Cruise line eyes bigger slice of the pie

| 30/09/2014 | 5 Comments
CNS Business

Royal Caribbean’s Oasis of the Seas

(CNS Business): Royal Caribbean’s ‘Double-Double Program’, a new three-year profitability initiative that aims to double earnings per share and increase the company’s return on capital to double-digits by 2017, may have a negative impact on cruise ports, including Grand Cayman, according to a Canadian academic who researches the cruise industry.

Memorial University of Newfoundland Professor Ross Klein believes the initiative, which was announced during Royal Caribbean’s stockholders meeting in July, could impact cruise destinations because part of the strategy is to encourage on-board spending.

“If they are spending more on ships they are spending less when they go ashore,” Klein pointed out. He believes all cruise lines push on-board spending very strongly, particularly in the Caribbean because the cruises themselves are so cheap. “The difference here is that Royal Caribbean has come out publicly,” he told CNS Business.

Building a cruise dock to accommodate the Oasis-class ships has more to do with the convenience for the cruise lines than profitability for the destination, he said. “From a port perspective the issue is, what is it going to cost and are we going to recover the cost of construction? The cruise industry is not interested in whether you can pay your debts but whether they can keep their profits up.”

Where the dock is owned by the cruise line, the situation can be even more stark. For example, Falmouth dock in Jamaica is owned and was built by Royal Caribbean and there is an enclosed area for passengers, “so there’s very little impact outside the terminal area,” he said. “Even the stores inside pay rent to Royal Caribbean.”

In the cruise ports local people want to maximise their income and the cruise industry wants to maximise its income, Klein noted. “My concern is that many ports end up giving more to the cruise industry and they have to and they end up subsidising the industry.”

As far as whether the dock should be built on Grand Cayman, he said, “I wouldn’t judge on whether it’s good or bad but the numbers should be worked out so that it is paid for by the cruise industry and not on the backs of Camanians. When crunching the numbers make sure that they’re all worked out.”

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Category: Cruise Tourism, Tourism

Comments (5)

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  1. david miller says:

    If a cruise ship doesn’t have piers to tie to then they will not come. Especially large ships like RCCL new Genesis class.
    Wed. the 15 th shows how a ship was 45 mins. late. All tours on the ship was late. If they were tied to a pier they could have made back that time.
    People who don’t understand about cruise ship business need to ask Kirk’s ,Dart, Stingray water sports, all prebook tours ( Turtle Farm, Dolphin discovery, Dolphin Cove, Hell , Pirates cave, Botanical park, Pedro St. James, Rum Point, Royal Palms beach, Calico Beach , Public Beach, 250 taxis and 80 busses) and I’m sure that there are still more people I forgot.
    We neeeeedddd a proper cruise ship facility to allow people to get off on time.
    If you haven’t noticed , when island tourist come and stay, they mostly rent cars to save money or go to grocery stores to buy food. They would rather take the public bus even if they are staying at the Ritz. I guess they are saving money?Rental cars slow down traffic to 20 mph.

  2. Paul Holmes says:

    I have recently been on a RC cruise in the med. The on board shops lack the individual charm of the port shops. Therefore many guests, like me, prefer to spend whilst on shore, thus supporting the local economy. However, RC then try to maximise profits by charging huge amounts for excursions.
    A new dock in Cayman would only come to fruition if it suited RC. Unless it enabled the Cayman tourism industry to increase profits and provide new jobs, then I think it would have a negative impact.
    Kusadasi in Turkey has changed dramatically over the last 20 years because it receives 800 cruise ships per year. It might be worth looking at their business model and look at a “before and after” effect of how the local population regard the bully tactics of the big corporations.

  3. Babs says:

    Royal Caribbean is saying in public what Carnival has been practicing for years and will continue to.

  4. Peter Milburn says:

    And we want to build a dock system for these people who are only looking out for THEMSELVES???

  5. Josephine Says says:

    There is nothing that anyone can say that would convince me that a port in Cayman is a good idea. It is only good for the cruise lines and the government pockets. NOT for the livelihood of the Cayman residents.
    Proof can be found at all formerly lovely sleepy quaint individual villages throughout the Caribbean. All like a cement garden now. Pristine clean and same same. Need some jewellery?! LOL

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