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Business / Putting a value on the loss of the cruise ship season

The cruise ship Magellan anchoring off The Knab in early March. Photo: John Waters

LERWICK Port Authority says it is too early to put a figure on the economic impact caused by the loss of this year’s cruise ship season – but the local tourism industry estimates the loss of income will amount to millions.

At the start of the year the port was confident to set another record-breaking season with over 100 cruise ships to call bringing an expected 90,000 visitors to the isles.

But after Covid-19 struck in early March and its implications began to turn life upside down, tourism, and with it the cruise ship sector, was effectively wiped out by the pandemic.

There was something of an uproar in the community when the Magellan called at Lerwick harbour on 13 March and passengers were allowed to land at a time Shetland had already six confirmed coronavirus cases.

At the time Lerwick Port Authority said all the protocols had been followed with screening and pre-arriving boarding checks being carried out.

Since then most of the 100 or so arrivals of cruise ships have been cancelled with just 12 cruise ships and three sail training vessels (Statsraad Lehmkuhl) left in the diary between 8 August and 14 October.

The economic impact is not just being felt by Lerwick Port Authority. The regular arrival of cruise ships with hundreds, and occasionally thousands of passengers and crew, has also created jobs and additional income for bus operators, tour guides, visitor attractions and many shops and cafes in Lerwick’s town centre.

Last year the port brought international recognition to Lerwick when the town was ranked among the top five British and Western Europe cruise ship destinations.

Lerwick Port Authority senior commercial executive Victor Sandison said it was unknown at this point whether any late season calls would happen given the ongoing uncertainty.

He said: “The final outcome for the 2020 season is unknown at this stage. With the level of growth in previous years, cruise has become an increasingly important sector for the port.”

Cruise liners calling at Lerwick pay in harbour charges either £0.17 per gross tonne if they berth at one of the port’s quays, or £0.085/GT when at anchor.

At just over 55,000 gross tonnes, the Seven Seas Explorer, due to call at Lerwick Harbour on 8 August, would have been required to pay around £9,400 in harbour charges alone.

In 2018, Lerwick Port Authority handled a cruise ship tonnage of almost four million.

There is also a charge (capitation) of £1.81 (each way) for every adult passenger who comes ashore.

“The economic impacts of having such a reduced number of calls are also being felt by the local service providers who support each visit and the venues, businesses and town centre retailers who look forward to the extra seasonal footfall,” Sandison added.

But Emma Miller of Shetland Tourism Association and Living Lerwick was prepared to be more specific albeit on the basis of educated guesswork.

In the absence of an economic impact assessment as to the accurate value the growing cruise sector, she believes that bus operators, taxis, tour guides, visitor attractions, security services, shops and restaurants are turning over as much as £3 million in addition to the port’s income.

“We don’t have firm figures for cruise passenger spend and economic impact, but even taking a conservative estimate, our tourism providers and local shops are losing out on a colossal amount of income this summer,” Miller said.

“On top of the trade lost from overnight visitors and those visiting family and friends, who also contribute extensively to our economy, this is an unsustainable loss for our fragile industry.”

A visitor survey carried out on 2019 identified a visitor spend of almost £36 million during the year. This was an increase of £23 million from the previous survey in 2017.

Miller continued: “With only two months of the main visitor season left and people, perhaps rightly, still cautious of travelling, we will not recover even half of our tourism income this year.

“The UK Government need to recognise that this industry cannot recover on its own and look again at the extension of furlough for businesses in this sector.

“If we lose businesses because they just can’t afford to continue trading over the winter then our recovery will be an even longer and difficult path than other industries.”

Looking ahead to 2021 and beyond, Sandison said cruise ship bookings were looking healthy but conceded that there was a level of economic and Covid-19 related uncertainly.

“We maintain close relationships with cruise operators who plan itineraries a number of years in advance,” he said.

“Our future bookings are healthy although this may change as the impacts of this season, including new protocols going forward, filter through.”