When Carnival Cruise Lines last sailed from the Alabama Cruise Terminal in 2011, Mobile was left with a vast and underutilized building floating a mountain of debt. Carnival and Mayor Sandy Stimpson announced last week they are finalizing a contract to bring a ship back to town, but the details are still under wraps. It’s too soon to tell whether the arrangement will cure the cruise terminal’s ills, or merely provide a shot in the arm.
In the nearly five years since Carnival left, the $26 million cruise terminal has been rented out as an event space and the city has been paying down debt service at a $1.8 million annual clip. The city still owes about $19 million on the building, dedicated in 2004, according to information from Stimpson’s office. Stimpson said in a previous interview with Lagniappe the debt service could be paid solely through parking fees if the garage was regularly full, but after last week’s announcement his administration suggested the new agreement will include additional sources of revenue.
“Parking is a piece of revenue, but it’s not the only piece,” Stimpson spokesman George Talbot said. “Our objective is to make sure we’re covering our debt service.”
Retirement Systems of Alabama contributed to the initial cost of constructing the Alabama Cruise Terminal, but the city purchased it in 2008 to reduce the interest rate, Stimpson spokeswoman Laura Byrne said. At the time of the purchase, the city was paying about 8 percent interest on the debt, she said. It has since dropped to less than 5 percent. In total the city has paid about $10 million on the building.
But even in its state of limbo, manager Shelia Gurganus said the terminal has stood prepared to process passengers. A new cruise ship could breathe new life into the building, as a full-time ship would provide about 150 jobs at the facility.
Alabama Port Authority CEO Jimmy Lyons said the port is equally prepared, with tugs, pilots, fuel and other support already in place.
“It’s plug-and-play as far as we’re concerned and I think it’s wonderful. You hate to see any kind of facility go underutilized like the cruise terminal,” Lyons said. “I know it has been a burden on the city.”
At a news conference announcing the imminent deal last week, Stimpson offered little detail, but said he hoped to deliver a contract to the City Council for approval by the end of the month. At the council meeting this week, he said it would be sooner. Stewart Chiron, a widely cited industry expert known as “The Cruise Guy,” speculated the agreement would include economic incentives for Carnival from the city.
Using Houston as an example to illustrate what a new deal could cost Mobile, Chiron noted it lured both Princess Cruises and Norwegian Cruise Line with millions in incentives, but both companies have since announced they’re leaving. In another example, Chiron said Brownsville, Texas, was asked to spend $100,000 on a feasibility study for cruises before a ship ever came to port.
Lisa Ashley, a spokeswoman for the Port of Houston, confirmed both companies are leaving after a relatively short courtship. Princess decided to not renew its contract with the port following the 2016 season and Norwegian will also book its last cruise from Houston in 2016. Norwegian sailed two ships from Houston for more than 10 years out of the port’s Barbour’s Cut Terminal before moving to Bayport Cruise Terminal in 2014, she said. Ashley referred questions about the companies’ reasons for leaving to them. She said the port offered marketing incentives to both.
Chiron believes Mobile will likely be on the hook for part or all of the marketing effort to attract bookings and may have offered to waive port fees, among other things.
As far as destinations are concerned, Bob Bender, president of Springdale Travel, offered an exciting possibility: “What’s changed? Why now?” he asked hypothetically. “Sit here and look. The only dynamic I see changed along the Gulf Coast is Cuba, so let’s hope that’s the destination.”
Previously, Carnival cruises from Mobile offered stops in Mexico, Jamaica and Grand Cayman, but Chiron seemed amused by Bender’s suggestion, and said the real answer in Carnival’s return lies in an improved national economy, the fact that Carnival has 24 ships now plus a new one taking its maiden voyage next year and fuel prices that have plunged since 2013.
“Why are they entertaining it? We’re in a different economic situation, there are millions of potential customers within a four-hour drive of Mobile and Carnival is open to retesting waters to see if there is any gold in those hills,” Chiron said. “Mobile has a great cruise terminal, great people and great support.”
New ships, new ports
In May, Carnival spokeswoman Jennifer De La Cruz confirmed the company had two new ships under construction.
“The first is Carnival Vista, which will enter service in Europe in May of 2016 and then begin operating from Miami late next year,” she wrote in an email. “There is also a sister ship to Carnival Vista scheduled for delivery in 2018.”
With the expanded fleet, Carnival had planned to move some of its other ships around. Spokesman Vance Gulliksen wrote in an email the company currently has six ships servicing ports along the Gulf Coast including one in Tampa, three in Galveston and two in New Orleans.
But beginning next year, the Carnival Magic is leaving Galveston for Port Canaveral, Florida. It will be replaced shortly thereafter by the Carnival Breeze, which is currently based in Miami, he wrote. The Triumph is leaving Galveston for New Orleans but will be replaced by the Liberty in the spring, but Gulliksen couldn’t shed light on which ship will be heading to Mobile.
With the city previously hosting the Holiday and the Elation, Bender speculated last week that Mobile may host the Carnival Fantasy, a 25-year-old ship currently based in Charleston, South Carolina, with a capacity for 2,675 passengers. However, Guilliksen wrote, the Fantasy will be moving from Charleston to Miami in February and the Ecstasy will take Fantasy’s place.
Chiron suggested Mobile will host another “Fantasy-class” ship, the oldest and smallest of Carnival’s fleet, but still capable of carrying as many as 2,600 passengers.
Meanwhile, Charleston is an example of a smaller port that has successfully hosted a Carnival cruise ship for years. The Fantasy has been traveling from Charleston to the Bahamas and Grand Turk since 2009, Guilliksen wrote. Erin Dhand, spokeswoman for the South Carolina Ports Authority, said Charleston has been active in the cruise industry since before 2000. In addition to being the Fantasy’s home port, Dhand wrote that Charleston, which is similar in size to Mobile, is a port of call for many of the major cruise lines, like Royal Caribbean, Norwegian and others.
In addition to helping to pay off debt on the terminal that was built for the industry, a new cruise ship would have positive economic implications for the rest of the city.
Mike Lee, president of Page and Jones and an original member of a cruise ship task force created by former mayor Mike Dow in 2002, said even though it’s a drive-in market, in the five-year period Carnival regularly departed from Mobile it resulted in 15,000 to 20,000 room nights annually at local hotels and benefited restaurants and taxi services on the ground as well as ship agents, line handlers, tug companies and fuel services at the port. Lee also wanted to make one point in particular regarding the city’s on-again, off-again history with Carnival.
“People have asked me if I have any ill feelings with Carnival and I always tell them to stop and consider something: There are four major cruise lines and many other small ones and nobody else has ever given Mobile a shot,” Lee said. “I think we should be thrilled with Carnival because they are the only ones who have made commitments and investments in Mobile and those have been meaningful.”
That’s why the push to bring a ship back to Mobile has never stopped since Stimpson took office. Lee said he was contacted shortly after Stimpson took office and traveled with the new mayor to Miami in February 2014 to attend an annual trade conference with cruise lines to let them know Mobile was still viable and interested in a partnership.
“Efforts never really stopped with the task force and the city to stay informed so if it came up where vessels were available, [the cruise lines] would remember we’re a home port and we’re available and they were successful here. We’ve always been encouraged we would get a ship back. It’s just that kind of industry where things happen quickly and you have to anticipate the changes and be able to respond. The mayor did a good job getting all the details together.”
Gabriel Tynes contributed to this report.
Updated to correct comments made by Lisa Ashley, a spokeswoman for the Port of Houston.