The cruise effect

How does cruising contribute to a destination's economy?
The cruise effect

By Guest |


The worldwide cruise industry delivered a global economic impact of around US$100 billion and more than 753,000 jobs in 2011, according to figures from the Cruise Lines International Association (CLIA). Data from the Florida Caribbean Cruise Association (FCCA) – which will be making its own economic contribution with its 2013 annual conference in Cartagena, Colombia – indicates this upward trajectory is set to continue with 21 million passengers cruising globally in 2013. The driving force behind this growth is largely thought to be the increase in per capita global income, as well as the more competitive price of cruise packages which have been achieved through economies of scale. So where are they all going?

Nearly 18 million are expected to sail from North America, a 2.5 per cent increase over 2012 figures, according to the FCCA. The Caribbean makes up 37.3 per cent of all global itineraries in 2013, followed by the Mediterranean at 19.9 per cent, the rest of Europe at 9.8 per cent, Alaska at 5.4 per cent, followed by Asia and the South Pacific at around 4 per cent and South America 3.4 per cent, with other regions making up the difference. The FCCA makes its own contribution with its annual conference in various destinations across the Caribbean.

Turning to the nations, regions and destinations themselves and the cruise lines that call on them, what do these numbers really mean? There is little disagreement amongst cruise lines and the destinations that cruise calls generate jobs, their passengers spend at local businesses, the lines themselves contribute port taxes and fees, but other areas are substantial too.

Giora Israel, senior vice president, Global Ports and Destination Development for Carnival Cruise Lines, says: “Eighty five per cent of spend at a destination is generated by our passengers. People generally spend time in two major activities – buying a tour from the ship, renting a car or visiting a beach, while some will want to discover the area by boat, bike, by foot or rental car. We’re not in the business of selling people tours, but great vacations. So exploration is a big chunk and around a third of passenger spend relates to the tours.

“Another third to a half is shopping. It really is a phenomenon. Passengers don’t have too much time to decide if they want to buy. The third element is food and beverage. Although food is free onboard, in Cozumel, Mexico we have four restaurants and although the ship is 100 m away, passengers enjoy sitting outside eating fresh fish and local food.” He points out that the economic benefits touch a lot of people, including taxi drivers, rental car companies and guides.

Holland America Line’s executive vice president, Onboard Revenue, Planning, Port and Shore Operations, Paul Goodwin, agrees and adds that provisioning is an area affects the local economy too: “A recent example is our purchase of local Maine lobster for our Canada-New England itineraries that supports local fisheries and has a trickle-down effect in relation to any taxes charged for those purchases. In German ports, for example, we go ashore to purchase authentic bakery goods – as only a local bakery can provide – for the deck barbecue. Local beers are purchased on every cruise to showcase the regional options. Certainly this is on a smaller scale than tours or fees but it adds to the ways in which a region can impact a guest experience.”

Seabourn’s director of Deployment and Itinerary Planning, Timothy Littley, says that although the company’s ships carry fewer guests than most cruise ships, the impact in terms of total tourism dollars going ashore may be more modest, but still significant: “Seabourn’s guests are affluent travellers who often contribute to smaller, more specialised local companies and other services such as fine dining restaurants, high-cost activities such as sailing, deep-sea fishing and higher-end purchases such as art, antiques, fashions and so forth which might not attract much business from the passengers on a contemporary or even a deluxe category ship.

“One element of a Seabourn visit that is often overlooked is the secondary marketing of the destination. If our guests have a good experience in a place, they will talk it up among their families and friends, who also tend to be affluent and interested in travel and more likely to have a positive opinion of a destination.

One of our major initiatives from a purely destination perspective has been to include Antarctica in our itineraries and we have added several new port calls in Greenland where few cruise ships stop. Given the population size and remoteness of these destinations, I believe that however infrequent our calls, they will show economic impact, including for small boutique ports such as Trois-Rivières, Gozo, Çeşme and Saint-Florent or rediscovered destinations like Myanmar/Burma, that tend to appreciate the social and economic boost that we can provide.”

The ‘taster’ element of cruise spending may not always be considered, agrees John Fox, Celebrity Cruises’ vice president, US & Europe Government Relations. “About 30-40 per cent of cruise passengers return for visits of seven days or longer,” he says. “There are also additional passenger spends, on not only cruise-affiliated business, but also airline flights before and after cruise journeys. And because we guarantee shore excursions and various shopping experiences, our company often elevates these businesses and in turn, the destination gains in employment and training.” He adds: “Crew spending in various destinations may approach 30 per cent of passenger spending and is very often overlooked.”

Crew spending is significant, says Israel, particularly for homeporting ships. “For example, crew will fly into Venice and stay a night at a hotel – they’ll consume food and beverage while waiting for the ship so we have crew signing on and those signing off. We also take care of crew wellbeing and health. In Southampton we have numerous agreements with various providers – if people get sick or injured, or if someone needs an operation. And as there’s no onboard drycleaning this happens in port too.”

This is an abridged version of an article that appeared in the Autumn/Winter 2013 edition of International Cruise & Ferry Review. To read the full article, you can subscribe to the magazine in printed or digital formats.

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