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Cruise Tourism: Unlocking India as a destination and source market

In 2017, at 2378, Japan received the highest number of port calls in Asia by cruise liners followed by China (1156 port calls), South Korea (747 port call) making up the top three destination by the number cruise vessels port calls. Indonesia, with 187 port calls, rounds up the top 10 destination in Asia. World’s second largest country in terms of population, seventh largest by area and one of the most endowed regions of the world in terms of its tourism attractiveness, India (128 port calls) doesn’t figure in the top ten in her continent – Asia in terms of cruise lines’ port calls.

The recently concluded SATTE 2018 Conference brought together an eclectic discussions with an international panel that discussed “Cruise Tourism - Untapped potential: Global Perspective & India” putting cruise tourism potential for India in the spotlight, while also discussing India’s potential as a cruise source market.

The panel discussion was moderated by Vinod Zutshi, Former Tourism Secretary, Govt. of India with Peter Kollar, Head of International Training & Development, Cruise Lines International Association (CLIA); Sean Treacy, Managing Director – Asia Pacific, Royal Caribbean International; Naresh Rawal, VP Sales- India, South Asia, Russia, Middle East & South Africa, Star Cruises; Felix Chan, Vice President of Sales - Asia, Norwegian Cruise Line Holdings; Ratna Chadha, Chief Executive, TIRUN Travel Marketing and Nishith Saxena, Founder & Director, Cruise Professionals, as the speakers.

India & Cruising: Overview

The policy on cruise shipping in India came as early as 2008 but significant little moved on this front in the later years. According to Zutshi, the current government that came in May 2014 had immediately swung into action to grow country’s cruise tourism. “In June 2014, a month after the new government took over Prime Minister Narendra Modi himself addressed the issue of cruise tourism in India and how to harness the potential,” he says.

Ever since, a high level Task Force has been constituted involving the two Union Ministries of Tourism and Shipping and Bermello Ajamil & Partners has been appointed as consultants to prepare a viable plan for cruise operation in India. The Task Force has conducted several rounds of meeting with travel trade, cruise professionals, custom officials, Home Ministry and other stakeholders to accelerate the process of bringing in cruise tourism in India.

A work in progress for a few years now, a new cruise tourism policy, with the main thrust to increasing the cruise line traffic to 700 vessels a year, is expected to see the light of the day soon. Other developments on this front include cruise hubs to be developed in Mumbai, Goa, Mangalore, Kochi and Chennai, a 30 per cent rebate on all cruise vessels related charge, number of the days a cruise ship can dock to be raised from one to three, foreign flag vessels, as part of cabotage reform, carrying passengers have been allowed to call at Indian ports without securing a license from the Director General of Shipping, eVisa facility for Mumbai, Goa, Kochi, Chennai and New Mangalore ports have already been initiated and foundation stone for a new 300 crore international cruise terminal at Mumbai that is expected to be ready by June 2019.

India’s untapped cruise potential is enormous. Rawal says that India’s strong reputation as an enchanting, exotic, historic and beautiful destination would have an immediate advantage in catapulting India as one of the leading cruise destination. “Long and scenic coastline, with access to many ports, several natural spots and breathtaking destination like Mumbai, Goa, Cochin, Andaman, among others, creates natural advantage for the country to attract more international cruise lines,” he says.

Besides, India has certain strategic advantages in the area that it can exploit. As Chaddha says, “India is in a very strategic positioning today. Unlike China and other parts of the world, India is the only country that allows people with multiple port experience and that is a huge advantage for us. If you look at China, it’s a turnaround port. It’s the same with other parts in Europe, it’s the same in the US. But in India, you are doing multiple ports. So we need to take advantage of that.”

Cruising Windfall

According to Zutshi, Bermello in their initial report has pointed that India is sitting on a gold mine of cruise tourism with a direct cruise revenue benefit to the government to the tune of Rs. 35,500 crore (US $5.5 billion) as against current Rs. 712 crore (Around US $110 million), clearly showing that there is massive untapped potential to grow the current size to a staggering 50 times more from the revenue point of view!

According to CLIA statistics, in 2017 India had a mere 128 cruise calls, whereas Thailand and Malaysia in the region get about 500 cruise calls a year. “There is a real opportunity if India can get to the number of calls that Malaysia or Thailand is getting. We are talking about say 400-500 per cent increase in calls,” says Treacy. He also pointed that with 94 ships on order by the global cruise line industry; there is also significant employment opportunity that India can take advantage of. “The industry is looking at 80,000 employees that will be hired,” he pointed.

Furthermore, he said that in terms of passenger destination days India only does 140,000 compared to over 4.3 million of Japan. “The economic impact is significant when we look at the number of visits. With over 8 million visits in North Asia (Japan, China, South Korea and HK), the direct expenditure through cruise tourism was to the tune of US $ 3.23 billion,” he informed.

Challenges & Way Forward

So how do we get the cruise liners into India and grow the market? It is important to prove to the cruise line decision makers that India is also a profitable region to bring their ships to, deploy and to invest in for long term benefits and profitability. To meet India’s untapped cruise potential, Treacy highlighted five key fundamentals- Government cooperation, infrastructure to accommodate today’s cruise ships, stable and consistent operating conditions, collaboration with all the stakeholders like travel agents, tour operators, developers of infrastructure and all other stakeholders and profitability, as key to building cruise industry in India. He particularly highlighted that stable and consistent regulations and operating conditions is very important as companies typically plan two to three years ahead and therefore need to know that the basic conditions of operating are easy to predict.

Chaddha says, “The fundamental problem at the moment remains that something else is discussed at the top level but it is not percolating down to the grass root level. There are so many agencies that one need to co-ordinate with. We need to get all stakeholders from the government side on the same page. What happens in Goa may not be in conjunction with what we have already discussed in Delhi. And that is where cruise lines are facing challenges because every day is a new day. We can’t have that kind of scenario. We need to be easy to do business with and there should be one window approach for all our issues. Although the SOPs are in place based on our recommendations but the implementation is not there yet.” 

Rawal advocated the need to develop international standard accessible, convenient and well equipped port infrastructure with passenger services, linkages and security, fast immigration and transit passage through ports and cruise terminals, especially at port cities like Mumbai, Goa and Cochin that will be key to developing cruise tourism in India. He also said that it is crucial to develop more such ports in India at Porbandar and Kandla on the West Coast and Vishakhapatnam, Kolkata and Paradip on the East Coast to create new cruising opportunities for the country and cruise liners. He also stressed the need of skilling cruise personnel through training programmes, developing their awareness on tourism, safety and security, among others, and for the cruise lines and authorities to have regular and ongoing dialogues to decide attractive cruise circuits.

Kollar drew attention to other markets that have had similar challenges and have succeeded. “One of the best examples is Australia that has the highest penetration rate in the world at 5.3 per cent that means one in 19 Australians cruise every year today. Firstly it started by selling to capacity the odd ships that did arrive in Australian waters. It started by selling more close-to-home cruises so the passenger counts from Australia grew. This drew the attention of the cruise lines and so few more ships came which was also sold out. And this started a boom with big companies all of a sudden deploying in Australian waters full time. In fact we were the first nation to have a cruise line ship based perennially year round outside of the US market,” Kollar said.

Similar to what Kollar said, Saxena also pointed that a vast coastline may not essentially be an advantage. He said, “Instead India should focus on developing one or two ports and make good examples of successfully handling cruise ships and then replicate the modal elsewhere in the country, that way cruise companies will have more confidence in bringing their ships.

India: A Cruising Source Market

The global cruise industry is growing rapidly. It grew from 10 million in the year 2000 to more than 25 million in 2017. And with 94 ships on order today, the number of cruise passengers is projected to reach 40 million by 2025. With India’s overall outbound travel growing at a robust pace year-on-year and being estimated to be a 50 million outbound travel market by 2020, cruise industry is keen to develop this largely untapped and hitherto a very small cruise source market.

While pointing at India’s growing economic clout on the world stage, Treacy says, “If we look at the World Bank statistics, India is projected to surpass Germany as the fourth largest economy over the next 12 to 15 years. We are looking at population that will afford to travel on cruise abroad greater than that of US. So when we look at cruise passenger numbers of 130,000, to let’s say we get 200,000 this year (2018); it’s still quite small compared to the 14 million that we are seeing out of US, or over one million that we are seeing out of Australia. There is untapped potential but there is a lot work to do.” 

Chan pointed that as a source market India should be viewed in terms of the number of cruise passengers that it is generating against the total outbound leisure travel. “We may have about 26 million Indians that travelled abroad in 2017, but less than 150,000 people going on cruising,” he said alluding that there is lot more that travel agents can to do to grow the numbers.

Sharing tips on how to convert land vacationers to cruising, Chan particularly highlighted two key aspects, value-adds and choices. “A lot of guests don’t care whether it is cruise vacations or land vacations. They care about if they want to go to a certain destination, at a certain budget, which form of vacation can offer them the best experience. Over the past three years, Northern Europe has become a very attractive cruising destination because the hotel, dining and transportation is expensive in the Indian market and in Asia. If you compare a cruising vacation to Northern Europe and are telling about having the same experience at much less total cost and value-adds, you will find great value. This is one of the most powerful ways to sell cruise vacations,” he suggested.

Furthermore he suggested that the travel fraternity need to highlight the range of choices a cruise vacation offers. “A lot people in India and Asia have strong perception that there may not be many offerings on a cruise ship. We need to change that perception. Talk about the choices,” he suggested.

Big Bucks for Agencies

Kollar says that it’s a simple fact that without the travel agent, the cruise industry could not survive. “Apparently 80 to 90 per cent of the world’s cruise bookings come from travel agents. The 60 odd cruise lines that are in existence, they have limited reservation capacities to handle 27 million people that will cruise this year and are dependent on travel agencies across the world to fill their inventory. It’s a travel agent who actually recommends a cruise or advises it as an option. Why do America, Germany, Australia and the UK have the highest amount of passengers? Because they also have the highest number of travel agents that believe in cruising and recommend them,” Kollar says.

Drawing travel fraternities’ attention to selling cruise vacations, Saxena said, “When it comes to cruise, that is the easiest package vacations that are available in the world. You talk to one cruise line and you can sell 200-300 destinations over their fleet of vessels. And compare that to any other vacation options or tour packages, the value that you get on cruise is far superior to anything else that you get elsewhere.”

Importantly, he however also drew attention of agencies’ dwindling income in India because of vanishing ticketing commission and warning travel fraternity of the same fate by cruise lines if they fail to grab the cruising opportunity. “Cruise lines are giving a lot of commission away to the travel agents and intermediaries, let that day not come when the cruise lines are forced to reach out to the consumers directly and slowly and gradually the importance of travel agencies fade away. This is the time to wake up. If the travel agencies don’t start supporting, the cruise business is going to get very-very difficult,” warned Saxena.

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