Industry
Cruises are booming despite the recession, thanks to economies of scale brought about by gigantic ships. Here, in the Bay of Venice (Photo Frédéric Dubessy)
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The recent sinking of the Costa Concordia cruise ship off the coast of Italy is not likely to result in a decline in the burgeoning cruise business. Since the early 2000s, big companies such as Costa, MSC and Grimaldi Lines have been living in a “state of grace”. But the same cannot be said for the 152 port cities, short stopovers, or even cruise ship terminals which dot the Mediterranean coast from north to south and east to west. This is one of the conclusions of Loïc Bourse, Plan Bleu Programme Officer for Tourism.
In the case of Italy, the Mediterranean country with the most terminals, these port cities are paying a high price to receive the bulk of the 40-euro spend by passengers going ashore. “The supposed enrichment of these countries by cruise activity is a myth that results in an escalation of infrastructure investment, without any real guarantee that the revenue collected can absorb the costs. In this sector, the only real winners are the cruise companies”, says Loïc Bourse.
With the average cost of a Mediterranean cruise of around €600 and an average spend on board of €400 per passenger, most cruise customers watch what they spend away from the ship and hotels. In any case, the system designed by cruise companies and their hotel partners is very efficient in capturing the lion’s share of their passengers’ budget. So, the main economic benefits are for cruise companies and the industrial areas with shipbuilding, a high value-added activity, winning orders to build cruise ships.
In the case of Italy, the Mediterranean country with the most terminals, these port cities are paying a high price to receive the bulk of the 40-euro spend by passengers going ashore. “The supposed enrichment of these countries by cruise activity is a myth that results in an escalation of infrastructure investment, without any real guarantee that the revenue collected can absorb the costs. In this sector, the only real winners are the cruise companies”, says Loïc Bourse.
With the average cost of a Mediterranean cruise of around €600 and an average spend on board of €400 per passenger, most cruise customers watch what they spend away from the ship and hotels. In any case, the system designed by cruise companies and their hotel partners is very efficient in capturing the lion’s share of their passengers’ budget. So, the main economic benefits are for cruise companies and the industrial areas with shipbuilding, a high value-added activity, winning orders to build cruise ships.
Returns mostly outweighed by the impact on the environment and costs
The added value and employment in the cruise business are primarily due to shipbuilding, far away from the cruise ships’ ports of call (doc. Plan Bleu)
These industrial areas are now in Germany and the United Kingdom. If Costa orders from Italian yards Fincantieri and Monfalcone, the main shipyards are called Meyer Werft, Papenbourg, and Saint-Nazaire to a lesser extent.
Of the 143,000 direct jobs created by the Mediterranean cruise sector, one quarter is in construction, 36% in on-board services, but only 14% of all maintenance services are in the ports of call.
If cruises offer benefits for the host territories, these are largely outweighed by the impact of costly investment intended to accommodate a large transient population. The imbalance is significant. The environmental impacts are particularly severe in terms of exhaustion of natural resources such as water or even in terms of producing pollution (solid waste dropped at sea, waste water, greenhouse gas emissions).
The search for competitiveness of Mediterranean port cities to compete with other global destinations such as the Caribbean, has led to an unsustainable pattern of activity. This finding counterbalances the cruise industry’s impressive profits, especially as it is a young industry. As the cruise industry has only recently become widely available, it has a great ability to bounce back in times of recession. So the tendency for companies is to seek economies of sale by using bigger and bigger ships in order to offer increasingly competitive prices. Plan Bleu is questioning, not whether public investment in port cities is able to continue, but should it continue?
Of the 143,000 direct jobs created by the Mediterranean cruise sector, one quarter is in construction, 36% in on-board services, but only 14% of all maintenance services are in the ports of call.
If cruises offer benefits for the host territories, these are largely outweighed by the impact of costly investment intended to accommodate a large transient population. The imbalance is significant. The environmental impacts are particularly severe in terms of exhaustion of natural resources such as water or even in terms of producing pollution (solid waste dropped at sea, waste water, greenhouse gas emissions).
The search for competitiveness of Mediterranean port cities to compete with other global destinations such as the Caribbean, has led to an unsustainable pattern of activity. This finding counterbalances the cruise industry’s impressive profits, especially as it is a young industry. As the cruise industry has only recently become widely available, it has a great ability to bounce back in times of recession. So the tendency for companies is to seek economies of sale by using bigger and bigger ships in order to offer increasingly competitive prices. Plan Bleu is questioning, not whether public investment in port cities is able to continue, but should it continue?
