Legco cruising for a terminal bruising

PUBLISHED : Wednesday, 30 June, 2004, 12:00am
UPDATED : Wednesday, 30 June, 2004, 12:00am

IT SEEMS WE are missing the boat again on proposals to build a new cruise terminal for an anticipated greater number of cruise passengers and the ever larger vessels on which they now travel.

In discussions of the scheme at a Legco economic services panel meeting on Monday, lawmakers got themselves tied up in questions of whether it should be a private or public venture and, if private, whether the developers should get additional property rights to defray the costs of operating the terminal.

But one question does not seem to have entered the debate so far. What about making the cruise operators or passengers pay for the terminal? As is usual when the powerful tourism lobby swings into action, it is taken as given that the public purse will bear the cost of enriching private tourism interests.

The proper model for this sort of thing, however, was recently established by New York City when it decided to spend US$200 million on renovating its dilapidated passenger piers to accommodate cruise ships.

Before it approved a cent of expenditure it secured an agreement with two cruise lines, Carnival and Norwegian, for reimbursement of the entire amount through higher passenger and dockage fees over the next 13 years. The agreement featured a commitment by the two lines to bring in an average of at least one million passengers a year over those 13 years. In return they get preferential berthing rights.

If New York can do it that way, why can we not do it too?

I suspect, of course, that we cannot do it because Hong Kong is not New York. We do not have the world's largest market of wealthy cruise passengers at our doorstep and we do not have the Caribbean only a short voyage away.

What we have in the way of nearby attractions for a cruise is, well ... ummm ... let me think ... perhaps some scenic karst formations in the waters north of Haiphong although the ships cannot get too close, plus the harbours of Kaohsiung, Manila, perhaps Xiamen and some rather dull beach attractions near Sanya.

These are definitely not in the same league as the Caribbean, the Mediterranean or the mountain-lined inlets of Alaska, neither is the climate for much of the year, which is why the big draw in a sea cruise from Hong Kong has hitherto been casinos that open once the ship is out of territorial waters. I shall grant you that Star Cruises has tried to make more of cruising but they are struggling.

To put things in perspective, passengers arrivals in Hong Kong from ocean-going vessels amount to about 300,000 a year now, which is down from 550,000 in mid-1999. As the chart shows, these sea arrivals amount to barely one-third of 1 per cent of total passenger arrivals to Hong Kong, which is less than the figure in 1990.

But the proof of the pudding is in the eating. If cruise operators really think there is a huge market to develop in cruises that pass through Hong Kong, then they should be happy to sign a New York-style deal with us for construction of a cruise terminal.

And if they tell us, as they will be tempted to do, that the extra cost to them is the make-or-break point in whether they can attract passengers, then it is highly unlikely that they really have a boom market here, in which case we should make our proposals for a cruise terminal very modest ones.

What we should certainly not do is cater to their profit and loss accounts by funding the entire cost of construction of a cruise terminal, whether or not we do it in a straightforward fashion or by the sleight of hand way of granting a private developer free land for the terminal plus other free land that he can develop to cover the cost of building the terminal.

And we should definitely not even think of subsidising the cost of operating the terminal. Somehow, for all the talk of the money that tourism brings Hong Kong (and it does not really bring much that stays here) we are bamboozled time and again into making money flow the other way with huge infrastructure expenditures from the public purse to accommodate tourism promoters.

It is so very simple and New York has shown us the way. We can recover all our expenditure from the tourists themselves if a big cruise terminal really makes economic sense.

And if does not make sense, we can find out an early date. The cruise operators themselves will tell us if only our discussions with them centre on money talk.