Economic Impacts of Cruise Tourism: The Consequences and Strategy for [More] Sustainable Development

Cruise tourism is an industry that has changed the world of traveling. As many countries (Indonesia too, ahem) are now developing its coastline, and investing in cruise facilities; I’d like to give my notes about what can we learn from the past and present cruise industry.

Cruise ship plays a big role in many countries in the world, for example, Italy, Australia, and the USA. In 2013, over 21.3 million passengers took the sea, most in and around North America and Europe (CLIA, 2014). While in the last three decades, the global cruise passenger numbers have expanded at annual rate of nearly 8% (CLIA, 2013). Many other countries have been relying on cruise tourism as their primary market in the tourism industry, and many more people depend their income on these cruise ships industry.

A study about cruise tourism impact in 1996 said that cruise tourists are higher yield tourists, averagely spending much higher than other categories of international tourists. However, things have much changed since, no exception to the profile of cruise tourists. Newer finding shows cruise tourists tend to eat, sleep, and prefer to spend funds on board with credit cards that sounds like tax haven; therefore they do not spend much on the ground.

With 71% of world’s surface is water, and 19 thousand islands spread in 7 continents; cruise tourism will never lose its potential market, having unlimited possibilities to open new lines to new coastal areas. 2016 marks an opportune moment for South-East Asia to set the sails and points on cruise ships. UNWTO has projected cruise market potential from China, around 3-4 cruise tourists on 2020. Therefore many countries are developing their cruise tourism, for example, Indonesia and Philippines.

However, as much as the cruise tourism industry gives advantages, the negative impacts somehow still occur, such as these two.

Leakages and Uneven Benefit Sharing

Aside from the high hospitality job available and high profit the cruise ships receive, local people from destination port also acquires economic impact. It may vary depends on the category of the port: homeport or port of call. Sadly, not all of the destinations get the positive economic impacts. Researchers since a long time have found that cruise tourism activity tends to exert more costs than benefit to local economies. Mostly in port cities.

A study conducted in 2013 shows a pattern that cruise passengers are the ones who spent the least time at a destination and spent the least money as well. Cruise ship passengers also not that into the conservation part as their visit is only hours, they do not remember much.

The leakages that commonly happened is because tourists are hesitant about buying souvenirs from local artisans. They prefer to buy from official operators that have the connection with the cruise company and pay with credit card on board. Therefore the company gets 50% of the profit, and the rest goes to the operators on land, therefore reduces the expenditure of passengers in the destination.

Overtourism and Inflation

Economic negative externality happens as the increasing prices of goods, lands and housing. It happens in Venice, Italy; where local people no longer have the comfort to live and stay in their city. The high number of tourists is the reason why Venice is endangered.

Venice has the largest cruise home port in Europe and can be considered as the most successful cruise industry in the world. The number of cruise tourists is large, 34 million in 2014; and in 2012 it provided 7500 jobs related to cruise sector. However, it is no secret that Venice is struggling with the gigantic number of cruise tourists. The size of the cruise ship has doubled over the last decade, bringing more tourists to come and stay for less than a day in Venice, averagely 20 hours per day.

While the city has to deal with the over tourism issue that cruise ships brought, Venice’s residents should face another problem. The price of everything is risen, that people choose to live in the nearby islands and commute every day to Venice. Even for them who commute, Venice is not that commuter friendly at all. In 2016, Venice is the priciest city for commuting. With the cost of unlimited travel pass was USD 22.40 per day, residents could spend 26% of their salary only for commuting.

Venice is facing an advance problem caused by tourism. It is no longer in the area of unbalance profit sharing among stakeholders, but worse, it is the inflation that comes from the tourism industry, mainly from the over tourists a cruise ship brings in.

However, cruise tourism will always be the magnet of global tourism movement. Cruise tourism development in South East Asia will soon be exceeding The Mediterranean and Caribbean. The new ports need better design and plannings to avoid the severe conditions that have happened in many ports and cities in Mediterranean or Caribbean.

Conclusion & Recommendation

Sustainable tourism must give the most even and impartial distribution of economic benefit to all stakeholders of a tourist destination. In cruise tourism, the focus may not be on port community income but rather to how the economic benefit may spread evenly between the cruise line and port and among the people or society living in the port.

Recommendations for strategies and best practices will involve multiple entities and government departments to implement the sustainable tourism development principal specifically on economic aspect. For countries who are currently developing their cruise tourism, it is suggested to build the value chain map using Global Sustainable Tourism Criteria and sharing profit understanding among stakeholders.

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This post is a refined assignment-essay during my uni days. Drop your email in the comment below if you’re interested to read the complete essay. I’ll send it right away. xo Anin.