Executive Summary

THE CONTRIBUTION OF THE INTERNATIONAL CRUISE INDUSTRY TO THE U.S ECONOMY IN 2016 OCTOBER 2017 CRUISE LINES INTERNATIONAL ASSOCIATION BREA Business Research & Economic Advisors The Contribution of the International Cruise Industry to the U.S Economy in 2016 Prepared for: Cruise Lines International Association August 2017 Business Research & Economic Advisors 201 Strykers Rd, Suite 19-132 Phillipsburg, NJ 08865 Cruise Lines International Association 2016 U.S. Economic Impact Analysis Table of Contents EXECUTIVE SUMMARY .............................................................................................. 2 THE CONTRIBUTION OF THE INTERNATIONAL CRUISE INDUSTRY TO THE UNITED STATES ECONOMY ......................................................................................................................... 2 TRENDS: 2011 – 2016 ....................................................................................................... 8 THE CONTRIBUTION OF THE INTERNATIONAL CRUISE INDUSTRY TO INDIVIDUAL STATE ECONOMIES ................................................................. ERROR! BOOKMARK NOT DEFINED. SECTION I: IMPACT OF THE INTERNATIONAL CRUISE INDUSTRY ON THE U.S. ECONOMY IN 2016 ......................................................................................... U.S. CRUISE PASSENGERS .............................................................................................. 16 SPENDING IN THE U.S. ECONOMY GENERATED BY THE CRUISE INDUSTRY .................... 21 Direct Economic Impacts in the United States During 2016 .................................... 24 Indirect and Induced Economic Impacts in the United States During 2016 ............ 36 Total Economic Impacts in the United States During 2016 ..................................... 40 SECTION II: THE CONTRIBUTION OF THE CRUISE INDUSTRY TO THE U.S. ECONOMY BY STATE IN 2016 .............................................................................. SUMMARIES OF THE ECONOMIC IMPACTS OF THE TOP TEN STATES ............................... 45 Florida ...................................................................................................................... 47 California .................................................................................................................. 50 Texas ......................................................................................................................... 53 New York ................................................................................................................... 55 Alaska ........................................................................................................................ 57 Washington ............................................................................................................... 59 Georgia ..................................................................................................................... 61 Illinois ....................................................................................................................... 62 Massachusetts ........................................................................................................... 63 New Jersey ................................................................................................................ 65 Economic Impacts in the Remaining States .............................................................. 67 APPENDIX I – STATE IMPACT METHODOLOGY ............................................................... 69 APPENDIX II – INDIVIDUAL STATE TABLES .................................................................... 73 Business Research and Economic Advisors Page 1 July 2017 Cruise Lines International Association 2016 U.S. Economic Impact Analysis Executive Summary The number of passengers sourced1 from the United States and those embarking from U.S. ports rose between 2014 to 2016. Passengers sourced from the U.S. including Puerto Rico, totaled 11.50 million in 2016, another record for the U.S. (see Table ES-1). This is an increase of 1.5 percent from 2014, and U.S.-sourced passengers is 10 percent higher than in 2011. Cruise passenger embarkations from U.S. ports increased by 5.4 percent from 2014 to 2016, to 11.66 million. Once again, this was a new high for passenger embarkations from U.S. ports. The Contribution of the International Cruise Industry to the United States Economy Driven by the strong growth in passenger embarkations, the growth in direct spending by the cruise industry in the U.S. increased. The growth in spending by the cruise lines and their passengers and crew in the U.S. rose by 3.2 percent to $21.69 billion in 2016. This is 15 percent higher than it was in 2011. Again, this represented a new peak in cruise industry expenditures in the U.S. Cruise lines spent significantly less on fuel in 2016 versus 2014, primarily due to lower fuel costs, but also from better operational efficiencies of the newer ships. Despite this decrease in fuel exenditures, the total cruise line expenditures still experienced a 2 percent overall increase from 2014. The $16 billion in expenditures by the cruise lines for goods and services, including capital expenditures, accounted for 74 percent of the direct spending. Cruise lines' direct expenditures for wages for U.S. employees and taxes paid to U.S. federal, state and local tax jurisdictions increased by nearly 4 percent to $1.48 billion, accounting for 6.8 percent of total direct expenditures. The $4.18 billion in passenger and crew spending for transportation, accommodations, food and other retail goods accounted for the remaining 19.3 percent of direct cruise industry spending. Passenger and crew spending increased by 8.9 percent, in part driven by the robust growth in passenger embarkations from U.S. ports. Since 2011, total passenger and crew spending has increased by 19 percent, which has helped drive the total economic impact up from $40.42 billion to $47.76 billion during this timeframe. 1 Cruise Lines International Association (CLIA) has recently developed a new, more accurate methodology for tracking and assigning the states from which passengers are sourced. While this has no impact on the overall number of U.S. sourced passengers, it has significantly impacted the numbers for individual states. Business Research and Economic Advisors Page 2 July 2017 Cruise Lines International Association 2016 U.S. Economic Impact Analysis Table ES-1 – Expenditures of the International Cruise Industry in the United States, 2011 – 20161 Percent Change from Previous Period 2011 2012 2013 2014 2016 2011 2012 2013 2014 2016 Passengers (Millions) Passengers Sourced from the U.S. 10.45 10.67 10.71 11.33 11.50 3.5% 2.2% 0.3% 5.8% 1.5% U.S. Embarkations 9.84 10.09 9.96 11.06 11.66 1.5% 2.5% -1.3% 11.0% 5.4% Industry Spending in U.S. ($ Billions) $ 17.59 $ 18.29 $ 18.72 $ 19.59 $ 20.20 4.6% 4.0% 2.4% 4.6% 3.1% Cruise Lines $ 14.07 $ 14.63 $ 15.09 $ 15.63 $ 16.02 5.0% 4.0% 3.1% 3.6% 2.5% Goods and Services $ 12.15 $ 12.66 $ 13.13 $ 13.65 $ 13.96 5.3% 4.2% 3.7% 4.0% 2.2% Capital Expenditures2 $ 1.92 $ 1.97 $ 1.96 $ 1.98 $ 2.06 3.4% 2.5% -0.4% 1.1% 3.8% Passengers and Crew $ 3.52 $ 3.66 $ 3.63 $ 3.96 $ 4.18 3.2% 4.0% -0.7% 8.9% 5.8% Wages & Taxes Paid by Cruise Lines $ 1.29 $ 1.34 $ 1.38 $ 1.43 $ 1.48 7.9% 3.8% 3.2% 3.1% 3.9% Total U.S.-based Spending $ 18.88 $ 19.63 $ 20.10 $ 21.02 $ 21.69 4.8% 4.0% 2.4% 4.6% 3.2% 1 NOTE: This study was not conducted in 2015 2 Includes net interest Source: Business Research & Economic Advisors and Cruise Lines International Association As indicated in Table ES-2, the growth in the economic benefits increased in tandem with the growth of passengers sourced from the U.S. After increasing by 4.6 percent in 2014, direct cruise industry expenditures in the U.S. rose by 3.2 percent from 2014 to 2016. The direct cruise industry expenditures in the U.S. rose to a new peak of $21.69 billion. Table ES-2 – Economic Contribution of the International Cruise Industry, 2011 – 2016 Percent Change from Previous Period 2011 2012 2013 2014 2016 2011 2012 2013 2014 2016 Passengers Sourced from the U.S. 10.45 10.67 10.71 11.33 11.50 3.5% 2.2% 0.3% 5.8% 1.5% Direct Economic Impacts Direct Cruise Industry Exp. ($ Billions)* $ 18.88 $ 19.63 $ 20.10 $ 21.02 $ 21.69 4.8% 4.0% 2.4% 4.6% 3.2% Employment 145,835 146,785 147,899 152,272 158,226 3.9% 0.7% 0.8% 3.0% 3.9% Wages and Salaries ($ Billions) $ 6.22 $ 6.39 $ 6.63 $ 7.02 $ 7.38 6.6% 2.7% 3.7% 5.9% 5.2% Total Economic Impacts Total Output ($ Billions) $ 40.42 $ 42.27 $ 44.09 $ 46.09 $ 47.76 6.8% 4.6% 4.3% 4.5% 3.6% Employment 347,787 356,311 363,133 373,738 389,432 5.4% 2.5% 1.9% 2.9% 4.2% Wages and Salaries ($ Billions) $ 16.50 $ 17.42 $ 18.27 $ 19.43 $ 20.57 8.3% 5.5% 4.9% 6.3% 5.9% * Includes wages and salaries paid to U.S. employees of the cruise lines Source: Business Research & Economic Advisors and Cruise Lines International Association NOTE: The Sum of the categories in the Tables and Figures within this report may not add to the totals due to rounding. Business Research and Economic Advisors Page 3 July 2017 Cruise Lines International Association 2016 U.S. Economic Impact Analysis The $21.69 billion in direct cruise industry expenditures generated an estimated 158,226 direct jobs throughout the U.S. economy paying $7.38 billion in wages and salaries during 2016, both records for the cruise industry within the U.S. economy. Driven by the 3.2 percent increase in direct expenditures, the employment impact rose by 3.9 percent while the income

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