Full Cruise Ship Schedule Could Mean US$300 Million In Revenues To Cruise Operators
Full Cruise Ship Schedule Could Deliver US$88 Million To Cuba
Delays with Authorizations From Cuba Could Reduce Revenues To Cuba By US$40+ Million
On 1 May 2016, Miami, Florida-based Carnival Corporation & plc (2015 revenues US$15.7 billion), through its Fathom subsidiary, commenced seven-day itineraries with the 700-passenger MV Adonia (launched in 2001; 594ft; 30,000 tons; 356 staterooms) directly from/to the United States (Port of Miami, Florida) for individuals subject to United States law who are authorized to visit the Republic of Cuba under regulations (twelve categories) issued by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury in Washington, DC. The first sailing carried 700 passengers for a load factor of 100%.
The April 2016 decision by the government of the Republic of Cuba to change policy relating to the means by which individuals of Cuban descent may visit the Republic of Cuba was politically significant, but equally important were the reasons: Not doing so jeopardized the implementation (already delayed) of regularly-scheduled cruise ship schedules; jeopardized the global political and public relations value already received from marketing by the cruise ship companies; and jeopardized significant revenues that would be earned, directly and indirectly, by the government of the Republic of Cuba.
Since 17 December 2014, approximately sixteen (16) companies (United States-based and non-United States-based) have announced intentions to operate OFAC-authorized (even when not departing from or returning to the United States) and non-OFAC-authorized (at this time) Republic of Cuba-focused itineraries. Some of the companies may not initiate schedules reflecting initial marketing efforts.
To date, Carnival Corporation & plc and Marseille, France-based Companie du Ponant have reported receiving required approvals from the government of the Republic of Cuba to operate itineraries originating and ending in the United States.
Geneva, Switzerland-based MSC Cruises SA (US citizens not permitted by company)
Guilford, Connecticut-based Pearl Seas Cruises
Ipswich, United Kingdom-based Fred Olsen Cruise Lines
Lakewood, Colorado-based Haimark Line (filed Chapter 11 bankruptcy)
London, United Kingdom-based Noble Caledonia
London, United Kingdom-based Thomson Cruises
Marseille, France-based Companie du Ponant (for authorized travelers)
Miami, Florida-based Carnival Corporation & plc
Miami, Florida-based Norwegian Cruise Lines Holdings Ltd.
Miami, Florida-based Royal Caribbean
Monaco, Monte Carlo-based Star Clippers (for authorized travelers)
New York, New York-based Group IST
New York, New York-based Lindblad Expeditions-National Geographic
Park Helena, Alabama-based International Expeditions
Piraeus, Greece-based Celestyal Cruises (for authorized travelers)
Seattle, Washington-based Zegrahm Expeditions
Thus far, Fathom has announced eighteen (18) sailings from 1 May 2016 through 13 November 2016. Depending upon passenger demand and the infrastructure capacity of the Republic of Cuba (immigration processing, customs processing, port facilities, ground transportation, etc.), the number of sailings is likely to expand from eighteen (18) to twenty-six (26) and as many as forty (40) encompassing the 2016/2017 sailing season (May through April).
To The Companies
If Fathom operates its announced and potential twelve-month schedule at full capacity, the company could deliver 12,600 to 28,000 passengers to the Republic of Cuba with per person pricing from US$1,908.00 to US$8,975.00, which includes “estimated taxes, fees and port expenses” of US$208.00 per person. Fathom expects to operate near or at capacity for its scheduled/anticipated 2016/2017 sailing season.
If each Fathom sailing operates at full capacity, the total revenue from each sailing could range from US$1.8 million to US$2.5 million with a total 2016/2017 sailing season gross revenue estimate of US$39 million to US$86 million. The gross revenue estimate does not include incidental passenger expenditures while aboard the vessel.
If those companies having announced intentions to operate OFAC-authorized itineraries receive required approvals from the government of the Republic of Cuba to implement their respective sailings for the 2016/2017 season, and the vessels operate near or at capacity, more than 100,000 individuals subject to United States law could arrive to the Republic of Cuba by 150 or more cruise ship sailings.
If those companies having announced intentions to operate OFAC-authorized itineraries receive required approvals from the government of the Republic of Cuba to implement their respective sailings for the 2016/2017 season, combined gross revenues for the companies could be US$300 million.
To The Republic Of Cuba
Projected sailing season gross revenues to the Republic of Cuba (government-operated entities and self-employed) if the cruise ship operators engage their intended schedules and use their desired vessels could be US$80 million or more. Large vessels could spend more than US$400,000.00 per sailing.
Projected sailing season total per passenger expenditures (souvenirs, snacks, meals, gratuities, etc.) while they are in the Republic of Cuba (at government-operated entities and at self-employed operations) could be US$8 million to US$16 million or more. The average per person per port expenditure in Caribbean Sea-area countries is US$75.00. Individuals subject to United States law are authorized to return from the Republic of Cuba to the United States with merchandise not exceeding US$400.00 in value, provided that no more than US$100.00 of the merchandise consists of alcohol or tobacco products and the merchandise is imported for personal use only.
The implementation of regularly-scheduled cruise schedules from the United States to the Republic of Cuba is the third leg of land, sea and air efforts by the Obama Administration to cement its regulatory policy changes- the goal is to make the initiatives big and loud so that they are harder to dislodge.
For the cruise ship industry, the Republic of Cuba provides another destination- and new destinations attract new passengers which result in more revenue and greater economic benefit to the United States.
There is a multiplier economic impact for cruise ship passengers. They may use credit cards to make payment for their cruise (banks earn interest and customers earn points/miles); may use airlines to reach the port of departure; may stay in a hotel prior to departure and upon returning to the point of departure; may dine in restaurants; may use a taxi; may purchase sundries and souvenirs. The ports have additional activity. The vessels purchase provisions, including fuel.
Since 17 December 2014, President Obama has used visitors as an army, airlines as an air force, cruise ships as a navy and, to a lesser extent thus far, companies as marines to create a beachhead in the Republic of Cuba that can't be pulled or pushed off the island- either by political forces in the United States or in the Republic of Cuba. The armada is digging in; not quite with a permanent foundation, but closing in....
In Internet terms, The Obama Administration is creating CubaLegacy 2.0- too big to roll back, too visible to hide, too collaborative, too many participants to remove, too bilateral to untangle... The perfect presidential legacy vehicle.
The government of the Republic of Cuba needs to do its part. More cruise line companies need to be authorized. A ferry needs to be tested. Imports of products from the United States need to increase. A distribution center needs to be authorized. Tractors need to be assembled. Coffee needs to be exported. Currencies need to be unified. Certified claims need to be settled. There are 262 days remaining (visit www.cubatrade.org to view the countdown clocks).
President Obama wants to bring change to the Republic of Cuba far more and far faster than President Raul Castro wants change to arrive in the Republic of Cuba. For both men, the issue is legacy.
That's where the similarity ends- President Obama wants more and needs more so that there can be more- and he can continue with regulatory changes and, perhaps, limited (though unlikely) legislative changes by 20 January 2017.
President Castro wants to withstand everything that is coming his way, yet find a means to gain value from it and not be perceived as rejecting it by governments and companies that are needed to fund what the government of the Republic of Cuba requires; a complex series of juggling maneuvers.