Hawai'i has become the fastest-growing U.S. cruise destination and now ranks eighth in the nation in terms of cruise industry expenditures, according to a study released yesterday.

The cruise industry pumped $512 million into Hawai'i's economy last year, up 52 percent from 2004, according to a study commissioned by the International Council of Cruise Lines. That lifted Hawai'i's national ranking for economic impact from 15th in 2003 to eighth last year.

Hawai'i's cruise industry has expanded rapidly in the last couple of years, largely because of NCL America, which added three U.S.-flagged cruise ships here since 2004.

The study estimated the cruise industry in Hawai'i generated more than 12,000 jobs — including positions on board and on land — with wages averaging $32,300 a year.

"The impact has been huge," said Marvin Otsuji, owner of Seasport Divers, a scuba diving operator on Kaua'i. The increased business from NCL's passengers has in part helped the company double its staff to 26 employees and add a second boat. Cruise passengers make up about 20 percent of the company's business, he said.

"They make the slow times now relatively busy," Otsuji said. "It keeps people employed. ... We have eight (employees) scheduled this afternoon, and six of those people are working because of NCL."

Nearly 236,000 passengers embarked on cruises in Hawai'i last year, a 38 percent increase over 2004, largely because of NCL America's ships, the study said. NCL America launched the Pride of Aloha in July 2004 and the Pride of America in July 2005. The company's third U.S.-flagged ship, the Pride of Hawai'i, began cruises here this summer and is not included in the study. All three sail weekly interisland cruises.

Norwegian Cruise Lines — including the foreign-flagged Norwegian Wind and NCL America's Pride of Aloha and Pride of America — made up about 70 percent of Hawai'i's cruise market in 2005, according to state figures. Other foreign-flagged cruise lines that stopped in the Islands include Princess Cruises, Holland America Line and Royal Caribbean.

NCL America last week said it has about 4,000 on-board employees, but that only about 10 percent of those workers are from Hawai'i. The company, which must employ U.S. workers on the U.S.-flagged ships, attributed the low percentage largely to Hawai'i's low unemployment rate and said it is working to recruit more people from the Islands.

The $512 million in the cruise industry's direct spending in Hawai'i made up about 3.2 percent of expenditures generated by the industry nationwide, the study said. About $350 million, or 80 percent, of the spending in Hawai'i went to tourism-related industries like tour operators, airlines and hotels. Another $6.5 million was spent with other business sectors, including apparel and textile manufacturers, food processors, financial service companies, advertising agencies and trucking companies, the study said.

Local fashion designer Mamo Howell partnered with NCL about nine months ago to sell her apparel aboard the ships, and she's developing a new line for cruise passengers.

"It has enhanced our business because people who have bought things off the NCL (ship) have come in to our shop to shop some more," Howell said. "So that has impacted us quite nicely. It's like advertising.

"The more we get from NCL, the more jobs we create because we have more sewing people doing it. ... We're using more and more contractors."

The Hawai'i data was included in an annual study on the cruise industry's economic impact in the U.S. The study was conducted by Pennsylvania-based Business Research and Economic Advisors. The economic study can be found on the International Council of Cruise Lines Web site at www.iccl.org.

Nationwide, spending related to cruises grew at the slowest pace in at least six years as fewer new ships were launched. Cruise ships traveling to and from U.S. ports and their passengers pumped $32.4 billion into the U.S. economy, a 7.9 percent increase, the study. Passengers traveling from U.S. ports rose 6.3 percent to 8.6 million, less than half the rate of growth in 2004.

Reach Lynda Arakawa at larakawa@honoluluadvertiser.com.