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  • Dec 22, 2014
  • Updated: 1:19am
NewsHong Kong

Predicted economic benefits of Kai Tak cruise terminal grossly inflated

Tourists visiting Kai Tak hub will generate just a quarter of official estimate of HK$1b in first year

PUBLISHED : Thursday, 24 January, 2013, 12:00am
UPDATED : Thursday, 24 January, 2013, 4:25am

Government projections of the financial benefits of the Kai Tak terminal appear to be overestimated by as much as 75 per cent, a South China Morning Post investigation has found.

Official estimates reported in 2008 suggested the total value-added contribution to the economy would be HK$860 million to HK$1.09 billion this year alone.

But an analysis of the numbers expected when 37,000 passengers on 16 ships using the terminal between its opening in June and April next year suggest this is hugely optimistic.

An examination of each vessel's itinerary by the Post shows Hong Kong will be a port of call for seven out of 10 passengers; the rest will be joining or ending their cruise tours in the city.

Based on the 2012 per capita spending of the two types of cruise tourists - HK$4,833 for those starting or ending their tours in Hong Kong and HK$2,141 for those stopping in briefly on their tour - all passengers will spend about HK$100 million in that time. This figure will be boosted by the value-added approach of economic analysis, which takes into consideration a "multiplier effect" of tourist expenditure, meaning the sum could go from one business to another and create bigger benefits.

The multiplier is 2.5 to 3 in Hong Kong, so HK$100 million of tourist spending would add HK$300 million to the city's gross domestic product, associate professor of economics at Chinese University Terence Chong Tai-leung said. This is just over a quarter of the official estimate.

Hang Seng Management College's dean of school of business Professor Raymond So Wai-man said the government tended to exaggerate the benefits of projects.

Delays in the terminal's construction may have dragged on its competitiveness, he said, but its opening would be the starting point for HK to join the cruise race.

Chong agreed: "The building of a terminal can enhance the city's image and create long-term benefits."

Work on the long-awaited terminal started in 2009, after the site lay vacant for more than a decade.

The government failed to find a suitable candidate to build the terminal, and eventually decided to build it itself at a cost of HK$7.2 billion.

Competitor Singapore opened its Marina Bay Cruise Centre last October. From this June to April it will handle 89 dockings.

Jeff Bent of Worldwide Flight Services, a partner in the consortium that will run the Kai Tak terminal, said he was disappointed in the number of ship calls.

Cruise companies were not confident the terminal would open on schedule and had not bothered to book ships into it.


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This article is now closed to comments

Like most other projects (Disney, third runway),
projections are for the projects,
and projects are for the vested interests.
Never mind about overestimate or underestimate. Projection is nothing but projection, so leave it alone, don't loose your sleep over it.
One should look at the bigger picture. The fact that HK is opening up this strategically located cruise-ship terminal means added tourism, added prosperity, added foreign exchange, added employment, ... Good for HK.
John Adams
It's no surprise to me that the economic benefits were over- estimated by 3 -4 times. That's typical of all Donald's eggs.
I bet also that the actual cost of building the terminal has been underestimated by the same wild factor, so finally it will end up costing us over HK$20 Billion
No wonder the cruise operators refused to take responsibility for building and operating the terminal themselves.
( I recall that Jake vd K at the time pointed out that if the cruise operators refused to take on the job it was a sure sign that it would be money-loser . It seems that Jake, as usual, was correct )
Another one of the eggs laid by donald duck.
Government is not a business and people are always going to complain about costs of things from Disney to airport to ocean park to a cruise terminal. But like the airport, Disney and Ocean Park people of HK will in the future will like the cruise terminal. HK people will be able to join cruises of Asia.


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