Skift October 26, 2020
While the pandemic dealt a huge blow to global tourism, perhaps no other sector in the industry has faced as much uncertainty and challenge as the cruise industry — keeping in limbo its primary and most profitable market, the Caribbean.
Seven months into the pandemic, the world’s three largest cruise lines — Carnival Corporation, Royal Caribbean, and Norwegian Cruise Lines — have yet to sail. In a third extension of the No Sail Order, which applies to ships carrying over 250 passengers and cruising in American waters, the U.S. Centers for Disease Control cited “recent outbreaks on cruise ships overseas,” as well as in Alaska on smaller 60-passenger ships, as evidence that this type of travel “continues to transmit and amplify” the spread of Covid in spite of cruise ships’ extensive increased health protocols and reduced capacities.
Where does this leave the Caribbean region, and how are island destinations repositioning their industries for a more resilient future without such an economic dependence on mass cruise tourism?
Months of no cruise tourism have allowed the islands “to detox,” said May Ling Chun, director of tourism for St. Maarten, one of the Caribbean’s top grossing cruise destinations. “We’ve been going and going and going, and all of a sudden, your destination looks greener and it looks better. And how can we do things that did work, limiting things that weren’t so effective and make sure we open up with all those in place? What are the opportunities we have?”
The news for cruise lines in the region is bleak. Carnival announced it was cancelling all cruise activity for the rest of 2020, except for cruises out of Port Miami and Port Canaveral, which are suspended through November for now. Royal Caribbean also suspended its cruises through November 2020. Meanwhile, an Americas Cruise Task Force — co-chaired by Barbados Prime Minister Mia Motley and Royal Caribbean, and made up of 40 Caribbean destinations – is working towards establishing cruising bubbles within the wider Caribbean.
“The return will indeed be gradual and slow as cruise fleets are smaller since shedding ships in recent weeks,” Brian Major, managing editor for digital publications and the Caribbean at Travel Pulse, and a cruise tourism expert, told Skift. “Also operators have indicated only a fraction of the dozens of itineraries previously available will operate initially.”
The challenges facing the three major cruise lines are gargantuan: sailing safely again to the Caribbean — where governments have effectively controlled the spread and where resources are limited to handle tourist outbreaks – adjusting to scaled down operations for an undetermined period in spite of a business model that thrives on increased passenger sizes and ship volume, and handling shareholder litigations that have surfaced, in the case of Carnival and Royal Caribbean.
A DATED MEASURE OF SUCCESS
More than 30 million cruisers flocked to the Caribbean’s ports through one of the three aforementioned cruise companies, bringing 22 destinations an overall gross domestic product contribution of $59 billion, according to the Caribbean Tourism Organization’s (CTO) 2019 statistical report. Of those, 14 Caribbean islands reported cruise tourism growth ranging from 11 percent in St. Vincent and the Grenadines to 70 percent in Dominica and 186.8 percent in the British Virgin Islands.
“For us, yes, overnight tourism provides more in terms of taxes, but cruise tourism is more impactful for socio economic development — it’s the artisans, the tour guides,” Karen Bevans, director of tourism for Belize, told Skift. It’s a sentiment shared among tourism leaders in the region, including The Bahamas, the region’s top cruise destination after Mexico, receiving up to 5.4 million cruisers in 2019. “Seeing as more than 70 percent of the government’s tax revenue comes from the millions of visitors who visit our shores each year, having the cruise lines return to The Bahamas would benefit local businesses, excursion and tour operators,” Joy Jibrilu, director general of the Bahamas Ministry of Tourism and Aviation, told Skift. “This is particularly true of Nassau and Freeport, our major population centers, that would feel the greater benefit.”
When cruises resume, The Bahamas is likely to be a top choice for its proximity to Miami. To boot, pre-Covid, a handful of destinations – Antigua, St. Kitts, Belize – had invested and were looking into investing in major infrastructure upgrades in light of booming cruise arrivals and bright 2020 projections.
But experts have long remained skeptical on the contribution of cruise visitors and the true benefit of mass cruise tourism for the local economy, while pointing out its high impact on the environment.
“Only between 3.4 and 13.5 percent of tourism expenditure is from the cruise sector. In the longer term, our vision needs to be focused strongly on value addition,” Michael Hendrickson, economic affairs officer at the Economic Commission for Latin America and the Caribbean, shared on a timely CTO panel this month on diversifying Caribbean tourism. “For too long we’ve been focused on maximizing the numbers of tourists to the region without doing the analysis in terms of what’s the average spending of those visitors.”
The pandemic crisis has shown, once again, that for the Caribbean – the most tourism dependent region in the world – reliance on growth numbers as a measure of success is risky, and at best, inaccurate, particularly for the cruise sector.
“We’ve got to come up with new ways to measure success that put communities at the heart of this,” Seleni Matus, director of tourism studies at George Washington University, told Skift, while cautioning against the lack of diversification that continues to plague the Caribbean. “This pandemic really exposed how ill prepared and how low resilience is in the region. There is no plan for diversification. Economic development will need to be looked at more broadly; by force, [destinations] will have to.”
RESHAPING TOURISM STRATEGIES
A primary aim of most Caribbean destinations remains to work with cruise lines to establish the safe return of ships, albeit in reduced numbers. “Our focus for moving forward is to protect the health and safety of all residents and visitors in The Bahamas […] whether they arrive by air or by sea,” Jibrilu said. Jamaica shared a similar goal. “Jamaica [is] focused on developing safe and seamless experiences for travelers,” Donovan White, director of tourism for Jamaica, told Skift.
“The ministry of tourism and the ministry of health and wellness worked together to develop the concept of the resilient corridors, which encompasses the majority of our tourism regions. These corridors were an industry first, allowing us to manage exposure between international visitors and our tourism workers and residents. Our top priority was — and still is — instilling traveler confidence.”
Beyond the safety aspect, some destinations are eyeing ways to attract higher value revenue streams – such as creating increased economic benefits from a smaller kind of cruise tourism, focusing on overnight visitors, and entering new markets.
“What we’ve seen is an opportunity to expand on our home porting because it’s also a different target market,” said St. Maarten’s Chun. “The home porting are more the exclusive cruises — Star Clipper, Seaborne, Windstar — so they’re smaller. [W]e see the benefit of it, because they do come a few days before or after, in order for them to get a taste of the island and contribute to the economy before, on that Saturday morning, they hop on their ship to go around the Caribbean.”
Experts agree that smaller ships bringing greater value and maximizing cruise benefits should be a focus for the Caribbean. “The niche cruising that has always been there and smaller vessels, they’ve looked to offer different types of experiences than mainstream large vessels – there is this ingrained educational aspect of the experience, culture is important,” George Washington University’s Matus said. “That segment of the cruise industry has an opportunity here. And I think many places would be very open to welcoming back smaller vessels that might give them the opportunity to test their readiness with outbreaks.” Aside from growing the niche cruises, however, destinations have a chance to reexamine their relationship structure with the cruise lines.
“I really think that the region is not optimizing the returns from the cruise sector,” Hendrickson shared with the CTO. “That is something we need to look at — to develop linkages with our agriculture, to do more on board provisioning, our handicrafts, and our creative talent – our musicians and artists on board those ships providing services and earning a decent income. There needs to be a whole reimagining of what the cruise sector means for the region.”
Jamaica was ahead of the learning curve as soon as the shutdown began. “[W]e used the downtime to actively work on increasing employment of Jamaicans onboard cruise vessels, which we will continue to pursue when the industry returns,” White told Skift. “We have already developed a successful winter homeport business out of the UK and Germany. We will continue to grow that business as a part of our overall tourism and cruise strategy.”
Belize has focused on the linkages across its industry to ensure safety standards are delivered throughout any sector . “It’s like a chain where one part cannot function without the others,” Bevans said.
In addition, highlighting Belize’s natural safety advantages — outdoor activities and low population density – will take priority in destination marketing efforts, while reaching out into new markets in Europe and South America were already on the agenda, as a result of pre-Covid capacity studies. “We contracted agencies in the UK, Germany, France, and the Netherlands, and one in Argentina,” Bevans said. “We are pushing other markets to spread out our inventory into low season months which will spread out capacity. Spread out the demand, getting into other markets that have high season for low peak – June to November – to help our sustainability.”
Experiential travelers, long elusive to the Caribbean, are now being targeted as well as high value consumers. “We can market now more towards the villa rentals, the people that like food, because we’re known for culinary, for both our French and Dutch sides,” Chun said. “We’ve been marketing the target groups that we know that want to travel right now, from the Millennials to those that still have their jobs and need to get away and are willing to get their tests and come to a safe place to vacation.”
Similarly, Caribbean destinations recognize they must rethink their attractions and craft innovative cultural tours for smaller groups of cruisers, including millennials and Generation Z travelers, who will be among the first to travel again in search of authentic, sustainable experiences. “It gives us an opportunity to explore what we’ve been ignoring – as a Minister for Tourism, I’m ecstatic about that particular prospect,” Grenada’s Minister of Tourism and Civil Aviation said at the 2020 Seatrade Cruise Virtual’s Regional Panel on the Caribbean this month. “I’ve always been saying, our community tourism, our ecotourism, our mountains, our trails – there are a number of things that we can do within the region that avoid the mass gatherings.”
St. Maarten’s Chun told Skift that just as the ships have evolved and “become fancier” so too must Caribbean destinations innovate. “They have everything on there, but what they don’t have is the island experience. They don’t have the culture, they don’t have the visits to historical sites, they don’t have any of that on their ships. St. Maarten’s objective is to enhance tremendously our culture; we have a rich history and culture that we have not put out enough.” St. Kitts and Nevis recently expressed plans to focus on its overnight tourism, noting that the destination is “determined not to disturb the delicate balance between necessary development and over-commercialization.” Martinique’s New York office was not available, but the president of Martinique’s Tourism Committee, Karine Mousseau, shared in a recent interview that with the cruise season lost, the French territory plans to pump 2.7 million euros in marketing the destination to overnight markets through February, including to mainland French tourists for the upcoming season.
DMOS AT RISK
In a May 2020 joint CTO-GW research study and survey on the effects of Covid on destination management and marketing organizations in CTO member countries, nearly 99 percent of destinations said they foresee sustainability playing a central role in their recovery plans. But the study also revealed that 61 percent of the Caribbean’s DMOs — which play a critical role in the Caribbean tourism industry – have had to reduce their budgets, with 39 percent sharing that they foresee employment cuts in the future. “The plans [tourism offices] have had have largely focused on bringing back people quickly,” Matus told Skift, ”but to sustain tourism in the new normal will require them to think more broadly about the implications to the entire value chain and plan accordingly. How do you do this with a diminished budget is a huge question.”
A NEW REALITY: QUALITY OVER QUANTITY
Hard questions face a region now forced to plan ahead while mitigating the absence of big ships. Whether all destinations are actively working towards this or are able to financially push new initiatives at this time remains to be determined.
What’s for certain is that the pandemic is a pivotal moment for the Caribbean — yet another one, that is, considering the 2017 twin hurricanes which revealed the region’s low resilience. But the magnitude of Covid-19 is such that Caribbean destinations will have no other choice but to embrace the new reality and make difficult decisions in the coming months. There’s just no going back to mass cruise tourism as we once knew it, where tens of thousands of tourists disembark in a single day in a single island destination — at least not for a long while.
For the Caribbean, which is well-positioned to bounce back post-Covid, that may turn out to be a silver lining as tourism leaders must now target higher value tourism — such as niche cruises, stay-over visitors — and create up market adventure and cultural experiences geared to the region’s changing, discerning millennial and Generation Z consumer base. All of this would bode really well for a post-Covid resilient and sustainable Caribbean tourism industry.
Jim Hepple is an Assistant Professor at the University of Aruba and is Managing Director of Tourism Analytics.