TSM3104 Economic Impact of Cruise Industry: Cruise Ship Tourism Assessment 3 Answer
Topic: The economic impact of the cruise industry
Introducing the topic
The foremost cruise lines of the world are comprised of Australia in their programs contain mid-range ships, expedition-style cruise lines, up-scale lines, mega-ships and everything. In 201819, the cruise industry contributed AU$5.2 billion to the national economy of Australia a rise of 11% from the previous year. The cruise line international association or CLIA and the Australian cruise association or ACA released the data in a report. Collected by the AEC Group, the sovereign assessment found that the industry supported near about 18135 full-time jobs in Australia in 2018-19 that is a rise of 6.6% from the prior year. During 2018-19, total 1240 cruise ships visited the country led to AU$2.5 billion of direct spending from cruise lines, crew and passengers. The accommodation industry in Australia influenced the maximum of cruise passengers, obtaining 33.3% of the total spending. The food and beverage industry accounted for an additional 20.3% followed by transport to 14.5% and retail to 11.7%. The cruise industry also improved spending by 4.6% for spending on products like food, fuel, administration and port charges a sum of near about AU$1.1 billion. Crew members also invested a sum of AU$35 million in port (Smith, 2019). Thus, it continues to influence the industry positively. In 2018-19 total spending of cruise passengers rose 17.4% compared to the previous year and reached $1.4 billion. Now, cruise passengers invest $387 every day on average when they are in Australian shore. As per the ACA, the cruise ships visited 47 different Australian ports in the last year, brought tourism to the most distant sea communities within the nation. Therefore, the economic impact of cruise tourism is not just huge and developing, it is also reaching places, which otherwise must be challenging for tourists to access. The wide variety of ports Australia provides across its coast is drawing the attention of more cruise lies besides disseminating the economic advantage to the industry of cruise tourism to the uttermost part of the continent. The accommodation industry was the largest recipient from cruise passengers, obtaining $450 million or 33% of their total spending. At the beginning or end of the visit, global visitors spend the highest onshore every day $596 each on average compared to the national travellers spending $436 every day. In a shipment port, global visitors spend $11 every day on average onshore while national tourists spend $174 every day. The crew members spend $173 each day in port that makes integrated spending on $35 million as of 2018-19. Cruise tourist contributed $1.1 billion of direct expenditure. The NSW obtained the highest proportion of the direct spending from the cruise tourism of $1.55 billion containing $1.54 billion in the major gateway of the Sydney port. Queensland obtained $490 million of direct spending followed by $168 million received by Vitoria, 449 million by Tasmania and $31 million by the Northern territory. The industry is defined as the present docking restraints in Sydney to attain a high growth rate in the domestic economic contribution (Network, 2019).
Australia is the most appealing cruise destination all over the world and they have more number of cruises than any other country in the world. The economic assessment of the Australian cruise industry has identified the fact that the cruise industry has continued in making a significant contribution to the economy of Australia. It can be estimated from the economic contribution of the cruise industry that it has the capacity of achieving sustainable growth in the coming years.
In this present era, cruise tourism has become a factor of success for Australian tourism. Cruise tourism has secured a double-digit passenger growth that has contributed towards the economic efficiencies in both the regional as well as the national level (Chang et al. 2016). According to the statistics of 2016 to 17, the national income contribution of this sector has achieved an effective growth of 15.4% that has reached AUD5.3 billion (Saraogi, 2020). The cruise ship calls in the Australian ports has been increased by 19% that has created 1401 cruise ship visit days. It is also been observed that the combined, crew and the passenger's visit has become 3.4 million days from 21%. From these facts, it can be said that the number of passengers in the cruise tourism is increasing that can improve the entire tourism industry. Brisbane, Sydney and Melbourne are accounted for 65% of the total visit days for passengers. These three countries are accounted for 90% of the onshore visit days for the domestic passenger (Dowling, 2016). In this present era, along with the improvement in the visit days, the expenditure of the passengers has also been increased. It has been observed that the expenditure of the passengers in the local port of Australia has become AUD1.2 billion which has been improved by 20%. Along with the development in the number of customers and the expenditure of the customers, the number of full-time workers has also been increased to offer an effective service to the customers. It has been observed that 21260 numbers of the full-time employees are directly as well as indirectly associated with the cruise industry which has been developed by 14.5%.
In this present era, the cruise operators are offering bite-sized breaks for the domestic travellers in various coasts of Australia so that they can explore the islander continents with efficiencies. Presently, cruising has become one of the options for the quintessential holidays (Saraogi, 2020). There are more than 32 million passengers who have considered cruise as one of the options for a luxurious journey in the year of 2020. Particularly, the love for the Australians for the cruise ships has been increased in the significant pace with the 1240 number of visits in the country in the year of 2018. According to the statistics of 2018, cruise tourism contributed to the Australian economy $3.6 billion. The cruise tourism has achieved more growth than even Europe and USA (Saraogi, 2020). Cruisers that are travelling around Australia is not comprised of international tourists. There are 1.35 million New Zealander who prefers to choose Australasian waters to conduct their tour.
In the year of 2018, 17000 people have achieved fulltime job in the cruise tourism industry that is directly supported by the direct expenditure of the passengers of the cruise, cruise lines and crew in Australia. The wages of these employees added more than $1.4 billion to the economy. Every year, more number of Australians selects cruise holidays and they invest a huge amount of money in visiting the regional ports (McCaughey, Mao & Dowling, 2018). This creates a significant level of economic benefits for the communities as well as businesses far beyond the ports and ships. The global cruise industry is expanding as well as growing into the new destination that has made Australia an effective hub for cruising. It has been observed that cruise passengers spent more or less $1.2 billion in every port cities of Australia. On the other hand, $171 million is spent by transit passengers when they visit ports (Vayá et al. 2018). The expenditure of the domestic passengers in the port destination of Australia is $934 million. On the other hand, the expenditure of the international passengers in the Australian port destination is $257 million. Along with the expenditure of the passengers on the cruise ships, customers also spend a huge amount of money on transport, accommodation, shore excursions, food and beverages (De Grosbois, 2016). Expenditure on these things accounted for almost 78% of the total onshore expenditure of the passengers that valued almost $900 million (Cruising, 2020). During their cruise visits, customers also spend money on retail shopping which mainly accounted for 11.3% of the total $134 million.
Along with the passengers, the crew of the ships also spent a huge amount of money that creates a significant impact on the economy. It has been observed that crew of passenger cruise spent almost $37 million in the cruise ports of Australia with the $101 average expenditure per crew (Travelweekly, 2020). International passengers also spent a huge amount of money during their visit to the Australian port cities. The international cruise passengers almost spent $590 per day. In the transit ports, international cruise passenger’s spent $215 every day. On the other hand, the domestic passengers of cruise mainly spent $447 on an everyday basis (Travelweekly, 2020). The expenditure of the domestic passengers in the transit ports is $165 per day basis. According to the statistics, it has been observed that one in the 17 Australians has used the facilities of the domestic cruising in the year of 2018. According to CLIA Australia, they have taken a project in adding 19 more number of cruises in the year 2020 so that they can fulfil the market demand. Operating expenses of the cruise mainly accounted for the 82% of the line expenditure of cruise that includes the charges for ports, fuel, food and beverages, and the commission of the agents (Travelweekly, 2020). The states of Australia that are the biggest contributor to the economic output of the cruise tourism are the NSW, Victoria, Queensland and Western Australia. Among these four different states, the state that has created the highest-earning in NSW. This is because; this state creates more or less AUD2.8 billion. After the NSW, Queensland creates AUD1 billion.
Figure 1: total contribution of cruise tourism in Australia by region
(Source: Travel weekly, 2020)
Among various location of Australia, New South Wales has enjoyed the strong cruise reason that welcomes a total of 368 cruise visits that equates the spent of 395 cruise ship days in various NSW ports (Travelweekly, 2020). Among various cruise destination, Sydney is the main position that attracts more number of tourists (Travelweekly, 2020). On the other hand, Queensland has been made up of 600 kilometres of the coastal area that offers 14 different destinations to visitors to explore. In the year of 2017 to 18, there was 830000 number of cruise passengers who visit Queensland destination. This destination welcomes more than 500 ship days. In South Australia, there are a total of 65 number of ship visits. In the year of 2017 to 18, there is 14 number of maiden ship visits. In 2017 to 18, Western Australia has welcomes 43 ships.
Despite the positive impact of cruise tourism on the economy, there are some factors which also cause issues in cruise tourism (Gibson & Parkman, 2018). The main issue that creates an impact on the cruise tourism is the shortage of the available berthing space in Sydney that has created issues for the cruise industry in increasing its capability in Australia (Maritime-executive, 2020). Along with this fact, the devastating fire of Australia affects cruise tourism in southern Australia (Maritime-executive, 2020). It has been observed that in the port of Eden, NSW (New South Wales) has invested a huge amount of money in the cruise business. Presently, they have just finished the wharf extension that costs $30 million for welcoming the cruise ships without any kind of tendering (Maritime-executive, 2020). Eden was hit by the fires that create a force on the visitors and the resident to take shelter on the waterfront. Due to the fire, cruises of different countries including Australia itself have avoided Eden so that they can avoid any kind of issues. It has been observed that cruises of Oceania Regatta has skipped the scheduled call in the Eden and they go to Melbourne. Due to the fire, the cruise operator has also been disrupted in the Kangaroo and Penneshaw (Maritime-executive, 2020). Different ships had cancelled their calls on the island. Most of the ships had been even cancelled. As an example, the CMV ship Vasco Da Gama had to cancel their call on the island. The tourism industry has been suffered due to the fire for two major reasons such as fire-related risks as well as the poor air quality-related risks. These facts can create a huge negative impact on the cruise business.
In the tourism industry, cruise tourism has become a success factor. Cruise tourism is a rapidly growing sector. For maximising the profitability, cruise lines gradually expanded their onboard services that have to encompass casinos, restaurants, cinemas and auction (Jones, Comfort & Hillier, 2019). These expanding facilities in the cruise create more entertainment facilities to the border which attracts them in arranging more number of cruise holidays. Several port cities across Australia are continually increasing that helps cruise ship organisation in arranging more number effective tour for the passengers (Cruising, 2020). Australian governments are increasing the infrastructure for improving the sector so that it can create a more positive impact on the Australian economy.
From the above discussion, it can be said that domestic travel is highly important than international travel. It has been observed that the development of the urban population in Australia has increased domestic travel (Henry, Hamlin & Simpson, 2015). For a variety of reasons, Australia has become a popular cruise destination for the locals. One of the main reasons for the development of cruise tourism is affordable costs than alternative transport. In some cases, flights also offer their services in the lowest possible costs (Brida, Bukstein & Tealde, 2015). However, flights create difficulties in developing tourism in the port cities and performing cruise sightseeing (Cruising, 2020). Due to the reason, cruise travel is a more suitable way for transportation for those people who want to travel in the natural environment. It has been observed that cruise travelling is helpful for the domestic traveller in reaching to the difficult to reach or costly location across Southern Australia and Western Australia that attracts more number of domestic travellers (Jones, Hillier & Comfort, 2016). Though international travellers also like cruise tourism they also use the flights or helicopter facilities to reach a difficult to reach location.
From the above-mentioned facts, it has been observed that foreign tourist spends more money than domestic tourists (TUTA & MICU, 2015). It has been observed that the massive volume of domestic tourists spends less because they know the way by which they can save money on transportation. However, for both the domestic and international customers, cruise ship charges the same price (Dooms, Haezendonck & Verbeke, 2015). Despite the fact, the expenditure of domestic customers is lesser than the international passengers. This is because international passengers spend money on retail shopping as they wanted to bring something to remember about the trip. On the other hand, domestic travellers are belonging from Australia for which they spend lesser money on memento.
Fire on Australia has created a negative impact on the cruise business because visitors are avoiding some island of Australia for better safety (Maritime-executive, 2020). Moreover, the air quality of Australia is not good in the present situation so that most of the Visitors are avoiding Australia. this fact has directly impacted the cruise businesses. This is because; international visitors are avoiding Australia in the present scenario (Maritime-executive, 2020). Moreover, the domestic visitors of Australia are avoiding the cruise holidays in the present situation which also generate a higher negative impact on the Australian cruise business. Fire in Australia has not only to affect the cruise business but it has also created an impact on the hotel industry. This is because; it is directly linked with the cruise business. For resolving the issues, the cruise business of Australia can rearrange their tours and avoid the port that has been affected by the fire.
Conclusion and recommendations
After the entire analysis, it can be concluded that cruise tourism plays an important role in the developing and sustaining the economy of the country. It is not just contributing the to the economic growth of the country, but it also attracts more cruise lines and distributes the economic benefit to every corner of Australia, so that people even in the remote locations can be benefitted. Australian cruise tourism is the leading cruise business in the world. The international tourists spend more on the industry comparing to the domestic tourists. However, the industry is experiencing some infrastructural issues due to lack of landing space available. Moreover, recently the industry is facing some backlash due to the devastating fires happened in January 2020. It is affecting the cruise routes and the damagers resulted in the changes for many trips and other aspects of the industry. The hard hit of the fire, which forced the tourists to empty or take accommodation on the nearby waterfront. Thus, the cruise business was disrupted, and it had to cancel many voyages. The quality of the air became poor and reached dangerous level. Therefore, a travel warning was given to the tourists. Thus, the postponement and cancellation of trips affected the cruise tourism negatively. The economic benefit is compromised. Therefore, the following recommendations are provided to the industry for overcoming the problems it is currently facing:
- The industry needs increase its spending on infrastructural development, so that it can attend more tourists with efficiency and serve them the best for enhancing their experience. Investment from government and external investors is necessary for spending more on infrastructural development and increasing the berthing space.
- To overcome the disastrous moment, the cruise lines can move to other destinations that can financially crucify. Apart from that, corporate responsibility and responsible tourism activities can help the cruise companies to counter this situation. Besides helping them to address the economic crisis, it will also help the industry improving their responsible image to the tourists.
- For future, the ndustry is suggested to plan for the future, so that it can handle similar situations more effectively in the future. Despite of the comparative uncertainty of the disastrous events, which can affect destinations severely, their certainty is known well. No year is there, which does not have at least one such event. However, the advanced planning for coping with these disastrous events is very little and the outcome is economic devastation. Hence, for preventing the amount of economic loss caused by such events, cruise line industry must make comprehensive plans. For example, they can diversify their service and product portfolio. It will help them offering alternative options to the tourists during such incidents. A diversified portfolio is always useful as a compact business persistence plan. An effective business activity is to plan for reserving cash to keep the business running and for marketing after the event to facilitate communicating customers why and when it is harmless to arrive.