New economic impact study charts Brazilian cruise boom gone bust

Rio de Janeiro, to host Seatrade Latin America in September, remains Brazil's second busiest cruise port after Santos Rio de Janeiro, to host Seatrade Latin America in September, remains Brazil's second busiest cruise port after Santos MSC Crociere

A new economic impact study shows how Brazil's once booming cruise business has retracted. While cruising is growing in most other parts of the world, the number of ships deployed in South America's largest country has shrunk, reducing passenger numbers by hundreds of thousands and cutting revenues and jobs.

The total economic impact of passenger, crew and cruise line spending in Brazil was R$1.15bn (US$663m) in the 2013/14 season, a sizable amount but 250m reis (US$110m) less than three years ago, according to the study by FGV Projetos for Cruise Lines International Association-ABREMAR, the Brazilian Cruise Association. The nearly 18% drop is due to fewer ships and cruises operating in Brazil.

The passenger count was 596,532 during the 2013/14 season, down from the peak of 805,189 in 2011/12 and 792,752 in 2010/11, the first time FGV—Brazil’s leading economics and business management university—produced its report. The results were announced at the Seatrade Latin America Cruise Convention in São Paulo in May 2011 and the latest report is sure to provide fodder for high-level discussion when Seatrade Latin America returns to Brazil in September.

In 2010/11, 20 cruise ships operated in country, a number that fell in subsequent seasons to 17, then 15 and, ultimately, 11, in 2013/14. 

During the recent season, ended in April, spending by passengers and crew had fallen 12.9%, to R$455m (US$201m), since 2010/11. Over the same period, cruise line spending dropped 22.4%, to R$693m (US$306m).

The cruise industry is still a significant employer in Brazil, generating 15,465 jobs. However, that is 25.1% fewer than in 2010/11, according to the study. A number of those jobs are shipboard; Brazilian cabotage law requires vessels operating more than 45 days on the coast to employ at least 25% Brazilian crew.

Spending was off in all categories since three years ago.

Retail spending fell 14.9%, to R$147m. Transport before/after the cruise fell 7.4%, to R$74m, and ground transportation during the cruise was off 13.4%, to R$26m. Spending was down for food and drinks (-14.2% to R$133m), shore excursions (-9.7% to R$61m) and lodging before/after the cruise (-16.5% to R$14m).

Travel agent commissions fell a whopping 27.1%, to R$90m.

Spending for fuel, the largest single cost item for cruise operators, declined 20.6%, to R$232m.

Taxes and fees dropped 21.4%, to R$169m. Spending for water and waste removal was off 35.5%, at R$18m.

As in 2010/11, Santos remains the leading Brazilian port, followed by Rio de Janeiro, but numerous other ports in the country handle cruise calls.

Five cruise lines operated ships in the 2013/14 season: MSC Cruzeiros (MSC Preziosa, MSC Magnifica, MSC Orchestra, MSC Poesia), Costa Cruzeiros (Costa Fascinosa, Costa Favolosa), Pullmantur (Empress, Sovereign, Zenith), Royal Caribbean International (Splendour of the Seas) and Ibero Cruzeiros (Grand Celebration).

Brazilians comprised 81% of the cruisers—483,191 of the total 596,532 passengers. The 19% international contingent is down from the 21.4% in 2012. The trend is counter to non-cruise international tourism, which grew 10.3% between 2012 and 2013, according to Brazil's Ministry of Tourism.

FGV noted the decline in cruise business impacts a wide range of links in the tourism chain, including airlines, hotels, taxis, car rentals, guides, bars, restaurants, attractions and retail shops.

Limitations to cruise development identified in the study include high operating costs for such services as pilots, steep taxes, bureaucracy, logistics issues and inadequate infrastructure, with cruise ships sharing cargo facilities at most ports.

Seatrade Latin America is set for Sept. 2-3 in Rio de Janeiro.

Posted 04 August 2014

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Anne Kalosh

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