Glut of cheap Caribbean cruise ships hurting Barbados tourism and island economy

How many cruise ships are too many for Barbados?

How many cruise ships are too many for Barbados?

Adrian Loveridge - tourism expert, hotel owner

Adrian Loveridge – tourism expert, hotel owner

According to a recent Travel Weekly (TW) article a total of 30 cruise ships will be sailing in the Caribbean this summer with Carnival alone offering over 1,600 cruises in the region across the entire year.

Hindsight is a truly wonderful thing, but it would have been difficult not to predict the massive over-capacity estimated at 19 percent, that has been created in 2014. Kevin Sheehan, CEO of Norwegian Cruise Line, described the ‘Caribbean train wreck’ as a product of a ‘lemming theory’. He went on to add ‘we all sat in our rooms and did our itinerary planning – on our own, or course – and we all concluded it made sense to go into the Caribbean’.

Ken Muskat, MSC’s senior vice President was equally candid, describing the situation as ‘oversaturated with inventory’.

“Whether you describe this scenario as over-capacity or under-demand inevitably the result has lead to dramatic price discounting, with daily all-inclusive rates lowered than US$43 per person/day on some cruises.”

“Land based tourism accommodation providers do not stand a ‘snowball in hell’ chance of competing with these rates…”

Probably what at least partially influenced the key players into redeploying more vessels to the Caribbean this year was the poor performance of its ships in Europe between 2010 and 2012, due to weak economies and the reluctance of many North Americans to pay higher transatlantic airfares. 

Other factors that have lead to the supply of Caribbean berths being more plentiful this year include the growth in size and number of ships the industry operates, together with the decision to position them in the region throughout the year.

The thinking behind this last point was, to quote TW ‘Executives of all the lines say that having a year-round presence avoids having their brand fall off the radar with travel agents, building sales momentum throughout the year’.

Whether you describe this scenario as over-capacity or under-demand inevitably the result has lead to dramatic price discounting, with daily all-inclusive rates lowered than US$43 per person/day on some cruises.

Land based tourism accommodation providers do not stand a ‘snowball in hell’ chance of competing with these rates given the tremendous tax and labour cost advantages the shipping companies have.

And while you cannot necessarily compare the two distinct products, at the end of the day many travelers are driven by where they can get the biggest bang for their buck.

Is this likely to happen again next year?

Probably not, as cruise lines are sending more ships to China and Australia to meet increased demand.

These include newly built Quantum of the Seas with its capacity of 4,180 passengers, which will now be based in Shanghai year round.

Not surprisingly, with 530,000 Chinese tourists taking cruises beyond their mainland in 2013. This was double the number in 2012 and industry forecasts have the country counting second only to the United States in passenger numbers by 2017. P & O Cruises will add another two ships to the three already based in Australia during 2015.

Barbados has not escaped this ‘surplus inventory’ unscathed, with a drop for the first four months of 2014 amounting to 12,359 cruise ship passengers or a 4.2 per cent decline, when compared with the same period last year.

But this is not beyond question as some of our neighbours have not suffered at all.

We must continue to ask, “Why?”

Thanks to Caribbean News Now! for the photo of Bridgetown Harbour

9 Comments

Filed under Barbados, Barbados Tourism

9 responses to “Glut of cheap Caribbean cruise ships hurting Barbados tourism and island economy

  1. Not an expert, only awake.

    The cruise ship industry is parasitic to small island economies. They also have the monetary and political clout to buy anything and anybody in small island governments. This has proven so destructive to Barbados, but only in combination with a series of governments that have ignored the deteriorating quality and feel of Barbados as a vacation destination in and off itself.

    We once survived primarily as an end-destination vacation paradise. Now we are nothing more than the small town that serves the airport and the sea port. We are chauffeurs taking passengers to and from the cruise ships. The passengers walk around and buy some trinkets or a beer and then head back to their ship for an all inclusive dinner and entertainment that can’t be matched on the island at any price save by the Sandy Lane crowd.

    How do we fix this?

    Well first, we have to clean up the garbage. Then our people have to learn to smile at the tourists. The whole thing is that far gone and needs that much of a basic reboot. Garbage. Smiles.

    When you’ve done that, ask me what’s next because there is no use doing anything if you can’t do steps 1 and 2.

  2. Why does Adrian think “you cannot necessarily compare the two distinct products”. That might have been true in the 70’s and early 90’s when I was in the cruise line business. However, I firmly believe that today’s mega cruise ships, with their multiple large scale leisure and retail outlets on board, do compete directly with much of the Caribbean’s resort inventory.
    Today’s cruise ship business model is utterly exploitative of the islands – they are NOT a good partner in regional tourism. Today 82% of the average cruise ship passenger’s DISCRETIONARY spend is on board and 50% ship commission on shore tours dissuades passengers from exploring the islands properly. The ships now arrive at 9am and are gone at 5pm. Cruise lines pay minimal tax or duties anywhere in the world and few people in the Caribbean seem to have recognised the drastic effect of the cruise ship’s changed business model. Let us see the impact this summer on hotel rates and occupancies from this extra cabin inventory in the region.

  3. Victor

    Yes and when you do venture into town for “trinkets and beer” someone shoots you.

  4. Mr Coco

    Too funny Victor. Sad but funny.

  5. Interesting article and yet the recent Barbados article I read recently ( Taxi and Tour Operators’ Convention with Port Authority / Minister) stated a cruise growth expected to 750,000 for year.(might be wrong) Concern was how best to get business with service expressed. My concern was how do you get even that $50 – $100 day spent per passenger off the ship into the hands of the average Barbadian. For sure the average taxi driver cannot compete with the Tour operator who pays part back to the cruise company yet on their own they can provide a good product in a private drive. Yes, monies are earned by the port and town business to help the government tax revenues and as was stated how do one keep this business going for the whole year , not just the winter time.
    If cruise line nickel and dime a passenger on board you can believe they will not be back and that is a concern for the cruise line. These megaship must now fill up with new passengers each week or fortnight to at least breakeven and they will port where the numbers come from. A lot of ships were pulled back from Europe not only for EU economic changes but also as a lot of passengers from North America were finding air travel expensive just to get there. Alaska has boomed again but it has a short window. Even if people are here for only a day , they need to know they are welcome so they return by cruise or land for a longer stay . Affordability is the tough one , not all can afford Sandy Lane or such.

  6. Adrian Loveridge

    Some very good points raised. Foreign based minimum tax paying cruise companies will continue to grab a higher share of ANY discretionary spending by passengers. Royal Caribbean Cruises Ltd are currently forming a new tour company (TourTrek) who will effectively arrange and sell the vast majority of shore excursions to their customers. Therefore further reducing any possibility for local tour operators, taxis etc. Like Sandals, they will be relentless in demanding the lowest possible prices from any local attractions and service providers.

  7. Interesting Adrian
    You bring up points that concern me in terms of ensuring the local industry is benefiting from cruise ship arrivals otherwise tax payers will be objecting to port improvement or being charged high leasing rates for dockside venues to exhibit local crafts. What is needed is the local Tourist board to advertise options that are better than ship paid excursions yet offer the same and a better service. In essence you have to compete against them. Your market to my mind would be the experienced cruiser who avoids ship excursions and their higher rates. Social media can play a large role into getting the market access .which the cruiseline cannot complain only compete. A lot of shops off the main down area in Victoria Canada complain that if they advertise thru the ship the rates they want do not get enough traffic and profit to warrant doing this,, This port is also like Barbados in a short season for the Alaska run. Many Brits will cruise back to Barbados on an annual basis for sun and fun but will go to Europe in the off season so how does one get them back is a challenge’
    Cheers

  8. Anonymous

    Barbadian recruiters for norwegian cruise lines told bajans at warrens, the cruise line will not hire you if you have dreads, speak with a heavy accent or have a tattoo markings showing “I CALL THIS DISCRIMINATION AND SHOULD NOT BE ALLOWED, THE DAYS FOR THIS IS OVER, THIS CAME FROM THE HORSE’S MOUTH AT WARRENS CENTER. SHAME ON ALL OF YOU BAJANS FOR TREATING YOUR PEOPLE LIKE THAT DO YOU THINK THE MANAGEMENT OF THE CRUISE LINES CARE ABOUT YOU? NO WAY, CARE ABOUT REVENUES.. BYE BAJANS RECUITERS WAY UP AND SMELL THE COFFEE SLAVERY IS OVER… GEORGE MAYERS AND COMPANY……

  9. Rob

    If you want the job , apply and see what the true details are. Many Hotel services will not hire one if you are looking unprofessional. On cruise ships your looks and English level expected are based on if you interact with the public. Given Barbados is an English country cannot see the concern.
    Many cruise employees are from the Caribbean, Asia , India , Europe and yes it is hard work but you travel, are paid, no taxes , provided for .
    A tattoo ,, have no idea , but one has an uniform on🙂
    I saw in the Nation a Bajan had just retired and worked on the ships for a long time, was very happy..
    No one gives you anything for nothing ,, a lot of folks have to work away from ones home, Sad but true
    All the best .