Will Cuba Steal Cruise Ships From Its Neighbors?
If you’re one of the big U.S. cruise lines preparing to steam to Cuba, you’re giddy over a long-forbidden, culturally rich port of call to offer customers.
If you’re one of the Caribbean islands that rely on hordes of American cruisers spending money in your shops and restaurants, you’re probably a little nervous.
Cuba was a hot topic for cruise executives and tourism officials gathered this week in Fort Lauderdale, Florida, at the annual Seatrade Cruise Global conference. Several panel discussions focused on the island, others veered to the subject, and many reflected concerns among Cuba’s neighbors about the competition. The cruise companies say there are plenty of ships to go around—although some don’t seem to mind leaving a little doubt out there to motivate the traditional destinations to bolster their offerings.
“In terms of size, [Cuba is] not going to divert that much traffic from other places,” said Richard Fain, chairman and chief executive of Royal Caribbean Cruises Ltd., citing port capacity as one major constraint. Cuba will “create a halo of interest” around the region, he said in a comment other executives echoed, by spurring cruise veterans and virgins alike to book a Caribbean outing.
Cuba’s opening will prompt other destinations “to step up their game and improve their offerings,” helping to sell more cruises, Rick Sasso, president of MSC Cruises USA, said during a discussion of the North American market. “It’s already forced people to differentiate their story: Here’s what we offer, here’s what we’ve done,” said Holland America Line President Orlando Ashford, who spoke on the same panel as Sasso.
“I’ve got the entire fleet just pouncing around the island,” joked Frank Del Rio, chief executive and president of Norwegian Cruise Line Holdings.
Most U.S. travelers who have seen much of the Caribbean have never been to Cuba, which is likely to occupy a day or two on the typical itinerary. Renewed U.S. relations will make Cuba “a great refresher for the Caribbean,” Carnival Corp. Chief Executive Officer Arnold Donald said Tuesday during a talk with Fain and other executives.
President Barack Obama announced the new diplomatic stance on Cuba in December 2014, rejecting the long-held U.S. policy of isolating the nation. He will visit next week, the first sitting U.S. president to step on Cuban soil in more than eight decades. On Tuesday, the Obama administration authorized individuals to visit Cuba, in so-called “people-to-people” exchanges, and U.S. banks to handle the financial transactions, removing a key obstacle for cruise lines and other travel commerce. Ships will be able to visit other nations after Cuba on their Caribbean itineraries, a change to the law that was critical to make stops in Cuba feasible.
“It’s the new girl in the dance party, so everybody talks about Cuba,” said Jorge Vilches, president and chief executive of Pullmantur, a former Spanish line that ended its Cuba calls in 2006 when Royal Caribbean bought it. “It’s going to be wonderful, it’s going to be beautiful … but it’s going to take a while to enhance its experience. We need to give the Cubans some time to prepare.”
By all accounts, Cuba has vital infrastructure needs and can’t accommodate multiple floating behemoths per day, as destinations like Aruba, Cozumel and St. Maarten do. And Cuban authorities are expected to regulate ships’ calls rigorously, preventing a huge wave of cruisers washing ashore the way they do at other locales.
Still, the math suggests some Caribbean destinations could see a decrease in ships calling at their ports, simply because the cruise lines have become more disciplined in their capacity growth and in balancing deployments by region. A line that serves Jamaica might add two days in Cuba, cut a day in Montego Bay, and just stop in Falmouth for a day before heading to another country.
The Caribbean is the world’s largest cruise market, accounting for 34 percent of all itineraries. Cruise travelers spent nearly $3.2 billion (pdf) last year at 35 destinations, according to the Florida-Caribbean Cruise Association. Much of that spending was concentrated in the western part of the region. The top market was St. Maarten, at $423 million. Cozumel collected $365 million, the Cayman Islands $208 million, and Jamaica $199 million. Cozumel led the region in the number of jobs tied to cruise tourism, with more than 9,700.
Right now, most of the cruises departing from Florida split their Caribbean itineraries between eastern and western locales. The distance of a destination from Cuba seems to be one source of comfort for tourism officials wary of what the Havana rush might hold.
Kenneth Mapp, governor of the U.S. Virgin Islands, led a delegation to the Seatrade conference to explore ways to lure more cruise lines to St. Croix. “I think we’re going to do just fine,” said Mapp, who governs one of the region’s top cruise destinations in St. Thomas. “The itineraries that include Cuba will be mostly in the western Caribbean.”
Beyond its novelty, Cuba presents cruise lines with vast coastlines, equivalent to the length of California, that will let them offer multiple ports of call near South Florida. In addition to Havana, Carnival has identified Cienfuegos and Santiago de Cuba as ports for its new Fathom brand, which begins operating in April with cruises to the Dominican Republic. Farther ahead, eight other Cuban destinations are “ports of promise” for Carnival, Fathom President Tara Russell said last year in an interview with a Miami television station.
Switzerland-based MSC Cruises has one ship, the MSC Opera, based in Havana year-round, and in November will position a second there for the winter season. Carnival plans to begin its first Cuba sailing in May, on Fathom’s Adonia, but is still awaiting Cuban approvals. Others will move in quickly, as permitted.
But the neighboring islands’ concerns are overblown, several cruise executives said, given that the industry plans to deploy 52 new ocean vessels by 2022, including nine this year, according to the Cruise Lines International Association, its trade group.
“Where do they go?” said Carlos Torres de Navarra, Carnival’s vice president of commercial port operations. “Over time, there’s going to be more than enough business for everybody.”