies, 16% of total direct expenditures. Table 14: Direct Cruise Tourism Expenditures in Indonesia, 2014 Cruise Calls Passenger and Crew Visit Days Turnaround Passengers Direct Expenditures Transit & Overnight Passengers Crew Cruise Lines Millions USD ,116 $ $ 8.54 $ $ 1.89 $ 5.94 Trillions IDR Rp Rp Rp Rp24.37 Rp76.54 As indicated in Table 15, the Rp76.6 trillion in direct expenditures by cruise lines were concentrated in the manufacturing and financial and business services sectors, which totaled a combined Rp57.2 trillion and accounted for 75% of total spending by the cruise lines in Indonesia. These expenditures primarily consisted of spending for food and beverages and supplies used on cruise ships and travel agent and tour commissions. This was followed by Rp14 trillion in spending for transport services, 4 Surveys of turnaround passengers were only conducted in Singapore. The results of these surveys are shown in the Singapore section of this report. The Singapore survey data were adjusted to reflect differences in currencies and purchasing power. Business Research and Economic Advisors Page 20 September 2015

22 primarily port fees. Cruise lines also spent a combined Rp5.4 trillion in the wholesale trade and other services sector, primarily for supplies and miscellaneous administrative expenses. Table 15: Cruise Line Expenditures in Indonesia by Sector, 2014 Manufacturing Wholesale Trade Transport Financial & Business Services Other Services and Government Millions USD $5.94 $2.60 $0.14 $1.08 $1.83 $0.28 Trillions IDR Rp76.59 Rp33.55 Rp1.84 Rp13.99 Rp23.63 Rp3.57 The Rp475 trillion in direct cruise tourism expenditures by themselves generated a significant contribution to the Indonesian economy. As shown in Table 16, these direct expenditures generated 590 full- and part-time jobs paying Rp131 trillion in employee compensation. These figures exclude the employees of cruise lines residing in Indonesia and their compensation which will be discussed below. In addition, these workers produced Rp242 trillion in value-added of goods and services. Combined, the wholesale and retail trade and transport sectors accounted for approximately two-thirds of the direct economic contribution of cruise tourism in Indonesia. The impacts in these sectors were primarily driven by passenger and crew onshore spending for food and beverages and retail goods and port charges paid by cruise lines. The other services and government sector added another 25% with spending concentrated in travel agent commissions and shore excursions. Table 16: Direct Economic Contribution of Cruise Tourism in Indonesia by Sector, 2014 Sector Manufacturing Wholesale & Retail Trade Transport Financial & Business Services Other Services & Government Output (IDR Tril) Rp Rp33.55 Rp Rp Rp3.57 Rp95.51 Value-Added (IDR Tril) Rp Rp11.88 Rp94.63 Rp82.99 Rp2.26 Rp50.10 Compensation (IDR Tril) Rp Rp5.28 Rp36.29 Rp51.68 Rp0.67 Rp37.54 Employment Including the indirect and induced impacts, the Rp475 trillion in direct cruise tourism expenditures in Indonesia was responsible for the generation of Rp1,003 trillion (US$77.8 million) in total output, Rp461 trillion in value-added and 948 full- and part-time jobs paying Rp210 trillion in employee compensation in the country (see Table 17). These economic impacts were spread throughout the country s economy with the wholesale and retail trade and transport sectors with each accounting for approximately 20% of the total output contribution. Combined, these two sectors accounted for nearly 50% of the employment contribution. Overall, the economy of Indonesia accounted for about 2.5% of cruise tourism s economic impact throughout SE Asia. Business Research and Economic Advisors Page 21 September 2015