1. 1 st Posidonia Sea Tourism Forum Panel 2 – The Economics of Sea Tourism Athens, June 21 st – 22 nd 2011 Giovanni Spadoni President of MedCruise Port of Livorno 2000 srl Technical & Commercial Director

2. West Med/ Atlantic Adriatic East Med Black Sea MedCruise keeps the Med together

3. MedCruise Ports (2010)

4. Industry trends – growth! Construction of megaships – and the need to expand port infrastructure More ships, bigger ships – multiple ships at one port Opportunities to expand marketing to new niches New itineraries needed – growth in new regions New ports needed – marketing opportunities Increased fuel costs – itinerary modifications, new opportunities

5. Cruise: a good investment choice Average annual traffic growth of more than 10% in Europe and the Mediterranean over the last 10 years. High levels of optimism in the industry High levels of passenger satisfaction –Product considered superior & better value than other tourism products –Repeat customers Immense potential for growth (latent demand)

6. Cruise Industry Model : the Players CRUISE LINES SHIPS SHIPYARDS TOURS & VENUES HOTELS/RETAIL DESTINATION PORTS AIRPORTS PORT AGENTS RECEPTIVE AGENTS PASSENGERS TRAVEL AGENTS

7. Why would a port want cruises? Requires a separation of uses at the port Requires expensive new port infrastructure Requires qualified personnel Requires state-of-the-art security systems Requires building new relationships with local tourism, city officials and the cruise industry community

8. The benefits Prestige

9. The benefits The development of a passenger port

10. … the main benefit Tourism – local industry with local profit Cruise tourism doesn’t compete with other land- based tourist products Cruise ship passengers aren’t always the same tourists that would visit your destination on their own Cruise passengers can experience your destination and decide to return to spend more time, and money

11. … the main benefit Cruise for local economic development –Example: Expenditures at Destination Excluding airfares, cruise passengers spent an average of nearly €70 at embarkation port cities. On average, cruise passengers then spent another €61 at each port visit on their cruise itinerary. –Source – GP Wild Intl, Ltd and BREA

12. PORT PRODUCTS MARKET COMPETITION Port Infrastructure € FinancingFinancing Indirect/Induced Impacts Private and/or Public Investors € Cruise Industry Model : Port Finance

13. DIRECT FOREIGN TRADE TOURISM Port Infrastructure National Debt ▼ ▲Accounts Balance Goal: Increase Foreign Revenue Foreign Investments Privatisation Public Entities Cruise-related Businesses Greek Services Greek Supplies International Payments Provisions sold to Cruise Lines Passenger and Crew Purchases

14. Governance of Cruise Terminals Partnerships between Port Authorities, Cruise Terminals and Cruise Companies play a significant role in investment and management decisions of every shipping player; Cruise lines are faced with decisions to directly control some specific operations and to obtain preferential port spaces in order to gain competitive advantage over cruise competitors.

15. Governance of the Cruise terminals Italy and Europe: Different forms of terminal governance with combined public and private sector involvement: – Barcelona Palacruceros = public-private partnership – Marseille MPCT approved by European Commission operated by Costa, MSC and Louis Cruises. Partnerships between the public and private sector are increasingly being preferred as a tool to attract capital for infrastructure investment and as a way to distribute the cruise management risks between the public and private sectors.

16. Governance of the Cruise terminals The Italian Model: Port Authority = Landlord. Concession = Long term Instrument to commit the management of the Passenger Port and the Cruise Terminal to a Private/Public Company. The P.A.: –Fixes the objectives to be reached; –Approves the Business Plan; –Controls its achievement.

17. GOVERNANCE AND EFFICIENCY OF ITALIAN CRUISE TERMINALS Research presented at 2010 Annual Conference of the International Association of Maritime Economists, Lisbon 7-9 July 2010 Professor Assunta Di Vaio Business Administration Department, University of Naples “Parthenope” Via Medina, 40 – 80132 – Naples, Italy Email: susy.divaio@uniparthenope.it Telephone: +39.0815474766 Fax: +39. 0815522313

18. Governance of the Cruise terminals PortNameTypePropertyShares 1SavonaPalacrociere SavonaS.P.A.Private100% Costa Crociere 2GenoaStazioni Marittime spaS.P.A.Private/Public10,22% P.A. 23,85% Finporto (P.A.) 5% Genoa Municipality 32,01% G.N.V. 5,91% Costa Crociere 13,24% Marinvest (MSC) 7,33% Moby Lines 2,44% Tirrenia 3LivornoPorto di Livorno 2000 srlS.R.L.Public/Private72% P.A. 28% Chamber of Commerce 4CagliariCagliari Port AuthorityInstitutionPublicN.A. 5PortoferraioPiombino&Portoferraio Port AuthorityInstitutionPublicN.A. 6CivitavecchiaRoma Cruise TerminalS.R.L.Private33,33% Costa Crociere s.p.a. 33,33% Royal Caribbean Cruises Ltd. 33,33% Marinvest s.r.l.(MSC)

19. Governance of the Cruise terminals PortNameTypePropertyShares 7NapoliTerminal Napoli spaS.p.A.Private/Public5% A.P. 20% Royal Caribbean 20% Costa Crociere 20% Marinvest(MSC) 20% Terminal Trade 10% Intership srl 5% MSC crociere 8MessinaATI Comet SRL-Messina Sea TerminalConsortiumPrivateN.A. 9PalermoPalermo Port AuthorityInstitutionPublicN.A. 10BariBari Porto MediterraneoS.R.L.Private-Public5% Banca Popolare Bari In 2010 the concession expired and Port Authority assumed the commercial and marketing management of the cruise terminal. The Terminal services were assigned by an international bid to a private Company. 30% Consorzio del Porto di Bari 5% Venezia Terminal Passeggeri 10% Fin.Mil. Bari 10% M.P.M.S.R.L. Bari 15% Iniziative Portuali & Partecip. S.R.L.BA 15% Impresa Logistica Portuale SRL BA 5% Servizi Integrati di Logistica SRL BA 5% Camera di Commercio BA

20. Governance of the Cruise terminals PortNameTypePropertyShares 11VeneziaVenezia Terminal PasseggeriS.p.A.Public-Private35,5% APV INVESTIMENTI SPA. 22,18% Finpax srl 22,18% Aeroporto di Venezia SAVE spa 17,5% VENETO SVILUPPO S.P.A. 2,5% Camera di Commercio Venezia 12TriesteTrieste Terminal PasseggeriS.p.A.Public100% P.A. Fully privatized in 2010

21. Governance of the Cruise terminals PortRegimenCoveredPier LengthFuture 1SavonaConcession 2003-20234800 sq.mt450 m. 2GenoaConcession 1987-20405 Terminals3000 m. 3LivornoConcession 1997-20292 Terminals1800 m.+commercialPrivatization-P.A.minority 2011 4CagliariP.A. Direct Management1 Terminal350 m.+commercialPrivatization 2011 5PortoferraioP.A. Direct ManagementTransit150 m + roads 6CivitavecchiaConcession 2004-20443 Terminals2622 m. 7NapoliConcession 2005-2035 1100 m.+commercial 8Messina Concession only for the services 2006-2011550 sq.m.800 m.New Terminal-Privatization 2012 9PalermoP.A. Direct Management3000 sq.m700 m. 10BariConcession Expired 2009 2370 Sq.m.+ Ferry terminal300 m. P.A.Direct P.A.Management since 2010-security-safety- cleaning services committed by bid to in 2010 11VeneziaConcession 1999-202547.267 sq.m.2.809 m. 12TriesteConcession 2008-20238.000 sq.m.480 m.Privatization 60%

22. Governance of Cruise Terminals Direct management: when the cruise terminal is managed by port authorities (Cagliari,Messina, Palermo, Portoferraio) Full public management: when a public company manages the terminal (Bari Porto Mediterraneo Srl, Trieste Terminal Passeggeri S.p.A., Venezia Terminal Passeggeri S.p.A., Porto di Livorno 2000 Srl) Mixed management: when the cruise terminal management is over 50% private (Terminal Napoli S.p.A., Stazioni Marittime S.p.A.) Private management: when the management is entirely privately operated (ATI Comet Srl – Messina Sea Terminal, Palacrociere of Savona, Roma Cruise Terminal Srl).

23. Governance of Cruise Terminals a) Technical efficiency (TE) of cruise terminals improves when the terminals are operated by private companies under a regulatory regimen; b) TE decreases when the terminal management type is public; c) TE increases when the cruise terminals are owned by a combination of public and private actors but predominantly by the private sector.

24. Conclusions Important development: participation of the private sector in the ownership, operations and management of the cruise terminals; The dataset shows how the intervention of the private sector in the ownership and operation of the terminals increases the efficiency levels; The duration of the concession contract, on average 20/30 years, does not allow competitive behavior from the various management operators.

25. Thanks! Giovanni Spadoni President of MedCruise Port of Livorno 2000 srl, Technical & Commercial Director 1 st Posidonia Sea Tourism Forum Panel 2 – The Economics of Sea Tourism Athens, June 21 st – 22 nd 2011