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Island’s cruise industry faces challenges

FCCA President Michelle Paige discusses Puerto Rico as a port of call for cruise tourism


May 13, 2005
Copyright © 2005 CARIBBEAN BUSINESS. All Rights Reserved.

Earlier this year, member lines of Florida-Caribbean Cruise Association (FCCA) signed a long-term agreement with Puerto Rico’s government to increase the number of visitors from an annual 1.3 million to 1.7 million. This increase in tourist visits is expected to boost the cruise industry’s economic impact on the island from $300 million to $500 million over a period of five years. "The incentive program will be extended only if by June 30, 2008, the number of cruise passengers shows a 20% increase over the current 1.38 million passengers visiting the island on a yearly basis," explained Puerto Rico Tourism Co. Executive Director Terestella González Denton.

According to a report from the Puerto Rico Tourism Co., cruise tourism has a $310 million direct economic impact on the island’s economy. Passengers in homeport cruise ships spend an average $50.88 per visit, whereas a transit cruise tourist spends an average $70.99 per visit. Cruise ships using San Juan as a homeport represent a $102.3 million per year economic boost, or $437,201 per visit. On the other hand, a transit cruise ship generates $74.8 million per year, or $233,172 per visit.

"Cruise ships using Puerto Rico as a homeport will receive a one-dollar incentive per passenger only if they dock for 20 or more days in a six-month span," said González Denton. Another incentive deal, based on the amount of time a cruise ship stays in San Juan, is the cruise ship will receive an 85-cents-per-passenger incentive if the ship docks in Puerto Rico for at least eight hours.

In a recent conference, FCCA’s President Michelle Paige explained the long-term benefits cruise tourism has for an island’s economy. FCCA members include cruise line companies such as Cunard Line, Costa Cruise Lines, Holland America Line, Norwegian Cruise Line, Princess Cruises, Radisson Seven Seas Cruises, Celebrity Cruises, Carnival Cruise Lines, Disney Cruise Line, and Royal Caribbean International. Since 1972, the FCAA has created a forum for its members to discuss and exchange views on issues relating to legislation, tourism development, ports, safety, security, and other cruise industry matters.

"The association represents 13 member lines with more than 100 vessels sailing in Florida, Caribbean, and Mexico waters. These vessels carry more than 95% of cruise visitors to Caribbean ports, such as San Juan," said Paige.

"Although the cruise industry is a very young industry and lacks the color, culture, and history of the destination it calls upon, it can boast that in the past 23 years almost 100 million passengers have taken a multiday cruise vacation," said Paige. Of this number, 61% were generated in the past 10 years and 37% in the past five years. Since 1980, cruise tourism has had an annual growth rate of 8.1%. The Cruise Line International Association (CLIA) projects 11.1 million passengers will travel on cruise ships in this year alone.

PricewaterhouseCoopers conducted an economic impact study on cruise activity. It showed cruise activity in the Caribbean accounted for direct expenditures of nearly $6 billion. Another study, done by Macro-AHF, exploring the nature of cruise passenger purchases in duty free shops showed that nearly 80% of cruise passengers purchased items during a port of call. "Over half of all shoppers, approximately 55.5%, didn’t plan their purchases beforehand," explained Paige.

"This study showed a vast majority of cruise passengers (65.9%) believe products in the Caribbean are less expensive than in the U.S., even more (74.1%) believe prices are better in port stores than ship stores," stated Paige. "Cruise passengers are extremely active consumers whose spending habits on luxury goods set them above the average American," she said.

"According to our findings, the amount of money cruise passengers spend is dependant upon several factors such as the overall degree of satisfaction with the destination experience, [or] ‘being wanted,’ cruise passengers want to feel welcome," explained Paige. Other key factors include cleanliness; the ability to understand and be understood; transportation; availability to buy unique, attractive items; and sports and recreation.

The 2001 PricewaterhouseCoopers study showed passenger spending at a high of $173.24 per passenger in St. Thomas, U.S. Virgin Islands, and a low of $53.84 in San Juan. The study shows spending in Puerto Rico fell from $100 per passenger five years prior. According to this report, passengers who have experienced San Juan have said there isn’t enough to do.

"It is important to remember cruise passengers tend to come back as land-based vacationers," explained Paige. "Cruise passengers equal profit," she added. The latest 2004 CLIA report showed nearly 50% of cruise passengers fully expected to return to the destinations visited for a land-based vacation. The study showed cruise ship passengers aren’t exclusively cruisers, but are frequent vacationers who cruise as part of their vacation mix. They average over three trips each year, taking only one cruise in a three-y ear period, thereby taking nine other types of vacations in the three-year period.

This Caribbean Business article appears courtesy of Casiano Communications.
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