Sunday, June 26, 2005

Cruise Ship Quality of Life Survey

This is an extract from the Cruise Ship Quality of Life Survey, that portion of it devoted to a comprehensive analysis done by the city's consultant for this project., Thomas J. Murray & Associates, Inc., a Gloucester Point, VA consultancy apparently specializing in the study of recreational matters in marine environments. The complete survey was managed by the City's Port Operations Department. It includes a variety of materials other than the consultants' report but the Murray & Associates analysis comprises the bulk of the 352 pages of the report, from page 29 through page 344.

The complete report (for those who might be interested) can be downloaded as a PDF file from the web site of the Key West Citizen.

Here is the extract:

EXECUTIVE SUMMARY

Introduction

Thomas J. Murray & Associates, Inc. was engaged by The City of Key West Naval Properties Local Redevelopment Authority (LRA) to conduct this assessment: "The Impacts of the Cruise Ship Industry on the Quality of Life in Key West" (Study). This report is to satisfy the requirements of this Study to analyze and make recommendations regarding the environmental and socio-economic impacts of existing and increased cruise ship activity.

The report follows the seven tasks associated with the City of Key West's Request for Proposals for the Study. Each of the seven individual sections contains lists of references for that section. The overall findings are summarized here by individual task.

Recommendations made as part of individual tasks are summarized here and contained in there [sic] entirety in the Study.

Economic Impact

The economic base of Key West has shifted increasingly toward tourism. Since 1970, the tourism cluster consisting of retail trade, eating and drinking establishments, lodging, and entertainment has increased from 25.7 to 38.7 percent of employment. The local share of employment in the tourism sector is now twice the national average of 19.6 percent. Government activity over the same time period declined from 18.5 to 10.0 percent of employment.

While the city's traditional tourism sectors have continued to grow, in recent years there has been a decided shift from the traditional tourism base to greater cruise ship tourism activity. Since 1990, the inflation adjusted bed tax revenues are up by 59 percent, and deplanements are up by 51 percent. The more dramatic increase over that same time period has been in terms of cruise ship activity where passenger counts have increased by 745 percent from 132,840 to 1,122,100.

Cruise ship passengers surveyed during 2004 and 2005 spent an average of $27.41 per capita while in Key West. The largest expenditures were for clothing ($6.05), souvenirs ($5.88), and jewelry, china, perfume ($3.99). Based on these expenditure patterns, it is estimated that a total of $23.7 million dollars was spent by cruise ship passengers during the 2003-04 tourist
season.

Crew members shopping locally averaged an estimated $65.80 in purchases, resulting in an estimated $13.1 million in crew member expenditures in Key West during the same time period. Cruise ship lines expended $14 million in local purchases.

Collectively, passenger and crew expenditures and cruise ship purchases resulted in a direct economic impact from cruise ship activity of $50.9 million during the 2003-04 tourist season. The largest impacts were for clothing and apparel (20.3 percent), other retail purchases (20.8 percent) and docking and disembarkation fees (19.9 percent). Passenger expenditures account for close to half of those direct expenditures (46.6 percent) followed by ship expenditures (27.6 percent) and crew expenditures (25.8 percent).

Based on surveys of non-cruise ship tourists, estimated expenditures in the 2003-2004 tourist season amounted to $659.3 million. The largest expenditure categories were lodging at $299.4 million followed by restaurants/eating establishments at $163.0 million. Together lodging and eating establishments account for 70.1 percent of total expenditures with drinking establishments accounting for another 10.4 percent of expenditures.

Combining cruise ship and non-cruise ship activity, tourism accounts for $710.2 million dollars in annual direct expenditures in the local economy (Table S1). Those expenditures represent 46.0 percent of total sales in Key West, and a direct employment impact of 8,060 jobs. Cruise ship activity accounts for an estimated $50.8 million in direct expenditures (7.2 percent of total tourism expenditures) and accounts for direct employment of 577 full time equivalent jobs.

TABLE S.1: TOTAL ECONOMIC IMPACTS OF TOURISM AND CRUISE SHIP EXPENDITURES KEY WEST 2004
Direct Indirect Total
All tourism
Output $710,206,629 $423,388,768 $1,133,595,397
Employment 8,060 4,134 12,194

Cruise Ship Tourism
Output $50,859,291 $30,319,701 $81,178,992
Employment 577 296 873

Including secondary impacts of tourism activity, it is estimated that tourism as a whole accounts for $1.13 billion dollars in direct and indirect impacts and for 12,194 jobs. Cruise ship tourism's share of that total amounts to $81 million in direct and indirect expenditures and 873 jobs.

Fiscal Impact

The city of Key West generated $31,288,802 in revenue in the last fiscal year (FY 2003-04). Based on relative shares of commercial activity as well as direct payments, it is estimated that tourism generates an estimated $15,072,553 million per year in revenues or 48.2 percent of the city budget. Cruise ship tourism accounts for $5,072,746 million or 16.2 percent of total city revenues. Cruise ship payments from disembarkation and dockage fees and utilities were $4,367,881 million.

Tourism related expenditures were broken down based on level of effort as provided by city department heads. Effort was apportioned based on property and non-property related activity, and within each sub-area into residential and tourism shares. It is estimated that tourism activity accounts for $14,803,116 million or 46.0 percent of city expenditures. Cruise ship tourism accounts for $3,245,936 of that total, accounting for 10.1 percent of city expenditures.

On balance, revenues exceed expenditures for cruise ship activity by $1.8 million. That represents a ratio of 1.56. For tourism as a whole, the fiscal balance is down to $344,210. The adjusted tourism column includes the 2.5 percent of bed tax revenues that are returned to the city. With that adjustment, the fiscal balance increases to $7.0 million or a fiscal balance ratio of 1.40.

What has gotten all the attention so far is the $27.41 expenditure figure for cruise ship tourists. When we were here before, in 1999, I remember that number being tossed around as $45 per passenger.

I'll be spending more time with the report, and will try to put some of its findings into the context of The Real Key West as I find it appropriate.

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