Summary
Since the initial renovation of the passenger terminals in Havana by Costa Cruises in the late 1990's, the US based cruise lines have been patiently waiting for the opportunity for Cuba to open its ports as the newest Caribbean destinations.
Will Cuba's tourism infrastructure be able to handle the US tourism invasion from its neighbors from the North? What are the obstacles that face cruise operators when dealing with Cuba?
Analysis
The cruise industry is facing a "berth control" problem in this down cycle of the travel and leisure industry. With bigger new builds coming online, cruise operators such as Carnival Cruises plc CCL.N, Royal Caribbean and Norwegian Cruise Line are faced with creating new destinations to offer its passengers and more importantly its loyal repeat passengers. With The Bahamas, Puerto Rico, St. Thomas and Cancun becoming virtual cruise ship parking lots, the cruise industry is in desperate need to create a new and exciting destination. Two important revenue variables drive cruise profitability; price and occupancy. With an industry that enjoys a large repeat clientele, it is important to create pent up demand for new destinations and control ticket revenues from deteriorating. Recent trends have shown tremendous ticketing discounting across all cruise lines in order to keep occupancy levels up.
Cuba offers a multiple of port destinations such as Havana, Guantanamo, Santiago de Cuba and Isla de la Juventud.
Cuba offers home port cruise ships from the southeast ports such as Galveston, TX to Charleston, SC to reach Cuba for a day visit on their way to the Caribbean or create a Cuba 3,4 or 7 day cruise itinerary. Miami base vessels should enjoy the most benefit from the close proximity to Cuba and the various itinerary options that could be created.
From my various visits to Cuba over the years, my sense tells me that there are major obstacles to be over come. The primary obstacle is the multiple layers of bureaucratic governmental ministries all wanting a piece of the capitalism that will be created. It is hard to change decades of ideology in a few short years. The second most important issue is the ability to handle thousands of American tourist arriving daily for a quick peak of the forbidden island. Does Cuba have the infrastructure, buses and capital to renovate tourist sight? The cruise industry stands ready to invest, the question is Cuba ready for the American cruise tourist invasion?
Eric Rahn
Rahn & Associates, Inc
www.bizdecisions.com
Rahn.Eric@gmail.com
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
