by Larry Luxner, Special to Travel Markets Insider
FCCA President Michele Paige
Yet passengers are getting tired of the “same old” and yearn for new, exciting destinations, says the FCCA’s president, Michele M. Paige.
“With the global expansion of the cruise industry, the Caribbean, Central America and Mexico need to put the ‘wow’ back into their destinations,” Paige told TMI recently. “When you’re the only game in town, you’re appreciated and everything you have to offer is great. But now that they’re not the only game in town, it’s very important that we showcase exactly how spectacular they are. That’s why the cruise industry is so conscientious about any increase in costs, [otherwise] the ships will go elsewhere.”
Cruise operators formed the FCCA in 1972, five years before ABC-TV launched “Love Boat” — the immensely popular comedy that romanticized the idea of cruising for millions of Americans. But Paige didn’t come on board until 1992. Before that, she spent 17 years at Cruise Lines International Association (CLIA).
“When I arrived here, things were amiss. It was really a forum for the cruise lines to discuss issues related to our needs and desires, but there wasn’t any communication between the private and public sectors, and the destinations,” she said. “Consequently, when I joined FCCA, there were a lot of problems.”
Paige spoke to Travel Markets Insider from FCCA headquarters on the second floor of a bank building in Pembroke Pines, a suburb of Hollywood, Fla. Surrounded by potted plants, snow globes, framed photos and other Caribbean souvenirs, Paige has run the association for 23 years.
Paige said that at the FCCA’s very first meeting, Carnival Corp. Chairman Micky Arison told his colleagues that negative things were being written about the industry (in fact, Kristoffer A. Garin’s 2005 exposé, “Devils on the Deep Blue Sea,” devotes many of its 366 pages to Arison’s father, Ted Arison, and the birth of the Carnival empire). But even back in the early 1970s, the younger Arison was already complaining that Caribbean island destinations didn’t appreciate the economic benefits cruise ships bring.
“Micky said that if the destinations don’t understand what the benefits are, then they wouldn’t take advantage of them to the full extent,” she said. “So we listened. We responded. We brought the cruise executives to the forum and that’s why we started our annual conference 21 years ago.”
The FCCA offers two ways to join. It currently has 445 associate members paying $500 a year, and 131 platinum members who pay $25,000 annually (though early members are grandfathered in at $10,000 a year). Its roster includes members from across the Caribbean, Central America, Mexico, Canada and Europe, and it represents 19 lines operating more than 100 vessels in the Atlantic, Caribbean and the Gulf of Mexico.
These include the three giants of the industry, all based in Miami: Carnival, which controls 41.8% of the worldwide cruise market, Royal Caribbean Cruises Ltd., with 21.8%, and Norwegian Cruise Line Holdings Ltd., with 8.2%.
The annual FCCA Cruise Conference & Trade Show brings together some 100 cruise executives and 1,000 industry professionals. Last year’s event, held Oct. 6-10, 2014, was hosted by St. Maarten; this year it’ll take place Oct. 5-9 in Cozumel, Mexico.
“We go on a cruise every January. This enables us to discuss work in a social setting. We help each other on issues like taxation, insurance, roads and hotels so we can respond before there are problems,” Paige said.
“We also take a tour to one of our platinum destinations,” she said, noting that previous such destinations have included Belize and St. Croix in the U.S. Virgin Islands. “This year (June 24-26), it’s Puerto Plata in the Dominican Republic.” That happens to be precisely where Carnival is building its $85 million Amber Cove cruise ship port.
According to the FCCA, some 21 million people worldwide cruised in 2014. The current cruise ship order book for 2014-16 includes 34 new ships (22 oceangoing vessels and 12 riverboats or coastal vessels) from FCCA and/or CLIA member lines, with more than 60,000 berths and a capital investment exceeding $14 billion.
While average expenditure per passenger across all destinations was $95.92, and average expenditure per crewmember was $96.98, some Caribbean islands way exceed that. For example, the U.S. Virgin Islands consistently ranks highest among the 35 destinations in the FCCA survey for per-capita passenger cruise expenditures, while St. Maarten generally takes the lead in per-capita crew spending.
In all, said the FCCA, five destinations enjoyed direct cruise tourism expenditures of $100 million or more in 2011-12, the year of its most recent survey: Bahamas ($393.8 million); St. Maarten ($356.2 million), U.S. Virgin Islands ($339.8 million); Puerto Rico ($186.6 million) and Cayman Islands ($157.7 million). Combined, these five destinations with $1.43 billion in direct spending comprised 72% of total cruise expenditures among the 21 destinations included in that report.
“We do an economic impact survey every three years,” Paige said, noting that updated 2014-15 numbers will be released in October, at the Cozumel conference. “How can destinations really appreciate what they have if they don’t know what passengers like or don’t like? One of the things we glossed over for decades was crew. In the last five years, it’s come to light that they spend a tremendous amount of money — on things like electronics, haircuts and even massages.”
Another rapidly growing cruise market is Puerto Rico. On Feb. 25, a record 17,847 cruise passengers crowded the narrow streets of Old San Juan, thanks to the simultaneous arrivals of the Disney Fantasy, Royal Caribbean’s Quantum of the Seas, Holland America’s Eurodam and the MSC Divina.
The Puerto Rico Tourism Company held a 6 a.m. press conference to celebrate the occasion — yet Paige warns that a proposed 16% value-added tax now being debated by the island’s legislature could put a serious damper on things.
“I heard the Puerto Rican government is doing a complete overhaul of its tax system,” she said. “The margins are so small right now that if they hit tour operators with this new 16% tax, we’ll make less money and there will be no desire for cruise lines to put ships there.”
In fact, the per diem for Caribbean cruises is already one-third of similar cruises to Alaska, said Paige, “and one-quarter of what the price would be in Europe or Asia.”
Not to be overlooked are the seven nations of Central America. Belize, Costa Rica, Honduras and Panama all have ambitious plans to lure cruise ship passengers, each with varying degrees of success. Roatán, a 37-mile-long Caribbean island just off the northern Honduran coast, is already a major port of call for cruise ships. It receives one million tourists a year, making Honduras the top cruise destination in Central America.
To help the region along, the FCCA holds a separate conference there every two years. Ironically, the next meeting will take place May 13-15 in El Salvador — the only Central American nation without a Caribbean coast.
“These are all very large countries,” Paige said. “The cruise industry is a very small part of their product, so we’re working with them, doing the same things we did in the Caribbean.”
Yet the biggest prize of all remains the one Caribbean destination still off-limits to U.S. tourists: Cuba.
Last December, President Obama announced he would re-establish diplomatic ties with the Castro regime after more than half a century of hostility. In his State of the Union speech, he also promised to push Congress to lift the controversial trade embargo, which prevents average Americans from visiting the communist-run island.
But until that actually happens, the FCCA can’t do a thing, says Paige.
“There’s really no work to do until the U.S. government removes all restrictions,” she told us. “Right now, [because of the 1996 Helms-Burton Act, which codifies the embargo into U.S. law], if any ship company’s vessels go to Cuba, then none of them will be allowed to call on a U.S. port.”
And even though negotiations are underway to open full-fledged embassies in Washington and Havana, regular cruises to the island only 90 miles south of Key West, Fla., are still a long way off.
“Cuba is something everyone is speculating about. There is so much pent-up demand that cruise lines all have their own plans,” Paige said. “Once it’s legally allowed to offer cruises, we’d have to make sure Cuban ports would be able to accommodate our passengers, crews and ships. A lot of people think it’s going to happen tomorrow or next month. But even if Cuba opened up today, our itineraries are already set for the next 18 months to two years.
D.C.-based journalist Larry Luxner is a regular contributor to Travel Markets Insider.
