Growth in Cruise Ship Industry Brings Major Changes to All Isles

posted in: May 1999 | 0

Ray Chuan’s memory of September 20, 1996, has not faded with time. That was the day when, just before noon, a gleaming, white, 440-foot cruise ship glided into Hanalei Bay and set anchor. No one in the community had been told in advance of the arrival of the super-luxury Seabourn Pride other than the non-permitted tour boat company that ferried the cruise passengers to shore in three 16-passenger Zodiacs.

At the time, Kaua`i’s North Shore community was already riven by a decade-long dispute over tour boats operating out of Hanalei Bay without county permits. Just a few days before the Seabourn Pride anchored, a federal judge had ruled that Kaua`i County had the authority to regulate boating in Hanalei. Immediately following that ruling, six tour-boat companies had received county permits – and Hanalei Sea Tours, the company ferrying Seabourn Pride passengers, was not among them. The luxury liner’s use of Hanalei Sea Tours added insult to injury for many Hanalei residents, Chuan said.

Hanalei may not have been forewarned about the Seabourn Pride’s visit, but the state was. Some weeks earlier, the state had approved the unprecedented anchoring of a cruise ship in the bay, as indicated by correspondence between the Department of Land and Natural Resources’ Division of Boating and Ocean Recreation and the agent for the Seabourn Pride. DOBOR had also known of — and not objected to — Seabourn’s intent to use the unpermitted Hanalei Sea Tours as a passenger ferry.

Scott Robeson, a resident of Hanalei, expressed his outrage in a letter to Gov. Benjamin Cayetano the day the Seabourn Pride anchored. Dismayed at the state’s lack of deference to the county laws, Robeson wrote, “If this type of uncontrolled venture is allowed in Hanalei Bay, it will spread to every coastal roadstead on the shoreline of every island that is capable of being used as an anchorage by any passenger ship so inclined.”

* * *
A Growth Industry

In the three years since the Seabourn Pride visited Hanalei, the basis for Robeson’s concerns has increased, if anything. The state Department of Transportation estimates that the cruise industry in Hawai`i will at least double in the next five years. To accommodate that increase and make port facilities more attractive to cruise-ship passengers, the state has outlined plans for nearly $100 million in harbor improvements over the next 20 years. Many people, such as Robeson and Chuan, worry that the state’s plans have been developed without taking into account the wishes of affected communities.

According to a recent study commissioned by the DOT’s Harbors Division, the improvements are needed to upgrade and expand port facilities are decades old and incapable of handling the projected increase in number and size of ships. The study, prepared by Leo A. Daly Co., recommends methods of accommodating the growing cruise industry, but for the most part does not consider the ability or desire of the communities visited to handle increased numbers of visitors.

As growth in the visitor industry has stalled out in recent years, the state is counting on the cruise ship traffic as one of the bright spots in a generally bleak economic landscape. Globally, the cruise industry is growing at a faster rate than any other segment of the travel industry, and Hawai`i, which now accounts for about 2 percent of the cruise market, wants to grab onto a bigger share.

American Hawaii Cruises represents the largest single component in the state’s cruise ship traffic. AHC now operates one liner, the S.S. Independence, which runs interisland cruises year-round out of Honolulu, but its presence will soon increase. By 2005, it will be operating two brand-new, 1,900-passenger vessels, homeported in Honolulu. The remainder of cruise traffic in Hawai`i is made up of foreign vessels, many of which visit the state in the spring and fall, in between wintering in the Caribbean and summering in Alaska.

In 1998, 20 foreign vessels, carrying a total of 65,200 passengers, visited Hawai`i. Forecasting growth of nearly 8 percent per year, the Daly study predicts that foreign vessels will bring 92,600 passengers to Hawai`i in 2004, with the number leaping to 312,800 by the year 2020.

American Hawaii carried 47,800 passengers in 1998, up from 45,144 the previous year. The company predicts that its occupancy levels will remain at 90 percent, giving it 141,000 passengers in 2000 when it reflags a 2,000-passenger foreign ship. For 2003, 2004 and 2005, American Hawaii will have three ships and its highest expected passenger numbers (averaging 250,000 per year). From 2006 through 2020, American Hawaii expects static numbers of about 190,000.

Bigger, Better Berths

To address these increases, the Harbors Division is proposing $44 million in improvements to its ports statewide in five years. The Daly study recommends an additional $10 million be spent to improve anchorage ports, for a total of $54 million statewide.

The DOBORs Commercial Boating Fund, made up of commercial harbor fees, will be used to pay for most of these improvements, with additional funds for improvements at anchorages to come from DOBOR’s boating special fund. Neither fund draws from the state’s general fund. Rather, these funds stay within their departments and make up most of the operating budgets of Harbors Division and DOBOR.

The largest single project contained in these planned improvements is being proposed to accommodate two new ships being built for American Hawaii Cruises. With the support of Congress, American Hawaii will add to its fleet a reflagged foreign vessel by next summer that will carry more than twice the number of passengers that can be accommodated on the Independence. In addition, and again, thanks to Congress, it will bring two new 1,900-passenger ships into operation in Hawai`i by 2004.

To accommodate these new liners and to address the needs of increased numbers of foreign liners expected to visit Hawai`i, the state is planning improvements worth some $42 million to O`ahu harbor facilities by 2020, according to the 2020 Master Plan, published in 1997.

Some of the planned projects are underway already. In February, an Environmental Impact Statement Preparation Notice was published for construction of a cruise ship terminal at Pier 2 (American Hawaii’s new home), improvements to the finger piers at Piers 12-16, construction of an excursion vessel terminal at Piers 24-29, and lay berths along Lagoon Drive at Ke`ehi Lagoon, all to be initiated by 2003. The document shows a $30 million estimated cost for “preliminary project costs for the construction phase” but no breakdown of costs for each project. (Cost estimates in the Daly study place the total cost of improvements at Pier 2 at $33.5 million.)

Currently, cruise ships dock at Piers 10 and 11 next to Aloha Tower Marketplace. Pier 2, at Fort Armstrong, handles the overflow. The Harbors Division would like to see Pier 2 become the primary docking area since Aloha Tower cannot accommodate more than one large vessel at a time. Plans for Pier 2 call for construction of two two-story terminals and berths for two 850-foot vessels. Work on the pier is to begin in the year 2000 and finish by 2001.

Also, the state has just prepared a draft environmental assessment for work on Pier 1C in Kahului. While some of the work described in the draft EA involves an expansion of the container yard, many of the improvements are intended to facilitate berthing for a second cruise ship at Pier 1.

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Putting a Pretty Face On State Harbors

The Daly study was intended to help the state determine whether and to what extent it should invest in harbor infrastructure to attract and handle increased numbers of cruise ship visits. The DOT paid $470,000 for the study, which Daly prepared in the second half of 1998.

According to the study, released in January, Hawai`i’s cruise industry contributes more than $300 million a year to the state’s economy and provided almost 3,000 jobs in 1998 (figures were provided by the Department of Business, Economic Development, and Tourism). By the year 2020, the Daly study projects economic benefits to be more than $1.6 billion annually and jobs to number about 10,500. Much of that projection is based on American Hawaii Cruises’ two new vessels.

The Daly study recommends that the state invest $54 million over the next five years in improving passenger terminals and services in Honolulu, Nawiliwili, Kikiaola, Kahului, Lahaina, Hilo and Kailua-Kona. An additional $43 million in improvements would be needed from 2004 to 2020, according to the study. The study notes that many of these ports function as cargo loading areas; are decades old; cannot handle the newer, larger ships; and generally could be spruced up and made more efficient to handle the cruise traffic.

Cosmetic Fixes

But how important is it to give Hawai`i ports a makeover for the cruise industry? The Daly report takes note of claims by the cruise industry that 85 percent of passengers on cruises are checking out spots for future land-based vacations. Since ports provide the visitor with a first impression, harbor officials and representatives of the tourism industry say the ports need to be improved and given a more Hawaiian feel.

Appearing to contradict this, however, is the finding contained in the Daly study that market demand for a location was much more important than the quality of the terminal facilities. Cruise industry and other maritime representatives call for safe and efficient facilities, but make it clear that new facilities alone will not bring ships to ports, the study says. It quotes Holland America’s Jack Anderson as saying, “Don’t invest millions of dollars in port facilities for cruise ships unless you are assured of getting significantly more revenues.”

Beth Walker, past president of the Cruise Industry Association of British Columbia, says more important than pier facilities are impressions of warmth and welcome passengers receive. “When people feel welcome, they will return,” she told Environment Hawai`i.

Still, the Daly study recommends improvements to each port in Hawai`i. Finding the $54 million to accomplish this in a timely manner is a problem, however. To make up the difference between what the two state harbor agencies would like to spend and what they have, the Daly study recommends asking the Legislature for money from the general fund, asking the cruise lines to help pay for some projects, and considering issuing bonds, raising harbor fees, or both.

Setting Priorities

Helping the state set its priorities on which improvements should be made first is the Temporary Maritime Authority Commission. This agency, established by the 1998 Legislature, was charged with investigating whether it would be feasible to have one overall maritime agency for the state, thus avoiding problems of overlapping and conflicting jurisdictions. The commission consists of 15 members, including seven heads of state boards and agencies and eight governor appointees representing each island, the Chamber of Commerce’s Maritime Committee, the shipping industry, and union representatives. The seven government members included people from the Department of Budget and Finance, the Hawai`i Community Development Agency (which has jurisdiction over Fort Armstrong and thus Pier 2), DOT, DBEDT and DOBOR.

The commission met several times over the past year and came to no conclusion — other than that the obstacles to creation of a single maritime authority are probably insurmountable for the time being, according to DOBOR acting administrator Howard Gehring. He said it is unlikely that the commission will continue another year, much less accomplish what it set out to do. It was charged with preparing a report and recommendations to the Legislature by the end of the 1999 session, but bills have since been introduced to extend the deadline for the report to December 20, 1999.

The Maritime Committee polled representatives of American Hawaii and foreign cruise lines to determine their preferences for state priorities. On April 5, Clint Taylor of Sea-Land Service, chair of the committee, presented the results to the Temporary Maritime Authority Commission. Improvements to Pier 2 should be the state’s first priority within the next five years, Taylor reported. Improving facilities at the Kailua-Kona pier was the committee’s second recommendation (some improvements are under way right now). The committee’s third priority was to establish a pier in Lahaina for the exclusive use of tenders, to minimize user conflicts. The committee also urged the state to improve facilities at Nawiliwili, Hilo and Kahului, and to develop Kikiaola as a secondary anchorage port for Kaua`i.

The first priority for the 15 years following those improvements was work on Piers 19-20 in Honolulu Harbor. Kahului placed second in priority, as American Hawaii may need another turn-around terminal for homeporting its third cruise ship. (A turn-around terminal is one where passengers can both begin and leave a cruise. With growing numbers of overseas flights planned for the Kahului airport, use of the pier there as a turn-around terminal becomes increasingly likely.) The committee’s third-ranked long-range priority was a new terminal in Hilo, followed by improvements at Nawiliwili.

The maritime industry in Hawai`i would like to create a fund earmarked for reinvestment in the maintenance and improvement of cruise industry facilities, Taylor said. He noted that the 4 percent Public Services Company tax that American Hawaii will be paying on the vessel it intends to place into service next year will come to $5.5 million per year. This amount, he suggested, could be temporarily diverted from the general fund to this new earmarked fund.

* * *
Sharing the Wealth

Honolulu may be the leading port stop, but its lead is not a commanding one. In 1998, Honolulu had 51 foreign-vessel visits, or port days. Lahaina had 49, Hilo 46, Nawiliwili 45, Kailua-Kona 44, and Kahului 11. American Hawaii had 104 port days in Honolulu last year and the same number in Kahului.

Ian Birnie, Hawai`i Island DOT district manager, said the important figure to consider is not the number of port days, but the number of passengers each port sees. While Hilo has about the same number of ships scheduled for 1999 as 1998, Birnie said, the ships that are coming are larger and bring more passengers — about 10,000 more in 1999 than in 1998.

In 1997, Hilo had a total of 63,655 passengers at its docks, according to port documents. In 1998, the number of foreign vessel calls more than doubled, to 46 from 21, and the passenger total (including the Independence), equaled 94,738. Birnie’s passenger-number projection for 1999, based on the size of the ships scheduled to berth in Hilo, is 103,700.

The lion’s share of improvements is scheduled for Honolulu, but Birnie said he hopes the Harbors Division won’t forget about the other ports. “We really need help on the neighbor islands,” he said.

Birnie said his alternate berth, Pier 3, is too small for the newer generation of ships. When multiple ships are scheduled for Hilo (as happened three times in April), only one large one will fit. “For the first time ever, we are having to turn ships away,” he said. “In the past, we could accommodate virtually every booking.”

A new pier in Kuhio Bay, west of Pier 3, is part of the 2020 Master Plan for Hilo Harbor, but it is not part of the improvements recommended for the next five years. Instead, the Daly study suggests that Hilo initially remove the north end of the Pier 1 shed and the rest of the sugar-loading equipment (which Birnie says will come down in the next few weeks). The study also recommends that the pier should be made more efficient for vehicle traffic and passenger loading and unloading and that temporary passenger facilities should be built at Pier 3, which it is used as a supplemental berth.

Kailua-Kona, on the other side of the Big Island, is a destination port in its own right, but it also serves as an overflow port for Hilo. According to the Daly study, the number of vessels that can anchor there is restricted by the harbor’s capacity for tenders and lack of sufficient facilities for ground transportation.

The study recommended no major improvements at Kailua-Kona for the next five years, citing environmental and social impact that would result from disturbing the highly congested pier. Not only is the area fringed by reef, but it is used by swimmers, canoe clubs, fishers and King Kamehameha Hotel guests. Still, the study recommends minor repairs be made to the pier. These improvements include extending the low deck of the pier on the south side so passengers can more easily alight from the tenders. Some $260,000 has been appropriated for design and $3.8 million has been requested for construction on the 40-year-old pier.

The DOT harbor at Kawaihae, north of Kailua-Kona, has not traditionally been a port of call for cruise ships. However, in April, the Independence scheduled a visit there when the vessel it regularly uses to tender passengers into Kailua-Kona was undergoing repairs. The 2010 Master Plan for Kawaihae Harbor describes the harbor as an alternate port for cruise vessels, but the Daly study does not recommend improvements to the harbor within the next five years, because “scheduled visits by cruise vessels are not anticipated within the near future.” However, it does suggest that improvements to the port be “a function of market demand which should be assessed on a regular basis with cruise lines and industry representatives.”

* * *
Growing Pains

The priorities of the cruise ships are not necessarily those of the small boat harbor managers, the boating community that finds itself having to share facilities with overgrown distant kin, or people in the towns where the cruise ships pull into port.

Hal Silva, one of three state harbor agents at Lahaina Small Boat Harbor, said the boating community would appreciate a new pier dedicated to the cruise ship tenders. The current pier, which handles all the gas, water, provisioning, loading and unloading for the harbor, now serves both the cruise ship tenders and the people who pay regular user fees for that pier.

But conflicts with small boat owners are not the only ones generated at Lahaina. In 1996, the town found itself overwhelmed on days when more than one huge cruise ship would anchor off-shore. Thousands of passengers would be ferried in and back out in foreign tenders belching black smoke, while tour bus queues made impossible demands on narrow streets taxed to the limit by routine traffic flows. In response to the congestion, in April 1997, DOBOR established a 3,000-person limit on the number of passengers and crew visiting Lahaina in one day. That limit soon fell to the demands of the cruise industry, which had difficulty reworking scheduled visits. On October 20, 1997, two large cruise ships won a temporary reprieve from the limit, bringing more than 3,900 people to the harbor in one day.

To accomplish this safely, Silva said meetings were held between the ship and harbor agents. They designed a plan for routing the tenders in and out of the harbor, with an agent stationed at the dock directing all boat traffic with a radio. A ship agent was on each liner, explaining the plans to the tender operators and the liner’s crew. The plan was a success, according to DOBOR, which the very next week decided a passenger limit no longer was needed.

Lahaina sailboat captain Randy Draper disagrees with the claims of success. He contends that the continued crowding on the docks, in the parking lot and in the harbor chases non-cruise ship tourists away from taking day charters out of the harbor. Draper also says the foreign cruise line tenders are often captained by non-English speakers who cannot monitor the same radio frequency as the local boat operators and thus often do not follow the prescribed route. These tenders “spew big plumes of diesel and often crash into docks and other boats,” Draper says.

Side Effects

Aside from Draper’s complaints, Lahaina harbor agent Silva says that now, both the harbor agents and the local users of the harbor “have gotten used to the cruise ship industry.”

The same cannot be said of the teachers and 650 pupils at Lahaina’s King Kamehameha III Elementary School. Principal Rick Paul says teachers and pupils have been complaining for years about the diesel exhaust from tour buses that pick up cruise line passengers. When ships are in Lahaina, four or five buses, with engines running, stop about 50 feet from the school walls to load and unload passengers, or wait to turn off Front Street.

“While they’re sitting there, they’re spewing out diesel fumes and noise,” Paul said. Because the school is not air conditioned, the smell and noise flow directly into the classrooms.

JoAnne Johnson, who was on the Mayor’s West Maui Advisory Committee last year, said the committee suggested making Front Street a walking mall or using trolleys as transportation for the tourists. Not only do the buses pollute the air, but they make narrow Front Street difficult and dangerous for deliveries. Johnson said that on a busy cruise ship day, up to nine buses are lined up and running near the docks in the downtown historic district.

“We need to protect the quality of not only the environment, but our tourists’ experience so they’ll come back,” Johnson said.

The Daly study takes a somewhat different view of the situation in Lahaina, saying, “The congestion of people and vehicles accentuates the charm and appeal of this special cruise destination.”

* * *
Designs on Kaua`i

One of the main requests of the cruise ship industry and the state planners is development of a secondary port in Kaua`i. Gehring said, “If ships can’t get into Nawiliwili, they are crowding and stumbling over each other” trying to find other ports.

Since cruise ships make their schedules 18 months in advance, most of that “stumbling” is done on paper as shipping agents try to plan where ships can dock or anchor, depending on slots that are available around the state.

The Daly study considered Port Allen, which has an existing pier, as an overflow port for Kaua`i. However, cruise line representatives told the Temporary Maritime Authority that 90 percent of the time the surge is too bad in Port Allen to safely unload and load.

The final report recommends use of the state small boat harbor at Kikiaola as the Kaua`i overflow port. According to the Daly study, the cruise industry says Kikiaola is ideal for safe, calm anchoring and passenger transport. Part of Kikiaola’s appeal is the fact that the Army Corps of Engineers has already appropriated funds for dredging the harbor and creating a breakwater there. Of the $6.3 million required for the project, the state would have to provide only $1.7 million in matching funds.

The Daly study had originally considered Hanalei as a secondary port and first drafts of the report included discussion of proposed improvements to the Hanalei pier to accommodate cruise ships. But apparently following the lead of Governor Cayetano, who ordered commercial tour boat operators out of Hanalei last August, the state and Daly proposed using Kikiaola.

When faced with proposals that hold the promise of expanding visitor traffic to Hanalei, residents have consistently and vocally risen up in opposition. For example, the state Department of Transportation had for years attempted to widen the one-lane bridge into the town, a move that would allow tour bus traffic to continue past Princeville. After years of battling the community, the DOT finally gave in to residents’ wishes and decided to repair rather than replace the existing bridge. Similarly, the town’s resistance to the all-but-unregulated tour boat industry culminated last year with the governor’s decision to ban all commercial boating activities from Hanalei Bay.

Resolute Opposition

According to Chuan, founder of Kaua`i’s Limu Coalition, after the September 20, 1996, visit of the Seabourn Pride to Hanalei, the community organized a meeting to address the issue. The ship agent for the Seabourn Pride, the Coast Guard, the state Board of Land and Natural Resources and DOBOR were all invited to attend.

Then-State Boating Administrator David Parsons, Board of Land and Natural Resources member Lynn McCrory, Deputy Kaua`i County Planning Director Ian Costa, and a representative of the governor’s office came to the September 24 meeting. They found the Hanalei School cafeteria full of about 150 Hanalei residents, Chuan said.

“The message was very clear,” he said. “People didn’t want any cruise ships in the bay. The natives were not friendly.”

But, as the community was later to learn, the state had rolled out the red carpet for the Seabourn Pride. Anticipating some trouble, Troy Brown, an employee of Waldron Steamship, Seabourn’s agent, had written to Parsons on September 12, 1996, asking Parsons to confirm that Waldron had kept the DOBOR informed of the Seabourn Pride’s itinerary and plans to visit Hanalei.

Parsons responded on September 16, confirming that the visit to Hanalei had been coordinated through DOBOR. “I understand that there may be members of the community who oppose this visit,” Parsons wrote. “However, since the vessel is a commercial passenger vessel it is authorized access to Hanalei Bay and short term anchorage there. The Commerce Clause of the U.S. Constitution supersedes the authority of the State to deny access to Hanalei Bay for this purpose.”

Regardless of the Commerce Clause, Hawai`i has no law limiting anchorages of commercial vessels. Hawai`i Revised Statutes Section 200-6 (b) exempts all commercial vessels from needing a permit to anchor in state waters. According to state officials, what limits cruise vessels from anchoring anywhere they might want to is the need to have support facilities (tie-ups or tender vessels, among other things) and to comply with other laws (including, in the case of foreign vessels, inspections by Customs, Immigration, and U.S. Department of Agriculture officials).

Chuan said he believes there has been a change in attitude at the state DOT over the past couple years. He said the department used to make decisions in Honolulu without visiting such places as Hanalei to get community input. “Now they are listening to the community,” he said.

The final version of the Daly study reads: “Hanalei has presented itself as a culturally and environmentally unique community with mixed receptivity to the cruise industry and other commercial ventures. This study does not recommend any improvements to accommodate cruise vessels at the Hanalei Pier at this time.”

While the DOT may have heeded the community in this instance, Barbara Robeson, past president of the Hanalei Community Association, is concerned that DOBOR has yet to do so and might well decide once again to welcome the Seabourn Pride or a similar super-luxury small liner to Hanalei.

“Their pattern of providing false and inaccurate information in public documents is irresponsible,” Robeson said of DOBOR. “There is a pattern of DOBOR being an advocate for their client, who is a private interest, not for the public good.”

If DOBOR does divert another cruise ship to Hanalei, Robeson said, “The community will provide active and visible opposition.”

And should DOBOR do so, it will go against the express wishes not only of the Hanalei community, but those of Cayetano as well. After visiting the bay last August, Cayetano put to rest nearly two decades of controversy over commercial boating in Hanalei. Noting that the bay was under the joint jurisdiction of the county and the state, Cayetano expressed his strong support for the removal of all motorized vessels from the bay into “recognized boat harbors.”

“Just as we would not allow boats in Hanauma Bay on O`ahu because of its unique environment, we should not be launching commercial boats from the Hanalei estuary. These boats need to be safely launched from a commercial small boat harbor,” the governor’s statement reads. “While we need to cater to tourists, small towns across the islands from Hana to Hanalei must never fail to care for their residents. It’s about more than tax incentives and our fiscal treasury. It is about what we treasure as a people.”

— Heidi Kai Guth

Volume 9, Number 11 May 1999

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