The potential of cruise tourism both in terms of passenger movement on varied itineraries and India as a cruise tourism port has been discussed since over a decade. In this cover story, industry experts identify the challenges and the possible way forward in this niche line of business By Reema Lokesh
That the cruise business has potential is no rocket science. The fact remains that this concern has been discussed, debated, deliberated upon since over two decades. A story related to this sector needs to be treated with clarity and spelt out in two parts. First, India’s cruise tourism potential in terms of passenger movement, and second, India as a cruise tourism hub. Though there have been a series of discussions on the issue of developing India’s ports, we would primarily try and decode what’s trending on the former. Industry experts have given their verdict on what is the latest trend in terms of passenger movement and demand in this niche tourism segment.
As one of the leading players in this sector, Ratna Chadha, chief executive, TIRUN Travel Marketing, has viewed and studied this market closely. She states that India’s cruise story is yet to unfold, the current market share is nowhere near its potential and there is lot of work that needs to be done before we can even begin talking of a market share. Nishith Saxena, founder and director, Cruise Professionals, shares a similar sentiment, “The Indian market share in the global scenario is very limited and marginalised. Except for South Asian cruises, Indians form a very small percentage on any other cruising region, may it be Alaska, Australia, Caribbean, Japan, Mediterranean or Mexico. The concept of cruising has more to do with ‘vacation’ and Indians feature among the top five ‘vacation deprived’ people in the world. While the concept of cruise vacation is catching up in metros and mini-metros, we still have a long way to go.”
Meanwhile, Kunal Sampat, GM-India, MSC Cruises, though cautious, states that the outbound cruise tourism business in terms of Indian passengers opting for a cruise holiday through the fly and cruise format has been experiencing a growth of around 13 – 15 per cent year on year, which is a good trend considering challenges outbound tourism has experienced from India in the past few years. He says, “2016 has been the best year so far and growth has been consistent. With the increasing trend of Indian travellers willing to experience unique destinations, cruising is becoming more and more popular. Being one of the fastest growing economies of the world, India is an emerging market for outbound cruise tourism for international cruise liners. Trade partners have been extremely supportive in promoting cruise holidays aggressively in India. With few trade partners using their expertise and out-of-the box ideas to create special interest groups, there are still lot of partners who need to put in an effort to understand the product before selling it to their clients.”
Sharing a few key statistics, Kishan Biyani, MD, Ark Travels, mentions that as per the Travel & Tourism Competitiveness Index (TTCI) 2015, of the World Economic Forum, India ranks 35th in Air Transport Infrastructure and 50th in Ground & Port Infrastructure from 141 countries of the world. He says, “Looking at the rankings which India has received over so many years of promoting tourism in domestic and overseas market, it’s obvious that we as a country are moving in the right direction to achieve the desired results of one per cent tourist arrivals and cruise tourism per se plays an important role. India has a vast coastline and huge potential as a destination – most cruise companies have shown great interest in wanting to move ships to India.” Star Cruises has a well established positioning in the India market and the company has been one of the forerunners in operating sailings few years ago ex-Mumbai, but pulled out due to bureacratic bottlenecks. However, the outbound movement for this cruise company has been encouraging over the years. Naresh Rawal, VP-sales, South Asia, ME, South Africa and Russia, Star Cruises and Dream Cruises, gives credit to his trade partners for helping the company grow in India.
Product understanding
Though there has been minor progress over the years in this business, it is just the tip of the iceberg. Most experts feel that there is a lot which the travel fraternity first needs to understand about this niche sector. Speaking about product knowledge and the willingness to understand this sector better, Sampat candidly states, “India is a B2B market for cruise liners with more than 95 per cent of business coming from trade partners. In such a scenario, it is extremely important for them to put an effort to understand the product. Selling a cruise holiday has better margins and I would be glad to see partners earning, rather than diluting the same. It is an opportunity which needs to be carefully studied and capitalised upon. I suggest partners to study the product before selling and not only sell as a onetime opportunity. We all need to come out of our comfort zones and explore new areas to make more revenue.” Chadha puts across a message rather strongly. She says, “The cruise category is way below in the holiday consideration due to lack of awareness and misconceptions and lack of category visibility on our own turf.” She further adds, “We need to work together with the Government of India to bring India on the cruise tourism map for the benefit of our own economy, a process which has started in the right direction I believe. We need to come together under one association and work together with our distribution partners to grow the category.”
What’s trending
According to Rawal, the cruising sector is moving at a steady pace and attracting more and more Indians to cruise from the shorter two nights itinerary to the longer seven nights itinerary as well. He says, “Being a huge market for Star Cruises we have noticed a recorded encouraging growth in recent years. There has been a consistent increase in the share of Indian passengers. Guests from middle and upper middle class segments are frequent travellers experiencing cruising as a new alternative to their travel options. Star Cruises offers a series of Fly Cruise holidays from India, allowing travellers to experience the unique opportunity of visiting exotic destinations by both air and sea, all within a single trip and at your own pace. Travellers get the best of both worlds, flying into their favourite homeport cities, as well as travelling further via a relaxing cruise on the high seas or to new destinations on board our cruise ships. While Genting Hong Kong has Star Cruises in its existing cruise portfolio, with extending the core business we have recently launched new brand Dream Cruises that will cater to the growing luxury Asian cruise market and the recently acquired Crystal Cruises is the world’s leading luxury cruise provider.” Speaking about India’s potential as a cruise hub, Rawal adds, “India has huge potential to be an emerging cruise hub in the region with its beautiful coastline and exotic islands. However at present, the existing infrastructure and policies do not encourage us to have a ship home-ported in India. We are working very closely with the concerned government offices to make India an attractive cruise home port for operators like us.”
Nikhil Thakurdas, director, CruiseBay, observes, “India has a miniscule share of the world cruise tourism market. However cruiseliners are now focusing on Asia especially in the winter months from November to March (where ships cannot sail to Alaska and Scandinavia).” Adding further on what is trending, Nalini Gupta, MD, Lotus Destinations (GSA of Costa Cruises-India) feels that though the cruise industry in India is in its nascent stage, currently there is a lot of interest for sailings in multiple ports of Asia which includes ports in India. Various international sailings of leading cruise liners of the world are being sold in India through dedicated offices or representations. She adds, “Costa Cruises has been making strong moves to establish a cruise industry in the region, by not only having multiple sailing options in Asia but very shortly from Mumbai as well. In fact, we are the first cruise liner to introduce sailings from Mumbai to Maldives and back. The Government of India has also been proactive. India has the potential of becoming a big market for cruising, not only because of our long coastline but also a large consumer base waiting to experience a cruise from their own country. We have seen big demand for our Mumbai sailing from both travel agents and direct consumers, which includes the corporates.” Saxena, adds, “In the last two years, we have seen many initiatives being undertaken by various stake holders – be it the government, port trusts, various cruise lines, etc, to make India one of the biggest source markets for domestic, coastal and outbound cruising. The consistent growth in the outbound cruising has made all the stakeholders sit up and take notice of this hugely popular vacation option, which in other countries is almost considered as an industry. Once we could get two-three cruise lines home porting their ships around the coast of India, we would not only see massive growth in passenger sales, but also the allied businesses which support and get support from cruise business.”
Concern areas
Nikhil Thakurdas, lists down the following areas of concern:
- The first is port infrastructure. Passenger facilities need to be developed in the main leisure cruise ports of Mumbai, Goa and Kochi. Cruise berthing facilities/ facilitation services need to be developed at sea and river ports. Main bottleneck is the infrastructure at the ports to be able to handle passenger traffic. This includes amenities as well as reducing the time for granting visas, getting customs & excise clearances, etc.
- e-Visa facility has to be set up at the main leisure ports for passenger convenience to enter the country.
- The custom and immigration process has to be streamlined at the main leisure cruise ports.
- Port charges and taxes have to be rationalised so that the pricing becomes affordable for travellers.
- Cruise liners should be incentivised to set up year round operations in India (for eg: concessional port charges, waive of taxes for first three years of operation, etc).
India gaining ground
Biyani points out that India is estimated to emerge with a market size of 1.2 million cruise visitors by 2030–31. Cruise companies from across the world are aiming to cash on this segment and are setting up offices or appointing representatives to market their product and services. Genting Hong Kong will be bringing its Dream Cruises by end of October 2016 as relocation cruise before it sets sail from Nansha in China. The ministry of shipping had organised the maiden Maritime India Summit, 2016 (MIS-2016) in Mumbai in April 2016 to create awareness of the untapped potential of Indian maritime sector and showcase investment opportunities. With the objective of promoting cruise tourism in India, a Task Force on Cruise Tourism has been constituted by the ministry of tourism, Government of India, which has recommended Standard Operating Procedures (SOPs) for cruise vessels.
Following are the recommendations:
- Foreign flag vessels carrying passengers have been allowed to call at Indian ports for a period of 10 years with effect from February 6, 2009, without obtaining licence from Director General of Shipping.
- Port Level Committees have been constituted to address manpower, coordination and logistic issues for handling cruise vessels at ports.
- All ports have been directed to offer rebates in port charges and other financial incentives for cruise vessels and also provide rebates in order to attract cruise liners to make major Indian ports as homeports. The cruise industry worldwide is expected to see annual pax growth rate of 6.5 per cent by 2019, which will largely be driven by capacity, new ships, more local ports and newer destinations. A total of 15 new cruise ships are likely to be added between 2016-17 adding 39,637 to worldwide passenger capacity, or 8.1 per cent, which in turn is expected to fetch US$ 3.6 billion in annual revenue to the cruise industry worldwide. To achieve even one per cent of the revenue quoted above, India needs more concrete and dedicated steps and right atmosphere to cater small and larger cruise.
Thakurdas highlights the reasons as to why India’s cruise tourism story is finally at an inflection point of growth:
- The Indian government is committed to growing cruise tourism in India. India has sought advice from Singapore government to promote cruise tourism by modernising infrastructure at all major and minor ports. Shipping minister, Nitin Gadkari has recently said that Rs 5,000 crore would be spent to develop infrastructure at the Mumbai Port Trust which will become a port exclusively for passenger traffic (and cargo facilities will soon be terminated)
- Star Cruises is launching its premium cruise ship, Genting Dream in Mumbai from October 2016 – this is the first time that any ship will be formally launched out of India. Costa Cruises has committed its ship, Costa NeoClassica to the Indian waters with weekly sailings between Mumbai and Male from December 2016 till March 2017. Both Genting Dream and Costa Cruises will help in creating awareness of cruising as a holiday and help in growing the market for cruises. Depending on the success of these two ships, more cruise liners will commence sailings from winter 2017 onwards. Once the port infrastructure is put in place, there is a likelihood of year round sailings in the Indian Ocean region.