Cruise ships berth at the B Street pier while officials talk about modernizing and enlarging the terminal and financing the construction. (photo/alandeckerphoto.com)

As the San Diego Unified Port District prepares to issue a request for proposals later this year to modernize and expand the cruise ship terminal and perhaps to connect the B Street pier to a new hotel on Lane Field, justifiable note will be taken of the many millions of dollars that steam into the local economy.

The number of cruise ship calls in San Diego increased from 100 in 2000 to 191 this year, and more longshoremen are working than ever before. On typical turnaround days, fuel barges fill the tanks of homeported cruise ships. Anyone who has pumped gas can imagine how much it costs to fill vessels that exceed the tonnage of the aircraft carrier Midway, now a museum at Navy Pier. Shipping agent Tom Jenkins of Paxton Shreve & Hays says bills exceeding $620,000 per fill-up are fairly typical.

Other barges take garbage and waste off the ships, while provisioning trucks resupply the homeported cruise ships with food, linens, souvenirs, flowers and even spare parts. Dollars flow in from the many out-of-town passengers who stay a night or two in area hotels, either before or after their cruises. Those folks also dine in local restaurants and browse nearby shops.

Not only passengers cause local cash registers to ring. Crew members, who generally number one-third to one-half the number of passengers served on a cruise ship, purchase gifts for their families who live around the world.

Even the so-called “visit ships,” like Royal Caribbean’s Monarch of the Seas, that do not base here but make one-day port calls, add to the attendance at the Zoo, Sea World, Seaport Village and Horton Plaza. Bus trips between the cruise ship pier and those destinations, as well as land and bay sightseeing tours, generate more dollars for San Diego’s economy.

So how much money are the cruise lines spending?

Stein Kruse, president of Holland-America Line, estimates his company spends $35 million here annually on a program involving two home-ported ships, the Ryndam and the Statendam. In 2005, a third ship in that line, the Oosterdam, will increase expenditure.

Three ships of Celebrity Cruises — Infinity, Mercury and Summit — also rotate through San Diego on homeported cruises, and Royal Caribbean Cruise’s Legend of the Seas makes some sailings from San Diego.

The consulting firm of Bermello, Ajamil & Partners estimates that total cruise line purchases amounted to $98.1 million in 2002. When passenger and crew member spending is added to that figure, the direct impact on San Diego’s economy hits $132 million. When one considers the economic multiplier effect — that is, money spent by local companies to supply those necessary goods and services — the cruise lines’ total impact in 2002 was about $235 million.

In that same year, 117 cruise ship calls were made, followed by 123 ship calls in 2003. For 2005, expected cruise ship calls already number 211 and more are likely. However, these economic impacts tell only part of the story. The cruise ships also bring an incredible variety of vacation options to San Diegans. Instead of flying to cruise ships based elsewhere, locals can simply drive up to the B Street Pier and unload their baggage.

There are a growing number of destinations available to San Diego-based travelers. There are the traditional seven-day round-trip cruises to the Mexican Riviera ports of Cabo San Lucas, Mazatlan and Puerto Vallarta. There also are round-trip adventures to the Sea of Cortez, with calls at La Paz/Pichilingue and Loreto in addition to Cabo San Lucas. And, starting later this year, Carnival Cruises will begin a season of cruises to Acapulco, Zihuatanejo and Manzanillo, with its speedy Carnival Spirit covering the same ports in an eight-day round-trip itinerary that slower vessels visit on one-way cruises of seven days.

The U.S. Passenger Services Act of 1886 reserves only to ships flying the American flag the right to pick up passengers in one U.S. port and drop them off in another. Foreign flag ships are permitted to make round-trip cruises to and from the same U.S. port, but when a one-way itinerary is offered, passengers must embark or disembark in a foreign port.

Ensenada provides the solution for Hawaii cruises, serving in essence as San Diego’s auxiliary port. One-way passengers gather in San Diego and are bused to Ensenada to board the cruise. Round trippers begin and end the cruise in San Diego. In some cases, the process is reversed with one-way passengers flying to Hawaii and then disembarking in Ensenada for a bus ride to San Diego.

The fly one way, cruise one way formula also works for traditional leisurely one-way trips farther down the Mexico coastline to Zihuatanejo and Acapulco, as well as for trans-Panama Canal cruises between here and Florida with a little bit of the Pacific Coast of Central America and a little taste of the Caribbean en route. A small but intriguing market segment for the San Diego cruise ship program is U.S. West Coast cruising, starting in San Diego and calling in such ports as Los Angeles, Santa Barbara, Monterey, San Francisco or Seattle en route to Vancouver, British Columbia.

Crowded Piers

With San Diego on the verge of attracting more than 200 cruise ships a year, the port sometimes handles as many as three ships on a single day. This growth over the last nine years has been remarkable, from a paltry 21,207 passengers in 1996 to an anticipated 505,474 passengers this year.

Among the reasons for this growth are the city’s well-regarded tourist infrastructure with the proximity of the cruise ship terminal to metropolitan attractions, dedicated local travel agents who sell their clients on San Diego-based cruises and the repeal of a California law that previously had prevented ships calling in two consecutive California ports from opening their on-board gambling casinos, even though they operate in international waters.

Another reason is a public-private booster organization that started as the Cruise Industry Consortium in the 1980s under the late Councilman Bill Cleator and today works with the port’s alert marketing director, Rita Vandergaw. The group, chaired by Chuck Hansen of Viejas Enterprises, is known as the Port’s Cruise Ship Advisory Committee. With links to government officials, the tourism industry, the maritime sector and provisioners, the committee is a problem-solving resource for the cruise ship industry.

Rita Vandergaw, the port’s marketing director, says the port could issue bonds to pay for a new terminal provided the cruise lines give assurances they would homeport in San Diego and not just for one or two seasons. (photo/alandeckerphoto.com)

Other factors have created an influx of cruise ships to San Diego. Since the terrorist attacks of Sept. 11, 2001, American passengers have been wary of flying to foreign countries for cruises as there is a feeling that it is safer to leave and return to a port adjoining American soil. Meanwhile, a shipbuilding boom means more and bigger ships are coming on line. With some foreign venues no longer desirable, cruise lines scout for homeports from which they can offer interesting itineraries.

As good as things are for San Diego’s cruise port, they could change for the worse. That’s the reason port commissioners and staff are working up a request for proposals for renovating the pier and creating a hotel and visitor complex across Harbor Drive on Lane Field — the big parking lot where the home ballpark of the minor league San Diego Padres once stood.

Watching operations on the B Street Pier on days when two cruise ships are in town, one understands why the cruise line industry is dropping pointed hints to San Diego to invest in infrastructure as Los Angeles and Long Beach have.

Bill Sharp, Holland-America Line’s vice president for operations and fleet security, says, “When you think about taking a facility which was designed for one ship and you double the operation, both from the standpoint of volume and the mere presence of another ship, it creates a very difficult day. We get through it, we all find a way to get through it. There certainly is no lack of cooperation. But the problem is in the end your guests and our guests suffer.”

Bill Sharp warns improvements are needed at the cruise ship terminal.

On a hot day, embarking passengers are “standing out there for extreme periods of time and it is not a very pleasant experience,” Sharp says. “And then when you come back (from a cruise) and you have that experience and you have potentially 4,000 people (total passengers from two ships), with everyone trying to get a cab or some sort of transportation, and move their bags, or meet friends and family who are picking them up, it leads to the end of a very enjoyable vacation going south quickly.”

The problem gets worse if the disembarking passengers have been cruising for longer than a week, because they have more luggage.

Sharp says another problem at the B Street Pier is that ships are required to maneuver in such a way as to line up with the gangway structure. In some cases, this can preclude the ships coming in stern first, which a captain may want to do for various reasons.

A 145,000-Square-Foot Solution

To solve these and other problems, the port wants to build across the back of the B Street Pier a multiple-story terminal, with mirror-image facilities from which passengers can access ships on either side. Embarking passengers would use one level, disembarking passengers the other. As part of this complex, separate areas for customs and border protection would be constructed.

Assuming ships continue to get larger and carry more passengers, consultants Bermello, Ajamil & Partners recommend a building of about 145,400 square feet, including spaces in each terminal of these square footages: baggage, 30,000; customs work area, 4,000; customs offices, 4,000; INS work area, 6,000; INS offices, 3,000; check-in, 14,000; lounge, 11,700; and support, 5,000.

Around the terminal a ground transportation area would have 200 linear feet of curb, 10 to 16 bus stalls per terminal, a 15-stall bus marshaling area, 40 spaces for taxis, some short-term parking for 400 to 500 cars, and the possibility of supplemental parking for another 1,000 cars during peak periods.

Some seismic retrofitting is needed for the B Street Pier, and improvements are necessary at the Broadway Pier, which would be used by visiting ships — those not picking up or dropping off passengers — and also might feature a viewing platform.

The terminals would be constructed in phases to minimize interruptions to existing cruises. Consultants Bermello, Ajamil & Partners outline a nearly $112 million construction program in which the terminal’s first phase would cost $27.1 million; the second phase would be $24.3 million; rehabilitation of the pier, $15 million; site development, $5.3 million; on-site parking, $6.2 million; and off-site parking, $33.9 million.

Port Commissioner Steve Cushman says while the Port of San Diego “is faced with providing the infrastructure, it is not the direct recipient of the dollars” that cruise ships bring. Based on the port’s resources alone, “There is no way that we can afford to build the terminal; we don’t have the income generation,” he says.

Accordingly, Cushman is proposing private developers be permitted to become partners with the port. He envisions a high-rise hotel on Lane Field and retail shops physically connected across Harbor Drive to the cruise ship facility where, “When we don’t have cruise ship passengers, we’d have corporate meetings.”

Cushman says he has cruised “extensively around the world, and generally cruise ship terminals are big old warehouses that are not nice. We could put in a first-class facility that would cause more cruise ships to want to come here.” He says such a plan is not without challenges, including how provisioners would access the complex to deliver goods to the ships. “Perhaps,” he says, “the cruise ship terminal could go under the hotel; the tractor-trailers could unload off Pacific Highway.”

Port Commissioner Bill Hall says with San Diego already attracting 500,000 passengers, he envisions 1 million passengers within reach by 2017, provided the terminals are up to snuff.

Bermello, Ajamil & Partners didn’t estimate the cost of a hotel, but figured a conference center would cost $29.8 million if it were a “stand alone” facility, compared to $10.6 million if it were integrated into such a project as Cushman envisions. Creating appropriate retail space would cost another $8.3 million. Assuming the integrated conference center idea were adopted, that would push the project estimate up to $130.7 million, a figure that does not include a private developer’s cost of building a hotel tower.

Vandergaw, the port’s marketing director, believes the port could issue bonds to pay for the project, provided that the cruise lines gave assurances that they would commit to home-porting in San Diego not just for one or two seasons but for a decade or more.

Strong of Holland-America says there is a possibility that not only his company, but others, would be willing to do so. The cruise line’s Kruse, on a recent day when 1,000 local travel agents toured Oosterdam, gave further cause for optimism, saying, “We have become San Diego Homeport’s hometown cruise line.”

It is possible that San Diego could be lulled into a false sense of security, given Holland America speaking so positively about San Diego, and its parent company, Carnival Cruises, planning to bring the Spirit here later this year. Carnival, which operates other cruises from a modern terminal in Long Beach, is pressing San Diego to stop talking about a new terminal and to get on with awarding a contract.

Dick Capen, a Rancho Santa Fe resident and former publisher of the Miami Herald who serves on Carnival’s board of directors, is particularly impatient, saying if San Diego doesn’t improve its port soon, it may find other California ports are more than ready to compete for the business.