Despite hurricanes, record $3.4bn in direct Caribbean cruise spending

In spite of 2017's devastating hurricanes, Caribbean and Latin American destinations overall benefited from a record $3.36bn in direct cruise spending, a 6.3% increase compared to the last measurement in 2015.

However, fortunes were changed due to the storms, with destinations like the British Virgin Islands, Puerto Rico, St. Maarten and the US Virgin Islands seeing declines, while others picked up business on ship redeployments.

The spending springs from the 29.6m passenger and crew onshore visits to 36 Caribbean and Latin American destinations (including several non-Caribbean, Pacific coast ports) in the 2017-18 cruise year.

79,000 jobs generated

As well, cruising generated 79,000 jobs paying more than $900m in wages during the period, according to a newly released study by Business Research & Economic Advisors (BREA). Details were announced at the FCCA Cruise Conference & Trade Show Thursday in Puerto Rico.

'We could not be prouder of these results and what they mean for all of our neighbors and partners throughout the Caribbean and Latin America,' FCCA president Michele Paige said. She had announced the overall spending figure during a September media call with cruise line leaders to update on Caribbean recovery a year after the storms.

'Beyond showing what cruise tourism brings to these destinations' economies, which was crucial in restoring lives and communities following last year's historic hurricane season, many of the findings will also serve as the foundation of building further mutual success between cruise lines and destination stakeholders,' Paige said.

The study—commissioned by the FCCA in partnership with destinations every three years—measured direct spending impacts through passenger surveys and crew surveys, cruise line spending for services and provisions, port revenues and employment generated by cruise ship calls. Measurement of economic impacts was calculated by collecting data from local government agencies, regional development agencies and international economic agencies to evaluate impacts on employment, wages, port fees and taxes.

Passenger, crew and cruise line spending

Of 25.2m onshore visits by cruise passengers, total spending was $2.56bn, or an average of $101.52.

Crew made 4.4m onshore visits, with total spending of $265.7m, or $60.44 on average.

Cruise lines spent $534 million, an average of $14.8m per destination.

The 29.6m passenger and crew visits represent a 5.2% increase compared to the previous (2015) study, and the 32 common destinations in the 2015 and 2018 studies experienced a 6.5% increase in passenger visits.

Average per passenger spending increased at 23 of the 32 common destinations, and 12 destinations recorded average spending rates above $100 per passenger, up from nine in 2015.

Impact of a single transit call

On average, a single transit cruise call with 4,000 passengers and 1,640 crew generated $378,500 in passenger and crew spending alone, $339,500 and $39,000, respectively.

The study's measure of cruise tourism expenditures did not include indirect benefits of cruise tourism, including supplies purchased by tour operators, restaurants and port authorities, though the estimates of these expenditures served as the basis for total employment and wage impacts. The study also did not account for other indirect benefits, such as spending from cruise passengers who return as stay-over visitors, nor did it measure other methods of cruise line spending that benefit destinations, including NGO partnerships and marketing.

Hurricanes changed fortunes

Results were skewed by last year's historic hurricane season with destinations like the British Virgin Islands, Puerto Rico, St. Maarten and the US Virgin Islands seeing declines due to the temporary effects, while still totaling expenditures more than $500m during the study and now regularly handling more than 10,000 cruisers per day.

Additionally, the temporary impacts led to increases in destinations like Guadeloupe, Martinique and Bonaire.

Cozumel on top

Eleven destinations had direct cruise tourism expenditures of $100m or more. Cozumel led all destinations with $474m, followed by The Bahamas with $406m, Jamaica with $245m, the Cayman Islands with $225m and the US Virgin Islands with $185m. Combined, these five destinations accounted for 46% of the total cruise tourism expenditures among the 36 in the study.

The next six destinations, with $100m or more in cruise spending, accounted for 24% of the total. Among these were Puerto Rico ($151m), St. Kitts and Nevis ($149m), St. Maarten ($143m), Dominican Republic ($135m), Honduras ($107m) and Aruba ($103m).

The next 10 destinations with expenditures between $50m and $100m, or 22% of the total, ranged from $52.9m in Guadeloupe to $89.5m in Costa Maya. In addition to Costa Maya, Turks and Caicos ($86.5m) and Belize ($86.1m) each had total cruise tourism expenditures in excess of $85m.

The next six destinations with expenditures between $20m and $50m accounted for 6.4% of the total. This ranged from $29.2m in Costa Rica to $42.5m in Puerto Vallarta. Ensenada ($40.4m), Martinique ($38.2m) and Progreso ($32.7m) each had cruise tourism expenditures in excess of $30m.

The remaining nine destinations each had less than $20m. These ranged from $1.6m in Puerto Chiapas to $19.2m in Grenada. In addition to Grenada, St. Vincent ($16.4m), Mazatlán ($15.9m), the British Virgin Islands ($12.6m) and Guatemala ($11.1m) each had in excess of $10m in cruise spending.

Onshore visit percentage drop storm-related?

Direct comparisons with earlier studies are not exact since the number and mix of participating destinations differs from prior studies. But BREA said some general comparisons with the 2014-15 study are possible. Of average passenger and crew visitation rates—the number that make an onshore visit—passenger visits dropped to 85% from 88%, while crew visits remained constant at 39%.

The FCCA is working with BREA to determine if the decline in disembarkation was influenced by the hurricanes, due to factors such as fewer available excursions or passenger perceptions of destination recovery. 'We feel confident the drop is an anomaly and are investigating further,' an association spokesman said.

Watches/jewelry purchases decline

The average per passenger spending, including transit and homeport calls, decreased 2.2%, from $103.83 in the last study to the $101.52 this year. BREA said this decline was largely due to a decrease in spending for watches and jewelry. While those who purchased watches and jewelry spent nearly $25 more per passenger, fewer people purchased watches and jewelry (15.5% versus 19.8%).

In addition, fewer passengers spent money on taxis and local transportation this year (18.7% versus 23.7%).

Higher spending on tours and souvenirs

These decreases were only partially offset by increases in the average expenditure per passenger for shore excursions, and local crafts and souvenirs, which increased by 8.3% and 11%, respectively.

Hurricanes Irma and Maria resulted in nearly 2m fewer passenger visits to St. Maarten and the US Virgin Islands—the top two destinations in terms of average per passenger spending in both the recent study and the last. Had these two destinations received a similar number of onshore visits as in the 2014-15 study, the overall year-over-year average per passenger spending would have increased, BREA said.

Crew spending decline continues

Average expenditures by crew continued its multi-study drop, experiencing a 10% decline, from $67.10 in 2014-15 to $60.44. This resulted from reduced spending primarily in electronics, watches/jewelry and clothing.

Expenditures by cruise lines for port fees and services and other goods and services increased to $533.8m, resulting in an average expenditure of about $14.8m per destination.

The full study, its Volume II focusing on the specific spending within the destinations, along with metrics including passenger satisfaction, time spent ashore and types of shore excursions, along with similar studies dating back to 2001, are available at www.F-CCA.com/Research.

Posted 09 November 2018

© Copyright 2019 Seatrade UBM (UK) Ltd. Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Seatrade UBM (UK) Ltd.

Anne Kalosh

Editor, Seatrade Cruise News & Senior Associate Editor Seatrade Cruise Review