The coronavirus outbreak is affecting every part of the world in one way or another. Due to sensationalism by media outlets, cruise lines have been (in our opinion) unfairly targeted as the primary way to catch and spread the virus. We dissected the myths from actual facts in this post. In another, we highlighted what can be done to keep from getting ill from viruses while on a cruise. But one thing that hasn’t been address is, what happens if fear of cruising takes hold? What impact will that have on the cruise industry, particularly the islands cruise ships sail to?
This is a big deal. The world today is a global economy. And tourism is a primary source of income. The talking heads on television would have you believe that cruise ships are horrible – too many people that makes it easy to generate and spread illness, plus sulfur pollution, cruise ship worker wages, etc.
And the thing is, you might be inclined to think that I’m going to sit here and defend against these complaints. The truth is, each one of those things is an issue on cruise ships. Norovirus is not uncommon on cruise ships. The sulfur output from diesel engines has moved cruise lines to produce new ships that run on LNG (liquified natural gas) that burns much cleaner. And cruise ship worker wages have always been a point of contention.
Yet, with coronavirus threatening to halt the cruise industry (funny that cruising is the only part of the travel industry officials seem focused on), what impact will that have on the people and places that depend primarily on the arrival of cruise ships for survival?
A Global Economy
In today’s world, everything is interconnected – from communication devices to industry. As the coronavirus (COVID-19) demonstrated, a drastic stop of production in one country can have tremendous impact on many others. This CNBC story examines the effect the coronavirus (COVID19) has had on electronics manufacturers.
Because of coronavirus, supply chains have been severely restricted. In some cases, production was halted. In others, production shifted to other facilities not affected by coronavirus. Either way you slice it, supply was impacted. And when that happens, revenues dip. Companies are then forced to make decisions on what to cut to keep shareholders happy. In most cases, it’s people. Namely, companies start dumping employees rather than take more creative ways to reduce expenses while protecting jobs.
But when your business is tourism, it’s a much different story. Sure, vendors can go up on price. However, if no one is coming to purchase your product, you still make no money. One billion dollars times nothing is still zero.
Economic Effect on Islands That Depend on Tourism
At this point, let’s switch our attention from the corporations of the world and shift it to the islands cruise ships travel to. I’ve compiled a list of countries and territories that will be severely impacted if cruise travel from the United States is halted:
- Antigua and Barbuda
- The Bahamas
- British Virgin Islands
- Cayman Islands
- Dominican Republic
- Puerto Rico
- Saint Barthelemy
- Collectivity of Saint Martin
- Saint Kitts and Nevis
- Saint Lucia
- Saint Vicent and the Grenadines
- Sint Maarten
- Trinidad and Tobago
- Turks and Caicos
- United States Virgin Islands
That’s a lot of places. Now multiply this by the fact that cruise ships visiting these locations carry around 2,000 passengers if the ship is on the small side. Larger ships have a capacity of double that and more! But we’re not done yet.
Each of those ships heads back to the same countries and territories (except when repositioning) the same day the cruise ship arrives back at its home port. If you take as an example, a cruise ship that holds just 2,000 passengers that sails on 7-night voyages, in just one month alone, 8,000 people have come to these beautiful places to visit.
And that’s from only one small ship.
Multiply that by the number of cruise lines sailing to these same places by Norwegian Cruise Line, Carnival Cruise Line, Royal Caribbean Corporation, Disney Cruise Line, Princess Cruises, MSC Cruises, Celebrity Cruise Line. If each of these companies sent only one ship to these top tourist destinations, our numbers explode to 64,000 visitors in just one month.
Remember, this is if each of the cruise lines listed sails only one small ship per line.
Using just this example, we can see how severe the impact curtailing or, even worse, shutting down the cruise industry in the United States would be. And take note, these are only the areas in the Caribbean. This doesn’t include sailings from the west coast of the United States. Or voyages between the United States and Canada.
Yet, despite my best efforts to reason on just have disastrous a shutdown of the American cruise industry would be, the argument would be more convincing if we looked at a sampling of real data from one of these locations.
The Bahamas – a Case Study
Let’s use one of the top places to visit by American cruise lines, The Bahamas. A story by the magazine The Bahamas Investor, published in November 2019 ran with the title, “Cruise Tourism Income Hits Record Levels”. Just how good were these numbers?
The story quoted the Business Research and Economic Advisors (BREA), Economic Contribution of Cruise Tourism to the Destination Economies concluded for the Caribbean and Latin America combined:
“cruise tourism directly generated $3.36 billion in total cruise tourism expenditures—more than six percent higher than the record set by the previous study in 2015—along with nearly 79,000 jobs paying more than $900 million in wage income in the 36 participating destinations.” – Source: The Bahamas Investor
Continuing with the finding of the study by Business Research and Economic Advisors (BREA), Economic Contribution of Cruise Tourism to the Destination Economies, some important numbers about how much money is actually spent on cruises is revealed:
- 78,954 jobs were attributable to the industry, up 5.2% compared to the last study, paying a total employee wage income of $902.7 million.
- Destinations welcomed 25.2 million onshore visits from cruise passengers, with an average spend of $101.52, generating a total of $2.56 billion.
- Destinations welcomed 4.4 million onshore visits from crew, with an average spend of $60.44, generating a total of $265.7 million.
- Cruise lines spent $534 million, an average of $14.8 million per destination.
- On average, a single transit cruise call with 4,000 passengers and 1,640 crew generates $378,500 in passenger and crew spending alone: $339,500 and $39,000, respectively.
– Source: The Bahamas Investor
Take special note of that last bullet. In our illustration used at the beginning, my scenario assumed a 2,000-passenger cruise ship. This one doubles that. For just one 4,000 passenger ship, $378,500 is generated. Remembering the fact that there can be multiple ships docked at the same time, there is the potential for that one port to make $1,000,000 in a single day.
Cruising Helps Disaster Relief
There’s another vital function the cruise industry provides to the Caribbean. Disaster relief.
Cruise ships aid in the relief effort by shuttling much needed supplies. They are also used to help hurricane victims escape the danger zone. But is there another way cruise ships help with hurricanes even after the storm has passed?
How You Help After a Hurricane
Go back and look at the money ports of call make because of cruise ship arrivals. Visitors are important to the survival of local vendors. It’s a main source of income to care for daily needs. After a hurricane, that number drops dramatically. That’s because ships stop sailing to those ports until repairs can be made.
Remember all that money that is raked in from cruise ship stops? Some of that cash goes into repairing and rebuilding after a hurricane. So, in a way, taking cruises not only provides a way to escape your daily life for a week or so. It also helps rebuild the lives of those dealing with the aftermath of a storm.
Cruising Affects Everyone – Even If They Don’t Realize It
In view of the foregoing, we can see that because we live in an economically connected world, everyone is impacted when one sector is affected. Even people who don’t take or even like cruising will feel the downstream pain of what would happen if the American cruise industry was halted. It’s a domino effect. Cruise ships need supplies and food. If they stop purchasing, the suppliers lose money and cut employees. The supporting industries for those companies do the same. And before you know it, the small diner or sandwich shop that used to be busy all week hardly has any customers.
Hence, as long as it’s still safe and you feel comfortable doing it, take advantage of those travel deals that are out there (we’ve seen some for as little as $10!). Find one of those last-minute vacation packages to some of the top tourist destinations in the Caribbean. After all, a cruise can be a great romantic getaway that you can extend once you get to port.
We’ll have to see what impact the progression of the coronavirus will have on the cruise line industry. It will likely not kill the business. But it will have a serious impact – both on the corporations and the regular people who depend on the new customers cruise ships bring.
So when this is all over, think about taking a cruise. You’ll love the experience. And you’ll be helping others support their families in so many ways.