Carnival Vista

The Carnival Vista cruises at sea. The largest cruise vessel in Carnival Cruise Line’s fleet, Carnival Vista weighs 133,500 tons, is 1,055 feet long and has a guest capacity of almost 4,000.

There was a lot of good news in the numbers we reported this week showing how well the cruise business is performing at the Port of Galveston.

The numbers also underscored how much the port has come to depend on that single line of business, however, and remind us there’s some urgency in the effort to diversify the port and add revenue streams.

The good news is that more than 937,000 cruise ship passengers passed through the island in 2017, up from 860,000 the year before, port officials said.

That was an increase in embarkations — the number of passengers boarding cruise ships — of almost 9 percent in one year, which is good by any measure.

The increase meant more money for the port, through the various fees it charges the cruise lines and the passengers, and it also meant almost 80,000 more people visited the island, which was a boon for local businesses related to the port only by geography.

Meanwhile, more than 113,400 passengers sailed from the port in December 2017, the biggest month ever for the port’s cruise business.

The trends have all been upward, which has shown steady growth in net numbers and profits since the cruise lines returned in 2000.

“It’s great news and there’s more on the horizon,” Wharves Board of Trustees Chairman Ted O’Rourke told a Daily News reporter. “Those numbers mean we are the fourth-biggest in the country. Maybe we will grow into No. 2?”

The strong 2017 numbers came despite several setbacks, most notably Hurricane Harvey.

The U.S. Coast Guard on Aug. 25, 2017, closed the island port to all traffic in anticipation of high winds and rain from Hurricane Harvey.

Port officials estimate 27,000 fewer cruise passengers visited because of the storm and that lost cruise-ship revenues totaled about $680,000, officials said.

Each cruise generates about $65,000 in parking and passenger fees for the landlord port, officials have said.

The port now depends heavily on revenues from cruise ships, anticipating about 55 percent of revenue budgeted for 2018 will be cruise-related.

Port officials project operating revenues of about $37.4 million in 2018 against operating expenditures of $37.2 million, according to documents.

Two things are noteworthy in those numbers. The port’s operating margins are razor thin — about $200,000 for 2018, while a seasonal blip such as happened during Harvey can cost it almost three times that amount.

Port officials are right to be optimistic about the cruise business, because all the trends are upward.

Carnival Cruise Line’s newest and largest ship, Carnival Vista, will move to Galveston on Sept. 23 and port officials recently began about $5 million in improvements to accommodate the 1,055-foot vessel.

Carnival Vista features the first IMAX theater aboard a ship, a water park and a brewery, officials said.

Carnival Vista’s arrival in Galveston could be a financial windfall for the island port, officials said.

The increased capacity of about 244 more passengers than the Carnival Breeze could result in 20,000 more passengers a year traveling to Galveston, Simons said.

At the same time though, cruise lines are highly mobile and have been fickle in the past, leaving one port for a sweeter deal somewhere else. Already, potential competitors are eyeing Galveston’s success and calculating how they might peel some of that business away.

So, port leaders should celebrate the good news of last year, and the solid forecast for this one, while they work hard to bring other lines of business and other revenue streams to the island’s docks.

• Michael A. Smith

Michael A. Smith: 409-683-5206; michael.smith@galvnews.com

(5) comments

Charlotte O'rourke

The embarkations cruise numbers are very good news.

Ports are extremely competitive. Currently New Orleans is our biggest competitor in the Gulf.

New Orleans has a longer transit time and more difficult waterway to navigate, but don’t seem to have the fog issue delays that plague Galveston in recent years.

When the Pilot Commissioners indicate they “weren’t sure what positive effects a meeting would have” with the port.

I would suggest starting the meeting with fog delays and determine what the commissioners, pilots, and Port can do to safely minimize these delays.

Proceed to other issues as decisions made by the Pilot Commissioners impact ALL level of of PORT business.

Excellent editorial.

Bill Broussard

You are right when it comes to the improved operating efficiencies of the portfolio, C.O.

I think its important to note that in most of America's and foreign ports, cruise ships are considered low margin, high labor but secondary markets. As was the case with the ill thought through Terminal with the Port of Houston, the cruise business came much after the core business of the port was well established. In Galveston, we've done well thus far taking a second tier product and making it our core but there is a huge risk involved as Michael points out.

Currently, one only needs to watch the line-up of ships waiting to get into the Houston Ship Channel and watch the 100's of millions the City of Corpus has put into dredging to take the Houston energy transport business away to understand the competition in every shipping business is as hot as it ever was. If you can unload and load a tanker in two days less than getting into Houston to do the same thing, as long as we remain net exporters of oil and gas, no one really needs a refinery. They just ship as quick as they can to Liberian or Chinese refineries.

Our dock line ups are evolutionary and not necessarily planned. So we have some sorts of business on Pelican and a real mixed bag or tourist and light industrial on the Galveston side. I was greatly relieved when the Board said they were planning a strategy cause if they even initiate 60% of it, they might be able to put order into an evolutionary system and balance the portfolio.

One irritant is the planned lack of rail transportation with the new bridge and the other is the P of H paying no taxes on its usable land on Pelican.

Though Michael didn't say it this way, we keep making expensive loans to invest capital into products that have a high risk and low margin. I think that might bite us someday unless we want to take the bold step of having all of the Galveston dock side look as though its is a pure cruise business and salt and pepper it with condo's and expansion hotels all the way to the yacht basin.

Charlotte O'rourke

Bill, I agree. Both you and Michael gave strong arguments for diversification.

I’m optimistic that the new port director along with the development of the strategic\master plan will address diversification as well as the need for rail to Pelican Island.

Since starting to follow the port and Pilot Commission in 1995, this is the first time that I can remember a refusal for any type of discussion - either through the chairmen or through a joint meeting.

That refusal does not not bode well for resolving important issues and future business satisfaction and growth.

Hopefully, the Pilot Commission will re-evaluate and call a joint meeting soon as the port has repeatedly requested a meeting since July of last year.

In the meantime, Ms Beeton is leading a port executive committee to help build accurate profit and loss reporting. Rodger Rees should be invaluable in this area.


Charlotte O'rourke

Cruises have a huge economic benefit on Galveston and Texas but other cargo and maritime businesses need to be developed and supported.

Jarvis Buckley

Very good article, very informative comments. Thanks 👍

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