Port banks on parties to make cruise terminal profit 

click to enlarge Port of San Francisco officials are considering ways to maximize revenue at the $100 million James R. Herman Cruise Terminal even as construction continues at the site. - MIKE KOOZMIN/THE S.F. EXAMINER
  • Mike Koozmin/the s.f. examiner
  • Port of San Francisco officials are considering ways to maximize revenue at the $100 million James R. Herman Cruise Terminal even as construction continues at the site.

When it opens in September, The City's new $100 million cruise ship terminal will be more than a place for luxury ocean liners to disembark thousands of tourists eager to spend the day, and a fair bit of money, in San Francisco.

It will also be The City's newest venue for concerts and parties. This dual use of the facility is necessary, the Port of San Francisco says, or else it stands to lose money on its investment in the high-tech terminal.

The first cruise ships are scheduled to dock at the new James R. Herman Cruise Terminal at Pier 27 at The Embarcadero and Chestnut Street on Sept. 18.

The cruise terminal's grand opening completes a 20-year effort to replace the aging, too-small and hard-to-access Pier 35 as San Francisco's main dock for cruise ship traffic.

But the terminal at Pier 27, which served as the concert venue for the America's Cup last summer, will also be an attractive venue for show promoters and corporate events, Port officials hope.

The Port is banking on booking up to 67 private events at the terminal in the next fiscal year, which begins July 1, according to documents.

For instance, if only 45 events -- including corporate shindigs, weddings, conferences and trade shows -- happen, and if only 70 ships visit, the Port could lose more than $1 million a year, according to a Port estimate.

Cruise traffic has nearly tripled since the late 1990s, boosting San Francisco's vital tourism industry. Last year, 64 cruise ships docked at Pier 35, according to the Port, which finished its cruise ship operations $217,850 in the red for the year.

Already, 2014 is projected to be a "record year" for ship traffic, according to Port spokeswoman Renee Dunn Martin, with 74 ships and 260,000 passengers expected.

But with more boats come more costs, as the Port begins paying off $4.2 million a year in debt incurred to build the terminal.

To stay afloat, the Port has raised the fee for passengers to disembark from $12 to $18 per passenger. The Port is also scheduled to approve today a contract with Metro Cruise Lines to manage operations and promote the terminal as an event venue.

In 2015, 84 ships are booked to dock at the Port. If that number holds, the Port would need to book six more ships and dozens of events and have 180 paid parking spaces in order to break even on the cruise terminal, according to revenue projections.

The Port plans to rent out the terminal for an average of $46,000 per event. So far, companies including LinkedIn and Salesforce.com have reserved the terminal for events this year, Port staff said, and there is "great interest" for 2015, Martin said.

The Port hopes to attract up to 90 cruise ships each year. If the pier is booked solid with 90 ships and 67 events -- with activity at Pier 27 for 330 days out of the year -- the Port could take home around $533,000 in profit, according to records.

The steep bill to build the terminal worried Port Director Monique Moyer. In a January 2012 email unearthed by SF Weekly, Moyer worried that building the cruise terminal would doom the Port to fiscal insolvency.

"Frankly, the cruise terminal isn't worth the risk," Moyer wrote at the time.

Waterfront activist Jon Golinger -- who led the effort to stop a luxury condominium complex planned for the waterfront at the ballot last year and is spearheading the initiative on June's ballot to put waterfront developments before voter approval -- agrees, saying the Port's current plan for the pier is "designed to fail."

"That is shocking. They'll lose money if they use it solely as intended [as a cruise ship terminal]," he said. "It's going to put massive pressure on the Port to get any event under the sun there."

About The Author

Chris Roberts

Chris Roberts

Chris Roberts has worked as a reporter in San Francisco since 2008, with an emphasis on city governance and politics, The City’s neighborhoods, race, poverty and the drug war.
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