Luis Ajamil President and CEO Bermello Ajamil & Partners, Inc.

Transcription

1 Luis Ajamil President and CEO Bermello Ajamil & Partners, Inc.

2 October 2014

3 CRUISE SHIPS IN MICRONESIA CHALLENGES AND OPPORTUNITIES LUIS AJAMIL BERMELLO, AJAMIL & PARTNERS OCTOBER 2014

4 Cruise experience

5 Cruise line experience

6 1 THE CRUISE INDUSTRY

7 Worldwide expansion

8 Passengers ('000) Cruise passenger growth 25,000 20,000 15,000 10,000 5,000 0 Asia Europe North America

9 Deployment Alaska 4 5 Mexico West 2 1 Mediterranean Caribbean N. Europe 3

10 Magic Kingdom Disneyland Global cruiseindustry Tokyo Disneyland EuroDisney Disney Sea EPCOT Disneys Hollywood Studios Disney Animal Kingdom Universal Studios Everland Disney California Adventure Seaworld Universal Studios Ocean Park Nagashima Island Spa Islands of Adventure Hong Kong Disneyland Yokohama Hakkejimma Universal Studios Lotte World Europa Park SeaWorld Busch Gardens De Efteling Tivoli Gardens Vegas Top 25 worldwide attractions 40,000,000 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0

11 Strategic industry growth factors FACTORS PASSENGERS SHIPS SHIP YARDS CAPITAL / PROFITABILITY MANAGEMENT CAPACITY CURRENCY FLUCTUATIONS FUEL ITINERARIES WARM WEATHER PORTS COMPETITION CONSTRAINT >+40 M (NA only annual) YES SHIPS/YR NO NO NO YES (NO) EXPANSION EXPANSION FEW COMPANIES

12 Cruise industry companies OTH, 14% RCCL, 24% CARN, 48% NCL, 7% [CATEGORY NAME], [VALUE]

13 Cruise line business model Control supply and demand through new-builds & deployments; develop cruise itineraries that are easy and profitable sell ticket price is only a portion of the overall revenue possibilities Create revenue opportunities on-board & shore-side; and, shore excursions destination-oriented deployments On-board retail options bar and casino revenues On-board services: spa, classes, experiences Control the expense side. balance cost of a destination against the value it produces

14 Success factors New products that generate sustained interest in cruising; New, exciting vessels, diverse on-board products and services New regions, itineraries and on-shore product offerings Converting land-based resort guests into cruise passengers; High level of passenger satisfaction; leading to repeat clientele and lower conversion costs Adapt quickly to changing market conditions; and, Limited competition, reduced operational costs, and diversified revenues.

15 Number of ships Cabin berths Capacities 14 35, , , , , , , Vessels Passengers

16 Average orders over the 10 year cycle

17 Passengers Forecast world cruise growth 60,000,000 55,000,000 50,000,000 45,000,000 40,000,000 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 Low Medium High

18 Forecasts The forecasts are based on current ship building infrastructure Carnival s Corporation announcement of exploring ship building in China could be a game changer of accelerating growth

19 2 CURRENT SITUATION

20 Guam cruise passenger throughput 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0

21 Guam vessel capacity 1,800 1,600 1,400 1,200 1,

22 Current situation Attracting vessels on round the world, repositioning or Pacific cruises No major recurring patterns in region No nearby source markets of passengers No regular homeport operations Luxury and premium brands Explorer consumer Japanese, NA and limited European passengers

23 Asia Pacific past trends (2013) North American and European operators have been concentrating on building markets close to home Voyager of the Seas deployment will mark the beginning of new regional competition. Industry supply over the last two years has tightened Once cruise lines begin to place new orders and expand capacity, markets such as the Asian-Pacific region will have more appeal While there is much interest in consumers in the Asian- Pacific market, few lines understand how to tap into this growing travel and leisure base Huge size of the overall market and diverse consumer groups

24 WHAT A DIFFERENCE A YEAR MAKES THINGS ARE CHANGING

25 A start to the local cruise industry GLOBAL Starts with an increase in global capacity Commitment to Asia - Pacific Developing the source market ASIA/ PACIFIC SOURCE MARKET MICRONESIA Visiting Guam Guam as a base for Micronesia GUAM

26 Today Asia Pacific is the talk of the industry Other markets are already beginning to feel the commitment to this region Royal Caribbean is putting its brand new Quantum of the Seas in Asia Carnival is relocating its COO to Asia and exploring local ship building Australia has been the most successful growth market for the industry More is yet to come

27 The potential cruise market expansion is tremendous

28

29 The Caribbean Galveston UNITED STATES New Orleans North MEXICO Mexico City Acapulco North Pacific Ocean Vera Cruz WESTERN Gulf of Mexico CARIBBEAN Cancun Puerto Morelos Playa del Carmen Belize City Cozumel BELIZE Turneffe Is. Roatan Guanaja Is. Puerto Barrios Puerto Cortes HONDURAS GUATEMALA EL SALVADOR Puerto Caldera COSTA RICA Port Everglades Key West Georgetown NICARAGUA Limó n PANAMA Tampa Miami Havana CUBA GRAND CAYMAN Montego Bay JAMAICA Freeport BAHAMAS Nassau Ocho Rios Kingston LOWER WESTERN CARIBBEAN Caribbean Sea Providencia Is. San Andres BAHAMAS Port Antonio Cap Haitien HAITI TRANSCANAL San Blas Is. Cristobal Balboa Panama Panama Canal Cartagena Medellin Bogotá Atlantic Ocean EASTERN CARIBBEAN Puerto Plata Port-au-Prince DOMINICAN REPUBLIC ARUBA Santo Domingo Willemstad PUERTO RICO San Juan ST. THOMAS (U.S. VIRGIN IS.) ST. CROIX NEVIS ST. CHRISTOPHER BONAIRE LOWER CURACAO SOUTHERN Margarita Is. Port-of-Spain CARIBBEAN TRINIDAD Caracas & TOBAGO VENEZUELA ST. JOHNS (U.S. VIRGIN IS.) ANGUILLA ST. MAARTIN BARBUDA ANTIGUA ST. VINCENT GUADELOUPE DOMINICA MARTINIQUE Fort-de-France ST. LUCIA GRENADA Georgetown BARBADOS GUYANA Bridgetown Cali COLOMBIA BRAZIL

30 Itineraries are key for recurring patterns Lines are focused on cruise itineraries easy profitable sell to cruise consumers Diversity of destinations Manageable distances to reduce speeds and fuel consumption Creation of cruise itineraries that fit within consumer vacation patterns mini-breaks week long cruises

31 Micronesia Diversity of history, culture and attractions Market Segmentation and expanded itinerary opportunities Good airline accessibility Available port facilities and services Shore excursions, business opportunities

32 Interisland cooperation Port of call Port of call Port of call homeport Port of call Ports should offer complimentary experiences Variety Active Passive Cultural Eco-tourism Shopping Multi national Marquee value

33 Cruise line owned destinations

34 3 ASIA-PACIFIC MARKET

35 Passenger Bed Nights Asia cruise bed nights SARS 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11

36 Passengers Projected Asia growth 5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, , ,306,903 3,768,540 3,085,500 Historical Low (9%) Mid (10.5%) High (12%)

37 Major Factors Natural potential for development. Timing of cruise line expansion and strategy. Interline competition. Seasonality (by month). Daily fluctuations.

38 Seasonality S E A S O N A L Y E A R R O U N D S E A S O N A L

39 Deployment patterns are beginning to emerge Summer in the North Beijing market Japan Korea Winter in the south Singapore base Others are coming

40 4 CASE STUDY THE ATLANTIC

41 The Atlantic Corridor

42 The Islands

43 The Classics 14 nights UK/UK Mar nights UK/UK Nov 2014

44 The Classics - extension 24 nights Nov nights Mar nights Mar 2014

45 Inter Islands and variations 7 night Mar night Nov night Nov night Mar night Mar 2014

46 Island hoping 15 nights 8 days Nov nights

47 West Med / Atlantic Islands 16 days June nights Dec 2015 Genoa-La Palma-Genoa

48 Transatlantic variations 42 nights London/London Feb nights FT. Lauderdale / Barcelona Mar 2014

49 West African Cruises 32 days Cape Town / Marrakesh Segmented Accra 34 nights Rome / Cape Town October nights Nov 2014

50 Around Africa 83 days UK / UK Sep 2014

51 5 SHIPS

52 Average passengers per ship by year of construction 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000

53 Average Length (feet) Average ship length by year of construction

54 RCI fleet

55

56 Past ship drivers physical The width of the panama Canal The air-draft of the Verrazano Narrows and Golden Gate bridges The draft of smaller harbors (for nontransatlantic)

57 Future drivers market and economies More passenger amenities Better sales yields Outside cabins larger perimeter Balconies Grander atriums Logistics Distribution of passengers Boarding and disembarking Better economics Crew to passenger ratios Power / fuel consumption

58 6 MANAGING GROWTH

59

60 Managing the Destination This is the area where planning is essential Now is the time It is not just about a pier or dock or terminal. It is about the destination as a whole Meeting the needs and expectations of the visitor. Competing for economic and social impacts. Providing value for money. Managing resources today and for the future. Not just stores, shops and restaurants Historic and natural resources, roadways, ports, parking areas, environment, etc.

61 Passenger experience Providing an outstanding guest experience Cruise lines are challenged to keep the cruise experience exceptional Must deliver a variety of products & services Must deliver a destination within a short period no second chance! A negative experience can tarnish a passenger s entire cruise vacation

62 The Paradox the more charming and attractive the destination the more desirable

63 The Life Cycle of the Urban/Port Waterfront Settlement A Port is established City detaches Declines Rediscovery

64 Ships are growing faster than waterfronts can be transformed

65 Cruise ships enter the mix Bringing an urban use to a older waterfront The perfect blend between people and shipping But cruise ships are also bringing certain issues that need to be planned Congestion Security Access

66 San Francisco

67 San Francisco

68 The San Francisco Embarcadero The new San Francisco Terminal

69 San Francisco s newest terminal first Totally integrated into the waterfront Multiple uses Public park as a waiting area Public access to the wharf Green design Recycled water system

70 San Francisco

71 San Francisco Pier 27

72 San Francisco Pier 27

73 Disappearing fence

74 Recycles its own water

75 Dublin

76 Fully integrating the port into the City Will work with and without the ships Integrating the riverfront Facilitating traffic

77 New Dublin Times Square

78 An active riverfront open to the public when ships are out

79 7 ECONOMICS

80 Economics Economic impact is the key Plan to maximize return Port investment is difficult Passenger spending and logistics

81 North American port revenues (US$/pax) $25.00 $20.00 $15.00 $10.00 $5.00 $0.00

82 Ketchikan AK Average US Virgin Islands Juneau Skagway St Maarten Prince Rupert Cozumel Puerto Rico Nanaimo St Kitts and Nevis Cartagena BC Average Jamaica Vancouver Cayman Islands Belize Acapulco Aruba Victoria Bahamas Curacao Cabo San Lucas Antigua / Barbuda Honduras Barbados St Lucia Costa Rica Turks and Caicos Total expenditure per passenger $ $ $ $ $ $50.00 $0.00

83 Newest terminals in the newest markets Singapore Singapore +US$400 m Hong Kong Hong Kong +US$350 m

84 Newest terminals in the newest markets Singapore Hong Kong

85 8 POLICY

86 Assembling the issues and meeting the challenges Transportation Marketing Venues Funding Access Cruise Operations Product Development

87 Framework Policy Ship Supply Product Demand Product Innovation Marketing Partner Cruise Industry Building The Future Support Infrastructure Transportation Community Planning Economic Impact Environment Private Sector Experience Development Job Creation Image Projection

88 Comprehensive policy framework Physical strategy Cruise facilities evaluation and capacity plan Site strategies Public and private uses, ISPS security Tourism development Building for land based and cruise tourism Regulatory framework simplicity covering berthing policy, environmental, etc. Financial strategy Setting tariffs Identifying issues requiring funding Lead by public or private sector Hard port infrastructure, operations, upland development

89 Comprehensive policy framework Marketing strategy Cover consumer and cruise line outreach Make cruise easy to sell Use existing tourism lines of communication to expand message Regional cooperation name brand recognition Community strategy Focus on cooperation address low hanging fruit (traffic patterns, GTA use, separation of facilities and community, education Vessel management - Caps on pax, hours, etc.

90 Destination strategies for regions and ports Organize at a regional level; Combine resources to effect consumer demand Educate and motivate the travel industry to sell the region Increase cruise line business acumen; and, Communicate on how the region can increase profitability Control expense side issues taxes, fees & regulatory costs Increase flexibility. Change as market opportunities and / or challenges warrant Know your client today and who they will be tomorrow

91 9 CLOSING

92 Conclusions The future is bright it will take a little time Use that time wisely to plan 2005 till today marks a major expansion in Australia / South Pacific region 2015 will mark a major milestone for cruise line deployment and beginning of focus on the Pacific RCCL deployment of the Quantum of the Seas Carnival Corporate commitment and ship building Strategies are broad to reach local source markets China Japan Korea This will open the entire Pacific region for growth

93 Conclusions Growth 1 Guam will grow for traffic growth in the region Growth 2 As the industry develops a Micronesia visitation product will evolve Growth 3 A Guam based market will evolve Guam As a port-of call As a homeport

94 October 2014