The Port of New Orleans is closing in on a second multiyear commitment with a big cruise line, having just secured one with Carnival Cruise Lines for the next five years.
The port is in the final stages of negotiating a new agreement with Norwegian Cruise Line, port director Gary LaGrange said.
LaGrange said he hopes to have an announcement on a new, four-year deal in the next 30 to 60 days. "We're right at the goal line," he said.
If LaGrange can strike a four-year deal, it would likely give New Orleans a complement of three big ships doing turnarounds in the Big Easy through at least 2018.
Carnival is the busiest cruise carrier out of New Orleans, which has two terminals in the heart of the city and is working on a third. Currently it sails the 3,652-passenger Carnival Dream and 2,052-passenger Elation on mostly western Caribbean itineraries.
The new agreement provides that Carnival will keep at least the capacity it already operates in New Orleans through 2019, namely a Dream-class and Fantasy-class vessel.
There are three one-year extension options after 2019. The agreement isn't written to specify a minimum annual passenger count, LaGrange said, but it provides for minimum annual revenue guarantees of $3.2 million.
If all the options are exercised, the deal would provide the port with at least $25.3 million over eight years.
The port can use the security of that revenue stream to fund capital improvements, LaGrange said.
For example, last summer Carnival asked for $2.3 million worth of upgrades to the port's Erato Street terminal to accommodate the Dream. "We saw that as a good investment, but it wouldn't have been an investment that would be easy to make if we only had requests for berthing agreements," LaGrange said.
Likewise, the port has funded improvements at its Julia Street terminal with guaranteed cruise revenue and is planning a third facility, the $30 million to $35 million Poland Avenue terminal, due for completion in 2016.
"Where we're at with the two existing terminals, it's pretty difficult to grow further," LaGrange said.
The Julia Street terminal is now used by Norwegian and Royal Caribbean International, which for the past four years has sailed the Serenade of the Seas from New Orleans during the winter months.
Royal's four-year agreement with the port expires next year, and LaGrange said he's been notified that Royal won't be returning after departing in the spring.
"They indicated to us it has nothing to do with New Orleans; they just have a limited number of ships right now, and they want to test other markets," he said.
Norwegian during the past winter season sailed the Norwegian Jewel out of New Orleans. In the fall, the Norwegian Dawn is scheduled to move from Tampa to take its place.
The Julia Street terminal also serves transit calls from lines such as P&O Cruises, Aida Cruises and others. Next year, Crystal Cruises will make its first stop in New Orleans in 10 years, LaGrange said.
There were 234 ship calls in New Orleans in 2013, according to port spokesman Matthew Grisham. Last year 987,860 passengers came and went through New Orleans, about 400,000 of them carried by Carnival.
Cruise passengers provide a meaningful lift to the city's already robust tourist trade.
About 80% of the passengers using New Orleans as a homeport are from outside Louisiana, according to a study by Business Research and Economic Advisors, a consulting firm. More than 60% stay in a New Orleans hotel pre- or post-cruise, the study said.
Those passengers spend an average of 2.4 nights in a hotel and directly spend $355 a day, compared with the $95 spent on average by passengers in other ports, according to CLIA.
Larger ships and year-round deployments in New Orleans have boosted the port's ranking among North American cruise ports from ninth largest in 2011 to sixth largest last year, according to CLIA.