Template revised September 22, 2016. COMMISSION AGENDA MEMORANDUM Item No. CTION ITEM April 11, 2017 Amount of this request: 1.5 million Total estimated cost: 1.5 million ACTION REQUESTED EXECUTIVE SUMMARY ��COMMISSION AGENDA Action Item No. _ Page of Template revised September 22, 2016. This program will reduce congestion at the cruise terminal, improve efficiency at Customs and Border Protection clearance and reduce wait times in the ground transportation lot. For passengers with flight times that require them to travel directly to the airport, this program will free them of their luggage while walking from th e bus drop off at the Airport’s North Ground Transportation Lot . In addition, having cruise passengers arrive at the a irport without their luggage lessens wait times for elevators reduces congestion in the ticketing area, and reduce wait times for other passengers at airline check in counters. This program also reduces congestion on the baggage system during peak times. Guests enjoying this service are still responsible for airline baggage fees . The fee is collected by Bags Inc. on board the ship during the check in process , and then remitted to the airlines by Bags Inc. At this time the proposed service will only serve domestic flights which comprise about % of Seattle’s cruise passengers To participate in this service, g uests must fly out the same day they complete their cruise and have flight times later than 11:00 a.m. The luggage service would be promote d to passengers by the cruise lines and the Port. Seattle would be the first homeport to offer a luggage valet service as a courtesy to benefit local tourism and small business. This action request would provide the service at no cost to the guest. JUSTIFICATION Last year the Port partnered with Delta Airlines on a pilot program at T erminal to provide a prototype service for cruise passengers flying on Delta The pilot program was in place for the final nine weeks of the cruise season. Approxi mately 6,500 bags were processed and delivered directly to the irport which enabled 3,000 to 5,000 passengers to spend time in the city Delta and the Port shared the cost of this pilot program , with the Port’s share totaling approximately $ 180,000 This year’s prototype in partnership with Bags Inc. will offer luggage service from ship to plane including airline boarding pass es, to passenger flying all major domestic airline ith effective promotion by the Port , cruise line and airline partners the 2017 luggage valet program could easily serve many more passengers It is estimated that 65% of all cruise passengers sailing out of Seattle would be eligible to participate Staff estimates that at 40% participation 208,520 pas sengers would take advantage of the program. The Bags Inc. service will be offered to all major airlines and cruise lines. service will provide a competitive advantage for Seattle as a cruise homeport by offering a one kind customer service that transforms cruise passenger into tourist who can readily contribute to the local economy . By allow ing guests to disembark without their luggage and with their boarding pass in hand they are easily able to enjoy the city before heading to the Airport. Visit Seattle has estimated per passenger spending of luggage valet program participants at $63.64 ��COMMISSION AGENDA Action Item No. _ Page of Template revised September 22, 2016. which results in $13.3 million in community economic benefit over the course of the cruise season. The estimate includes spending o n transportation, retail, restaurants and attractions. DETAILS Bags Inc. has proprietary software and special permissions from Customs and Border Protection and the T ransportation ecurity dministration to offer this service. Bags Inc. has an offsite location near the airport where luggage is retagged and sorted according to flight times then brought to the Airport in a metered fashion. This streamlined process removes congestion of operations at both the cruise terminal and the airport. Scope of Work Following approval , staff would complete all necessary steps to have the program in place by the start of the 2017 cruise season. The f irst ship call with disembarking passengers eligible to receive this service is April , 2017 (1) Complete negotiations and execute service contract with Bags Incorporated (2) ALTERNATIVES AND IMPLICATIONS CONSIDERED Alternative 1 Discontinue the passenger check in and luggage vale t service. Cost Im plications: $0 to the Port, but customer experience would decline, and the local economy potentially would not benefit from cruise passengers touring the area after disembarking. Pros (1) The cost would reduce below last year. Cons (1) Does not take advantage of momentum gained in 2016 prototype. (2) Congestion in the Airport and Cruise terminal is not reduced. (3) Tourism opportunity (spending and job creation) is lost. This is not the recommended alternative. ��COMMISSION AGENDA Action Item No. _ Page of Template revised September 22, 2016. Alternative 2 Continue same prototype from last year 21 weeks full season One Airline same operational footprint at T only Cost Implications: Estimated cost for Port of Seattle r a full season 450,000 Estimated Cost to Airline $410,000 __________ Pros (1) Provides a benefit /improved experience for cruise passengers flying on Delta (2) Improves customer experience for some passengers Cons (1) Limits program to cruise passengers flying on only one airline (2) Program cost outw eighs benefit This is not the recommended alternative. Alternative 3 Continue prototype from 2016 for the entire 2017 cruise season of weeks with an expanded operational footprint for additional airlines at T Cost Implications: Estimated cost for Port of Seattle $723,000 stimated cost to Airlines 524,000 Pros (1) Provides benefit /improved experience to cruise passengers flying on two different airlines (2) Improves customer experience for some passengers Cons (1) Limits program to cruise passengers flying on one of two airlines (2) Program cost limits the benefit This is not the recommended alternative. Alternative Provide the Bags Inc. valet service to cruise passengers. Cost Implications: First year program cost including service contact with Bags Inc plus funds to promote program estimated at Cost to Port of Seattle 1.5 million Cost to Airlines No additional cost to Airlines Pros: (1) Increases the customer experience for ruise passengers all cruise lines and all airlines can participate (2) Will r educe congestion in the cruise and airport terminal (3) ill increase airport jobs as program grows ��COMMISSION AGENDA Action Item No. _ Page of Template revised September 22, 2016. (4) Provides a marketing opportunity for Port of Seattle ONE PORT our cruise lines and airline A message that Port of Seattle and our customers are committ ed to improving passenger experience growing tourism and the benefits it brings to the community (5) Drives economic benefit to our community from tourist/traveler spending (6) Promotes Seattle as a tourist destination Cons: (1) Increased cost of investment the Port. (2) Not available to passengers flying internationally or those having flights before 11:00 This is the recommended alternative. FINANCIAL IMPLICATIONS Cost Estimate /Authorization Summary Capital Expense Total COST ESTIMATE Estimated Service Contract Bags Inc cost full season $1.4 million Funds to promote the program through multiple mediums 100,000 AUTHORIZATION equest for authorization $1.5 million Annual Budget Status and Source of Funds This program was not anticipated in the 2017 operating budget. Source of funds will be General Fund ATTACHMENTS TO THIS REQUEST (1) Presentation slides PREVIOUS COMMISSION ACTIONS OR BRIEFINGS None