cruise port alternatives in Hampton Roads
Map Source: US Geological Survey, National Atlas
Virginia tourism officials are trying to attract more cruise ships to Hampton Roads. The competition is primarily Baltimore, though Philadelphia, New York and Savannah (Georgia) also draw business away from Virginia.
Baltimore is a shorter drive for passengers coming from the population centers in the Northeast, but Norfolk is closer to Bermuda, the Bahamas, and various other resort destinations. After all, what tourist wants to spend an extra day sailing through the cold Chesapeake Bay during a winter cruise when they could be sitting in deck chairs, holding drinks with little umbrellas and basking in 80-degree warmth in the sunny Carribean? (Answer: tourists who hate driving on I-95 through DC/Northern Virginia, and then through the Hampton Roads Bridge-Tunnel to get to Norfolk.)
Why do Virginia officials want cruise ships to dock at Virginia ports? In addition to the fees (up to $10,000/night for a 900-person floating hotel), there's plenty of spending money in the pockets of passengers. When a cruise ship with 500-2,000+ passengers docks and the average tourist spends $100 or so in town... and you can see why Virginia officials are willing to build facilities to stimulate more cruise ships to visit Hampton Roads. Extra business from tourists generates more sales/meals tax revenues.
Deciding where cruise ships should dock in Hampton Roads involved competition between Newport News and Norfolk. On December 7, 2000, the USS Wisconsin took up residence next to the Nauticus museum in Norfolk harbor. At that time, the Nauticus dock could handle only afternoon visits from cruise ships. Overnight cruises to the Carribean used the Newport News Marine Terminal, across Hampton Roads. Newport News officials loved the income associated with the cruise business - after all, the tourists required minimal services but contributed substantial tax revenue to the city. However, the Newport News Marine Terminal was busy handling cargo; it could not accomodate more cruise ships.
While the state's Virginia Tourism Corporation studied how to attract more cruise ship visits to the state, the Newport News Industrial/Economic Development Authority studied how to ensure those ships continued to stop in Newport News. However, Norfolk was also angling for a larger slice of the tourism pie as well. By 2002, the cruise ships were docking at a temporary facility at Town Point in Norfolk, on the other side of Nautilus from the USS Wisconsin.
Elected officials in Tidewater will all nod their heads and agree in public that it's great to have tourists in the area, and they will celebrate the Hampton Roads region as a destination to visit. The travel and tourism-related businesses in both North Hampton Roads and South Hampton Roads will benefit, if they can combine efforts to convince visitors to come to the Hampton Roads region rather than go to the North Carolina beaches, Richmond, Atlanta, etc.
The HarborLink ferry connected Nauticus in Norfolk and the Virginia Air and Space Center in Hampton starting in 1992. It was sponsored by the Norfolk Convention and Visitors Bureau and the Hampton Convention and Visitors Bureau. Visitors who stay long enough to see *both* communities are likely to spend the night and buy meals at various restaurants in the region, and in one effort to attract business HarborLink advertised "Make total purchases of over $100 in Hampton and return trip to Norfolk is free."1 However, HarborLink was discontinued in 2002, when it became clear that tourist and commuter traffic would remain insufficient to cover costs.
Cooperation on regional tourism can increase sales tax revenues across the Hampton Roads region. However, Hampton Roads is a collection of competing, as well as cooperating, jurisdictions. At some point, political lines dividing jurisdictions on the regional map become critical.
When the cameras are turned off, it's natural for local elected officials to direct their staff to ensure sales taxes from tourists are returned to a particular local jurisdiction. Newport News tax revenue does not fund Norfolk schools, and Norfolk taxes do not support services in Newport News. If the local sales tax collections are high, then the local property tax rate can be kept low and the local voters can be kept happy.
It matters where tourists actually spend their money. A percentage of the state sales tax goes back to the jurisdiction - not the region - where the tax revenue was collected. Meals taxes and occupancy taxes on hotel rooms are local taxes. Though some of that revenue may be dedicated to the regional tourism organizations, most is used primarily for providing services (especially schools, fire, and police) in one jurisdiction.
Local officials need local (as well as state and Federal) revenue to pay teachers, maintain government buildings, etc. When tax revenue is credited to one particular jurisdiction, then voters in that particular city/county can receive good services from their local government along with a low property tax rate. If the City of Poquoson does not get business from cruise ships docking in the City of Norfolk, then landowners in Poquoson may have to pay higher property taxes than landowners in Norfolk.
Before September 11, 2001, the Virginia Port Authority started to plan a major upgrade of the Newport News Terminal. The Virginia Port Authority is a state agency, so it could not arbitrarily provide state funding for Newport News while ignoring potential other sites. The state agency had to focus on regional cooperation, and could not select a "winner" in a competition for building infrastructure to attract cruise ships without documenting its reasons.
Taking advantage of that delay, Norfolk built temporary facilities and obligatted local funds to draw cruise ships to the other side of the harbor in 2002. In 2004, Norfolk committed $36 million in city funds to build the permanent Half Moone Cruise and Celebration Center next to Nauticus. (The Virginia Port Authority contributed an additional $5 million for improving the piers and other infrastructure.) The city calculated that it would have to almost double the number of people choosing Norfolk as their port of embarkation for a cruise, but decided it was a good risk.2
The $36 million Half Moone Cruise and Celebration Center on Town Point (next to Nauticus and the USS Wisconsin) opened in April, 2007. Norfolk quickly attracted business away from Baltimore, a competing port of call for cruise ships - but an extra day of sailing up the Chesapeake Bay, when customers on cruise ships want to travel out into the Atlantic Ocean.3 In addition, the Norfolk cruise terminal was designed to attract trade shows, parties, exhibitions, and other events that would draw people to the city and its downtown.
Local officials justified constructing the new cruise ship terminal by claiming taxes generated by more tourists would pay for most of the cost, and the taxpayers of Norfolk would not be stuck with the bill.Cruising has become an economic "driver" for the Norfolk economy, though the business has its ups and downs. Back in 2003, one local official estimated the new terminal would need 150,000 passengers annually to be cost-effective. In 2008, 28 cruise ships "called" at Norfolk and brought over 100,000 passengers, but in 2009 that dropped to 17 ships bringing just 64,000 passengers.4
The Virginian-Pilot paper reported in 2008, "while the Half Moone produces enough revenue to offset its operating expenses, it is falling short of covering its annual construction debt payment, according to financial information provided by the city."5. The mathematics of calculating economic benefits from tourism can be confusing, based on various assumptions about business with/without the Half Moone Cruise and Celebration Center. The loss of Royal Caribbean business after 20106 made the business risk of Norfolk's investment even more clear.
1. HarborLink website, http://www.harborlink.com/ (last checked August 12, 2011)
2. "Cruise Terminal Plans Move Forward," The Virginian-Pilot, April 21, 2004 www.cruisenorfolk.org/php-bin/news/showArticle.php?id=7 (last checked June 11, 2006)
3. "Sleek new cruise terminal set to welcome travelers," The Virginian-Pilot, April 7, 2007, http://hamptonroads.com/node/247981 (last checked August 12, 2011)
4. "Temporary terminal to shield waiting travelers at Nauticus," Hampton Roads Business Journal, January 12, 2004, http://www.insidebiz.com/ME2/dirmod.asp?sid=6E1D4E1DFAE84C08B7F5FB89A6769EBF&nm=PREVIEW&type=Publishing&mod=Publications%3A%3AArticle&mid=8F3A7027421841978F18BE895F87F791&tier=4&id=D6EF54A6AD924961A175E35D1CDBA809
- "Norfolk continuing transformation," Virginia Municipal League Town and Country magazine, "Local cruise industry hits rough seas," October, 2008, http://www.vml.org/VTC/08VTC-PDF/08OctVTC_Web1-29.pdf
- "Local cruise industry hits rough seas," The Virginian-Pilot, October 20, 2009, http://hamptonroads.com/node/527720 (last checked October 21, 2009)
5. "One year in, cruise ship terminal is a beacon for Norfolk," The Virginian-Pilot, May 1, 2008, http://hamptonroads.com/2008/04/one-year-cruise-ship-terminal-beacon-norfolk (last checked October 21, 2009)
6. "Norfolk cruise port takes a hit with Royal Caribbean departure," Hampton Roads Business Journal, June 11, 2010 http://www.insidebiz.com/news/norfolk-cruise-port-takes-hit-royal-caribbean-departure (last checked August 12, 2011)