On a balmy evening last month, the big cruise lines showed up at Portland’s new Ocean Gateway terminal. Not their ships — the $21 million terminal lacks a deepwater berth that can accommodate them — but rather their vice presidents and chief executive officers. Under the soaring roof, they rubbed shoulders with local officials from New England and Atlantic Canadian ports eager for their business. The event — replete with cocktails and a lobster feed courtesy of taxpayers and local businesspeople — was a chance to showcase Portland’s eastern waterfront, much of which is being redeveloped with cruise ship tourism in mind.

Portland has embraced cruise ships in a big way. Over the past decade, tens of millions of federal, state, and local dollars have been spent building cruise ship infrastructure and promoting the city to cruise lines. The city is trying to get private investors to pony up tens of millions more to build a cruise ship berth at Ocean Gateway and redevelop the city-owned Maine State Pier — where ships currently tie up — with cruising in mind.

But amazingly, the city has never commissioned an economic benefit analysis to determine if any of these investments are worthwhile. Nor has anyone else.

Figures long bandied about by public officials and cruise industry promoters do not stand up to scrutiny; they are not based on actual data and appear to overestimate passenger spending by a factor of two. And much of that spending probably accrues to not to Portland businesses, but to their counterparts in Kennebunkport, Freeport and beyond.

Portland has been aggressively courting the cruise ship industry for more than a decade. That’s when the city committed itself to developing a new cruise ship and international ferry terminal with a 1,000-foot berth to be located on the eastern waterfront, within walking distance to the Old Port.

Now that the epic plan is nearing completion — minus the 1,000-foot berth — industry proponents say these investments will soon bear fruit.

“We’re poised for a considerable amount of growth in future if we have facilities that are up to par,” says Amy Powers, director of CruiseMaine, which promotes Maine to cruise lines. “Tourism is our number one industry in Maine, and I think it’s a wise idea to invest in one of our great income providers.”

CruiseMaine claims the economic benefits to Portland are considerable: $4.7 million in annual passenger spending in 2005, driving an overall economic effect of $6.7 million.

But those figures — from a 2006 University of Maine study of impacts in Portland and Bar Harbor — are illusory, as its estimates for Portland were not based on hard data.

“In Bar Harbor we went to the pier and handed out surveys to passengers as they returned to the ships, but it’s 120 miles down to Portland and we’ve never had the funding to do that,” says the report’s lead author, economist Todd Gabe. “It could be done, but we haven’t done it to this point.”

Lacking data, Gabe simply used the North American average expenditure figure reported by the Cruise Lines International Association (CLIA). He says he was encouraged that that figure — $103.68 in 2005 — was very similar to the $105.82 his own surveys had found in Bar Harbor.

Unfortunately, Gabe’s assumptions that Portland expenditures are similar to Bar Harbor and the national average are incorrect, according to the head of the consulting firm that generated the CLIA data.

“The average spent per passenger in Maine is probably similar to Atlantic Canada, and those numbers are lower than the [North American] average,” says Andrew Moody of Business Research & Economic Advisors (BREA) in Philadelphia. “Also destinations like Halifax and Portland are a different kind of destination — they’re business and government centers, not just tourist destinations, and when you step off the ship you don’t tend to see 200 vendors waiting at the dock.”

Moody says that Halifax, Nova Scotia, and Saint John, New Brunswick, provide better analogs for Portland than North America as a whole, or a tourist destination like Bar Harbor. Those Canadian cities are similar to Portland in many respects and, in many cases, are receiving the very same passengers as Portland.

In March, BREA released a detailed study on these markets, based on the 2007 season, when the North American average expenditure per passenger was estimated at $123 per day. In Halifax that figure was $66.16, for Saint John, just $56.75.

The figures suggest that the economic impact for the Portland area may be less than half what the city’s investments have been predicated on. And much of what passengers do spend likely winds up outside city limits.

Studies show that the vast majority of passengers book a shore excursion, and that it is the largest in-port expenditure they will make. Most excursions are sold directly by the cruise line, typically at a 60-70 percent markup, capturing a large portion of what a given passenger is willing to spend that day.

In Portland, approximately 70 percent of excursion-going passengers head for Kennebunkport, according to the chamber of commerce there.  Industry sources say another 10 to 20 percent go to Freeport on the four-hour “L.L Bean Freeport Shopping Transfer.” The remaining 10-20 percent are divided among a nine-hour “Mt. Washington and Cog Train” trip, a three and a half hour “Lighthouses of Maine” trip to South Portland and Cape Elizabeth, and a variety of tours in the city and harbor.

Bottom line: 85-90 percent of passengers spend a large portion of their stay — and probably their money — outside the city.

If Portland made a mistake, even critics agree that it’s stuck with it. “We’ve spent the big money and we’re in business now, so we have to try to make it succeed,” says city councilor John Anton. “But I think we need to be clearheaded about the benefits.”

Maine Port Authority director John Henshaw says the city’s investments will turn out to be wise ones. “It’s a growing industry which has significant economic benefits to the state,” he says. “Beyond the immediate economic benefit of passenger spending, there’s enormous potential if you can entice somebody to do their ship’s turnaround operations of Portland.”

Doing that will require more lobbying and promotion, according to Sandra Needham, executive director of Discover Portland and Beyond, the organization that co-hosted the 10th annual Canada-New England Cruise Symposium in Portland last month, which occasioned the cruise line executives’ visit to Ocean Gateway.

“The cruise lines always tell us that it’s our job to educate, and our job to create demand for our destination,” she says. “We’re seeing results, but if we had more funding we could have so much more.”

 

— Colin Woodard is an award winning journalist and the author of The Lobster Coast, Ocean’s End, and The Republic of Pirates. www.colinwoodard.com. His column appears in Working Waterfront every other month.