Cruise Tourism in the Caribbean

Lessons Learned

Martha Honey

In May 2016, when Carnival Cruise’s ‘Fathom Adonia’ docked in Havana, Cuba officially became the last remaining Caribbean nation to be integrated into the region’s large-scale cruise tourism network. This modern-day cruise industry dates from the 1960s, when the three major cruise lines, Carnival, Royal Caribbean, and Norwegian, first opened their offices in Florida. Today these three corporate conglomerates control 90 percent of the U.S. cruise market.

Cruise tourism is the most lucrative sector of the tourism industry, with revenues of $40 billion in 2015, and profits forecast to double between 2008 and 2018. Over the last half century the U.S. political and economic embargo against Cuba effectively excluded the region’s largest and most diverse island destination. This changed in 2014. The political steps towards normalizing U.S.-Cuban relations unleashed a tourism “tsunami”. According to Cuban government statistics, cruise passenger numbers jumped from a mere 8,085 in 2014 to 437,429 in 2017, a 54-fold jump in just four years.

Cruise ships – a success model

Globally, passenger numbers increased more than 40-fold between 1970 and 2016. The phenomenal growth of modern-day cruise tourism has been built on a combination of unique factors: ships are movable and can be repositioned from troubled regions to more lucrative markets; the number and size of ships and number of ports have all grown; cruises have built a loyal customer base because they are perceived as affordable and safe, offering vacations tailored to every demographic; and cruise package prices are adjusted to keep ships operating at near capacity.

Newer and larger ships have become destinations in themselves, offering entertainment and attractions that capture an estimated 25 to 35 percent of cruise line profits (over half on gambling and liquor) and diminish the appeal of onshore excursions. This creates, as a UNWTO report states, “a significant rivalry between cruise ships and their shore side destinations.”

Most shore excursions are purchased by passengers onboard the ship and include hefty commissions of up to 100 percent, which goes to the cruise line. In the 2014/2015 season in the Caribbean, local tour operators and destinations lost about 50 percent of the total that cruise passengers paid for onshore tours, while cruise lines gained an estimated $273 million in commissions. Similarly, onshore shops and restaurants promoted onboard by the cruise lines also pay commissions, again up to 100 percent. While shore excursions are the most popular expenditure, cruise passengers spend the largest amounts on duty-free items like watches and jewellery. The cruise lines typically collect commissions from these sales as well, even though no tax is charged and very little of this money is retained in the destination.

Little income for destinations

Cruise lines negotiate terms of engagement with individual ports and fear of being excluded often leads destinations to accept lower taxes and fees. The head or passenger tax, for instance, which cruise lines pay to the port or local government for each passenger on board an arriving ship, varies wildly from as little as $1 per passenger in the Dominican Republic to $15 in Jamaica, and $60 in Bermuda; the average in the Caribbean is $8.92.

The Caribbean Tourism Organization (CTO) estimated that in the early 2000s each cruise passenger generated an average of $17 in taxes per visit ($9 in head tax plus about $8 in sales tax), while stayover tourists generated on average $133 in taxes.

Environmental problems

While large-scale cruise tourism has very limited benefits, the industry has also created environmental problems at sea and in port. Seventy percent of cruises take place in biodiversity ‘hotspots’ and environmental monitoring is notoriously difficult. In addition, cruise tourism is both contributing to and impacted by climate change. The cruise industry emits greenhouse gas emissions into the atmosphere and waste effluents into the ocean. According to the International Maritime Organization, shipping globally (both cruise and cargo) contributes about 2.4 percent of manmade greenhouse gasses (GHGs). In comparing the shipping to the airlines industry, British science writer Fred Pearce contends, “Ships are as big a contributor to global warming as aircraft – but have had much less attention from environmentalists."

Increasing risks of hurricanes

At the same time, cruise ships and their coastal port facilities are especially vulnerable to increasingly fierce storms and sea level rise because they are concentrated along low-lying coastlines and in coastal waters. In the summer of 2017, two of the most severe storms on record, hurricanes Irma and Maria cut a trail of destruction across the Eastern Caribbean, closing two of the region's most popular cruise ports in St. Thomas and St. Maarten. The super storms also caused extreme damage to port facilities in Puerto Rico, as well as to ports in Florida; in the Virgin Islands; in Barbuda; and in Dominica.

In the wake of hurricanes Irma and Hurricane Maria, many cruise lines either diverted or cancelled trips to avoid areas severely damaged from the storms.With climate-change induced storms, heavy rainfall, and higher-than-normal temperatures all predicted to intensify, researchers are warning that travellers may well begin to move away from the Caribbean.

Raising the bar

Caribbean states would benefit from a coordinated region-wide policy that takes steps to increase cruise tourism’s economic benefits and reduce its environmental impacts. Destinations need to work together to craft mitigation and adaptation strategies, establish sustainability standards, and negotiate collectively with cruise companies. Instead of bargaining separately with each cruise line, Cuba and other countries could present a common front to ‘raise the bar’ for all destinations in the Caribbean.

Martha Honey, Ph.D., is co-founder and Executive Director of the Center for Responsible Travel (CREST), headquartered in Washington, DC. Over the last two decades, she has written and lectured on tourism, climate change, and certification issues.

For further information:

Por el Mar de las Antillas: 50 Anos de Turismo de Cruceros en el Caribe. By Martha Honey, José Luis Perolló, Jannelle Wilkins, Rafael Belancourt. E-book, in Spanish. Ediciones Temas, Havana, 2018. English version forthcoming in late 2018.

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