Cruising Cash Cows: Perceptions and Misperceptions

Abstract: Most ports and governments see cruise tourism as a potential economic boom. They are mesmerized by the glamour and majesty of cruise tourism and often overlook that cruise tourism is big business - the three major cruise lines typically earn more than $3 billion a year in net profit, while paying little to no taxes in the locales where they earn their income. Local ports and local governments need to also approach cruise tourism as big business. They need to recognize the economic drivers of the cruise industry, maintain a realistic (empirically-based) perspective about the economic benefits (and costs) of cruise tourism, and have a plan for how cruise tourism will directly benefit local interests and the local economy.

The presentation gives a picture of the economics of cruise tourism, from what goes on onboard cruise ships to the relationship between ports and cruise ships. It isn¹t just a matter of recognizing that 60% of discretionary spending by passengers on a cruise vacation is spent onboard, which impacts what is available for spending onshore; or that the economic relationship between the cruise ship and shore providers and onshore vendors often favours the cruise ship, leaving onshore merchants and vendors less income than the ship; but also the economics of hosting a ship (i.e., whether a port community is subsidizing incurring direct cost from cruise ship visits). A survey of ports around the world reveals that some ports derive considerably more income than others from cruise tourism (including from fees for docking and other related port services/taxes). Another issue worth consideration is the potential problem posed by multiple ports competing for the same cruise business. Based on the picture painted of the cruise industry, the presentation focuses on what a port can do to best protect its interests and what it can do to maximize the value of cruise tourism. Some of these strategies require cooperation with other, nearby ports.

Biography: Ross A. Klein, PhD, is an international authority on the cruise ship industry. He has published four books, six monographs/reports for nongovernmental organizations, and more than two dozen articles and book chapters. He has also been invited to testify twice in the U.S. Senate and once in the U.S. House of Representatives, and he has served as an expert witness in legal actions against cruise lines related to sexual assaults and other crimes and labour issues. Ross is a professor at Memorial University of Newfoundland in St. John’s, Newfoundland, Canada and is online at www.cruisejunkie.com. His CV can be found at www.cruisejunkie.com/vita.pdf