Campbell River’s failed cruise ship terminal is being held up as a warning to other communities seeking to purse the holy grail of cruise ship business.
The topic generated a fair bit of buzz at last month’s Vancouver Island Economic Alliance conference.
A panel discussion hosted by the Nanaimo Port Authority was packed with cruise and tourism luminaries both local and international, and delivered to a standing-room-only crowd.
Though the tone was upbeat, and projections of future cruise traffic rosy, the elephant in the room was of course Nanaimo’s own costly and under-utilized cruise ship terminal that, by all estimations, has not lived up to its projections.
What was also clear, if not explicitly stated, is that Nanaimo is at a crossroads.
The failure of the Campbell River terminal looms large in the background. That facility shut down several years ago after ship numbers had dwindled to nothing.
However, cruise ship proponents argue there is hope for Nanaimo yet. They hold up municipalities like Prince Rupert, which saw seven vessels this year, as a working example of how cruise traffic can be lured back after lean years.
During the height of its fundraising push, projected numbers for Nanaimo ranged from 25 to 35 cruise ship visits per year. Campbell River estimated that with a cruise industry growth of seven per cent a year, it would easily get the 10 to 14 ships necessary to break even, and then some.
The reality has been much more stark.
With more than $40 million invested in both terminals, Nanaimo received three ships this year — after two in 2014 — while Campbell River saw its usual zero.
“It’s a huge gamble, that’s all I can pretty well say,” said Robert Pollard, chief of the Wei Wai Kum First Nation in Campbell River. “I don’t know what a better choice would be, but if we had a choice, we wouldn’t have done the cruise ship (terminal).”
Completed in 2007, the Campbell River facility required almost $16 million in public funds to build, including more than $750,000 from the band and $2.3 million from the City of Campbell River.
Despite the lack of traffic, the band remains locked in to paying a yearly water lot lease for the 300-metre-long terminal, which Pollard estimates is at least $20,000 annually.
Though Campbell River had much to offer — glacier skiing, golfing, bear watching, river swimming — it was primarily industry-related factors that led to the drop in traffic, said Pollard.
“It worked, no doubt, when the ships came here. But the ships just stopped coming,” he said.
Terminal boosters had banked on the Jones Act, a U.S. shipping law which requires cruise ships to visit at least one foreign port before returning, to guarantee them traffic.
However, other challenges hit the industry: the recession of 2008, an Alaskan cruise ship gaming and head tax and increasing fuel costs. Cruise lines ended up docking at safe bets like Victoria and Vancouver.
Though Pollard takes full responsibility for the band’s involvement, he said the projected numbers offered to communities by the industry can be convincing, and perhaps misleading.
“They come in and say, ‘We’ll target Campbell River, six stops this year, but within five years you’ll be getting 24 stops,’ for example, and then they calculate how many passengers, and if they’re going to spend how many hundreds of thousands . . . they have that all charted out and they feed that to you, but in the end if they don’t come, there’s zero there,” said Pollard.
“So you spend the big money promoting this. We promoted Campbell River as a destination stop, which was a lot of money in promotions. There was a lot of work done, not just with the band but with local people at different businesses . . . you name it. And when this all fell apart and they didn’t come here, a lot of people lost money.”
Though it was clear by 2009 that Campbell River had entered rough waters, efforts to build Nanaimo’s cruise ship terminal continued.
Completed in 2011, the facility cost $25 million and included $8.5 million from a federal infrastructure fund and $5 million from the province. Prior to the terminal, the city was already attracting ships.
Thirty-three stopped here in 2005.
But the city has never seen numbers that high since.
Since completion of the terminal, it has seen an average of two to four ships, with six in 2014. On average, it is estimated that each passenger will spend $50 to $80 per day. In 2014, the NPA spent $300,000 to promote the terminal.
“What we were seeing as a decline at the time was basically mirrored by what was going on in the industry,” said David Mailloux, manager of communication and public affairs for the NPA. “It wasn’t as though we were doing something wrong, we ran into a timing issue where, when you have an expectation and you build a terminal, you think that you’re building it with the idea that things are going to escalate.”
Today, the bulk of cruise traffic on B.C.’s coast goes almost exclusively through Victoria and Vancouver, which received 230 and 235 ships in 2015, respectively.
The Nanaimo Port Authority expects six cruise ships will visit the city in 2016.