DEMYSTIFYING CRUISE PORT DEVELOPMENT IN SOUTHEAST ASIA · 1970 1980 1990 2000 2005 2010 2018 2020p...

DEMYSTIFYING CRUISE PORT DEVELOPMENT IN SOUTHEAST ASIA

Presented by NV Terminals Sdn Bhd for IAPH Regional Meeting 2019

CRUISE INDUSTRY GROWTH TO CONTINUE

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10

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40

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1970 1980 1990 2000 2005 2010 2018 2020p 2025p 2030p

Global Cruise Passenger Volume (Million)

NV TERMINALS - DEMYSTIFYING CRUISE PORT DEVELOPMENT IN SOUTHEAST ASIA 2

Sources: Cruise Industry News with projections from industry

ORDERBOOKS SHOW TRENDS FOR MEGA CRUISE SHIPSPreviously mega-cruise ships were limited to a few players with only one player for 5000k pax Oasis-class. These ships were made for NA/EU market.

Now, multiple lines building up towards ships with 4.5k – 5.4k pax (160k – 230k GT) and many designated for Asia.

Are Asian ports ready for size of ships and industry growth ?


Source: Cruise Industry News

CRUISE NUMBERS

40%

15%

11%

6%

5%

4.4%

4%

2018 Global Cruise Deployment by Region

CaribbeanAsia & ChinaCentral & Western Med.Northern EuropeSouth PacNA West CoastEastern MedAlaskaSouth America

Source: CLIA Research Reports

NV TERMINALS - DEMYSTIFYING CRUISE PORT DEVELOPMENT IN SOUTHEAST ASIA 421 August 2019

DEPLOYMENT BY REGION

Sources: Cruise Industry News and Moffatt & Nichol, 2019

Cruise Industry Capacity Placement by Primary Deployment Region, 2018


OVERVIEW OF CRUISE FACILITIES IN SOUTHEAST ASIA


Cruise DestinationsEstablished Mass Market Call

Established Niche/Minor Call

Dedicated Facilities

Cargo Terminal

Tender

Established routes

Note the gaps in port-of-calls, let alone dedicated facilities, as you head to eastern region.

21 August 2019

THE STRUGGLE TO MEET DEMAND FOR MORE DESTINATIONS

• Facility cost and sources of finance a significant obstacle.• Not enough understanding of the industry.• Increased need for collaborative working groups to

address destination wide issues, including destination carrying capacity.

Ports & Destinations responding, however…

• Lines often work independently and focus on destinations considered most strategic.

• Not always ready with assurances.• Lines now learning to be more proactive in comprehensive

destination planning.

Cruise lines responding, however…


DO YOU EVEN KNOW YOUR CUSTOMERS?

Cruise Segmentation Factors Into

Port Feasibility & Development

Itinerary Length

Itinerary Cost

Source Market

Destination Types

Homeport v Port of

Call

Ship Sizes


Disconnects:• Traditional port

operators treating cruise like cargo.

• Tourism bodies treating cruise like ferries / planes.

Any aspiring destination must understand what cruises are and what they do.

DESTINATION PLANNING APPROACH

ANALYSIS IDEATION DESIGN IMPLEMENTATION

Financial Options

Market Context

Tourism Products

Site Technical

Community Framework

Business Model

Facility Concept

Community Engagement

Community Rollout

Financial ModelFacility Design

Operations Design

Branding

Operations Rollout

Facility Rollout

Marketing Rollout


HOW SUCCESSFUL PORTS OF CALL ARE DEVELOPED

A Successful Port of Call

ITINERARIES- Identify and assist in developing supporting local destinations- Use regional reach to influence development of ports outside the country- Promote to cruise lines based on complete itineraries and not purely destination based.

FACILITIES- Ensure facilities match the right market segments.- Design terminals which are fit-for-purpose i.e. optimizes capacity and utility vs cost.- Future-proof designs.

EXCURSIONS- Work with local operators to develop tourist sites at different distances from the port.- Develop proper transport staging areas.- Improve port area experience through waterfront developments


IMPORTANCE OF DEVELOPING EXCURSIONS

Penang

Klang / Kuala Lumpur

Walk from Port 30 min 60 min 90+ min

George Town Heritage City

Shopping, Food tourism, Bazaars

Penang Hill,Butterfly & Insect park, Beach

Turtle sanctuaryFar side villages

???? Shopping, Cultural village,Royal Klang Town

Kuala Lumpur City Centre,Putrajaya,Theme Park

Batu Caves,Royal Selangor

Good destinations have a mix of excursions and on-shore activities to fill up a cruise visitor’s day. Where gaps appear at certain distances, especially at close distances, they should be filled up by developing new sites. Transport options are also key.


CASE STUDY:THE STRAITS ITINERARY

The Straits of Melaka is currently Southeast Asia’s regular itinerary.

• Overnight sailing between stops.

• Mix of natural, historic and urban attractions.

• 3 UNESCO World Heritage sites – George Town, Melaka and Singapore Botanic Gardens

• Strong brands: UNESCO sites, Petronas Twin Towers, Batu Caves, Marina Bay, Langkawi

• Malaysia: Successfully built and cruise initiated dedicated piers in Klang, Langkawi & Penang

• Singapore – successful example of government developed iconic projects with concession awarded for management & operations

• Belawan – Dedicated facility built but issues remain with channel & turning basin. Inability to berth large cruise vessels

• Potential for docks in other destinations, however the correct privatisation models and funding issues remain


Cruise DestinationsEstablished Mass Market Call

Established Niche/Minor Call

Dedicated Facilities

Cargo Terminal

Tender

PhuketKrabi

Langkawi

Penang

Pangkor

Belawan / Medan

Port Klang / Kuala Lumpur

Melaka

Singapore

21 August 2019

SG & HK - SUCCESSFUL GOVERNMENT CRUISE PROJECTS

Marina Bay Cruise Centre Singapore

Kai Tak Cruise Terminal Hong Kong

21 August 2019 NV TERMINALS - DEMYSTIFYING CRUISE PORT DEVELOPMENT IN SOUTHEAST ASIA 13

Main homeport for SE Asia. Major capex (SGD500mil) risky but SG knew what they were doing by learning the market. Coordinated approach to cruise lines, structured policies. SG currently highest volume Asian port with 990k PDD (MBCC + Harbourfront).

Main homeport South China. Massive brownfield development cost close to USD1b. Successful despite significant local skepticism. Currently fourth highest Asian volume overcoming China geopolitical issues, with 606k PDD

Yes, both had high capex, but the key is both understood operations and how to approach market.

CASE STUDY PHILIPPINES: MEETING CRUISE CHALLENGESPhilippines lacked the facilities necessary to address HK source market demands.

• No dedicated facility for key Manila port of call.

• No noteworthy intermediating call between Manila and HK. Cruise have to do two sea days every round trip to Manila, whereas 2 calls + sea day is preferred.

• No other locations aside from Boracay (currently issues) to expand itinerary.

Solution: Development of Manila and Salomague facilities. Next step is to assess additional locations.


Manila(complete 2021, currently cargo terminal)

Hong Kong

Salomague(complete end 2019)

Puerto Princessa

Kota KinabaluSandakan

Muara

* Locations marked grey under assessment.

21 August 2019

MANILA – LAUNCHING THE FUTURE FOR CRUISE IN THE PHILIPPINES


Solaire Cruise Center, a greenfield pier at an Integrated resort within Entertainment City, Manila

21 August 2019

ADDRESSING FUNDING

Not many players willing to take a fully private development risk.

Cruise terminals cannot be comfortably sustained from tariffs alone, unless volumes are >500k.

Not easy to have commercially attractive volumes so what models work?


• In theory good but what model of partnership? Tendency for public sector to ask for too much.

• Future Penang development one good example but built off fully public facility.

PPP

• Where governments are not ready or unwilling. E.gStar Cruise (Klang, Langkawi) when cruise was new.

• Will not go to destinations out of their strategic scope.

Cruise Line

• Great risk, difficult to establish feasibility unless site is high demand or can tap into ‘downstream’.

• Possible as value add to existing development e.g. Manila

Fully Private

• Massive concerted educated effort – SG & HK• How to establish sustainable model? How to fund?• Private partnerships via terminal management

model.

Fully Public

21 August 2019

ADDRESSING THE ENVIRONMENT

Emissions• Emissions abatement tech – scrubbers, catalytic reactors• New fuels - LNG

Water• Desalination / production through waste heat recovery• Wastewater, ballast and bilge water treatment beyond Marpol requirements.

Waste• Active sorting / recycling• Hazardous / chemical waste - qualified handling. Inventorising of chemical use.

Energy• Efficient hull design• ‘Air lubrication’ – use air to make ships go through water easier.• Energy efficient lighting & electrical appliances.


Cruise Environmental / Sustainability Tech

CONCLUDING POINTS TO PONDER

Successes of SG / HK due to massive concerted and educated effort led by government. Educated meaning an understanding of how cruise tourism works

Many other governments do not recognise benefits of cruise tourism where opax arrivals match 10+ airplanes, opax are referred to as the ”super tourist” with ability to spend USD100 within a port of call / 8-10 hours and o a % of cruise pax will return to a specific destination.


DEMYSTIFYING CRUISE PORT DEVELOPMENT IN SOUTHEAST ASIA · 1970 1980 1990 2000 2005 2010 2018 2020p...

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