Cruising is big business. Since 1980 the industry has seen more than a 7 percent annual growth rate, which makes it arguably the fasting growing sector of tourism. It is estimated that more than 23 million people cruised globally in 2015, which generated more than $120 billion in revenues and was responsible for almost 1 million jobs1. This trend shows no sign of slowing, with approximately 23 new ships providing more than 37,000 berths projected to enter the market between 2016 and 2018. These ships will represent more than $18 billion in investments1.
While the Caribbean is still the most often cruised destination with more than one-third of all available berths (36 percent), they are slowly losing market share, with Asian and Mediterranean cruises gaining in popularity1. Thus it is imperative for the destinations in the Caribbean, and all of the suppliers of the attractions cruise tourists visit, to understand the cruising environment, to better retain market share and earn profits.
The global cruise market is currently dominated by two companies which control multiple cruise lines2. With almost one-half of the market (48.1 percent), Carnival Corporation currently dominates the market and includes the following lines: Carnival Cruise (21.3 percent), Costa Cruises (7.4 percent), Princess Cruises (7.9 percent), AIDA (3.7 percent) and Holland America (3.0 percent) among others. Royal Caribbean Cruises owns the second largest share (23.1 percent) and operates Royal Caribbean Cruise Line (16.7 percent) and Celebrity (4.2 percent) among others. Other significant cruise lines include: Norwegian Cruise Line (9.5 percent), MSC Cruises (5.2 percent) and Disney Cruises (2.8 percent).
While it is certain the cruise industry generates a lot of income, it is less clear who gets the money generated. The cruise lines do all that they can to capture passenger spending while on board. A typical cruise passenger spends $1,779 for a cruise, with an average ticket price of $1,350 and onboard spending of $4293. Onboard spending on average includes: casino/bar ($236), the cruise line’s portion of shore excursions ($86), spa ($43) and other onboard spending ($64). Cruise lines attempt to maximize their share of these dollars by limiting the time passengers have in ports of call, manipulating tours to have passengers return to the ship when they are completed, enticing passengers to stay on board in ports of call, and in some cases managing shops in the ports of call visited.
Cruisers’ spending in ports of call has been found to vary by port of call and includes spending from both passengers and cruise employees. For ports in the Caribbean, it has been estimated that cruise tourism generated $3.16 billion in direct expenditures, more than 75,000 jobs and almost $1 billion in employee wages in the 2014/2015 cruise year4. These estimates reflect $103.83 spent per passenger, per port visited. More than three-fourths of all expenditures in Caribbean ports in 2014/2015 came from watches and jewelry ($877 million), shore excursions ($551 million), Clothing ($238 million) and food and beverages ($189 million)4. More than one half (53 percent) of passengers in the Caribbean purchased shore excursion, and local tour operators received an average of $44 per passenger from the excursions purchased directly from the passengers or through the cruise lines4. Additionally, the estimated 4.5 million crew members on board these vessels spent approximately $302 million, ($67.10 per worker), with their expenditures heavily weighted toward food and beverages, jewelry and electronics4.
While the above show direct effects of passenger spending, there are also indirect effects related to future visits via future cruises or vacations directly to the ports visited and word of mouth advertising. Ports of call that satisfy cruisers during their visits have a higher likelihood of getting them to come back for a future visit. These visits typically entail bringing other guests with them, stays of almost a week (average = 6.4 nights5), large daily expenditures, and due to their extended stays, visitors who care more about the local environment than cruise passengers. Thus, it is important for destinations to entice both cruise lines and passengers to visit. Research has shown that the port characteristics most important for cruise lines to choose a port include: cost (port charges), safety/security, efficiency (ship turnaround time), services to cruise passengers (shopping, restaurants, etc.) and services to cruise ships (pilotage and towage)6.
The same research revealed the most important destination characteristics for cruise passengers are: degree of site attractiveness (popularity and beauty), distance to areas of attraction, and transportation services to areas of attraction. The key factors for determining site attractiveness for island visitors, in order of importance have been found to be: beach quality, friendliness, accommodations, safety, restaurants and transportation7. Further, the primary motives of cruise visitors to take a cruise have been found to be: to escape/relax, discovery/thrill and esteem/social reasons8. Thus, cruises which have ports that fulfill these motives and offer the destination characteristics preferred will more likely be chosen by passengers and be more likely to be revisited in the future.
The key for tourism businesses to capture passenger spending in local ports of call is to understand the variables that are most likely to increase expenditures. The two variables that have been found to have the greatest impact on the amount of money passengers spend in a port are the amount of time they spend shopping, and the amount of time they are on shore9. Yet, cruise passengers have been found to be quite price sensitive, and to feel they will receive value in order to make purchases10. For cruise passengers to feel they receive value, they need to feel their purchases have high quality for the price paid, have a good reputation, are easily purchased, and give them a sense of joy after they’ve purchased11.
While the above discussed growth of the tourism product at the destination level, it is vital that all development be enveloped in a plan for sustainability. With passengers desiring destination attraction over everything else and having a primary motive of relaxing/escaping, it is imperative that cruise ports do not blindly develop their products without ensuring they protect the very resources that are at the center of their tourism product. Tourists are also more concerned with sustainability practices than they have ever been, and destinations which do not also feel the same will lose not only visitor expenditures, but also the resources their local citizens desire. Today’s megaships carry as many as 6,296 passengers and 2,176 crew members (i.e., RCL’s Allure of the Seas). These passengers are at the ports of call they visit for minimal time, meaning they are less likely to be mindful of their environment than people who stay for longer periods of time.
It is thus crucial that tourism planning includes means for reducing the negative impacts these passengers have on both the natural environment and culture of the visited destinations. These plans should involve participation by local residents and key stakeholders (i.e., local government, tourism boards, businesses, etc.) and develop products based on the destination’s current strengths (i.e., don’t develop new attractions)12. These plans should also be centered on strengthening the local capacity to manage tourism (equip local businesses with the skills to succeed), target high-yield market segments who are responsible travelers and create specific guidelines for both locals and visitors to limit environmental impacts12.
The Cayman Islands are positioned well to capture cruise passenger spending. In 2014 the Cayman Islands had 382,816 air arrivals, which is a 10.8 percent increase over 201313. Additionally, even with an outdated cruise ship terminal, they had 1,609,555 cruise ship visitors, which is up 17 percent over 201313. These numbers suggest the hotels, restaurants, taxi drivers, attractions and shops are also doing well. With a proposed new cruise ship pier, estimated to cost $190 million, the Cayman Islands are poised to increase their market share14. Yet, arrivals by overnight visitors to the area are a scant 0.6 percent higher in the first nine months of 2015 over the same period in 201415.
In order to maintain and/or grow market share, the Cayman Islands will need to find ways to sustainably enhance its tourism product. With destination attractiveness being the key to attracting cruise ships and visitors, the quality of the Cayman beaches (in particular Seven Mile Beach), the hospitality of locals, perceptions of safety and the businesses related to tourism (i.e., restaurants, accommodations, transportation and shops) will need to continue to improve. Additionally, measures should be taken to get more cruise passengers off the ships they arrive on and to entice them to stay longer. While an enhanced cruise terminal will help, working closely with the on-board Shore Excursion Managers to ensure accurate information about things to do in the Cayman Islands will also be very important. Other keys will include: keeping the area around the pier full of shops and restaurants that the passengers feel they are receiving good value from, keeping the beaches as pristine as possible, and training taxi drivers to politely encourage passengers to take extended tours of the Islands. Lastly, all decisions made regarding the tourism products of the Caymans must consider sustainability. Both locals and visitors should be made fully aware of the importance of the natural attractions the area has, and should be trained to understand ways to reduce their carbon footprint.
- Cruise Lines International Association. 2015 Cruise Industry Outlook: Cruising to New Horizons and Offering More.
- Cruise Market Watch. http://www.cruisemarketwatch.com/market-share/
- Cruise Market Watch. http://www.cruisemarketwatch.com/home/financial-breakdown-of-typical-cruiser/
- Cayman iNews. Caribbean Cruisers Spending more on… http://www.ieyenews.com/wordpress/caribbean-cruisers-spending-more-on/
- One Caribbean. http://www.onecaribbean.org/content/files/Strep2BVItoDominica2010.pdf
- Tsamboulas, D., Moraiti, P. and Koulopoulou, G. (2013). How to Forecast Cruise Ship Arrivals for a New Port-of-Call Destination. Transportation Research Record, no. 2330, p. 24-30.
- Semrad, K.J. and Rivera, M. (2015). A Destination Performance Analysis through the Comparison of Tourists and Stakeholders’ Perceptions: The Case of Curacao. Journal of Tourism Hospitality, 4(4), 1-6.
- Hung, K., and Petrick, J.F. (2011). Why do you Cruise? Exploring Motivation to Cruising and its Influence on Cruising Intentions. Tourism Management, 32(2), 386-393.
- Henthorne, T.L. (2000). An Analysis of Expenditure by cruise passengers in Jamaica. Journal of Travel Research, 38(3), 246-250.
- Petrick, J.F. (2005). Segmenting cruise passengers with price sensitivity. Tourism Management, 26 (5), 753-762.
- Petrick, J.F. (2004). First timers’ and repeaters’ perceived value. Journal of Travel Research, 43 (1), 29-38.
- Solimar International. Supporting Global Development through Sustainable Tourism. http://www.solimarinternational.com/resources-page/blog/item/174-best-practices-integrating-sustainability-tourism-management-operations
- Travel Pulse. Cayman Islands Posted Record Air, Ship Arrivals in 2014. http://www.travelpulse.com/news/destinations/cayman-islands-posted-record-air-cruise-ship-arrivals-in-2014.html
- Travel Pulse. Consultant: Cayman Islands Cruise Port Will Cost $190 million. http://www.travelpulse.com/news/destinations/consultant-cayman-islands-cruise-port-will-cost-190m.html
- Travel Pulse. Weak Third Quarter Numbers Slow Cayman Islands’ Arrivals Surge: http://www.travelpulse.com/news/destinations/weak-third-quarter-numbers-slow-cayman-islands-arrivals-surge.html