In Havana, historic gathering pairs cruise CEOs with government officials

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The Norwegian Sky in Havana.

Cruise lines are laying the groundwork for further expansion into Cuba now that the rules governing U.S. tourism to the island have been revised and clarified by the Trump administration.

CEOs from seven cruise companies met in Havana on Nov. 27 with Cuban government officials, along with representatives from CLIA and the Florida-Caribbean Cruise Association, to exchange viewpoints.

It was the first time so many cruise CEOs had gathered in Havana, according to Charles A. Robertson, who attended the meeting as chairman and CEO of Pearl Seas Cruises, which sails to Cuba from Fort Lauderdale.

“It was very positive,” he said. “The Cuban government did a great job. I think the whole relationship with the cruise industry is maturing very nicely.”

Cruise lines were left largely unscathed when the new rules for U.S. trade and travel to Cuba were announced a month ago. Hotels in Havana that are owned or operated by entities with ties to the Cuban military were made off limits, crimping land tourism. The Trump administration also blocked individual travel to Cuba, restricting visits to groups in itineraries designated as people-to-people exchanges.

MSC Cruises CEO Gianni Onorato, who also attended the Nov. 27 summit, said Cuban officials asked the group to back an easing of President Trump’s restrictions.

“We had sort of an official presentation of CLIA to the Cuban authorities, and the Cuban authorities were also asking for some sort of help or support to lift the ban,” Onorato said.

An effort to seek comment through Cuba’s Ministry of Tourism was unsuccessful.

As a practical matter, the cruise lines were unaffected by almost all the new U.S. restrictions.

“I would say it’s a minimal impact,” Robertson said. “It’s sort of a refining of the people-to-people rules under the general [travel] permit. There’s no significant change.”

So, for example, Robertson said that Pearl Seas passengers taking the line’s 10-day cruises circumnavigating Cuba can participate in organized group tours with guides and interpreters, but they also have time on their own.

“They do both,” Robertson said. “That’s true in all the cities we visit in Cuba.”

Cruise ships sailing from Florida have only been visiting Cuba since May 2016, when the now-defunct Carnival Corp. brand Fathom offered the first regular cruise to depart the U.S. for Havana in 50 years.

Since then, two Carnival Corp. brands, all three Norwegian Cruise Line Holdings brands and two Royal Caribbean Cruises Ltd. brands have made plans to visit the island from the U.S., along with Pearl Seas and Victory Cruise Line.

Cruise CEOs have said that pricing and demand for the cruises have been strong, stimulating plans to add new capacity. Norwegian Cruise Line has scheduled Cuba calls on a second ship in 2018, adding the Norwegian Sun from Port Canaveral to its Cuba cruises on the Norwegian Sky from Miami.

Cruises on both ships will include overnights in Havana.

A day after the summit in Miami, Royal Caribbean International announced that it, too, would add a second Cuba ship. Starting in April, its 2,350-passenger Majesty of the Seas will offer four- and five-day cruises from Tampa that include day trips and overnight stays in Havana. In October, it will do the same from Fort Lauderdale.

Royal’s 1,602-passenger Empress of the Seas, which had been sailing to Havana from Tampa, will move to Miami, where it will offer more varied itineraries. Along with five-day sailings to Havana and Key West, the Empress will offer seven-day trips that feature Nassau, Havana and Cienfuegos, which is a new Cuba destination for Royal.

The Empress will also debut an eight-day cruise that calls in Cienfuegos and Santiago de Cuba, another new port, along with Grand Cayman and Royal’s private destination in Labadee, Haiti.

Robertson said Pearl Seas, too, is planning to expand. In 2018 and 2019, it will offer more Cuba cruises on its 210-passenger Pearl Mist. By late 2019, Pearl Seas expects to take delivery of two more ships, at least one of which will likely be added to Cuba.

MSC Cruises is in a somewhat different position. Based in Geneva, it already has a well-developed business of taking European passengers to Havana. It has two ships, the MSC Armonia and the MSC Opera, that homeport in Havana year-round. In addition, it operates a ship seasonally from Martinique or Guadalupe that calls in Havana.

None of those cruises is sold in the U.S., so MSC doesn’t have to conform to U.S. regulations.

But MSC is also adding ships in North America, beginning with the MSC Seaside in Miami later this month, and Onorato said he is definitely interested in adding a Cuban port call for those ships in the future.

He said MSC has announced itineraries for its North American ships through 2020. “Until 2020, we don’t go,” he said. “We see the worst thing you can do in this business is to change itineraries because this creates uncertainty and disruptions among the customers.”

As things stand, it wouldn’t be feasible anyway for either the 3,502-passenger Divina or the 4,138-passenger Seaside to call in Cuba because the ships are too large for existing piers there.

Robertson said Cuban officials addressed the infrastructure obstacles at the summit.

“I think they’re working on it,” he said. “There were no specifics that I heard, but they are working on it, and I think we’re all going to see some improvements in the infrastructure coming along fairly soon.”

Another stumbling block was a U.S. State Department warning against travel to Cuba. Issued in late September, the warning was tied to mysterious health symptoms suffered by some U.S. and Canadian diplomats in Havana.

Robertson said the impact on bookings was short-lived.

“Demand remains strong,” he said. “When the travel warning came out, there was a dip for about 10 days. I would say it’s quite normal now, and it’s encouraging us to operate more to Cuba.”

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Cruise CEOs say ship renovations key to maximizing revenue

Cruise CEOs say ship renovations key to maximizing revenue

Enchantment of the Seas

FORT LAUDERDALE — The cruise industry will increasingly emphasize growth in revenue yields rather than the number of cabins and ships it is adding, according to the CEOs of its top companies.

Four chief executives spoke together on a panel at the annual Seatrade Cruise Global convention, held for the first time this year at the Broward County Convention Center.

“You’re going to see a more balanced approach to building new ships,” said Frank Del Rio, CEO of Norwegian Cruise Line Holdings. More dollars will flow toward maintaining the existing fleet at the highest level so that higher prices can be supported fleetwide, he said.

“We have no choice,” chimed in Arnold Donald, CEO of Carnival Corp. “The fastest we can grow is at about 6% a year, even with the largest ships. And there’s only so many shipyards.”

Donald said investors in any of the companies represented on the panel would not be satisfied with a 6% return on investment. So attention is turning to investing more in existing ships to bring up yields and to introduce innovations that customers will pay extra for.

In sheer numbers, Carnival’s fleet has already plateaued. Since mid-2011, Carnival Corp. has added only one net ship to its 101-ship fleet, according to a presentation by Giora Israel, Carnival’s senior vice president of global port and destination development. But in that timeframe, it has added 32,000 berths because bigger new ships are taking the place of smaller old ones.

Arnold pointed out that new ships on order are increasingly split between China and other markets, which means growth from North America could only be 2-3% a year if it had to depend solely on new capacity.

On another topic, the CEO panel agreed that cruises to Cuba, while of high interest, await approvals from the Cuban government.  And they said the infrastructure to support cruise tourism is lacking for anything larger than mid-sized ships.

MSC Cruises, which is privately owned and headquartered in Geneva, is currently the only major cruise company sailing in Cuba. Pierfrancesco Vago, executive chairman of MSC Cruises, said that when its 2,150-passenger MSC Opera ship docks in Havana, the 275-meter ship (about 902 feet) overhangs the end of the pier by about 80 meters (about 262 feet).

MSC Cruises’ private island to have pier, amphitheater and restaurants


MSC emphasized that Ocean Cay represents a “permanent presence” in the Bahamas, and said it will be used by four ships.

MSC Cruises confirmed it will acquire use of Ocean Cay, an island about 20 miles south of Bimini, for a private cruise ship destination and that it has budgeted $200 million for the project.

MSC said that it will be called Ocean Cay MSC Marine Reserve. Bahamian Prime Minister Perry Christie and MSC Cruises Executive Chairman Pierfrancesco Vago signed a 100-year lease agreement in a ceremony on Dec. 16, MSC said.

Among other things, Ocean Cay will have a pier so that guests do not have to tender ashore, which cruise lines must do at some private islands in the Bahamas. MSC plans to open the destination by December 2017, in time for use by the MSC Seaside, a ship entering service in December 2017 that will be based year-round in Miami.

MSC emphasized that Ocean Cay represents a “permanent presence” in the Bahamas, and said it will be used by the MSC Divina, which sails out of Miami, and the Opera and Armonia, which will sail out of Cuba. It expects to hire 240 Bahamians to work there and will open a crew training school in Nassau to provide “local manpower” for MSC ships sailing in the Caribbean.

Plans suggest that the 95-acre island will be the most extensive cruise port in the Caribbean. MSC will build a 2,000-seat amphitheater and many bars and restaurants. The ship and all onboard services, including the casino, will stay open while berthed at Ocean Cay, MSC said.

The island has 11,400 feet of beach front, MSC said, and will accommodate six separate beach districts.

A former sand-extraction station, the island will be planted with more than 80 indigenous Caribbean trees, grasses, flowers and shrubs, such as Jamaica dogwood; red, black and white mangroves; and beach morning glory.

For MSC Yacht Club guests, an exclusive spa and wellness sanctuary with private bungalows and massage huts will be built on the northwest corner of the island.

Various areas of the island will be connected by a network of walking and running paths, and bicycle rentals and other “stress-free” transportation options will be available.

Plans also call for a Bahamian shopping village, a family beach with a kids’ restaurant and play area, a zipline attraction, a lagoon water feature, and a pavilion for weddings and celebrations.

Groundbreaking is scheduled for March, MSC said.