Connect with us

Global Banking and Finance Review is an online platform offering news, analysis, and opinion on the latest trends, developments, and innovations in the banking and finance industry worldwide. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website. .

Business

Cruise operators reap benefits of their own private islands

Tropical beach resort with cruise ship docked nearby.

Published : , on

By Doyinsola Oladipo

NEW YORK (Reuters) – Major cruise operators are steering their ships – and millions of dollars in investments – into their own private destinations packed with excursions, beaches, bars and restaurants.

The phenomenon appears to have started with Royal Caribbean Group, which in 2019 opened “Perfect Day at CocoCay,” an amusement park-like private destination in The Bahamas that has caught the eye of Wall Street.

By operating their own private destinations on small Caribbean islands, Royal Caribbean and other cruise operators have managed to grow revenues faster.

By having their own port and not having to pay passenger fees and government taxes, they are able to capture more of that total revenue,” said Bob Levinstein, CEO of cruise marketplace Cruise Compete.

For example, Royal Caribbean spent $250 million to renovate CocoCay. Since its opening in 2019, the company’s expenses including commissions have increased 34% while ticket revenues are up 43%.

Now, competitors Carnival Corp and Norwegian Cruise Line Holdings are scrambling to recreate that success.

Royal is getting some of the best returns in all of cruise right now, and the big edge they have is CocoCay, and everybody else is trying to catch up,” said Kenneth Kuhrt, executive vice president at Ariel Investments.

Cruise companies have been posting banner earnings as the affordable price of cruises attracts consumers itching to travel in the post-COVID era. Royal Caribbean shares are up 69% so far this year, while peers Carnival and Norwegian are up 27% and 30%, respectively.

Perfect Day at CocoCay has been a game changer for both our guests and our business,” Royal Caribbean CEO Jason Liberty said in a statement.

Cruise companies are shuttling a record number of travelers into the region on three- and four-day itineraries with stops at private destinations, according to industry experts.

Meanwhile, rising direct bookings allow Royal Caribbean to save on commissions, which are about 10% to 20% of the ticket price, said Patrick Scholes, Truist Equity analyst.

“Travel agents are getting cut out of the mix,” Scholes said. Cruise companies are extremely reluctant to acknowledge this because they are still very dependent on travel agents and don’t want to highlight that they are seeing more direct bookings.

MORE PROPERTIES ON THE WAY

There are currently 12 private destinations in the Caribbean, including two set to open in 2024 and 2025, with more on the way.

Carnival plans to invest $600 million to develop Celebration Key, its private destination in Grand Bahama.

The returns must be pretty good if Carnival is willing to put a half-billion dollars into development of their private island rather than either trying to clean up the balance sheet or build another ship,” Kuhrt said.

Carnival CFO David Bernstein told Reuters that the rate of return on investment for Celebration Key is similar to those of its new ships, which is “high teens” with a three- to four-year payback period.

Royal Caribbean has three more private destinations set to open between 2025 and 2027. The company will spend $650 million to develop a private destination in Mahahual, Mexico, and $165 million on another destination in the Bahamas. The company has not disclosed its investment in the third destination in Cozumel, Mexico.

Norwegian announced plans in April to invest $150 million to develop a new pier at the company’s private island Great Stirrup Cay in the Bahamas.

THE PRIVATE-ISLAND EFFECT

Based on itineraries published as of July 2024, passenger capacity for private islands increased 41% year over year to about 10 million passengers, according to Tourism Economics‘ Christian Savelli. Non-private island Caribbean destinations increased 18% to about 57 million passengers.

Visits to some public Caribbean destinations, however, are falling compared to before the pandemic, even though the region is expected to see a record 14.5 million in visitors in 2024, according to the Cruise Lines International Association.

The Cayman Islands saw a 36% decline in cruise visits from the first half of 2024 compared to 2019, according to the Caribbean Tourism Organization. Certain other destinations, including St. Kitts and Nevis, Belize and St. Maarten, saw declines of more than 20%.

I don’t think they can deliver the same authentic experience guests are still looking for,” said Natasha Chalwell, the British Virgin Islands Port Authority marketing director. But it pushes us as well to deliver on our unique offerings.”

Visits to the Bahamas, where major cruise operators all have or are developing private destinations, were up 66.5% in the first half of 2024 compared to the same period in 2019.

The consumer has changed,” Liberty told Reuters. They want to immerse themselves in the experience and as much as we can tell local providers to do that, they also need to up their game because that’s what the customers expect.”

 

(Reporting by Doyinsola Oladipo in New York; Editing by Mark Porter)

 

Wanda Rich has been the Editor-in-Chief of Global Banking & Finance Review since 2011, playing a pivotal role in shaping the publication's content and direction. Under her leadership, the magazine has expanded its global reach and established itself as a trusted source of information and analysis across various financial sectors. She is known for conducting exclusive interviews with industry leaders and oversees the Global Banking & Finance Awards, which recognize innovation and leadership in finance. In addition to Global Banking & Finance Review, Wanda also serves as editor for numerous other platforms, including Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune.

Global Banking & Finance Review

 

Why waste money on news and opinions when you can access them for free?

Take advantage of our newsletter subscription and stay informed on the go!


By submitting this form, you are consenting to receive marketing emails from: . You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

Recent Post