Is it really $20 million?



To the Editor:

“$20.2-million for Bar Harbor in 2016!” screamed the headlines. It was in all the major newspapers up and down the coast of Maine and beyond.

But where is all this money? Who is making all this money touted by an economic study the Town of Bar Harbor had done in 2016?

I decided to mathematically analyze the $20.2-million study and was appalled by what I found.

It turns out $20.2-million is a 99.333 percent exaggeration. Only $135,000 stays in the pockets of any Bar Harbor year round residents.

After two years of investigative research on the cruise industry and cruise ship passenger spending I have found a rather straight forward way to get closer to the truth then “randomly” handing out a tiny amount of mail in surveys.

Anyone can see with their own eyes $108 is not being spent by every passenger. If you don’t mind sitting in your car for a half hour, pencil in hand, next to the harbormaster’s office, you can observe and count the passengers coming down the ramp in single file, shopping bags in hand. Only between 1 in 3 and 1 in 7 passengers carry a retail purchase. The number will depend on the ship and the weather.

Over the past two seasons I have counted every passenger that disembarked from 7 large cruise ships totaling 9,814 passengers who together carried 1995 shopping bags of various sizes.

Also, 6 one-hour quick counts, on six different cruise ships, simply to check the bag per passenger rate, amounted to an additional 1,130 passengers who carried another 212 bags.

All told 11,000 passengers carrying 2,207 bags. On average 1 out of every 5 passengers carried a shopping bag. That’s an 80 percent reduction on the study’s supposition that every passenger bought $50 worth of retail products.

Almost every store designs their own bags and it became apparent that four stores were making 75 percent of the sales. Two in particular dominated the sales. One of those is owned by Bar Harbor year round residents while the other is owned out of state.

One extreme over-estimation by the 2016 study is the claim that 46percent of the passengers take ship-sponsored tours. On three different occasions I asked tour bus operators about how many took the ship-sponsored tour bus ride that day. Their answer equated to 5 percent. That is 90 percent less than 46 percent.

The cruise-sponsored tour money goes to the Lewiston and Bangor bus companies and their drivers and a large cut goes to the ship. However, there is approximately $50,000 in tour guide wages, paid to guides who live in Bar Harbor. Even though the study overestimated the tour bus business by almost 9 times over, it makes little difference to the bottom line for Bar Harbor. Except for $50,000 in tour guide wages, the study’s $4.7-million for cruise sponsored tours does not stay in Bar Harbor. $20.2-million becomes $15.5-million.

I wouldn’t be surprised to find that most passengers are taking the free shuttle into ANP. I heard recently from one of the Island Explorer drivers that the cruise ship passengers are at times crowding his bus.

Another error concerning exactly how many ships came to Bar Harbor results in another reduction of $2-million. As reported by the Islander Apr. 20, 2017, after the economic study was made public, only 105 ships actually came to Bar Harbor in 2016. Not 117. There were apparently 12 cancellations. That’s 10 percent fewer people shopping. 15.5 million minus 2 million is 13.5 million.

Then there is the oddly included multiplier effects that have no bearing on a small area like Bar Harbor. Multipliers speak of money re-spent in the future in the larger region and “the rest of the world,” which includes China, where quite a bit of the gross revenue gets spent for apparel and souvenirs.

What Bar Harbor residents want to know is how much net profit money we make here and now, not how others in the rest of the world reinvest money spent on the goods we buy from them. This $5.28-millon is nothing more than exaggeration, so it is off our screen. 13.5 million minus 5.3 million is 8.2 million.

Next it was found that after carefully counting 9,814 passengers disembarking from 7 ships, 77.5 percent on average disembarked. Again the economic study has over estimated with its claim of 85 percent. This calls for a further 7.5 percent overall deduction in passenger spending. 8.2-million minus 1.5-million is 6.7-million.

Now we can take that 6.7-million gross and divide it up into two separate categories, each with known net profit rates. It is well documented that light apparel and souvenirs make 6 percent net profit and restaurants range from 3-3.8 percent. The economic study allots two thirds of this money, or $4.4-million to the retail gross and one third, or $2.2-million, to restaurants’ gross take. However, in the case of retail where it has been found to have been exaggerated by 80 percent by the bag count, the $4.4-million must be divided by 5 before a 6 percent net profit can be calculated. $4.4-million divided by 5 is $880,000 and 6 percent of $880,000 is $52,800. That the amount for net profits on retail sales.

Now $2.2-million in food is another ridiculous statement because it assumes that all 138,285 passengers ate $24 worth of food. Cruise passengers can order a meal any time they want and it’s free and usually an epicurean delight. It also helps keep more of the passenger’s money on the ship for onboard spending.

A cruise director, while doing a tour for a half dozen Bar Harbor residents is quoted as saying, upon seeing a tender full of passengers coming back out to the ship, “They come back out to eat lunch.”

It figures if you’ve paid for all the gourmet food you can eat, you would not be looking for restaurants during your short visit.  But let us say that every passenger averages $10 on lobster rolls, ice cream and drinks.

That is $3 more per passenger than a recent 2015 BREA study on dozens of ports in the Caribbean and South America.

$10 is 40 percent of $24.00. $880,000 is 40 percent of 2.2M. $880,000 in gross food sales multiplied by 3.5 percent gives a net profit of $30,800.

The total net profit for all year-round-resident-owned Bar Harbor businesses is $30,800 plus $52,800, or $83,600.00.

Having talked at length with a leading tour guide for Intercruises, I was told a guide could make $5,000 per season in wages if they could work the odd sporadic schedule. Since it has come to light that only a relatively few self taught older retired people are needed as guides solely for cruise line sponsored excursions, it would probably be well within the ball park to assume something like $50,000 in wages go to any Bar Harbor residents occupied by this business.

So adding $50,000 to $83,600 you get 133.600.  Rounded up to $135,000 and then compared with $20.2-million you will see a 99.333 percent exaggeration on the part of the economic survey.

The only substantial benefit to Bar Harbor seems to come from the purported $688,472 that represents a $4.30 per passenger fee based on the lower berth capacity of each ship and a $1,000 docking fee for the small ships that tie up to our pier that carry 100-200 passengers. About half of this goes to Homeland Security, Customs and Border Patrol, and other necessities needed specifically for the Cruise Ship industry. The other half the Town must use for the enjoyment of the passenger experience.

This does not equate to tax savings for the people of Bar Harbor. It is under control of the cruise industry how this money is spent. Ultimately it is spent in a small area amongst the business district. As a community member, if I had my say, I would hire a bunch more math and science teachers with this money.

Jim O’Connell

Bar Harbor