Where to, cruisers?

In her book, Last Resorts: The Cost of Tourism in the Caribbean, Polly Pattullo (1996) devotes an entire chapter (Ch 7 - Sailing into the Sunset: The Cruise Ship Industry) to a discussion of the impact of cruising. This discussion is still as valid and current as it was 25 years ago, here is an (updated) overview:

The Caribbean ports of call attract cruise companies more than anywhere else. The marketing plans fit with their source markets and offer very flexible itinerary options. Even though the cruiselines bring almost as many visitors to the region as airlines, these same destinations are bound up in a relationship that is almost completely in the cruiselines' favour.

In fact, destinations often find themselves in competition and conflict with the cruiselines. To the point that the stay-over visitor may actually be turning away because of the demands and pressures of the cruise ship calls. As well, cruise passengers spend far less per visit than stay-over tourists. So, one is left to wonder what is the real benefit is to local economies.

Cruise visits are short and almost always during daylight hours. Island suppliers are eager and work hard to sell their services. Taxi drivers, tour guides, beach vendors, handicraft suppliers, and so on, are lining up to service the hoards of cruise visitors that are arriving in their destinations. The potential for these local business people to benefit is great.

On the other hand, bars, less so and restaurants, hotels, guesthouses, etc, not at all. There is, therefore, little trickle of benefit to the local supply chain. Local owners and residents gain no advantage. Farmers and hotel suppliers also derive no benefit. In fact, a major complaint from hotels is that the itinerant floating hotels pay no hotel tax and this has imposed a competitive disadvantage that is very difficult to overcome.

Notably, a cruise cabin costs far less to build and maintain, compared to a land-based hotel room. So this is a further competitive disadvantage for land-based accommodations. Adding injury to insult, because of very effective marketing the cruise cabin also probably averages a higher occupancy rate making the small space a much more profitable one.

Whenever a destination tourism authority makes waves about imposing port fees or head taxes, an outcry from the cruiselines, who see the hit to their bottom line, ensues. But it is also taxi drivers who complain bitterly. The question will be: do taxi drivers benefit more from cruise visitors than stay-over visitors? From the all the noise, this would seem to be the case but with the sometimes very low occupancy rates in land-based hotel rooms, does not tell the whole story. In any case, the taxi drivers still need to make money when they can.

So, whenever destination countries have made moves to bring this relationship into a more balanced revenue model, the cruise companies have reacted by pulling their call away to another port. Even the threat is enough to stop the authorities from acting. This dysfunctionality has meant that there are few Caribbean ports willing to take a chance to offend cruise executives because they know what the result will be. There has also been little appetite for a co-ordinated approach, probably for similar reasons.

See, for example: Commentary: The View from Europe: Time to reconsider the value of cruise tourism? by David Jessop, Jamaica Gleaner, January 7, 2018. Mr Jessop states that a regional agreement on a head tax was established in 1993 but "cruiseline lobbying, vocally supported by taxi drivers and craft vendors, saw the decision collapse, as first Barbados, then others withdrew". Other attempts have met with no agreement. The issue is still on the table.

However, the drain on the resources of these countries is quite severe and some countries are showing an inability to ante up for the very expensive infrastructure investments that the cruiselines demand. At the same time, ports are overrun with visitors who often outnumber the locals on port call days. As well, ports that are not being refurbished and renewed are becoming less attractive. So, how long the attractiveness of the Caribbean ports —either to cruise passengers or to stay-over visitors —will be maintained is anybody's guess.

As Pattullo states: "Another reason why the Caribbean is sometimes suspicious of the cruise industry is that, compared to land-based tourism, its financial contribution to the regional tourism industry is low. Jean Holder of the CTO calculated its share at 10 per cent in 1993." It actually may be lower. So, the cruise industry delivers around half of the visitors to the region but less than a tenth of the total spending that ends up in local coffers. There is little evidence that this contribution has increased. After deducting the cost of investing in expensive infrastructure, it is very hard to see what the benefit really is.

The cruislines sell on-shore tours, delivered by the same taxi drivers and tour guides as anyone can book on their own. They negotiate a cut rate deal and add a huge markup often making more on the tour than the guide who actually delivers the tour.

Cruise companies often portray ports-of-call as 'unsafe' and promote their own tours as a safe alternative because they, and their operators, have been vetted by the cruiselines. As has been witnessed recently, lack of safety on excursions has led to some injuries and loss of life. Cruiselines claim to vet tour guides and transport providers but this has not always improved safety. We know now that this is not going to bear out, as the 2017 accident that killed 12 cruiseline passengers in Mexico shows. It is clear though that cruiselines are sending passengers on more or less the same tours to more or less the same sites in these destinations, so claims about 'safety' are disengenuous, at best.

Further, while on-shore shopping is touted as a key contribution by cruise passengers, most of the visitors' shopping dollars end up in shore-side malls and outlets which are largely owned by, or pay rent or promotional fees to, the cruiselines. Again, a portion of the money cruise passengers spend on land probably returns to the cruiseline.

At the same time, however, the cruiselines have extended promotional opportunities that were not capitalized on. Big mistake.

"The Caribbean often misses opportunities to entice cruisers back on to dry-land holidays, say the cruiselines. According to the F-CCA’s Michelle Paige, only one Caribbean destination, the Cayman Islands, responded to an F-CCA request to provide a promotional video to be shown to cruisers before they arrived at port. Destinations, she says, do not package themselves as well as they could or advertise their attractions. ‘If we don’t make the passengers feel comfortable, they are going to get right back on the ship.’"

Further, the cruiselines agressively market to this existing cruise customer base. It is very unlikely that a cruise customer will ever re-visit, except on another cruise. Ironically, cruise visitors who have taken a sight-seeing tour may feel LESS inclined to return. (Note 1)

Pattullo observes:

"'Petits fours', ice-carvings and champagne waterfalls have little to do with the Caribbean but if the ship is the destination, the Caribbean itself loses relevance except as a vague and shimmering backdrop. Or, as Carnival’s Bob Dickinson puts it: ‘The limited number of countries and ports offered is not a deterrent to Carnival customers; after all the ship is the attraction, not the port of call.’"

Pattullo further states: "As Jean Holder points out, the Caribbean has ‘few resources left which give us any real bargaining power’. One of those is the Caribbean Sea". So, is it the sea that separates or does the sea unite?

The ship itself is seen as the destination for most cruisers. Cruise companies are quite brazen in their portrayal of the Caribbean as a not much more than a map on which to plot out their calls. Floating resorts have no allegiance to a destination and yet are dependant on at least some destinations accepting them. A cruise, after all, must have 'somewhere' to cruise to. So, by alienating destinations, cruiselines expose themselves to becoming less marketable. Significant pushback has already been seen in ports such as Venice or Key West.

In turn, these issues expose all suppliers to potential risks should cruising lose it attractiveness as a travel option. Suppliers may include any entity from ship builders and outfitters to food producers, staff, entertainers and local businesses in destination that depend on cruise ship visits. But, while there is no evidence that cruising will become less attractive in the near future, there is also no evidence of any contingency planning on the part of Caribbean destinations should this scenario bear out.

In fact, the growth of cruising appears destined to increase for the foreseeable future. As trip prices tumble, more and more cruisers are eager to fill the new cabins being brought online. So far, the cruise customer has not been turned off by anything the cruise companies are doing. All types of cruise customers, from first-timers to seasoned repeat cruisers are a ready market for the cruiselines. Even the Pandemic was only a temporary impediment.

Up to now, cruiselines felt they could afford to sneer at environmental demands because the customers who might care are being readily displaced by many with lesser concerns for enforcing standards. There appears to be very little awareness of the impacts, environmental or economic. At least, any awareness has not been sufficient to slow growth or to place demands on cruise companies to change strategies with respect to these impacts. But this is changing, as environmental awareness increases aided by reports such as the "Friends of the Earth’s Cruise Ship Report Card".

What other 'where to' is there? The cruiselines need the Caribbean

It is clear that the most tourism dependent region, the Caribbean, has a great deal to lose should cruiselines take their business elsewhere. But, where? The Caribbean island chain offers unparalled flexibility to cruiselines to schedule their itineraries in warm weather ports, year round. This archipelago also offer opportunities to re-schedule port calls should disasters hit, and they do.

There is no other 'where to?' for cruising, so close to American and European markets, that can offer these benefits. With more than a third of annual world cruise calls, it would seem that the cruise industry is dependant on Caribbean just as much for their own purposes, maybe more. The Mediterranean is already saturated and does not have enough untapped capacity to replace ports-of-call, should the Caribbean become unavailable. And it is probably too distant for the dominant North American cruise customer. So, cruiselines are placing themselves at great risk by annoying and/or putting off their most important regional destinations.

So, in summary, the multi-decade long dominance of cruising as a travel option in the Caribbean has meant the near complete domination over these mostly small island economies. The risk of a reduction in cruise popularity or cruise visits, caused by any number of inputs, will also impact Caribbean destinations with unknown outcomes.

In order to mitigate these risks, the region must become 'One Sea, One Voice, One Caribbean'. This marketing mantra has been created as a key anchor from which all Caribbean destinations are enabled to launch their marketing programs. The Caribbean small island economies must act in their own interest and the only path to acheiving this - at a scale that will be effective - is to do so in unison.

So far, this does not appear to be happening. When it comes to the cruise industry, almost the opposite is the pattern. While any given destination is not willing to attempt new taxes or landing fees for fear of the next destination capturing the visitation, there is no appetite for collective action. Its a no-brainer for cruise companies, who wield much more economic power than local authorities, to capitalize on competitive spirit, political weakness, infighting and lack of will to take collective action - and they do so with great effect.

The powerful cruiselines continue to cruise, with destinations and itineraries in the Caribbean that suit their whims. The cruisers continue to book, blithely unaware (willfully ignorant?) of what has gone on under the surface to deliver these cruise experiences.

The cruiselines know what needs to be done in order to act responsibly towards their destinations. Are they willing to take steps to improve distribution of income to the often impoverished places and people they visit? Are cruise companies taking care of the waste they generate in a responsible manner? Indeed, they must do so to develop truly sustainable product. Ultimately, cruise companies need to reach out to the small island economies that make their industry possible.

Key points:

• The cruise industry, acting as one entity through the F-CCA, absolutely dominates Caribbean tourism.
• Cruise companies will take advantage and further, will dictate the terms of engagement, because they can.
• Cruise industry marketing is extremely effective, much of which is done by travel agencies. The cruise customer continues to book in numbers sufficient to keep ships at capacity.
• Cruise industry is mainly controlled by three groups: Carnival, with several brands; Royal Caribbean International and Norwegian cruiselines as the major players. They exercise enormous economic clout. Together these lines deliver more than 80% of cruise trips. The only country in the insular Caribbean with a GDP larger than Carnival's gross revenue is Trinidad & Tobago.
• Cruise lines emphasize return of visitors as a main benefit to destinations but this is far from obvious.
• Cruise companies are openly contemptuous with regard to local authorities who miss out on opportunites for marketing and collective action to tax cruise companies proportionally to their impact and demands.
• Cruise companies are very effective at capitalizing on political weakness, infighting and lack of will to take collective actions.

At the same time ...

• The cruise industry needs the Caribbean more than the other way round.
• Local marketing authorities have been re-miss in capitalizing on opportunities to sell their destinations to cruise customers.
• The example of the highly effective marketing of cruising is not taken up by local authorities, who, with similar marketing campaigns might deliver similar results.
• Destinations are far too reliant on the cruiseline marketing to deliver visitors. They give up significant profit and power to the cruise companies.
• Local governments do not act in unison, leaving them vulnerable to the more powerful cruiselines.
• No local government is willing to challenge the cruise companies out of fear they will not come back.
• The Pandemic was a missed opportunity for local authorities to come together to rebalance their needs in relation to cruiselines.

Risks of cruising

While cruising, for many travellers, is an attractive travel option with many benefits, cruising is not without it's risks. Environmental risks are clear and have been discussed elsewhere at great length.

Although the modern cruise ship is relatively safe, there are still risks to personal safety. Risks from illnesses, such as Covid19, Influenza, Novovirus and Legionnaires, spreading in enclosed spaces. More on this @ Cruise Junkie. And, while still low, risks from some passengers who may travel with intent to steal from fellow cruisers do exist.

However, the greatest risks are economic risks and these can take several forms:

The destination risk of allowing too many cruise visitors to overtake stay-over visitors who, as has been documented, contribute far more to local economies. Whereas, the cruiselines and the F-CCA are aggressive in promoting the economic benefits of cruise visits, some, such as Jean Holder, calculate ten times more.

The impetus of the cruise industry collectively is to bigger and bigger ships and the small ports are completely overwhelmed by the influx of people along with the very powerful marketing that presents cruise ship visits as the answer to local economic problems.

The risk is that stay-over visitors may stay away perceiving that the influx of cruise visitors has compromised the attractiveness of the destination. What this means, on the ground, is crowded shopping areas as well as traffic problems. No cruiser takes a vacation only to be faced with the same problems they might have at home. This overcrowding, along with degradation of infrastructure and cultural sites, are becoming increasingly serious problems. It may eventually become a negative perception of the entire region but this does not appear to have happened yet.

In-destination suppliers such as tour guides and taxi drivers appear to support the cruise ship visits. This is based on the economic value of the cruise visitor contributing more to these sectors than stay-over visitors. However other in-destination suppliers such as hotels, restaurants, bars - along with suppliers of food and beverages - and entertainment venues will likely benefit more from land-based visitors. The question, 'where to' for cruisers' money is therefore also relevant. Handicraft producers are not capturing enough of either market but this is a separate discussion. Somehow, a balance needs to be struck.

Destinations themselves are at risk of the cruiselines abandoning them, as has been a constant threat posed by cruiseline executives in the Caribbean. As a consequence, destinations become more acquiescent to the cruiseline demands, thereby deepening the risk. On occasion, cruiselines have indeed removed their ships from visiting a particular port resulting in the port authorities stepping up, at their expense, to offer more and better attractions to them.

These destinations have put a lot into the belief that cruise visitors will 'become' stay-over visitors, as cruiselines often say. In reality, this is not happening, certainly not at the level that the local agencies would like to see. The risk of losing money, therefore, from the investment in infrastructure places an onerous burden on already stretched economies.

Somehow local economies, many of which are smaller than the cruise companies supplying their visitors, need to find the resources to meet the cruise companies' increasing demands for services and features. The risk is that, at some point, they simply will be unable to support this level of expenditure. This may have happened already in some places as can be seen in the condition of the infrastructure. Further, these large companies make little to no investment on their own in these destinations, including the facilities that directly connect the massive ships to the shore.

Cruie lines may also be exposing themselves to over-marketing. Aggressive 'supply-side' marketing of cruises is driving the price point down. How long can cruising remain a quality product and a profitable one? At what point will markets become saturated?

As it stands presently, and for the foreseeable future, the cruise companies have the upper hand. The risk is when the power balance shifts, will the transition from the current supply-based marketing force to more power being based in the hands of local tourism authorities be a gentle one, or, more likely, a calmitious one. Also, how will cruise customers react?

Because cruise companies are mostly supply-driven, how will a reduction of the customer base impact their marketing? Empty ships and vacant suites don't make money, so will ships need to be withdrawn from the market? Will the cruise companies further drive prices down? Will marketing shift to other as yet untapped markets such as other source markets and/or customer types?

This may be a classic case of 'careful what you wish for'! For destinations and for cruiselines. At some point all this may play into the hands of the destination ports, and maybe some already have an inkling what this means in terms of how the cruise companies will approach them in the future. Whereas, ports-of-call have usually given in to cruiseline demands, in the future, at least the larger ones could become the more influential players. An opportunity for ports-of-call to be more selective as to who they let in may be in the offing. Ports-of-call may also be able to dictate when the visit is convenient, for them.

Cruise ships themselves are at potential risk for degraded services. More ships demand more workers. But the risk of under-supply of quality trained staff, along with very low pay, long days and poor working conditions, unavailability of fresh ingredients, unsanitary production facilities and improper waste disposal may leave cruise visitors wanting for more, better on-board services. The most important one, food quality may suffer and if there is one area where cruise customers complain, it is about low quality meals. (See note 2)

Problems Caribbean countries face in dealing with ship generated waste, or 'where to' for your waste?

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Note 1: See: Cruise Tourists Returning to Curaçao for a land-based vacation: A logit model by Miriëla Carolina and Lennie Pau, 2010
(https://sta.uwi.edu/conferences/09/salises/documents/L.%20Pau.pdf)

Note 2: See, for example: Geographic limits to global labor market flexibility: The human resources paradox of the cruise industry by William C. Terry, 2011
(http://www.sciencedirect.com/science/article/pii/S0016718511001084)