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Ministry of Tourism, Government of India

Cruise Tourism
Potential & Strategy Study

Final Report

December 2005

CRISIL Limited
CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
TABLE OF CONTENTS

PREFACE.............................................................................................................................................. 9

ACKNOWLEDGEMENTS ............................................................................................................... 12

EXECUTIVE SUMMARY ................................................................................................................ 13

1 GLOBAL CRUISE TOURISM INDUSTRY PROFILE......................................................... 23


1.1 HISTORICAL BACKGROUND .......................................................................................................... 23
1.2 MARKET GROWTH AND DIRECTION............................................................................................ 24
1.2.1 Statistical Highlights ......................................................................................................................... 24
1.2.2 WTO Market Trends .......................................................................................................................... 24
1.2.3 Recent Growth Trends ....................................................................................................................... 25
1.2.4 Market Share vis-à-vis Tourism Industry.......................................................................................... 28
1.2.5 Global /Regional Players .................................................................................................................. 28
1.2.6 Passenger Demographic Profile ....................................................................................................... 30
1.2.7 Trends in Duration of Cruises........................................................................................................... 32
1.3 INDUSTRY KEY DRIVERS ................................................................................................................ 33
1.3.1 Strategic deployment to maximize yield ............................................................................................ 33
1.3.2 Itineraries that satisfy key passenger requirements.......................................................................... 34
1.3.3 Home Porting Advantage .................................................................................................................. 35
1.3.4 Flexibility in repositioning ................................................................................................................ 35
1.3.5 Capacity Drives the Market............................................................................................................... 36
1.3.6 Sensitivity to global security issues ................................................................................................... 36
1.3.7 Strict Environmental Standards ........................................................................................................ 36
1.3.8 International Aviation Developments................................................................................................ 37
1.4 PRODUCTS AND SERVICES OFFERED .......................................................................................... 38
1.4.1 What makes Cruising unique............................................................................................................. 38
1.4.2 Niche cruise tourism markets ............................................................................................................ 38
1.4.3 Types of cruises.................................................................................................................................. 39
1.4.4 Onboard Entertainment Facilities..................................................................................................... 41
1.4.5 Accommodation ................................................................................................................................. 42
1.5 RIVER & CANAL CRUISES ............................................................................................................... 43
1.6 PROFILING OF CRUISE LINERS ...................................................................................................... 45
1.6.1 Carnival ............................................................................................................................................. 45
1.6.2 Royal Caribbean ................................................................................................................................ 47
1.6.3 Star Cruises........................................................................................................................................ 47
1.6.4 Disney Cruise..................................................................................................................................... 49
1.7 ASIA CRUISE TOURISM MARKET.................................................................................................. 52
1.7.1 Growth in the region.......................................................................................................................... 52
1.7.2 Market Highlights .............................................................................................................................. 52
1.7.3 Cruise passenger traffic at key ports................................................................................................. 53
1.8 FUTURE GLOBAL GROWTH TRENDS ........................................................................................... 54
2 INDIAN CRUISE TOURISM SCENARIO.............................................................................. 56
2.1 INDIAN TOURISM MARKET SCENARIO ....................................................................................... 56
2.1.1 Indian Tourist Trends ........................................................................................................................ 56
2.1.2 Indian Tourism Market Dynamics..................................................................................................... 56
2.2 INDIAN CRUISE INDUSTRY............................................................................................................. 60
2.2.1 Target Tourism Segment for the Indian Cruise Sector ..................................................................... 60
2.2.2 Current Trends of Indian Cruise Tourists......................................................................................... 61
2.3 PRIMARY SURVEY RESPONSE TO INDIAN CRUISE TOURISM............................................... 62
2.3.1 Objective of the Survey ...................................................................................................................... 62
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Ministry of Tourism, Government of India
2.3.2 Profile of Respondents....................................................................................................................... 62
2.3.3 Primary Survey Response.................................................................................................................. 62
2.4 INDIA AS A CRUISE DESTINATION ............................................................................................... 73
2.4.1 Cruise Tourist arrivals in India......................................................................................................... 73
2.4.2 Indian Cruise market scenario .......................................................................................................... 74
2.5 GOVERNMENT INTIATIVES ............................................................................................................ 75
2.6 CRUISE MARKET POTENTIAL ........................................................................................................ 76
2.6.1 Potential arising from Cruise Tourist arrivals in India ................................................................... 77
2.6.2 Potential arising from International Tourist arrivals in India......................................................... 80
2.6.3 Potential arising from Domestic Indian Tourists ............................................................................. 82
2.6.4 Potential arising from Indian Outbound Tourists............................................................................. 84
2.6.5 Total Cruise Tourism Potential ......................................................................................................... 86
2.7 IMPACT OF GROWTH IN CRUISE SHIPPING SERVICES............................................................ 87
2.7.1 Economic Impact ............................................................................................................................... 87
2.7.2 Environmental Impact ....................................................................................................................... 88
2.7.3 Socio-Cultural Impact ....................................................................................................................... 90
3 INFRASTRUCTURE & LINKAGES ....................................................................................... 91
3.1 CRUISE TOURISM PORTS ................................................................................................................. 91
3.1.1 Roles Ports play in cruise tourism .................................................................................................... 91
3.1.2 Identified Ports for Cruise Tourism in India..................................................................................... 92
3.1.3 Analysis of the key Cruise Tourism Ports ......................................................................................... 93
3.1.4 Facilities provisioned for Cruise Ships at the prospective Ports ..................................................... 99
3.1.5 Benchmarking of facilities at the Indian Ports ............................................................................... 100
3.1.6 Study of international ports with respect to their infrastructural aspects ..................................... 101
3.1.7 Listing of standard facilities desirable at Cruise Ports.................................................................. 102
3.1.8 Gap Assessment of Infrastructural aspects at Indian Ports ........................................................... 103
3.2 PROFILING DUBAI AND SINGAPORE CRUISE TERMINALS.................................................. 105
3.2.1 Dubai Cruise Terminal .................................................................................................................... 105
3.2.2 Singapore Cruise Terminal ............................................................................................................. 108
3.3 FINANCIAL IMPLICATIONS........................................................................................................... 110
3.3.1 Investment Estimation...................................................................................................................... 110
3.3.2 Earnings from passenger spends: ................................................................................................... 113
3.3.3 Potential Economic Impact of the Cruise sector for India ............................................................. 115
3.3.4 Viability of Cruise Terminals .......................................................................................................... 116
3.4 DEVELOPING CRUISE TERMINALS IN INDIA ........................................................................... 120
3.4.1 Primary Stakeholders ...................................................................................................................... 120
3.4.2 Funding approach ........................................................................................................................... 121
3.4.3 Options for ‘Private Sector Participation’ ..................................................................................... 121
3.4.4 Identifying possible Private Sector Partners .................................................................................. 125
4 DEVELOPING CRUISE TOURISM IN INDIA : STRATEGIES & IMPERATIVES ..... 127
4.1 POSITIONING APPROACH.............................................................................................................. 127
4.1.1 Need to develop India as a single national brand .......................................................................... 127
4.1.2 Need to address the requirements of varied segments.................................................................... 127
4.1.3 Need to create port wise & region wise destinations ..................................................................... 127
4.1.4 Need to position Indian Cruises for the youth and for families...................................................... 127
4.2 PRODUCT APPROACH..................................................................................................................... 128
4.2.1 Itineraries......................................................................................................................................... 128
4.2.2 Designing Cruise Circuits ............................................................................................................... 128
4.3 PROPOSED CRUISE CIRCUITS....................................................................................................... 130
4.3.1 Rejuvenation Cruise......................................................................................................................... 130
4.3.2 Discover India’ Cruise .................................................................................................................... 131
4.3.3 ‘Shopper’s Bonanza’ Cruise............................................................................................................ 132
4.3.4 Heritage Cruise................................................................................................................................ 132
4.3.5 Sunshine Cruise to Beaches............................................................................................................. 133
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Ministry of Tourism, Government of India
4.3.6 Nature Lovers Cruise....................................................................................................................... 133
4.3.7 Party Cruise ..................................................................................................................................... 134
4.3.8 High seas cruise or ‘Cruise to Nowhere’........................................................................................ 134
4.4 CRUISES TO FOREIGN DESTINATIONS ...................................................................................... 135
4.4.1 Eco Cruise across high seas............................................................................................................ 135
4.4.2 Shoppers’ Bonanza .......................................................................................................................... 136
4.4.3 International Heritage Cruise ......................................................................................................... 136
4.5 DEVELOPING ‘RIVER CRUISES’ ................................................................................................... 137
4.5.1 Potential River Cruises.................................................................................................................... 138
4.6 MARKETING CRUISE TOURISM ................................................................................................... 138
4.6.1 Marketing Approach........................................................................................................................ 139
4.6.2 Strategy by the Apex Tourism Bodies for Cruise Operators .......................................................... 139
4.7 DEVELOPING CRUISE TERMINALS............................................................................................. 142
4.7.1 Developing Cruise terminals into ‘Destinations’ ........................................................................... 142
4.7.2 Strategizing Cruise Operations ....................................................................................................... 143
4.8 ADDRESSING ENVIRONMENTAL ISSUES.................................................................................. 144
4.8.1 Role of Ministry of Environment and Forests ................................................................................. 145
4.9 TAXES & PROCEDURES.................................................................................................................. 145
4.9.1 Taxation Aspects impacting on Cruise Tourism ............................................................................. 145
4.9.2 Procedural Aspects impacting Cruise Tourism .............................................................................. 149
4.10 HR & TRAINING................................................................................................................................ 158
4.10.1 Need for Training ........................................................................................................................ 158
4.10.2 Performance Evaluation ............................................................................................................. 162
4.10.3 Organizational Development ...................................................................................................... 162
5 RECOMMENDATIONS.......................................................................................................... 163
5.1 KEY RECOMMENDATIONS TO MAKE INDIA A STRONG CRUISE DESTINATION........... 163
5.1.1 Create the Cruise Terminals ........................................................................................................... 163
5.1.2 Create the Product........................................................................................................................... 165
5.1.3 Create the positioning : India as a ‘MUST SEA’ destination ........................................................ 167
5.1.4 Create the Experience...................................................................................................................... 169
5.1.5 Build the capacity ............................................................................................................................ 170
5.1.6 Create the Policy and Institutions to support development............................................................ 171
5.2 AREAS OF RESPONSIBILITY ......................................................................................................... 172
5.2.1 Ministry of Shipping ........................................................................................................................ 172
5.2.2 Port Authorities................................................................................................................................ 172
5.2.3 Ministry of Tourism ......................................................................................................................... 172
5.2.4 State Department of Tourism........................................................................................................... 172
5.2.5 Private Sector................................................................................................................................... 173
5.2.6 Ministry of Environment & Forests................................................................................................. 173
5.3 ACTION PLAN ................................................................................................................................... 173
ANNEXURE I: GLOSSARY OF INFRASTRUCTURAL FACILITIES AT PORTS .......... 175

ANNEXURE II: DETAILS OF CRUISE PURCHASING COSTS .......................................... 177

ANNEXURE III: DEVELOPMENT OF INLAND WATER TRANSPORT .......................... 181

TABLE OF EXHIBITS

Exhibit 1 : Cruise Tourism : Significant Growth Worldwide ............................................................... 13


Exhibit 2 : Positive response to Global Opportunities .......................................................................... 13
Exhibit 3 : Global Lessons .................................................................................................................... 15

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Exhibit 4 : Stakeholder Responsibilities ............................................................................................... 21
Exhibit 5 : Region-wise Statistics ......................................................................................................... 25
Exhibit 6 : Growth Trend in the North American Cruise Market ......................................................... 26
Exhibit 7 : Accommodation capacity measured in thousands of berths ............................................... 26
Exhibit 8 : Market Share of the four major Cruise Operators............................................................... 26
Exhibit 9 : Global Seasonal Trends – October to March ...................................................................... 27
Exhibit 10 : Global Seasonal Trends – April to September .................................................................. 27
Exhibit 11 : International Arrivals vis-s-vis Cruise Arrivals ................................................................ 28
Exhibit 12 : Main Cruise Liners that offer Sea Cruises (January 2002) ............................................... 28
Exhibit 13 : Horizontal concentration of 4 key players ........................................................................ 29
Exhibit 14 : Market Share (%) of Big Four in destination regions ....................................................... 29
Exhibit 15 : Distribution of Ocean going fleets as on January 2002 .................................................... 30
Exhibit 16 : Demographic Profile of the North American Cruise Market ............................................ 30
Exhibit 17 : Study of cruise passengers in the European and Asia-Pacific market .............................. 32
Exhibit 18 : Trends in Duration of Cruise (Passengers) in the N American market............................. 32
Exhibit 19 : Trends in Duration of Cruise (Market Share) in the N American market......................... 32
Exhibit 20 : Trends in Cruise duration in the European markets .......................................................... 33
Exhibit 21 : Global Fleet Deployment .................................................................................................. 34
Exhibit 22 : Global fleet deployment, 2002.......................................................................................... 36
Exhibit 23 : Viking River Cruise .......................................................................................................... 45
Exhibit 24 : Profile of the Segments Targeted ...................................................................................... 49
Exhibit 25 : Profile of Destinations....................................................................................................... 50
Exhibit 26 : Profile of Accommodation Facilities ................................................................................ 51
Exhibit 27 : Cruise Passenger Traffic in the main Asian Ports in 2001................................................ 53
Exhibit 28 : Dubai Cruise Tourism Market .......................................................................................... 53
Exhibit 29 : Statistics of Indian Tourists : 1999-2003 .......................................................................... 56
Exhibit 30 : Trip purpose of outbound travel by major generating regions, 1996-97 (% Of total) ...... 57
Exhibit 31 : Top 5 Overseas destinations for Indian Tourists............................................................... 63
Exhibit 32 : Top 5 Foreign Destinations for Foreign Tourists in India ................................................ 63
Exhibit 33 : Attractiveness of different Holidays for Foreign and Domestic Tourists ......................... 64
Exhibit 34 : Actual Cruisers among Domestic and Foreign Tourists ................................................... 64
Exhibit 35 : Intention to go on a Cruise among Domestic and Foreign Tourists.................................. 65
Exhibit 36 : Popular Cruise Destinations for Domestic Tourist ........................................................... 66
Exhibit 37 : What attracts tourists while on a Cruise............................................................................ 66
Exhibit 38 : Relative importance of different aspects........................................................................... 67
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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
Exhibit 39 : Rating of the Ports by Domestic Tourists ......................................................................... 68
Exhibit 40 : Rating of Ports by Foreign Tourists .................................................................................. 68
Exhibit 41 : Aspects considered important while disembarking from the Cruise................................. 69
Exhibit 42 : Initiatives rated important to develop Cruise Tourism in India ........................................ 70
Exhibit 43 : Rating Cruise Circuits in India.......................................................................................... 70
Exhibit 44 : Rating Cruise Circuits by Foreign Tourists....................................................................... 71
Exhibit 45 : Does India have good River Cruises to offer? .................................................................. 71
Exhibit 46 : Rating Indian Cruises by Domestic Tourists..................................................................... 72
Exhibit 47 : Rating Indian Cruises by Foreign Tourists ....................................................................... 72
Exhibit 48 : Cruise Tourists Arrivals in India – 1999:2005.................................................................. 73
Exhibit 49 : Some Cruise Vessels that visited Indian Ports (2004-05) ................................................. 74
Exhibit 50 : Cruise Arrivals and Tourist Statistics at different Ports : 1996-2005 ............................... 75
Exhibit 51 : Number of Cruise Tourist arrivals in India (1996-2001) .................................................. 77
Exhibit 52 : Cruise Tourist Trend in India during 1996-2001 .............................................................. 77
Exhibit 53 : Potential Cruise Tourist Forecasts (2003-2031)................................................................ 78
Exhibit 54 : Cruise Tourist Trend Forecast for 2001-2031................................................................... 78
Exhibit 55 : Number of Cruise Tourists in North America................................................................... 78
Exhibit 56 : Table – Number of Cruise Tourists in Europe .................................................................. 79
Exhibit 57 : Forecast of Cruise Tourists in India (2003-2031) ............................................................. 79
Exhibit 58 : Forecast of Cruise Tourist in India.................................................................................... 80
Exhibit 59 : Table – Number of International Tourist arrivals in India ................................................ 80
Exhibit 60 : WTO forecast for International arrivals ............................................................................ 81
Exhibit 61 : Forecast of International Tourist arrivals (2003-2031) In Millions .................................. 81
Exhibit 62 Forecast of International Tourist arrivals in India taking cruises (2003-2031)................... 82
Exhibit 63 : Projected potential Cruise market arising from International Tourist arrivals in India .... 82
Exhibit 64 : Data for Domestic Indian Tourists (2001-2003) ............................................................... 82
Exhibit 65 : Demographic Segmentation of Domestic Indian Tourists ................................................ 83
Exhibit 66 : Table – Projection of Cruise tourism market within Domestic Indian Travellers (2003-
2031) ..................................................................................................................................................... 83
Exhibit 67 : Number of Cruise Tourists within Domestic Indian Travellers (2003-2031) ................... 83
Exhibit 68 : Number of Cruise Tourists within Domestic Indian Travellers ........................................ 84
Exhibit 69 : Indian Outbound Tourists (1999-2003)............................................................................. 84
Exhibit 70 : Forecast of Indian Outbound Tourists enjoying leisure facilities abroad (2003-2031)..... 85
Exhibit 71 : Forecast of Indian Outbound Tourists taking cruises from Indian Ports (2003-2031)...... 85
Exhibit 72 : Projected Indian Outbound tourists cruising from India ................................................... 86

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Ministry of Tourism, Government of India
Exhibit 73 : Total Cruise Tourism Potential ......................................................................................... 86
Exhibit 74 : Performance of Star Cruises in India ................................................................................ 87
Exhibit 75 : Impact of Cruise Shipping Services .................................................................................. 88
Exhibit 76 : Analysis of Mumbai Port .................................................................................................. 93
Exhibit 77 : Analysis of Goa Port ......................................................................................................... 94
Exhibit 78 : Analysis of Cochin Port .................................................................................................... 95
Exhibit 79 : Analysis of New Mangalore Port ...................................................................................... 96
Exhibit 80 : Analysis of Tuticorin Port................................................................................................. 97
Exhibit 81 : Analysis of Chennai Port .................................................................................................. 98
Exhibit 82 : Infrastructure Facilities at identified Cruise Ports............................................................. 99
Exhibit 83 : Benchmarking of Facilities at the identified Cruise Ports............................................... 100
Exhibit 84 : Infrastructure Facilities at Key International Ports ......................................................... 101
Exhibit 85 : Primary facilities for Cruise Tourists .............................................................................. 102
Exhibit 86 : Secondary facilities for Cruise Tourists .......................................................................... 102
Exhibit 87 : Facilities for Cruise Vessels............................................................................................ 103
Exhibit 88 : Port & Port related infrastructural facilities .................................................................... 103
Exhibit 89 : Facilities for Entry-Exit Checks/Clearances ................................................................... 103
Exhibit 90 : Facilities & Services at the Port Rashid Cruise Terminal, Dubai ................................... 106
Exhibit 91 : Services and facilities at the Singapore Cruise Centre.................................................... 109
Exhibit 92 : Broad Estimates for developing a cruise terminal .......................................................... 112
Exhibit 93 : Cost Estimates for each Cruise Terminal........................................................................ 112
Exhibit 94 : Average spends per cruise tourist per port ...................................................................... 114
Exhibit 95 : Cruise Passenger Spending at Base Port ......................................................................... 115
Exhibit 96 : Cruise Passenger Spending at Secondary Port................................................................ 115
Exhibit 97 : Estimation of total cruise tourist & crew spending for 2010-11 and 2030-31 ................ 116
Exhibit 98 : Project Cost for a Cruise Terminal.................................................................................. 117
Exhibit 99 : Key Viability Parameters (Base case)............................................................................. 118
Exhibit 100 : Sensitivity of a Cruise Terminal constructed on Renovated Berth ............................... 118
Exhibit 101 : Sensitivity of a Cruise Terminal constructed on New Berth......................................... 119
Exhibit 102 : Broad Funding Approach .............................................................................................. 121
Exhibit 103 : PSP Models ................................................................................................................... 122
Exhibit 104 : PSP Structure vis-à-vis Government objectives............................................................ 123
Exhibit 105 : Map showing Cruise Destinations in the South East Asia ............................................ 129
Exhibit 106 : Map of Cruise Destinations in the Indian Ocean .......................................................... 129
Exhibit 107 : Map of Ports of South Asia ........................................................................................... 130
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Exhibit 108 : Distance Time Matrix between Key Cruise Ports ......................................................... 131
Exhibit 109 : Discover India Circuit Itinerary .................................................................................... 131
Exhibit 110 : Distance Time Matrix between Mumbai-Porbander-Dubai.......................................... 132
Exhibit 111 : Eco Cruise across high seas .......................................................................................... 135
Exhibit 112 : Long shopping Cruise to Mumbai, Dubai, Singapore................................................... 136
Exhibit 113 : Heritage Cruise ............................................................................................................. 137
Exhibit 114: Statement of Taxes Impacting the Tourism Industry ..................................................... 145
Exhibit 115: Tax Rates on Tourism in Competing Destinations ........................................................ 147
Exhibit 116: Corporate Taxes in competing tourist destinations ........................................................ 148
Exhibit 117 : Other Taxes in competing tourist destinations.............................................................. 148
Exhibit 118 : Benchmarking tourism related taxes to taxes across comparable tourist destinations .. 148
Exhibit 119 : Activity interactions of the Cruise Industry with the Government agencies................. 151
Exhibit 120 : Laws & regulations governing the cruise industry........................................................ 152
Exhibit 121 : Pre Berthing Activities.................................................................................................. 153
Exhibit 122 : Activities related to Port Call and Ships at Berth.......................................................... 154
Exhibit 123 : Applications related to Cruise Operations .................................................................... 156
Exhibit 124 : Stakeholder Vs Training Required................................................................................ 159
Exhibit 125 : Short, medium and long term Development Plan ......................................................... 174

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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India

PREFACE

The potential of the tourism sector to stimulate economic and social development thereby
transforming economies has been internationally acknowledged. Tourism has been placed on a
priority platform in India with the Governments at the centre and the states making directed efforts to
exploit the tourism resources offered at the national and local level.
However, in exploring avenues for consolidating the tourism strengths of the country, it would be
vital that India be sensitive to global developments and demands, responsive to changing international
trends and tourist perceptions.
‘Cruise Tourism’ represents one such avenue where far reaching developments have been witnessed
worldwide with India having no claim to even a marginal positioning. In 2002 North America, which
forms around 71% of the international cruise demand, had 7.64 million cruise travellers while the
same period saw only 0.012 million cruise tourists in India, representing less than 0.16%.
It is thus clear that, despite its position on the south pacific international sea-route, an impressive 7516
km coastline, several natural ports and breathtaking destinations, India has continued to miss out on
the cruise tourism potential.
It is in realization of this that the Ministry of Tourism has initiated a study of the market and potential
for Cruise tourism in India with the objective of evolving strategies towards an effective exploitation
of its global possibilities.
The Terms of Reference of the study are as follows.
- To assess the potential and to recommend various steps to develop India into a major cruise
market for Domestic, Regional and International Cruise.
- To study the existing scenario world wise – number of cruise ships, their ownership, funding
pattern, trips made, destinations covered with frequency, present demand, financial viability,
State support available, facilities offered into the ship and at ports, year-wise volume of traffic
handled and total berths available in the last, say 5years.
- To study the future demand – world wide and financial viability of creating infrastructure in
India at a few selected ports;
- To identify the ports which need be linked/ developed for cruise tourism in India; existing
facilities at those ports; and facilities required to be created to make them International
standards, including financial implications for up gradation / creation of facilities and number
of ships required, to begin with.
- Carry out necessary primary and secondary survey to establish the data
- To study the procedural requirement for Customs and Immigration at such ports
- To identify the private sectors which may be interested in such a project and State support
required in the form of finances, tax holidays etc..
- To analyse as to how to take up the project, i.e., as a joint venture of GOI with private sector
or public – private partnership with public ownership and private running / management on
lease basis or any other mode;
- To assess the feasibility / demand of both domestic and foreign tourists coming to the ports by
other means of transport like air / rail / road; and then availing the Cruise facilities for an
Indian Cruise Circuit;
- To assess the infrastructure demand for such a cruise tourism, including the cost factor;
- To assess the feasibility of Cruise Toursm from Indian ports to selected foreign destinations
(to also identify foreign cruise circuit with reasons for such a circuit); demand for the same
from and to India;
- Marketing strategies – both nationally and internationally required to capture / create the
market
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Ministry of Tourism, Government of India
- Reviewing, identifying and justifying the cruise routes of importance at National and
International Level w.r.t. Indian Tourism and its territory as base point.
- Assess the future cruise tourism trend and impact of growth of shipping services in India for
next 26 years.
- Assess the gap in tourism facilities and services in existing and proposed terminals.
- To identify gaps in the infrastructure in the ports for promoting cruise passenger lines.
- To assess infrastructure facilities available and required at designation seaports as per the
International standard.
- Strategies to develop and market cruise tourism and action plan for future development.
- Availability of promotional brochure on cruise tourism.
- To identify the Human Resources required, assess the present training facilities available and
to recommend a strategy for developing the required trained personnel.
- To suggest alternatives and recommendations to convert cruise terminals into major
destinations by themselves
- To suggest measures to simplify Taxation on Cruise vessel and make clear the position
regarding applicability of different types of taxes at Union / State / Municipal level.
- To study the feasibility of conceptualizing tourist cruise as a floating hotel
- To estimate the share of cruise holiday among the world wide market of international holidays
and the average duration of stay of a cruise passenger.
- To study the social – demographic profile of a cruise passenger
- To prepare products to be offered to potential cruise tourists which includes specific,
structured itineraries, Port Infrastructure, the ship and the distribution channels.
- To assess the effect on marine life due to disposal of high level of waste products
- To study the aspects of safety against accidental risks and the threat of external forces.
This study report has analysed all elements of the cruise tourism sector as set forth in the TOR above,
duly consolidating the elements into the relevant macro aspects. The objective has been to develop an
understanding of the features, characteristics, demands and trends related to the cruise tourism market
so as to be able to develop appropriate strategies for developing the Indian Cruise Tourism market
The Executive Summary presents an overall view of the report and the main recommendations.
Chapter 1 focuses on a macro level analysis to enable a close understanding of the dynamics and
demands of Cruise Tourism in the context of international developments, precedents and trends
leading to an appreciation of the developments in the Indian cruise market that have implications for
the development of the sector.
Chapter 2 takes a close look at the Indian cruise tourism scenario with the objective of understanding
the nature and direction of developments that have taken place and initiatives that have been taken at
the government level to stimulate the sector. Assessment of the potential that cruise tourism holds for
India forms an important part of this chapter. A primary survey of high value domestic and
international tourists has also been undertaken to obtain direct feedback on certain critical and ‘soft’
aspects of cruise tourism. The results of this survey as also an analysis of the tourists’ perception and
feedback have been presented as part of Chapter 2.
Chapter 3 is in the nature of a critical appraisal of the preparedness of the Indian Cruise Tourism
industry to respond and meet the demand potential as assessed. It essentially examines the practical
aspects of developing cruise tourism market in the country such as developing the ports, the linkages
and connectivity that necessarily needs to precede any cruise tourism development initiatives. The
chapter presents an exclusive study of the key ports identified for cruise tourism in India to highlight
the current status vis-à-vis the cruise tourism objectives and draw the development imperatives
including the financial implications.
Chapter 4 analyses the strategic aspects related to the development of cruise tourism in India
emerging from an understanding of the international trends as well as the gaps identified in the efforts
being made in the country. The objective of this would be to evolve recommendations towards an
effective growth of this tourism sector in the country.
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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
The learning and conclusions that has emerged from the study has been summarized in Chapter 5 in
the form of salient and specific recommendations imperative for positioning India as a key cruise Port
of call’ as well as a ‘home port’ catering to global as well as domestic cruise tourists. The
recommendations are based on the studies made and conclusions drawn through the study and drawn
from international understanding and precedents.

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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India

ACKNOWLEDGEMENTS

At the outset, we would like to express our thanks to the Ministry of Tourism, especially the
Secretary, Mr.A.K.Mishra and Joint Secretary, Mr. Amitabh Kant for the valuable inputs given during
the presentation of our draft report.
The prepration of our report was invaluably aided by our interactions with the industry stakeholders
and participants. In particular, we would like to record our appreciation to officials of the Mumbai
Ports Trust including the Chairman, Ms.Rani Jadhav, Secretary, Ms.S.G. Tahiliani, Mr.Gautam De
and Mr.Sunil Deshmukh, Asst Docks Managers, for time they took off from their busy schedule to
share with us their invaluable experience and perceptions. It has enabled us to develop a complete
understanding of the Cruise tourism sector its status today and future potential in India.
We would also like to specially appreciate the inputs given by the Cochin Port Trust personnel
including Mr.Jacob Thomas, Chairman, Mr.Vipin R Menoth, Deputy Secretary, Mr.K.C.Kuncheria,
Traffic Manager.
Special thanks are also due to Mr Keki.M.Master, Vice President for J.M. Baxi & Co for providing us
support with all the ports related aspects and issues including the procedural aspect.
On the marketing front, important insight and understanding of the international and domestic cruise
market and the perceptions of the key tour and cruise operators were given to us by Mr Jimmy Sarbh
Chairman & MD South-Asia & Middle East for P&O Ports, Mr.Aakash Sheth, Director, Raj Travels
& Tours Limited, Mr.Gopi Iyengar Sr. Gen Manager of SOTC, Mr.Subair and Ms.Samira Ravel,
Sales Manager of Royal Caribbean International, Mr.Santosh Sukumaran, Sectional Head of
Marketing and Product Development of Travel Corporation (India) Pvt. Ltd., Ms. Sadhana Seth,
Manager of Thomas Cook and Mr. Jamon of Interglobe Cruises. Mr Anto T Joseph of The Economic
Times gave us important insight into the media side of the industry. We are thankful to them for
sharing so clearly their understanding of market developments in the cruise industry.
We would also like to place on record the support provided by Mr N.S.Rathor, Executive Committee
Member & Chairman, IATO Maharashtra and Goa Chapter for giving us an overview of the entire
procedural aspects, which helped us in identifying the impediments and providing recommendations
for the same.
We would like to give a special word of appreciation for the AC Nielsen ORG Marg Team for
undertaking the primary survey and providing the results with great efficiency.
Last but not the least, we would like to thank all the other industry participants with whom we
interacted during the field study, including government officials, travel agents, tour operators, media
for their perceptions and feedback.

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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India

EXECUTIVE SUMMARY

Cruise Tourism is becoming an increasingly popular ‘leisure choice’ worldwide


Cruises, which were at one time considered the prerogative of the rich, the only option for the aged
and the natural choice for honeymooners, is today fast reaching the wider leisure market.
Representing one of the fastest growing sectors worldwide, cruise market trends indicate a qualitative
as well as quantitative consolidation in the industry, with cruising gaining greater significance in the
global ‘tourism pie’ and successful seizing a significant ‘niche’ market.
Consider the following significant facts
Exhibit 1 : Cruise Tourism : Significant Growth Worldwide

• As per the office of Statistical and Economic Analysis, US Department of Transportation the cruise
industry tripled in size during the course of 1990’s. As of January 1st 2004 there were 339 active
ocean cruise vessels operated by cruise lines around the world, with the global fleet amounting to a
total of 10.9 million gross tons.
• Statistics given by the Lloyds Shipping Economists, March 2002, reveal that by the year 2000, the
cruise sector alone was carrying an estimated nine million passengers on 243 vessels. By 2001, it
was carrying 10.3 million passengers, which constituted 1.5% of global travellers who used cruise
liners making it a $15 Bn industry.
• Cruise Lines International Association (CLIA) reported an unprecedented 16.8 per cent annual
growth in passenger numbers in the US market alone.
• WTO reported that cruise ship passengers currently represent 1.4 percent of international arrivals
and are producing increasing amounts of revenues in all locations.

Asia has responded proactively to the global cruise tourism developments


The response of Asia to the global cruise tourism activity has been significant and very meaningful.
The Asia-Pacific region, which includes South Pacific, Southeast Asia, Far East & Trans-Pacific,
experienced a growth of 134% during the 1992-2001 period reaching a figure of 2.1 million nights
and a global market share of 3.5%. The heightened activity in Asia in building cruise ports and
terminals demonstrates the positive market trends and potential for cruise tourism in the region.
Exhibit 2 : Positive response to Global Opportunities

• Singapore became one of the fastest growing ports in the world through positioning its new Cruise
Centre and international airport as a real connecting hub for the region. In 1998, it opened its
cruise terminal, with a total investment of 13.8 million dollars for accommodating cruise ships of
up to 300 metres total length.
• The Middle East/Arabian Gulf/Indian Ocean represent the strongly emerging regions, marking a
growth of 88% in 2000, though it only represents 0.38% of world night stays growing from around
0.10% in 1992. Dubal is the leader in this region, having opened its new cruise terminal in March
2001 at a cost of 2.8 million dollars. Its major international airport and its close links with
Cunard/Seabourn are playing a major role in its development.
• Another important destination is Oman, with ports in Muscat, Salalah and Khasab in the
Musandam, which has had a cash injection of 26 million dollars.
• Asia’s strength lies in its many destinations and it is estimated that in the near future it will have the
critical mass of world category ports, enough to be able to offer its great cultural diversity. Other
significant investments in this region include the ports of Port Klang (Kuala Lumpur), Penang
(Malaysia) and Langkawi (Malaysia).
• Star Cruises, headquartered at Singapore, dominates the Asian market, with an order book of 1.28
billion dollars & exceeding 34,000 berths in 2004.
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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
India has a negligible share of this rapidly growing market
Internationally cruise tourist arrivals constitute 1.4 % of
2% of India’s Int’l Tourists,
the international arrivals. In India in the year 2000 we 0.6% of World Cruise Tourists
had around 0.056 million cruise visitors representing
2.11% of the 2.65 million international tourists who 56
visited India. This was an impressive increase of 133%
19 12 11 25 22
in cruise tourist arrivals in India in that year. However
2000 2001 2002 2003 2004 2005
the 9/11 WTC incident in the US and the SARS incident Indian Cruise Arrivals In ‘000s
in S.E.Asia saw a marked fall in cruise tourist arrivals
for the years 2001 and 2002. Cruise ship arrivals a tour
ports also significantly dipped. Today cruise arrivals 0.56x
constitute less than 0.5% of the country’s foreign
arrivals though the fact that international tourist arrivals 30 17
in India have shown a steady increase over the years 1996- 2001 2001 & 2002
proves that India has a lot of appeal in the international Average Cruise Liner calls at Indian Ports

market.

Cruise tourism potential for India is high


India today is poised for making a significant India’s vibrant economy supports growth in cruising
mark in the international tourism scenario. • Buoyant disposable incomes
WTTC projects India’s travel and tourism • Increasing outbound travel –6.8% cagr in last 5
industry to grow at CAGR of 7.5% upto 2014 years
much above the expected growth in South East • Business travel important part of outbound travel –
Asia and the world aggregate level. The WTO 29% #
• India’s 309 million domestic tourists formed
projects an annual average growth rate of 6.2%
43.9% of global tourist arrivals in 2003
in South Asia over a larger timeframe till 2020. India’s Demographic features significant
To realise this growth target, it would be • “Middle class” over 150 Mn in 2004
essential for India to explore all avenues • Rupee Millionaires > 2,00,000
escalating tourism activity in the country • 22% Indians spend > USD 2000 per trip abroad
including the extremely attractive area of cruise • Indians rank 9th on Singapore's visitor arrivals, are
tourism in which the country has much to offer. 3rd highest revenue-generating market

• India’s reputation as an enchanting, exotic, historic and beautiful destination would enable the
country to make an instant international cruise positioning and move into the ‘cruise destination’
market. Cruise operators and liners are more than ever searching for new destinations and
itineraries.
• India’s long coast line and strong port positioning imparts a natural advantage to the country to
attract international cruise lines.
• India’s positioning in South East Asia and its proximity to already popular cruise destinations
would enable strong cruise circuits to be created over a period of time.
• India’s strong domestic tourism sector would enable the country to achieve a strong domestic
cruise sector that could complement the growth and support viability.
• India’s impressive growth in the tourism sector would impart an important advantage to its cruise
tourism positioning mutually strengthening each other.
• The cruise ports selected for development are also strong tourism states, especially Kerala, Goa
and Chennai. This could provide an important platform for cruise tourism to takeoff.

India has many lessons to learn


To benefit from her natural strengths, it would be crucial for India to learn important lessons from
global precedents in the cruise sector as well as integrate this learning with the tourism sector lessons
derived over the past decade.
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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India

Exhibit 3 : Global Lessons

- Globally the cruise industry is a horizontally concentrated market with 4 large players holding
more than 81% of the world supply of berths, more than 17 brands and 114 ships.
- The cruise tourists represent a rich and demanding category with high expectation regarding
comforts aboard the liner, variety of activities on board, a variety of destinations at every port,
state of the art conveniences during transit and a ‘seamless’ travel.
- Short 2 to 5 days cruise have growth 7.5 times in the period between 1980 and 2003, showing the
highest growth trend internationally
- Cruise liners have equally high requirements from the ports at which they call, principal
expectations being proximity of access to major markets, quality and availability of port
infrastructure and services, competitive cost of port services, capacity of the port to accommodate
and process high volumes of passengers efficiently and the quality of the destination in terms of
shore based attractions available.
- International ports have dedicated cruise terminals designed to satisfy the cruise liners and the
cruise tourists.
- As per research conducted by leading cruise industry associations, Cruise passengers are high
spenders with international average working out to $ 94 per cruise tourist per port.
- Sustained product development in line with global demand trends, strategic positioning and
marketing backed by consolidated investment in infrastructure and a strong human resource
network are sine-quo-non to success in the cruise sector
- It is a ‘supply driven’ market with capacity driving the market, because cruise liners are ever in
search of new markets, new itineraries and new destinations. If adequate facilities, services and
infrastructure are provided, that will in turn attract more and more cruise operators to the shores
- Internationally aviation developments are impacting positively on cruise tourism with air gateways
impacting on time & accessibility, easy connectivity to regional tourism destinations and variety
and brand

Indian Ports would need to gear up for the challenge


Ports constitute the core infrastructure requirement of the cruise sector. If India wishes to integrate her
position in this market Indian ports would have to meet internationally accepted standards of port
infrastructure, passenger services, linkages, other conveniences and amenities. Internationally, cruise
terminals are similar in facilities and services offered to tourist at airports. Whereas the major airports
in India are designed to international standards, most of the Indian ports lack dedicated facilities for
cruise tourism and do not offer the basic standards or the amenities expected.
Cruise terminals represent the entry point of the cruise tourists into various tourism locations and offer
important opportunity to market the country’s brand, its culture, heritage, cuisine and other offerings.
Cruise tourism development would be impossible without all strategies being preceded by an
integrated and sustained development of the identified cruise ports. Examples from Singapore and
Dubai have shown that developing quality cruise terminals are imperative for stimulating growth in
cruise tourism.
As per estimates developed the total investment required would be approximately Rs. 105 crores for
each cruise terminal with development of new berth and approximately Rs. 70 crores, in case of
renovation of an existing berth.

Market Trends indicate sound potential for Indian Cruise Tourism


Demand for Indian Cruise tourism would arise from 4 segments
◊ The Foreign Tourists who represent the International Arrivals into India would offer the
greatest potential representing tourists who are already interested in India as a destination and
for whom the Cruise would be another mode of seeing the country.

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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
◊ The Indian Outbound Tourists who travel out of India also offer a high potential because of
their interest in foreign travel and would be very open to the idea of taking a cruise from India
that visits foreign destinations.
◊ The Indian Domestic Leisure Tourists, represent active high value domestic leisure travellers
who are active travellers inside the country and can be effectively targeted to take a cruise.
◊ The current Cruise Tourists, both International and Indian, would be good targets. It is known
that cruise tourists are repeat travellers and therefore offer a great potential. Current cruise
tourists, who form part of the existing & future cruise tourism market, can be attracted by
creating new itineraries and destinations in India.
Assessing the potential from each of these segments based on current trends and forecasts it is
estimated that by the year 2010-2011 India can expect a market size of 184,710 cruise tourists and by
the year 2030-31 a market size of 1.2 million cruise tourists. These are conservative estimates and the
actual potential may be much higher depending on the infrastructure developed and the marketing
efforts undertaken.
Taking a conservative estimate of each tourist spending 2710
US$ 45 per port (as against the international average of 6.59 x
US$ 94 per tourist per port), it is estimated that this
cruise potential will translate to an earning of Rs. 411.
44 million in the year 2010-2011 and Rs. 2710.37
million in the year 2030-2031. The cumulative total 411
earnings from cruise tourists & crew during the period
from 2005-06 to 2030-31 is estimated at US$ 599
million (Rs. 26980 millions). 2010-11 2030-31
Rs In million
Considering the tremendous boost that cruise activity
would provide to the domestic GDP through increased CUMULATIV E TOTAL EARNINGS FROM
spending on various aspects, the one-time investment on CRUISE TOURISTS & CREW DURING THE
creation of cruise facility would be justifiable. PERIOD FROM 2005-06 TO 2030-31 IS
ESTIMATED AT US$ 599 MILLION (RS. 26980

Indian Cruise Terminals would need to be viable


The preliminary viability analysis carried out for cruise terminals in India show that viability is highly
sensitive to the levels of tourist traffic as also the tourist spend. This makes the viability marginal
especially in the initial years, leading to the conclusion that cruise terminals may require financial
support in the form of subsidy or other viability gap funding measures. This would essentially be a
project to project decision arising out of the detailed feasibility carried out for each of the terminals
prior to initiating privatization measures.

Feedback from our domestic and foreign tourists


The market survey undertaken among Indian and visiting foreign tourists has given important
feedback on the market perceptions, chief among which are
◊ Both domestic and foreign tourists find “the chance to see many places” to be the most
attractive thing about going on a cruise.
◊ Domestic tourist are keen to include foreign destinations in the cruise circuit whereas foreign
tourist are satisfied to see India through India Cruises.
◊ Goa, Cochin and Mumbai are the three ports that are considered best for cruise tourism in
India.
Goa is the most attractive destination amongst Domestic Tourists &
Cochin is the most attractive amongst Foreign Tourists
◊ While on a cruise, foreign tourists give utmost importance to the food & cuisine, where as, for
Indian tourists the cruise liner itself is the most important.
◊ Fast immigration & transit through the port is the topmost priority for both foreign and
domestic tourists.
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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
◊ The most preferred cruise circuits among the tourists are:
Mumbai- Cochin – Kerala Backwaters, for Foreign Tourists
Cochin - Goa - Lakshadweep – Male, for Domestic Tourists.
◊ Foreign tourists consider building international cruise terminals & making India more tourist
friendly to be the most important initiatives to position India as a cruise destination, while
Domestic tourists give importance to creating good destinations at the ports of call.
◊ Among domestic cruises, Goa Sea & River Cruises are perceived to be the most attractive by
the domestic tourists whereas the Kerala Backwaters cruise is most highly rated by the foreign
tourists.
The tourist feedback on these and other aspects may be taken into account in designing the circuits

Key Strategic Imperatives : What India would need to do


While the cruise industry has reached a fair level of maturity globally it is as yet in its infancy in
India. As such India would be entering into a market already dominated by strong cruise tourism
players and markets. Summarized below are the key recommendations for development of cruise
tourism in India. These have emerged from our market interactions and also from the learning we
have derived from the study.
1. Create the Cruise Terminals
◊ Develop good infrastructure at identified Ports
o Phase 1 : Create dedicated cruise terminals at Mumbai, Cochin and Goa & Upgrade
port facilities at exotic locales like Lakshadweep & Andamans and Chennai
o Phase 2 : Create dedicated cruise terminals at Chennai, Mangalore and Tuticorin and
Explore potential of other ports like Porbandar & Kandla in the West Coast: and
Vishakapatnam, Calcutta & Paradeep in the East Coast
◊ Recommendations to reinforce port development
o Cruise Terminals should be an integral part of Port Master Plans
o Dedicated terminals would need to address security concerns and facilitation
o Terminal Plans would need to be developed in consultation with key players
o Initiate Feasibility Studies
o Structure bankable PPP Options
2. Create the Product
◊ Design attractive cruise circuits
o Design theme based cruise circuits
Exploiting existing tourism/coastal destinations
Linking foreign destinations depending on cruise design, theme and logistics
◊ Recommendations to reinforce cruise design
o Select circuits related to port development should be responsibility of Ministry of
Tourism. The Ministry of Tourism, should earmark a dedicated fund towards
Hinterland tourism development
Tourism related Infrastructure and linkages
Viability gap funding
o Quick connectivity to other destinations/ attractions/ tourism locations to increase
choices
Access to heritage locations, monuments, natural features, tourism destinations
that lie in proximity to the cruise ports such as linking Mumbai Port to the Taj,
Mangalore/Cochin Port to Hampi, Goa Port to Somnath/Dwarka etc.
o Creating port wise & region wise destinations
o Create and position river cruises to complement and strengthen cruise tourism
development
Link cruise terminals to river cruises that connect significant destinations

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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
Plan river cruises in sync with the larger Inland Water Transport development
plan of the Ministry of Shipping
Link river cruises with ecotourism and rural tourism, both of which form a
priority area for tourism development in India & are great attraction for foreign
tourists.
3. Create the positioning : India as a ‘MUST SEA’ destination
◊ Develop Brand Cruise India as an umbrella brand
o The key ‘brand message’ underpinning the Indian brand will be ‘diversity in
harmony’, ‘more for less’, ‘value for money’ must ‘sea’ destination underlining
Value for money, for both cruise lines and passengers, given the $ and Rs
exchange rates
Safe and friendly
Exotic, offering a blend of heritage, natural beauty, art, culture, cuisine &
adventure
o Build destination brands into the core brand
◊ Position theme based circuits targeting niche segments
o For domestic/outbound tourists – highlight foreign/exotic destinations
o For foreign tourists – highlight world heritage, history, health
◊ Recommendations to reinforce positioning
o Develop an effective media campaign
Audio-visual presentations and films, out-door advertising, organizing events &
exhibitions, preparing attractive brochures, leaflets, posters, hand-outs, TV inserts
etc.
o Participate and create visibility in International forums
Road shows, trade fairs, exhibitions, seminars etc and entering into tie-ups with
proper bodies, participation in International Sea trade Shipping conferences,
conventions, trade shows, promotional fairs
o Establish dialogue with all the four key players
o Develop a greater ‘ Indo-Asian’ alliance to attract cruise shipping to the region
Access to different tourism product to incorporate into regional packages
Access to other expertise and processes in Port management and services
Development of consistent management policies and quality assurance processes
across key regional ports to control the cruise line experience enroute.
4. Create the Experience
◊ Create ‘cruise friendly’ ports
o Position cruise ports as the entry points, promotional platform and first experience of
India;
Ensure positive, memorable ‘port experience’ hassle free ‘seamless’ travel
◊ Recommendations to reinforce experience
o Simplify procedures to reduce harassment at Ports
Streamline clearance of tourist and baggage at Customs, using electronic
machines wherever possible.
Immigration officers can board at previous port of call and finish formalities en
route
Visa requirements may be done away with – eg Colombo, Singapore
Expedite issue of passes
Simplify health checks and clearances
o Develop a ‘tourism’ approach (‘6S’) at ports
Swagat, Soochna, Suvidha, Suraksha, Sahyog, Sanrachna – ports authorities
would need to address and underline these six aspects while undertaking cruise
terminal development and maintenance.
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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
5. Build the capacity
◊ Focus on ‘Software’ & ‘hospitality’ face of cruise tourism
o Identify personnel to be trained would have to be identified such as:
Ground Staff including baggage handling staff and officials in charge of various
procedures
Other Terminal staff including shopkeepers, staff at information kiosks, tour
guides, travel agents etc
Other interface personnel especially the police and taxi drivers
o Formulate programmes covering the key training areas relating to:
• Awareness of cruise tourism & tourist
• Communication & hospitality
• Tourist safety & security
• Services Management
• Environmental aspects
◊ Recommendations to reinforce capacity building
o Training responsibility may be given to the tourism department
o Structure focused programmes aimed at awareness building and skill development
• Training for immigration and customs officials
• Communication programmes for all
• General awareness building and sensitization campaigns
• Workshops to police, taxi drivers, security personnel
o Contact Foreign Universities conducting training for approach & structure
• Southern New Hampshire University and the Bremerhaven University
o Consider ‘accreditation’ as a tool to improve quality and surveillance
6. Create the Policy and Institutions to support development
◊ Evolve a ‘national policy’ for cruise shipping.
◊ Establish a ‘national agency’ to spearhead the Initiative
o Cruise Tourism Council/Board
• Having representatives from major ports, department of shipping, Department of
Tourism, industry stakeholders to represent all interests
• Dedicated to the promotion of cruise tourism
• Equitably representing interests & concerns of all the agencies
• Discharging multi-disciplinary and coordinative functions

Key Success Factors for India


The following are the bottom-line factors which would determine success for India:
1. Bringing cruise ships to Indian shores
It would be imperative for India to attract the existing cruise ships to India. Today there are
around 315 vessels cruising around the world. Taking the routes into consideration, there are
around 150 ships which can ‘call’ at India ports, during the off-season in their typical routes, such
as vessels plying from US West coast to Hong Kong, Singapore to SE Asia &
Gulf/Mediterranean, South Africa to US East Coast. India’s strategy would lie in ‘pulling’ these
cruise vessels to our shores by creating the necessary infrastructure & attractions, positioning,
linkages and affiliations.
Similarly, India can also try to woo the cruise operators position one or two of their cruise ships in
India, using the Indian Ports as ‘home ports’. The example of Star Cruise proves that rather than
bringing new cruise ships, the objective would be to attract existing cruise ships, cruise operators
and cruise lines to adopt India either as a turnaround port or as a home port.

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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
2. Developing River cruises to support cruise tourism
Like Europe India has destinations in its interiors many of them which are connected by beautiful
rivers. Developing River cruises that connect these destinations would not only create the access
that is so important for cruise tourism, but would also enable India to strongly position its tourism
destinations and its exotic heritage.
India’s strategy in creating river cruises would lie in
o Linking cruise terminals to river cruises that connect significant destinations would
stimulate cruise ships to touch India for the sake of the destination. For example, Sarnath,
the key Buddhist pilgrimage destination, lies on river Ganges. Offering this as a river
cruise would be a powerful stimulus to the large base of Buddhist tourists who come to
India from Asia. Linking this to one of the cruise terminals would ensure that the cruise
ships from the Buddhist countries – especially Japan, China - come to India.
o Planning river cruise development in sync with the larger Inland Waterways Transport
development plan of the Ministry of Shipping while also relating it to the larger tourism
potential and proposed cruise terminal development.
o Linking River cruises in India to ecotourism and rural tourism, both of which form a
priority area for tourism development as many of the rivers in India link to interior
villages, rural areas, exotic locations, forests, sanctuaries etc.
Some of the river cruises could be linked to adventure activities like rafting, sailing, river crossing
etc. while certain other river cruises could offer other entertainment elements, refreshment,
pleasure trips, floating restaurants or guesthouses, local sightseeing, nature watching, safaris
across forests, sanctuaries etc.
3. Making Cruise terminals into vibrant destinations
India should develop cruise terminals that not only provide positive experience to the passengers
but also act as ‘gateways’ to the wider tourism offering in the hinterland/region. The more tourism
product a cruise terminal is able to offer within the shortest possible time, the more successful it
can be as a ‘port destinations’.
The first imperative is that world-class facilities cruise tourists are used to and look forward to be
made available at Indian Ports. Despite the fact that the investment may not yield adequate returns
in the near future, it is felt that unless this is done, it will not be possible to promote and market
India as a cruise destination. Huge investments required to develop requisite cruise infrastructure
at ports can be justified on grounds of broader economic benefits to the nation.
Secondly, Cruise terminals should be made into mini tourism destinations much like a tourist
village showcasing India’s art and handicrafts, ethnic bazaars, a small museum offering a birds
eye view of the tourist attractions of the region, food stalls with typical Indian cuisine, children’s
play area etc. It should effectively promote the ‘India Brand’ while simultaneously increasing
commercial and business potential of the terminal.
Thirdly, the cruise terminal should also act as a gateway to the tourism offering of the region, thus
becoming a destination in itself. Thus, for the cruise traveler, in addition to the cruising
experience and the infrastructure and facilities at ports during port visits, the destinations covered
and the general experience within the country/destinations visited would form a critical part of the
overall product expectation. Hence it would be important to create links to significant
destinations, heritage locations and natural features with the port so as to enable a special and
varied experience that is holistically ‘Indian’. This would also help to link the development of
tourism in India to the development of cruise tourism, helping to synergize each with the other.
The following would be essentially to provide the connectivity required to link to tourism
offerings to cruise ports:
Ž Connectivity through small and feeder aircrafts
Ž Connectivity through river cruises and exploiting inland waterways
Ž Connectivity through road transport where distances are not prohibitive
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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
4. Fulfilling of responsibilities by Stakeholders
The responsibility for developing Cruise tourism is spread over various agencies. Unless the
commitment is also shared among these agencies Cruise Tourism development will not take off in
India.
Exhibit 4 : Stakeholder Responsibilities
Ž The Ministry of Shipping, being the apex body, would need to look at the macro level
policy/approvals/incentives issues, its role essentially being to develop proactive policies to simplify
procedures while looking at pioneering initiatives to develop new products like river cruises to
support the overall development.
Ž The Port Authorities would be directly responsible for all aspects related to the development and
operations of the Cruise Terminals, including initiating suitable/positive measures to initiate bankable
Private Sector Participation in the development of Cruise terminals.
Ž The Ministry of Tourism should act in its areas of strengths which would include synergistic
hinterland/regional tourism development to support cruise terminal development as well as giving
financial support where necessary, creating tourism related infrastructure and linkages and enabling
the necessary capacity creation to service the sector.
Ž The State departments of tourism would have responsibility for tourism development within the State
including State level marketing efforts & coordination for creation of circuits.
Ž The private sector would bring in the typical efficiencies related to the sector for successfully funding
and managing the cruise terminals, operating & managing all facilities, tourism related infrastructure
in the hinterland & the tourism related services – restaurants, hotels, other accommodation, travel and
trade, communication, publicity & marketing
Ž The Ministry of Environment and Forests would play proactive role to enable the development of
Cruise tourism in environmentally sensitive areas including sound policy measures,
framework/guidelines for environmental compliance, provide approvals etc subject to meeting certain
basic environmental standards & stipulations and other quality certification measures etc.

5. Making Private participation happen


Like the new civil aviation policy, the cruise
tourism policy of India should stress the Possible private developers who would be
need to ‘change the traditional concept of ready to get involved in developing cruise
terminals, may be any one or a combination of
terminal development, ownership and
the following:
operations’ and underline active Ž Cruise Lines/Cruise Operators
‘participation’ of all private stakeholders. Ž Cruise Terminal Operators
Since the development of the cruise Ž Port Operators
terminals in each region would be closely Ž Hoteliers/hospitality players
linked to tourism development and circuits Ž Large entrepreneurs in Tourism/other
in the region, it would be possible to develop businesses
a viable model wherein development of the Ž Private Airlines
cruise terminals could happen through Ž Other private stakeholders
participation of the stakeholders.
Smaller stakeholders like tour operators, travels agents, shipping services agent etc would also be
interested in participating in cruise terminal development, however, they may not have the finance
to take it up independently. Accordingly, their participation must be explored in a consortium
model where they tie up with the larger player in the investment while gaining special privileges
in the development.

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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India

6. Carefully resolving Cruise tourism development in environmentally sensitive areas


Since many of the interior beautiful areas in
India are sensitive areas such as sanctuaries, • Drawing up plans for development of cruise
coral islands, forests, mangroves etc, it is tourism, ecotourism, rural tourism in
imperative that India should have a clear policy environmentally sensitive areas
on developing cruise terminals & hinterland
• Drawing up guidelines for the reference of
tourism products in environmentally sensitive other agencies which could be used in the
areas, such as Lakshadweep, Andamans & implementation of all projects related to
Nicobar, Sundarbans etc. while ensuring cruise tourism
environmentally protective measures within the
• Drawing up a system of quality certifications
Indian territorial coastal limits. In this regard the
providing the minimum compliances for
Ministry of Environment and Forests would play basic certification and right to operate and
an important role in conjunction with the other further higher levels of compliances to
agencies responsible for cruise tourism obtain quality certifications
development.
7. Making cruise Ports & terminals tourist friendly
Last but not the least, it would be imperative for India to simplify procedures to reduce
harassment at Ports through a few focused measures:
Ž Streamline clearance of tourist and baggage at Customs
Ž Immigration officers can board at previous port of call and finish formalities enroute
Ž Visa requirements may be done away with – eg Colombo, Singapore
Ž Expedite issue of passes
Ž Simplify health clearances
The cruise ports would need to develop a ‘tourism approach’ at ports duly stressing the ‘6S’ of
tourism development which would include Swagat, Soochna, Suvidha, Suraksha, Sahyog,
Sanrachna

Way Forward : The immediate steps


While detailed action plan has been proposed in the report the following would constitute the
immediate steps:
Ž Evolve a comprehensive cruise policy
Ž Develop the Institutions needed to support initiatives
Ž Undertake pilot feasibility studies for identified cruise terminal development
Ž Develop Phase 1 projects along with cruise circuits
Ž Initiate dialogue with four key players – involve the players in policy and planning decisions

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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India

1 GLOBAL CRUISE TOURISM INDUSTRY PROFILE

1.1 HISTORICAL BACKGROUND


We present below an understanding of the historical cruise tourism background that reveals how the
social, political and technological trends have importantly affected the growth and adaptation of the
sector.
Passenger crossing as part of Mail Service
Cruise tourism made its small beginnings in 1839 as part of the fortnightly crossing mail service
between Liverpool and Boston. Samuel Cunard obtained a British Admiralty contract of 55,000
pounds to provide a mail service and started his ‘British and North American Royal Mail Steam-
Packet Company’ later known as the Cunard Line. The inaugural sailing carried 63 passengers along
with the mail and constituted the first regularly scheduled trans-North Atlantic passenger service.
Almost 58 years later, technological advancement in the form of the steam turbine propulsion
technology enabled bigger and better vessels to be launched. In 1907 Cunard introduced a new
30,000-ton class of liner, the Lusitania and Mauretania, marking the beginning of leisure passenger
travel on the seas.
The twentieth century witnessed other European countries compete for progressively larger and faster
passenger ships: Germany's Hamburg American Line with the ‘Imperator’, ‘Bismark’ and ‘Vaterland’
and the French Line's ‘France’ to name a few. These ships provided three classes of service; first,
second and steerage. The first catered to the elite and rich, the second to the white-collar working
people and the steerage to the relatively poor. The mass immigration of both rich and poor to America
which began during these years provided the bulk of the trans-North Atlantic traffic.
Impact of the Immigration Limitation Act, 1920
With the passing of the Immigration Limitation Act in 1920 by the United States Congress,
immigration traffic was vastly reduced with the ‘steerage’ space going vacant in large liners. To fill
this void and to foster American tourism abroad, a brilliant marketing scheme was devised. New
accommodation named ‘Tourist Third Cabin’ was offered, the space was enhanced, a few more
amenities and services were added and offered to the American middle & working class and college
students with a flare for adventure. The idea was a success and immediately the traffic became 80%
American and remained so to the end of the year-round regularly scheduled trans-North Atlantic
crossings era.
Passengers become tourists & ships become floating resorts
The increasing travel demand through the 1950's and into the 60's kept the liners busy crossing with
tourists from both continents. Gradually the concept of ‘tourist ship passengers’ was enhanced with
value additions to the accommodations and activities : shuffleboard, deck tennis, a walking deck,
inside swimming pool, skeet shooting, miniature golf, dancing space, comfortable deck chairs with
blankets, kennels for dogs, costume parties, games, quizzes etc. were gradually added. Interior designs
became elaborate with expensive murals, draperies, wood, marbles, and glass.
When the majority of the trans-Atlantic passengers became tourists, the crossings became more
festive for the enjoyment and entertainment of passengers. Ships became more like floating resort
hotels than mere containers. The object still remained to cross, but the theme was to enjoy it.
World and exotic area cruises
This theme was even more prevalent on ‘world and exotic area’ cruises that grew in parallel to the
trans-Atlantic crossings and became a dominant model with the gradual decline of the Atlantic ship
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Ministry of Tourism, Government of India
crossing market. The technological revolution of the jet airliner was the next event that importantly
changed the nature and clientele of the exclusive world and exotic area cruise markets. Knute Kloster,
a Norwegian, was one of the first to recognize this fact and established Norwegian Caribbean Line
(NCL), later renamed Norwegian Cruise Line. Cunard and Holland America were providing regularly
scheduled world cruises in the 1960's and were beginning to develop certain regional areas for
seasonal trade, for instance, Alaska. Cunard's Queen Elizabeth 2, and Holland America's Rotterdam V
christened in 1965, sail popular annual world cruises with a faithful clientele often repeating this
three-month voyage again and again. Today several cruise lines have their fleets deployed seasonally
in both hemispheres to provide annual fair weather cruises in all global tourist regions.
More ships and lines
In response to the growing market demand, the ships grew in size as well as number with the result
that the number of lines and ships gradually outgrew existing port capacities leading to the growth of
new ‘sister’ ports. For example, to supplement the port capacity of Miami, Fort Lauderdale developed
as a sister cruise embarkation port. San Juan in Puerto Rico became the centre for the Southern
Caribbean and Panama Canal cruises. World cruising and cruises to Alaska, Hawaii, the South
Pacific, Europe, and the Orient expanded rapidly along with the Caribbean.

1.2 MARKET GROWTH AND DIRECTION


Worldwide market trends indicate a qualitative as well as quantitative consolidation in the cruise
industry, with cruising gaining greater significance in the global ‘tourism pie’ and successful seizing a
significant ‘niche’ market.
1.2.1 Statistical Highlights
The following statistical highlights that reveal the growth trends in the global cruise tourism industry:
• Over the last decade, the cruise industry has been one of the fastest growing sectors in the
international tourism industry and during the course of 1990’s, the industry tripled in size. As of
January 1st 2004 there were 339 active ocean cruise vessels operated by cruise lines around the
world, with the global fleet amounting to a total of 10.9 million gross tons.1
• Statistics reveal that by the year 2000, the cruise sector alone was carrying an estimated nine
million passengers on 243 vessels.2 By 2001, it was carrying 10.3 million passengers which
constituted 1.5% of global travellers who used cruise liners making it a $15 Bn industry.3
• Cruise Lines International Association (CLIA) reports an unprecedented 16.8 per cent annual
growth in passenger numbers in the US market alone.
• Following the events of 11 September 2001, passenger numbers fell dramatically due to resistance
to air travel (to reach cruise-ship ports). However, as per WTO reports, the industry returned to its
previous buoyancy, but with a more moderate growth rate. Cruise ship passengers currently
represent 1.4 percent of international arrivals and are producing increasing amounts of revenues in
all locations. 4
1.2.2 WTO Market Trends
The following market trends, as reported by WTO, significantly underlines the potential and direction
of growth of the cruise tourism market:
• The market is still primarily driven by a rapidly ageing world population as cruising is still largely
undertaken by people at or near retirement age. However, key trends reveal ‘signs of a broadening
demography of younger people looking for shorter, high quality, cruising experiences’

1
Source: Office of Statistical and Economic Analysis Maritime Administration, US Department of Transportation
2
Source: Lloyds Shipping Economists, March 2002
3
Source: CRISIL Analysis
4
Source: WTO Report
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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
• The cruising market is still in its infancy in an essentially developing phase that offers major
prospects for growth as it reaches maturity. The longer-term outlook for the industry is robust.
• A key feature of importance is that the size of the cruise vessels is becoming larger, in part to
augment the capacity and the other to replace older vessels with high operating costs to cash in on
the economies of scale.
• Europe is one of the fastest growing markets, offering larger population base yet to reach the
levels achieved in North America.
• Asia is the fastest growing region in terms of cruising industry. The origin of these passengers
shows a dominance of the ASEAN passengers in cruising vis-a-vis that of other markets.
• Between 1997 and 1999, the world’s major cruise lines had reportedly committed to investing
US$ 7 billion on 27 new ships which was more than the industry’s annual worldwide revenues
then, thus showing a positive growth trend ever since.
1.2.3 Recent Growth Trends
Although relatively young, the cruise industry is currently valued at US$15.3 billion. The industry is
expected to carry in excess of 17 million passengers by 2010; an increase of 70% on 2000 and 54% on
2002. This huge growth in the market over the last two years is due to continued expansion, with
berth numbers ballooning 77% over the last four years. 5
Region -wise Demand Trend
In 2000 the worldwide demand had reached 9.61 million passengers. Exhibit 5 details the evolution in
the period between 1989-2000 indicating a clear increase in the growth of these holidays with the
demand growing by as much as 50%.
Exhibit 5 : Region-wise Statistics

World-wide cruise demand (in millions)


Region 1989 1991 1993 1995 1997 1999 2000
North .America 3.29 4.00 4.48 4.40 5.05 5.89 6.88
Europe 0.53 0.70 0.88 0.97 1.36 1.79 1.95
Rest of the world 0.20 0.22 0.25 0.30 0.46 0.85 0.78
TOTAL 4.02 4.92 5.61 5.67 6.87 8.53 9.61
Source: WTO Report and CRISIL Research

As per WTO estimates, it is expected that this trend would be maintained in the future with the
demand from North America and Europe poised to surpass 13 million passengers towards the end of
the first decade of the 21st century.
One of the key features of the demand trend for cruises, as highlighted by WTO, is that it is supply
oriented, thus demand being driven by supply and growing in response to supply increases.
Passenger Growth Trend
Exhibit 6 shows the growth trend of the North American cruise industry in terms of passengers over
10 years from 1994 to 2003. The North American industry forms 71% of the worldwide cruise
demand (as seen in the earlier table) and is consequently an important indicator of world trends. The
average growth rate from 1980 to 2003 is 8.1%, thus throwing light on the potential that exists in this
sector.

5
Source: WTO Report
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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
Exhibit 6 : Growth Trend in the North American Cruise Market

Year No. Of Cruise Travelers (000’s)


1994 4448
1995 4378
1996 4656
1997 5051
1998 5428
1999 5894
2000 6882
2001 6906
2002 7640
2003 8195
Source : CLIA

Region –wise Supply Trend


Exhibit 7 shows the accommodation capacity provided by the cruise sector. From the figures given
below, it can be seen that the cruise industry represents just 0.6% of the world’s accommodation
capacity. In order to understand the importance of the cruise sector, the following aspects other than
the figures must also be considered.
◊ The optimism that the operators have demonstrated is reflected in their order books that stood
at over 14 billion dollars approximately.
◊ The present and expected growth rate stands at 8% per year approximately
◊ Consumptions by tourists at respective destinations
◊ High value addition of cruises
◊ Development of new destinations of land based tourism due to a trend towards returning to
the destination.
Exhibit 7 : Accommodation capacity measured in thousands of berths

Region 1980 1990 1998


Europe 8,542 9,824 11,869
America 6,436 8,616 10,329
East Asia & the Pacific 763 4,798 6,974
Africa 269 665 855
Middle East 141 319 442
South Asia 126 222 343
Total 16,277 24,444 30,812
Cruises (*) 45 93 177
Source: CRISIL Research and WTO Report

Market Share (%) of the Four Majors in destination regions


Exhibit 8 shows that there is a trend towards horizontal concentration with the process of
globalisation. Europe is the only region in which the four main cruise line groups do not control 50%
of the market share.
Exhibit 8 : Market Share of the four major Cruise Operators

Group Caribbean Alaska Europe Far East


2000 1999 2000 1999 2000 1999 2000 1999

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Ministry of Tourism, Government of India
Carnival 37.8 38.5 31.2 31.0 23.6 19.1 0.4 4.5
RCC 25.7 24.0 23.7 25.0 4.1 3.8 0.2 0.5
P&O Princess 5.9 5.5 29.0 32.0 9.1 5.8 3.5 3.5
Star Cruises 7.5 7.0 12.9 9.0 4.3 3.1 74.4 66.0
Total Share 76.9 75.0 96.8 97.0 41.1 31.8 78.5 74.5
Source: WTO Report

Seasonal Trends
Cruising seasons form an important aspect of the cruise industry, being as or more important a
determining factor just as it is for tourism at land destinations. Exhibit 9 and Exhibit 10 outline the
key seasonal trends in the major world cruise regions.
Exhibit 9 : Global Seasonal Trends – October to March

October-March
The Mediterranean

Western Mexico

Asia-Pacific
Caribbean
Indian Ocean

South America

Exhibit 10 : Global Seasonal Trends – April to September

April-September

Asia Pacific
Caribbean
Atlantic Europe

Mediterranean
Alaska

Western
Mexico

The following observations can be made from the exhibits given above:
◊ The Caribbean is the busiest cruise region especially during the winter months in the northern
hemisphere.
◊ Following the Caribbean, the Mediterranean region is important from April to September
◊ Atlantic and Alaska also experience a surge during April to September, but to a lesser degree
◊ The share in the Asia Pacific region is also significant indicating the potential and the
foundations for strong developments in the region.
Order Book
As per WTO estimates, on 31st January 2001 the order book was at its highest figure at 18.5 billion
dollars, 53 new ships and 98,162 additional berths. However, despite the September 11 attack later the
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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
same year and an economic downturn, there was only a slight reduction in the same quantities in
November 2001 where the order book stood at 14.8 billion dollars, 41 new ships and 79,658
additional berths thus indicating the strong business commitment towards this particular sector.
1.2.4 Market Share vis-à-vis Tourism Industry
The world demand for international trips during the period of 1990-2000 grew at an annual
cumulative rate of 4.3%. During the same period the cruise market grew at 7.9%. The capacity of sea
cruises measured in berths is 0.6% of the whole of available hotel space worldwide.
Exhibit 11 shows that the cruise industry arrivals form 1.4 % of the international arrivals. It throws
light on the economic weightage in terms of potential for growth of sea cruises rather than just their
relative weight in the tourism Sector.
Exhibit 11 : International Arrivals vis-s-vis Cruise Arrivals

Region 1980 1990 2000 2001


Europe 2121.0 282.7 403.2 400.5
America 64.3 92.8 128.3 119.3

East Asia and Pacific 31.1 54.6 110.6 114.9


Africa 9.7 15.0 27.6 28.5
Middle East 7.5 9.0 21.2 19.4
South Asia 2.5 3.2 6.4 6.0
Total 327.1 457.2 697.5 688.5
Cruises N/a 4.5 9.6 N/a
Source: WTO Report

1.2.5 Global /Regional Players


There are many players in the Cruise Industry but majority of the market is essentially dominated by
the Big Four namely the Carnival Corporation, Royal Caribbean International, P&O Princess and Star
Cruises Group. Exhibit 12 shows the summary of the world’s most important Cruise Lines.
Exhibit 12 : Main Cruise Liners that offer Sea Cruises (January 2002)
4 Main Groups USA and Europe Asia
Canada
Carnival Royal P&O Star
Corporation Caribbean Princess Cruises
Cruises Group
Carnival Royal P&O Star Cruises Clipper Louis Cruises Indian
Cruise Lines Caribbean Cruises Ocean
(CCL) /international Royal Cruises
(RCI) Olympic
Cruises
(ROC)
Holland Celebrity Swan Norwegian Silver sea Festival Cruises NYK
America Line Cruises Hellenic Cruise Line Cruises Cruises
(HAL) (NCL) Star Clippers
Windstar P&O Orient Lines Crystal Saga Cruises Mitsui
(Australia) Cruises OSK
Costa Princess Disney Airtours Sun Japan
Crociere Cruises Cruises Cruises Cruise Line
Cunard Aida Cruises Radisson Thomson Hyundai
Seven Seas Cruises
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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
Seabourn Residen Sea Fred Olsen
Cruise Line Page and Moy
Hapag Lloyd
Peter Deilmann
Club
Mediterranee
Nouvelles
Frontieres
Mediterranean
Shipping
Cruises
Valtur
Spanish Cruise
Line
Pullmantur
Cruises
Vistamar
Canarias
Source: WTO Report
Carnival Corporation has a market capitalisation of over 15 billion dollars (2001), which gives us an
insight into the economic magnitude of the company. Carnival is one of the world’s largest tourism
companies with a fleet of 46 ships, with more than 60,000 berths, and annual revenues of 3.78 billion
dollars.
With the increasing globalization of cruise tourism, there is a growing trend towards horizontal
concentration. Europe is the only region where the four main groups Carnival Corporation, Royal
Caribbean Cruises, P&O Princess and Star Cruises do not control more than 50 % of the market share.
As seen in the chart below they hold 81% of the world supply of berths. These multibrand companies
are known as the Big Four.
Exhibit 13 : Horizontal concentration of 4 key players

Others
Carnival Corporation
RCC
P&O Princess
Star Cruises
11% 19%
17%

21% 32%

Source: WTO Report 2001

Exhibit 14 : Market Share (%) of Big Four in destination regions

Group Caribbean Alaska Europe Far East


2000 1999 2000 1999 2000 1999 2000 1999
Carnival 37.8 38.5 31.2 31.0 23.6 19.1 0.4 4.5
RCC 25.7 24.0 23.7 25.0 4.1 3.8 0.2 0.5

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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
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P&O Princess 5.9 5.5 29.0 32.0 9.1 5.8 3.5 3.5
Star Cruises 7.5 7.0 12.9 9.0 4.3 3.1 74.4 66.0
Total 76.9 75.0 96.8 97.0 41.1 31.8 78.5 74.5
Source: Christiania Bank of Kreditkasse ASA
Exhibit 15 shows the supply, which is characterised by a situation that is close to oligopoly, wherein
the majority of the share, which is 72% of the global supply of berths, is dominated by the Big Four.
‘Minor Cruise Lines’, as shown in the Exhibit, demonstrate those players that are specialised in the
niche markets and mainly aim at the North American clientele.
The supply of cruise lines in the European and the Asia –Pacific markets equals the demand in these
regions, which is starting to take off.
Exhibit 15 : Distribution of Ocean going fleets as on January 2002

Group/Cruise Total Fleet Order Book


Lines
NS GT GT/Berth Berths NS GT GT/Berth Berths
Minor Cruise 18 508,944 52.3 9,728 3 203,000 66.7 3,044
Lines
Big Four 106 6,152,670 38.1 161,411 31 3,006,656 41.7 72,046
Europe 49 926,188 26.8 34,512 3 178,600 37.6 4,746
Asia Pacific 10 252,133 35 7,206 0 0 - 0
Total 183 7,839,935 36.8 212,857 37 3,388,256 42.4 79,836
Source: WTO Report

1.2.6 Passenger Demographic Profile


Exhibit 16 presents a brief synopsis of Cruise Lines International Association (CLIA) studies that
identifies the profiles, segments and dynamics of the North American cruise market. It may be
underlined that the North American cruise market forms more than 70% of the global cruise market
and would therefore be representative of the global trends
Exhibit 16 : Demographic Profile of the North American Cruise Market

Type % Of % Of % Of Age Median Features


Cruisers Cruising First Income
Days Timers (Us$)
Restless 33 17 59 25 to 50 58000 Interested in experiencing different
Boomer types of vacations, wants a family
planned, fun filled vacation, travels
mostly in the mass cruise market
Enthusiastic 20 15 46 25 to 50 55000 Interested in being comfortable,
Boomer having someone wait on him, fine
dining, some romance,
participating in sports, socializing
and learning something new,
travels principally in the mass
cruise market
Consummate 16 20 20 55 60000 Looking for the best cruise value,
Shopper taken an average of five cruises,
knows the cruise lines and their
ships, wants fun, relaxation,
pampering, comfort and fine
dining, travels principally in the

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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
Type % Of % Of % Of Age Median Features
Cruisers Cruising First Income
Days Timers (Us$)
mass and premium markets
Luxury 14 18 30 95000 Willing to spend for luxurious
Seeker available accommodations and
service, sophisticated in world
travel and experiences, travels in
luxury and other class markets,
books the suites and penthouses
for the highest service and
accommodations in each class
Explorer 11 18 20 64 81000 Intellectually motivated, travels to
remote places of scientific and
historical interest, Cost not a
factor in quest for adventure, used
to Spartan accommodations and
not interested in relaxing or
securing luxurious
accommodations and service,
travels on specialty cruise lines
and premium and mass market
ships
Ship Buff 6 11 13 68 78000 Extremely knowledgeable of ship
design, accommodations and
service and has a special
attachment to the ships he sails,
cruises more for the ship rather
than its itinerary and has cruised an
average of 6.3 times representing
all market segments
Source: CRISIL Research and CLIA
The CLIA studies also uncover several findings common to all segments that would be extremely
significant for cruise tourism elsewhere in the world:
• Frequent travellers are frequent cruisers and a cruise represents about one of every three
vacations they have taken in the past six years.
• Cruisers possess a degree of curiosity and flare for adventure as indicated by the majority
saying they like to experiment with new and different things.
• Three of the most mentioned factors used to arrive at a decision to take a particular cruise
were the itinerary's ports of call, the price of the cruise and the season of the year, followed by
the cruise line or ship.
• The five top benefits of cruising listed were:
◊ provides relaxation away from the home and office
◊ allows one to be pampered
◊ gives the opportunity to visit several places
◊ offers good value for the price
◊ enables a choice of many shipboard activities.
• Cruisers enjoyed their cruise experiences with 93% of frequent cruisers and 83% of first time
cruisers reporting high levels of satisfaction.
• 69% of frequent cruisers and 63% of first time cruisers rated their cruise vacation as better
than other vacations.
• 95% of frequent cruisers and 82% of first time cruisers said they intend to cruise again.
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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
Exhibit 17 details the passenger profile in the European and Asia Pacific market as given in the WTO
Report.
Exhibit 17 : Study of cruise passengers in the European and Asia-Pacific market

GERMANY UNITED KINGDOM ASIA-PACIFIC


Age Group (years) 2000 (%) Age Group (years) 2000 (%) Age Group (years) 2000 (%)
20-40 10 <25 4 <25 20
40-60 52 25-34 6 25-39 40
>60 38 35-44 11 >40 40
45-54 23
55-64 26
>65 30
Source-CRISIL Research and WTO Report

1.2.7 Trends in Duration of Cruises


Global trends in cruise holiday durations are relevant from the marketing and positioning angles.
Whereas previous trends were reflective of long cruises, recent trends indicate that, globally, cruises
have moved towards increasing popularity for shorter & medium term holidays.
Distribution of Cruises in the North American market
As per CLIA reports on passenger carrying, the length of cruises varies from two or three days to
round-the world voyages. 3, 4 and 7 day cruises are most typical, with others being of 10, 14, and 21
days in duration. In the North American market, shorter cruises (two to five days) have increased their
market share to 33.6% in the past 20 years; those longer than nine days have declined in market share,
to 11%; six to eight day voyages account for 59% of the North American market.
Reflecting North America’s shorter vacation patterns, Exhibit 18 and Exhibit 19 show that the cruise
industry’s highest growth has been in the 2-5 day cruise category.
Exhibit 18 : Trends in Duration of Cruise (Passengers) in the N American market

Passengers (000’s) %Growth


1980 2003
2-5 days 347 2,698 677.5
6-8days 846 4,612 445.1
9-17days 221 855 286.8
18+ days 17 30 76.4
Total 1,431 8,195 472.6
Source: CLIA Year End Passenger Carryings Reports

Exhibit 19 : Trends in Duration of Cruise (Market Share) in the N American market

Category Shares %Point change


1980 2003
2-5 days 24.3% 32.9% 8.6
6-8days 59.1% 56.3% -2.8
9-17days 15.4% 10.4% -5.0
18+ days 1.2% 0.4% -0.8
Total 100% 100% 0.0
Source: CLIA Year End Passenger Carryings Reports

Distribution of Cruises in the European market

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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
As per WTO report, statistics point out favourably towards short duration cruises in the European
market too, as shown in Exhibit 20 below. An important feature to be noted in this market is how the
duration trends are different for different seasons. Thus, in 2000, almost 14% of cruise holidays were
over 15 days in length between October and March whereas in April-September, the same category
had a 7% share. Studies have revealed that retired people constitute the major proportion of cruise
travellers and they prefer cruising during October-March period.
Exhibit 20 : Trends in Cruise duration in the European markets

FRANCE UNITED KINGDOM


Nights % Days %
<7 26 <5 18
7 50 5-7 36
8-12 19 8-14 37
>12 5 15-21 7
>22 2
Average = 7.2 nights Average = 9.3 days
Source: WTO Report

1.3 INDUSTRY KEY DRIVERS


In this section we have covered the major aspects that drive the cruise tourism sector. The industry
drivers dictate market trends and demand features and also decide what makes certain markets more
attractive than others.
Such dynamics that represent strategic direction in the global cruise tourism industry would be of
considerable relevance in all efforts that any country may make in developing strategies towards
development of this tourism product.
1.3.1 Strategic deployment to maximize yield
Cruise tourism is a capital intensive industry and the strategic deployment of vessels is driven by the
need to maximize yield year round. Augmented by the trend towards construction of larger vessels for
carrying larger numbers of passengers and the imperative need to derive the economies of scale, it is
estimated that at current cost levels, break even requires load factors of atleast 80% and a strong
reliance on the revenue from onboard activities, and the sale of shore excursion products. These trends
require cruise lines to establish itineraries that appeal to a large population base. This is supported by
the current strong focus on US market which accounts for 66% of the total passengers worldwide,
considerable growth opportunities and load factors in excess of 100%. Exhibit 21 illustrates that more
than 50% of the global cruise fleet was designated for European, North American and Caribbean
cruising. Asia accounts for a relatively smaller market share of 7% of the global fleet.

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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India

Exhibit 21 : Global Fleet Deployment

Others
South Pacific/Austarlia
Mediterranean/Caribbean/Alaska
Asia
World
17% 20%
7% 3%

53%

Source: Seatrade Cruise Review, March 2001 (courtesy Victoria Cruise Ship Stategy)

1.3.2 Itineraries that satisfy key passenger requirements


Market competition demands that itineraries be developed that satisfy a number of key passenger
requirements, including the following:
◊ Accessibility: Market requirements are for short term (4-7 day) cruises to accommodate
the relatively short vacation period. Time and ease of access to and from the port of
embarkation/disembarkation is therefore an important factor.
◊ Season: An important aspect of the cruise sector is the seasonality, which is determining
factor as it is for the tourism on land. This leads to the relocation of the global fleet. North
American winter is the most popular season for cruising the Caribbean which competes
with the Southern Hemispheres October to March cruising season.
◊ New Products: Cruise lines are continuously seeking new and innovative products to
satisfy a high proportion of repeat travellers. Also with growing competition from other
cruise lines the unique selling point lies essentially in the products offered.
◊ Many Destinations: Visiting different ports of destination is an important experience
sought on 7-10 day cruises. This new concept emphasises on the “region being the
destination” rather than the port.
◊ Seamless High Quality Port Visit: The quality of ‘port experience’ specially in terms of
basic facilities like quick and easy clearances (immigration and customs), transport
facilities, baggage handling facilities and some basic amenities like telephone booths etc
from the perspective of both passenger and the ship, is an important determinant.

Other determinants of fleet deployment


In addition to the market driven determinants, cruise lines also consider the following as critical in
choosing itineraries
◊ Market Size/ Proximity: The local/regional market must be of sufficient size to support
the presence of high cost cruise ships.
◊ Shore Excursions: The capacity to sell and control the distribution of shore excursions
constitutes one of the principal sources of total cruise-line revenue. This implies:
o Strong awareness of destination by cruise line by the cruise line
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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
Destinations should offer a range of attractions to induce a high passenger take up
o
Development of high quality shore excursion product by inbound tour operators
o
Competition for cruise lines from competitively priced independent tour products
o
available at ports is a disincentive for that port’s inclusion in a cruise itinerary.
◊ Market Competition: It consists of the number and passenger capacity of cruise lines
already servicing the port.
Given the range of variables, vessel deployment planning can extend over a five-year period with
itenaries fixed 12-18 months before, strongly underlining that the nature of the cruising experience is
multi-faceted and multi-dimensional - a result of synergy of many destinations coming together for
collective attractiveness.
1.3.3 Home Porting Advantage
Home porting, either permanently or seasonally is the major objective of any port engaged in hosting
international cruise lines. The economic benefits derived from the number of passengers and crew it
brings through the port is sizeable, with spill over effects into accommodation, retail, transport and air
travel etc. The principal features that cruise lines consider in selecting base ports are:
◊ Proximity of access to major markets
◊ Reputation of the port
◊ Access to the centre of the city
◊ Quality and availability of port infrastructure and services
◊ Cost of port services
◊ Capacity of the port to accommodate and process high volumes of passengers efficiently
◊ Space to accommodate support services such as transport to and from the ship.
◊ Sufficient airlift capacity to cater for the significant fly/cruise component of the market
◊ Provisioning and bunkering capability
◊ Hotel capacity
◊ Crew travel cost
Consequently, while the benefits to be derived from being a homeport are sizeable, so are the hurdles,
which ports must surmount. In Asia, Singapore is the leading homeport for most cruises.
1.3.4 Flexibility in repositioning
Although planning five years in advance is a typical of the cruise industry operating in the normal
circumstances, the industry has demonstrated its potential, capacity, and readiness to respond
promptly and adapt to the fundamental and sudden shifts in the market conditions.
In late 2001 after the September 11 attack, when fly/cruise packages became difficult to sell the
following industry response was observed6 :
o The industry responded swiftly to relocate substantial passenger capacity back to North
America, the Caribbean and to a lesser extent in Asia.
o Cruise liners and operators broadened operational base in North America to include additional
embarkation ports for ‘home cruising’ in Florida, Texas, Louisiana, Alabama, South Carolina
and Baltimore, to minimise the need to fly.
o Strategically the industry resorted to significant price discounting to overcome the resistance
to flying
Exhibit 22 indicates the global fleet deployment in 2002 of selected main cruise lines. It highlights the
predominant position of the Caribbean, Central and North America. In addition it also throws light on
the degree and speed of repositioning global fleets in response to major market disturbances.

6
Source: Victoria Cruise Ship Strategy, 2002-2005
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Exhibit 22 : Global fleet deployment, 2002

Region %Capacity deployed per global region in 2002


Carnival RCI Princess Norweg- Celebrity Holland Disney
% % Cruises ian Cruises America Cruise
% Cruise % % Line %
Line %
Caribbean 80.4 83 44 58 74 41 100
Mexico 14 6 14 0.5 5.5
Transatlantic/Europe 0.2 0.5 4.5 3 3.5 6.5
Alaska 1.8 7 26 11 14 34
North America 3 0.2 2.5 4 4.5
Hawaii 0.4 1.7 2 20 2 2.2
Transcanal 0.2 0.8 3 0.5 3.5 3
Asia/Pacific 0.8 3 1 1.2
South America 1 2 3 1.4
Africa 0.3
World Cruise 0.3
Indian Ocean
100 100 100 100 100 100 100

Source: Cruise Industry News, 2002 (courtesy Victoria Cruise Ship Strategy, 2002-2005)

When confronted with political unrest and fundamental shifts in market conditions, some cruise lines
are forced to seek new markets in other parts of the world.
1.3.5 Capacity Drives the Market
The planning cycle for this industry is continually driven by the need to generate demand, thereby
continuously forcing the industry to increase the size and number of new cruise ships being built.
Over the period of 2002-2006, 45 new cruise ships are scheduled for completion. This would generate
an additional 87,000-passenger capacity. These forward deliverables have not been impacted on by
the downturn in demand but rather maintained by the buoyancy in the long-term projections for the
industry in the USA and Europe. The industry’s short-term response to the downturn in demand was
reliance on the price discounting mechanism to bring demand and supply into equilibrium.
1.3.6 Sensitivity to global security issues
Cruises are highly sensitive to security issues, as demonstrated by the events of September 11. Cruises
demand heightened levels of security that provide a safe and secure passenger and vessel
ingress/egress environment. Cruise ships attract public interest that presents important marketing
opportunities. However global terrorists’ trends require an appropriate balance between security and
public interest and access.
1.3.7 Strict Environmental Standards
The International Council of Cruise Lines (ICCL) members have unanimously adopted mandatory
environmental standards for all of their cruise ships. These standards are based on principles that
include: designing and constructing cruise ships to be as environmentally friendly as possible,
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embracing new technology, complying fully with international and U.S. environmental laws,
minimizing waste production, and maintaining cooperative relationships with the regulatory
community.
All ICCL member cruise ship operators implement the adopted standards, which include effectively
dealing with the following areas:
◊ Graywater and Blackwater discharge.
◊ Hazardous chemical waste such as photo processing fluid and dry-cleaning
chemicals.
◊ Unused and outdated pharmaceuticals.
◊ Used batteries
◊ Burned out fluorescent and mercury vapor lamps.
The cruise industry’s commitment to protecting the environment is demonstrated by the
comprehensive spectrum of waste management technologies and procedures employed on its vessels.
ICCL members are committed to:
◊ Designing, constructing and operating vessels so as to minimize their impact on the
environment;
◊ Developing improved technologies to exceed current requirements for protection of
the environment;
◊ Implementing a policy goal of zero discharge of MARPOL, Annex V solid waste
products (garbage) by use of more comprehensive waste minimization procedures to
significantly reduce shipboard generated waste;
◊ Expanding waste reduction strategies to include reuse and recycling to the maximum
extent possible so as to land ashore even smaller quantities of waste products;
◊ Improving processes and procedures for collection and transfer of hazardous waste
◊ Strengthening comprehensive programs for monitoring and auditing of onboard
environmental practices and procedures in accordance with the International Safety
Management Code for the Safe Operation of Ships and for Pollution Prevention
(ISMCode).
Each ICCL cruise vessel operator has agreed to utilize one or more of the practices and procedures
contained in the attached “Cruise Industry Waste Management Practices and Procedures” in the
management of their shipboard waste streams. Recognizing that technology is progressing at a rapid
rate, any new equipment or management practices that are equivalent to or better than those described,
and which are shown to meet or exceed international and federal environmental standards, will also be
acceptable. Member lines have agreed to communicate to ICCL the use of equivalent or other
acceptable practices and procedures. As appropriate, such practices and procedures shall be included
as a revision to the attached document. As an example, when improved systems for treating
blackwater and graywater are perfected and shown to meet the requirements for MSDs and accepted
by appropriate authorities, the new systems and associated technology will be included in the
attachment as a revision.
1.3.8 International Aviation Developments
Time and accessibility are major issues as cruise line passengers typically move towards shorter but
more frequent vacations. The pressure of time means that the extended air travel to or from a cruise
ship is a deterrent for potential customers.
However the recent developments in aircraft design indicate that the distances are closing and are no
longer a deterrent. New designs fro sonic aircrafts promise to make serious inroads into long distance
flight times.
This development could enhance the attractiveness of ‘exotic’ cruise locations, such as Australia.

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1.4 PRODUCTS AND SERVICES OFFERED
1.4.1 What makes Cruising unique
Cruising is a unique tourism product, a blend of the 5A’s: attractions, 5 A’s of Cruising
activities, access, accommodation, amenities. The words "luxury" and •Attraction
"pampering" are found in all cruise brochures, and every cruise line •Activities
•Access
proudly highlights these five aspects to market its product. Cruising is now
•Accommodation
well established as one of the most service-intensive sectors in the world, •Amenities
with ever more incredible state-of-the-art vessels being built each year.
‘Pampered in luxury" accurately describes the cruise experience. We
capture below what makes a cruise a unique tourism product.
◊ Cruising is intensively service-oriented. Most ships provide a 24-hour Room service.
New ships are adding 24-hour pizzerias. Other facilities include casino, pool, jacuzzi,
sauna, gym, on-board lectures, card rooms, an unending variety of organized games and
contests, supervised children's activities and entertainment including Broadway and Las
Vegas-style shows, lounges, nightclubs, movies, dancing and more. Cruise ships are more
like mini cities providing most of what such a city has to offer.
◊ Cruise ships are destinations in themselves, with features and amenities comparable or
superior to land-based resorts. This can be particularly attractive in destinations that lack
high quality hotels or "creature comforts." Onboard facilities such as spas, pool and open
deck areas, jacuzzi, lounges, casino, shipboard activities, spacious accommodations and
legendary service make the ship a great place to relax, retreat, rejuvenate and play. The
Seabourn Pride, Legend and Spirit as well as several Radisson Seven Seas ships have
platforms that drop off the back to create a private water sports area when the vessels are
at anchor.
◊ Modern cruise ships have state-of-the-art telecommunications equipment, including in-
cabin ship-to-shore phones. Yet they enable the passenger to feel secluded and "out of
time." You have the illusion of getting away from it all.
◊ Cruising is remarkably affordable. The following is typically what is included in the cost
of the cruise, at a price that is generally lower than a comparable land-based vacation:
• Round-trip airfare.
• Transfers from airport to ship and from ship to airport.
• Three main meals per day (breakfast, lunch and dinner). Special children's menus
are available if children are present or three buffet meals per day (breakfast, lunch
and midnight). Some ships add a fourth buffet for late-nighters at around 1:30
a.m. Many ships also have afternoon snacks or traditional high teas.
◊ Cruising offers multiple destinations, without the hassles of packing and unpacking.
Itineraries include visits to three or more ports of call (depending on length of cruise).
◊ Cruises are floating resorts. Cruising presents a unique competition feature, with the
main competitors of cruise liners being the land resorts rather than the other cruise line
companies. Thus a cruise ships are increasingly looked upon as a floating resort than a
mere means of transport. The amenities offered on board are a result of popularising
cruising with this concept of a floating resort.

1.4.2 Niche cruise tourism markets


The following are examples of some niche markets prevailing in the cruise tourism industry:
Cruises for Family segment
This segment targets the youngest end of the market. Since families look for moderately priced
holidays, most operators offer such packages with interesting complementary activities. Fifty per cent
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Ministry of Tourism, Government of India
discounts for the under 12s and free flights for children under 2 years of age are a common feature of
such packages. Special offers are available during the school holiday season. Of the major cruise
operators, Carnival carries the most children and is the Number One family cruise line. Though it has
entered the market late in 1998, Disney is also one of the most popular cruise line amongst this
segment.
The Senior Citizen Segment
This is the largest growing niche with senior citizens having considerable purchasing power and a
great affinity with the product. A study done by Travel and Tourism Analyst in 1996 shows that 10%
of the senior citizen segment in the European Union used cruise as mode of transport for international
trips. Certain cruise lines like the British tour operator – Saga and Swan Hellenic cater to this class
exclusively. Some cruise lines like Fred & Olsen, P&O also offer cruises with no flights involved.
The Conferences and Incentives Segment
With the increasing combination of business with leisure, cruise ships are wooing the business
segment with well equipped with state-of-the-art features that can house all delegates within a closed
space facilitating the holding of conferences and seminars with an element of novelty thrown in. Most
large ships have 700 to 800 capacity assembly, the largest hall being one with a capacity of 1,350 in
Royal Caribbean International’s ‘Voyageur of the Seas’. Cunard estimates that 15% of its business is
from incentives and conferences. Cruises organized by large companies are also widely approved of
in Japan. Such cruises are generally short in duration.
Theme Cruises
Themes are built by offering new itineraries or by adding specialized products. The best example of
such types of cruise is the Disney Cruise. Thus, Carnival has the Paradise ship exclusively for non-
smokers, HAL offers a Caribbean cruise with a screening of films from the forties, there are cruises
dedicated to wine tasting and such other exotic themes added to exotic locales.
Adventure Cruises
Expedition cruises have a modest, though not insignificant, demand. Most companies that operate this
market do not belong to the big groups. Some notable cruise operators in this category are The World
Cruise Company and Abercrombie & Kent with ships like Explorer, Clipper, Marine Expeditions and
Quark Expeditions with the total fleet being 63 ships and around 5,500 berths. There are also other
liners like the Swan Hellenic and Orient Lines with a strong educational element.
1.4.3 Types of cruises
There is an incredible diversity of cruise vacations available, most of them custom designed to suit
different interests and personal preferences. Broadly looking the following are the general
category/types of cruises that operate.
Ocean Voyages
An ocean voyage is a one-way passage from one point to another over a major body of water. Some
voyages have intermediate ports of call while others do not. Trans-Atlantic or trans-Pacific crossings
are the most common ocean voyages. The ships most used for ocean voyages are cruise ships, yacht-
style ships, masted sailing ships, and freighters.
Standard Cruises
An open water cruise may be one-way or round-trip with several ports of call. These cruises are
traditionally vessel-oriented trips in which the ship and all the amenities it provides are the main focus
of the voyage. The ship is selected based on accommodations, recreation, entertainment and service.
The ships most used for open water cruises are cruise ships, yacht-style ships, masted sailing ships,
freighters, ferries and private yachts.

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River/Canal Cruises
River and canal cruises are closely linked to the culture and heritage of the country being toured.
Along the journey, the waterway's villages, town and cities offers particular appeal to scenery buffs
and those who enjoy ever-changing landscape. Travellers choosing river and canal cruises are
interested in and attracted to the destinations as well as the cruising experience. The ships most used
for river and canal cruises are yacht-style ships, river ships, barges and private yachts.
Destination / Expedition Cruises
Destination and expedition cruises are selected, just as river cruises, based on the destination to be
visited. Travellers are attracted by the unique, out-of-the-way, remote or exotic ports of call. These
cruises offer the stimulation of exploring new territories while in the company of like-minded
travellers. The ships most used for destination and expedition cruises are yacht-style ships, river ships,
and private yachts.
Day Cruises
Day cruises are typically a cruise experience of 15 hours or less. Passengers choose this method of
cruising, as a day's outing or combined with a longer vacation. These cruises may be geared to
gambling, whale watching, dinner, etc. The ships most used for day cruises are cruise ships,
steamboats, ferries, river ships, and private yachts.
Contemporary Cruises
These are the most popular and recognized cruise lines, having the following key features:
◊ These cruise serves the most popular segment, the mass market or first class cruisers
◊ These cruise lines typically have resort-style facilities with heavy emphasis on ship-
board activities.
◊ Most of these lines have both shorter itineraries that are closer to home and longer
ones that may require international travel.
◊ These cruises tend to have newer and larger cruise ships with lots of amenities
including lavish show rooms, extensive spa facilities, expansive children's programs,
televisions and in-room movies in all cabins, double/queen beds, etc.
◊ Often have something for everybody - all age groups. These lines are typically the
best for families and kids of all ages.
The most famous examples of these cruise lines are Carnival Cruises, Celebrity Cruises, Costa
Cruises, Disney Cruises, Holland America Cruises, Norwegian Cruises, Royal Caribbean
International Cruises, Princess Cruises
Luxury Cruises
These constitute the ultimate cruise experience, taking service to a different level. The following
features define luxury cruise:
◊ The highest quality of cruises available, offering high style luxury with emphasis on
destinations and ship-board amenities.
◊ Most sailings tend to be significantly more formal than first class cruise lines.
◊ Luxury ships tend to be exclusive carrying far fewer passengers. Accommodations
are often more spacious with a very high percentage of ocean-view staterooms and
suites.
◊ These cruise lines are more itinerary-oriented, often featuring longer cruises and
international travel.
◊ Luxury cruises cater to the mature, experienced audience with very few first time
cruisers. Accordingly the cruise tends to be less "entertainment-oriented" and more
"experience-oriented", less suitable for young children or the first choice for families.
Most popular luxury cruises are Cunard Cruises, Oceania Cruises, Crystal Cruises, Radisson Seven
Seas, Silver Star Cruises, and Windstar Cruises.
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Specialty Cruises
Specialty cruises, as the name implies, are special destination oriented cruises offering unique
experiences. The main features include:
◊ Adventure-style cruising with a heavy emphasis on destination, education, and off
ship activities, sometimes offering the only way to see a certain area of the world that
the large first class cruise lines can't visit.
◊ Quality on these cruises varies from very modest to very deluxe, being more of an
experience than a cruise. Accommodations and amenities vary greatly by cruise line
and product.
◊ Types of ships vary from Sailing Ships, Paddle Wheelers, Cargo Vessels, River
Barges, and Yacht-like Ships.
◊ Speciality cruises, like luxury cruises, are not a good choice for children or families.
◊ Pricing is flexible and varies by product.
1.4.4 Onboard Entertainment Facilities
Present-day cruise ships are organized much like “floating hotels”, with a complete "hospitality staff"
in addition to the usual ship's crew. There is a variety of full fleged entertainment activities for all the
age groups, with the concept varying from one cruise line to another depending on how the business
model is built.
There is an endless chain of entertainment activities on these ships, the range including dance classes,
classical music, casino lessons, shopping, cabaret shows, bridge, spa treatments (massages,
manicures, pedicures, facials), health clubs, wine testing, golf chipping, skeet shooting, cooking
demonstrations, ping pong, fashion shows, acts by jugglers and magicians, galley (the kitchen) and
bridge (where the navigators work) tours, lectures, crafts, movies, reading and eating at least six times
a day. Captured below are the variety of entertainment on board.
Sports Oriented Facilities
◊ Rock walls 200 ft above the ocean level giving an adventurous mountaineering thrill
among the seawaters, with professional trainers to encourage passengers.
◊ Mini Golf rinks for golf lovers
◊ Basketball or volleyball on full-size courts
◊ Ice Skating Rings with professional trainers for all ages and skill levels and world
class ice skating shows
◊ Innovative self-levelling pool tables
◊ Juggling lessons, backgammon, chess, scrabble, bridge and many other board/card
games.
◊ Scavenger hunts
Theatre
The theatre is the oldest and the most popular forms of entertainment, showcases a variety of
performances from a contemporary musical stage production to a comedy act to a Las Vegas-inspired
floorshow. Some production shows are produced exclusively for a particular ship e.g. for Royal
Caribbean. Fashion shows are also being hosted on certain occasions. Full-service bar, stadium
seating, state-of-the-art sound system and theatre lighting is set up for a multipurpose studio complex
for just about anything.
Rejuvenation
Most cruise ships have spas that offer a luxurious range of relaxing massage techniques and treatment
programmes from oxygenating facials, detoxifying seaweed wraps, aromatherapy and reflexology
massages to exotic treatments like Chakra Stone therapy or Rasul. These are delivered by highly
trained experts who also give initial to determine and customize the treatment needed. They also host
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Ministry of Tourism, Government of India
health, fitness and beauty demonstrations and educational seminars where experts offer advice on a
variety of exercise options and healthy dining possibilities.
Audience Participation
In order to give the entertainment a creative angle and a more exciting feel there are some activities
that are designed to encourage Audience Participation. Some of these participatory activities may be:
◊ Karaoke contests
◊ Trivia contests
◊ Game shows
◊ Guest talent Shows
◊ Parties like '50s and '60s Night, Masquerade Ball, Toga Party and Pirate Theme Night
◊ Wine testing and classes
◊ Cooking demonstrations
◊ Casino and card game lessons
◊ Ice-carving instruction
◊ Jewellery seminars
◊ Latin dance schools that teach Cha-cha, rumba, merengue, waltz, two-step, tango,
swing, foxtrot, jitterbug, line dancing, country, caribbean, hula, cha-cha slide and '70s
Disco.
Tournaments
Tournaments like Ping-pong, floating golf green, billiards, shuffleboard, ring toss are organized
specially on long cruises to bring healthy competition, for example on ‘Voyager and Radiance-family
ships’ you have basketball and volleyball tournaments, and on Splendour of the Seas, Legend of the
Seas, and all of Voyager and Radiance-family ships there are mini-golf tournaments too.
Library
Reading being one of the favourite indulgences on the cruise, cruise ships are stocked with an
impressive and wide range of subjects which are available starting from topics like travel, art,
biography, fiction, non-fiction, science fiction, beauty, health and many more.
Other Activities and Facilities
A list of some more activities in addition to the above are:
◊ Sun soaking in the Solarium, which is basically a room, built largely of glass to afford
exposure to the sun. There are also sunbeds which is a device emitting radiation
(usually UVA, but recently also UVB) used for cosmetic reasons (to induce an
artificial tanning) but also for medical reasons.
◊ Casinos, with games like Poker slots or blackjack. Some cruises also offer casino
classes
◊ Dance floors, wine bars, night clubs/lounges for pub-goers. There are theme pubs
with live bands and shows.
1.4.5 Accommodation
Cruise accommodation is targeted for different categories of people and their preferences. These
accommodation facilitates and categories vary from cruise to cruise, however captured below is the
most common and standard type.
◊ Superior Ocean View Staterooms : offer a gorgeous view often with a mini bar and private
balcony among their amenities. With an area of 188 sq. ft., balcony 50 sq. ft, these staterooms,
consists of two twin beds (can convert into queen-size), private balcony, sitting area (some with
sofa bed) and a private bathroom.

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◊ Ocean View Staterooms : offer all of the amenities of a star hotel added to a magnificent view of
the ocean. Generally covering an area of 180 sq. ft. these staterooms have two twin beds (can
convert into queen-size bed), sitting area with sofa, vanity area, and a private bathroom.
◊ Deluxe Ocean View Staterooms : offer an ocean view with mini bar and private balcony among
their amenities. Measuring 173 sq. ft., balcony 47 sq. ft., they consist of two twin beds (can
convert into queen-size), private balcony, some offer Pullman beds, sitting area with sofa, and a
private bathroom.
◊ Family Ocean View Staterooms : accommodate up to six people, with family oriented amenities,
including a mini bar and sitting area. Measuring 265 sq. ft., these family rooms have two twin
beds (can convert into queen-size), sofa bed and/or bunk beds, separate sitting area, and a private
bathroom with shower. Such family rooms may be large ocean view staterooms also.
◊ Promenade Staterooms : are unique, for e.g. the Royal Caribbean International Cruise Line has
bowed windows overlooking the Royal Promenade, creating an interior room with a view, and
they offer the amenities of a standard stateroom. Measuring 167 sq. ft. these rooms, which are
also called the Atrium Stateroom, have two twin beds (can convert into queen-size), sitting area
with sofa, vanity area, and a private bathroom.
◊ Interior Staterooms : which are on the interior of the ship, offer all of the amenities for comfort.
Generallt measuring 160 sq. ft. these rooms have two twin beds (can convert into queen-size),
some offer Pullman beds, sitting area with sofa, vanity area, and a private bathroom.
◊ Royal Family Suites : have a whirlpool bathtub, entertainment center, a separate living area with
refrigerator and wet bar, and complimentary concierge service, which includes access to a private
lounge as well as personalized service to help make reservations or other arrangements. Most
Royal Suites have a separate bedroom with a king-size bed and some even have a baby grand
piano. These large rooms measure 1,188 sq. ft., with a balcony of 170 sq. ft.
◊ Owners Suites : have a queen-size bed, separate living area with large sofa bed, bathtub, and
refrigerator and mini bar, among their amenities. With an area of 506 sq. ft., they have a private
balcony of 64 sq. ft, private bathroom and concierge service.
◊ Grand Suites : generally come with a private balcony, sitting area, bathtub, a mini bar and
complimentary concierge service with an area of 381 sq. ft., balcony 95 sq. ft.
◊ Junior Suites : offers a private balcony sitting area, refrigerator and bathtub. With an area of 277
sq. ft., balcony 69 sq. ft, these suites, also called Superior Ocean View Suite, have two twin beds
(can convert into queen-size), private balcony, private bathroom with bathtub and a sitting area,
sometimes with a sofa bed).

1.5 RIVER & CANAL CRUISES


Canal & River cruises form a niche element of the cruise sector, arising from the fact that most cruise
ships take by and large coastal routes, whereas all of the destination’s charm can hardly be explored
within the constraint of a one-day stop at a port of call. Cruise ships take coastal routes because the
rivers and canals cannot accommodate large cruise ships, however, it would be possible to enable
interested passengers to explore the charms of the destination through a flotilla of specially designed
river ships and cruise barges. As a niche of cruising, river and canal voyages are an increasingly
popular option, particularly for travellers who enjoy the comforts and variety of cruising, but want to
see more of the heartland.
The boom in river cruises started from Europe, which has exotic destinations connected by rivers and
far from coastal areas. Today, the European river-cruise industry is in a major expansion mode.
Nearly every corner of the continent has navigable rivers and a selection of ships, which continue to
grow increasingly comfortable and luxurious. Peter Deilmann Cruises offers 39 different itineraries
and 243 European river cruises on nine ships. Viking River Cruises has unveiled 10 new ships in the
last five years, including the 198-passenger Viking Sun, new in Europe this year.

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Viking River Cruise's is recognised as the world's largest river cruise line, it has added about 7 new
ships in the last 3 years and 10 new ships in the last 5 years (base year is 2002). Viking has about 24
ships with over 3,700 berths. Viking has also acquired KD River Cruises, Europe's oldest passenger
line.
River cruising in particular is in the midst of a major expansion boom. In the past two years cruise
lines have introduced new ships, and 2003 saw the introduction of a brand new cruise line, the MS
Artistry by Avalon Waterways, one of the newer companies on the scene, which already has three
ships and big plans. Itineraries may incorporate major cities as cornerstones, but the experience will
focus more on smaller towns/villages, natural features and local experiences.
Today coming out of Europe, we have cruise travellers also sailing on America's Mississippi,
Columbia, and Tennessee rivers. In Asia, one of the fastest growing destinations for riverboats, in
particular, is China's Yangtze.
Product Design
River/canal cruise ships, are essentially smaller versions of cruise ships, rarely holding more than
200-plus passengers, and generally carrying less. The river/canal barges are even smaller, carrying
between six and fifty passengers. The entertainment on broad is also much simpler. Beyond
mealtimes, entertainment onboard may be limited to shuffle-board or book-reading. River cruise ships
do not provide a range of experiences as happens aboard a large ship. These ships carry no casinos
and offer little in the way of evening entertainment.
River cruises range from a couple of hours cruising along a city’s shoreline for a romantic dinner to a
full blown week or month-long cruise experience in some of the world’s most exotic locations. There
are dining or party river cruise boats that sail for a few hours. These offer fine dining, professional
entertainment, music and dancing while cruising up and down the city’s waterways. They often cater
to romantic occasions, large parties and business dinners and itineraries that are normally offered
could be dinner cruise, lunch cruise, Christmas cruise, New Year eve, conference & meetings, floating
restaurant and cruises targeted to specific events. Also, many of them offer special holiday packages.
On the other hand, there are long river cruises that cover theme-based destinations like rural
exploration or pilgrimage destinations on holy rivers. For example, the Columbia River Cruise plies
on the Columbia River running through seven states of the US, offering magnificent views of river
while allowing the passenger to visit national parks, cities, and towns en-route. Some river cruises
also offer adventuresome activities such as kayaking and white water rafting.
The season for river cruises
River and canal cruise ships do not demonstrate the same sharp seasonality patterns as do larger cruise
ships. While their operations do fluctuate, showing greater activity during spring, summer and fall
months with a hiatus during December, January and February, many Asian operators go year-round
taking advantage of the varying offerings of different seasons. Another fabulous exception is the
Christmas season in Europe, where, despite the cold and the snow, several river cruise operators offer
voyages that stop in towns and cities with Christmas markets. Latin America-based voyages are fairly
limited though good for wintertime. The cruise on River Yangtze is fairly all through the year.

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Trends in River Cruising
Over the period, river cruise industry has shown following
trends:
In Europe, the most established river cruising
destination, the biggest trend is the continued
evolution in ship design. Ship design is focusing
particularly on staterooms providing more
contemporary technology like television, internet
connections, bathrooms, fashionable french windows
offering clear river and scenery views.
China has emerged as a very hot destination,
appealing to both cruise line operators and
passengers. Not only is the Yangtze a most-exotic
trip for even well travelled cruise travellers, it also Exhibit 23 : Viking River Cruise
lacks limitations -- such as low bridges and offers
The ship Viking Century Sky of Viking River
opportunity for plying large ships. Cruise sails the Yangtze River in China. The ship
Operators tend to traditionalise both itineraries and features 153 all-balcony cabins, a restaurant,
observation lounge & bar, coffee bar, gym, sauna,
onboard environment apparently targeting an older, business centre, sun deck, shops, and a beauty
more sedentary traveller. salon.

1.6 PROFILING OF CRUISE LINERS


In this section we have profiled the following Cruise Liners:
Carnival Corporation
Royal Caribbean International
Star Cruises
Disney Cruises.
We have selected for profiling 3 of the four major cruise operators who between themselves hold
control over the cruise market and cater to the different types of cruise tourists, covering maximum
destinations, with varied itineraries and a fleet of the most impressive cruise ships. In addition we
have alos considered it important to profile Disney Cruises as representing a niche operator who
demonstrates the strategy for survival in an essentially monopolistic market. The objective of the
profiling is to understand the operations and approach of these operators so as to draw on international
precedents.
We present below a profile of these cruise liners based on information available and which we could
derive from market interactions. However, some of the cruise liners are more sensitive giving out
information due to reasons of confidentiality. Hence we have accordingly structured the profile.
1.6.1 Carnival
Carnival is a global cruise company and one of the largest vacation companies in the world. Their
portfolio of 12 leading cruise brands includes Carnival Cruise Lines, Holland America Line, Princess
Cruises, Seabourn Cruise Line and Windstar Cruises in North America; P & O Cruises, Cunard Line,
Ocean Village and Swan Hellenic in the United Kingdom; AIDA in Germany; Costa Cruises in
Southern Europe; and P & O Cruises in Australia. These brands, which comprise the most recognized
cruise brands in North America, the United Kingdom, Germany and Italy, offer a wide range of
holiday and vacation products to a customer base that is broadly varied in terms of cultures, languages
and leisure-time preferences. They also own two tour companies that complement their cruise
operations, Holland America Tours and Princess Tours in Alaska and the Canadian Yukon. Their
combined vacation companies attract 5.4 million guests annually. Carnival Corp is the most profitable
company in the leisure travel industry. They operate a fleet of 75 ships, and they have another 9 ships

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scheduled for delivery by mid- 2006. With 123,000 berths and almost 55,000 crewmembers, there is
roughly 175,000 people at sea with Carnival at any given time.
History
The history of the Carnival Corporation begins in 1972, when Ted Arison set up Carnival Cruise
Lines as a subsidiary of the American International Travel Service. The first ship ran aground, but
Arison remained steadfast in achieving his vision of a cruise line offering affordable vacation
packages to middle-income consumers.
By 1977, Carnival had three ships, and ten years later, as the industry leader, the company went
public. In the early 1990s, Carnival began to diversify into land-based entertainment, thus changing its
name to Carnival Corp. The company is the world's largest cruise operator with about a third of the
market.
In 1988 Carnival was able to increase profits through the acquisition of Holland America Line and
consequently Carnival expanded its cruise lines to a broader market, however Carnival experienced a
loss of $135 million from disposal of the Crystal Palace Resort & Casino in 1991.
Carnival also operates 14 hotels in Alaska and Canada and runs Holland America Westours, which
markets sightseeing tours. Carnival has a 29.5% stake in Airtours, one of the UK's largest tour
operators, and is bidding for control of cruise line NCL. CEO Micky Arison and family control
Carnival.
Some Facts and Figures
Carnival Corporation & plc is the largest cruise vacation group in the world, with a portfolio of 12
cruise brands in North America, Europe and Australia, comprised of Carnival Cruise Lines, Holland
America Line, Princess Cruises, Seabourn Cruise Line, Windstar Cruises, AIDA, Costa Cruises,
Cunard Line, Ocean Village, P&O Cruises, Swan Hellenic, and P&O Cruises Australia.
Carnival Corporation & plc also operates the leading tour companies in Alaska and the Canadian
Yukon, Holland America Tours and Princess Tours. Traded on both the New York and London Stock
Exchanges, Carnival Corporation & plc is the only group in the world to be included in both the S&P
500 and the FTSE 100 indices.
Its Carnival Cruise Lines offers affordable vacation packages primarily to Caribbean locations on
about 20 ships, while Holland America offers more luxury-oriented cruises to Alaska, Europe, and
South America and is an upscale line targeting the older, more sophisticated cruisers with fewer
youth-oriented activities and emphasizes on the beauty of the Alaskan wilderness. Further Holland
America Westours operates various tours targeting different markets. Seabourn, known as the "Rolls
Royce" of the industry, targets the luxury market
Carnival Corp. basically has three market segments: Contemporary, Premium and Luxury.
The Market Cap (intraday): 45.78B
Company Strategy
Carnival is considered the cruise industry’s leader, and in the past few years, Carnival has increased
its market share through acquisition and joint venture. In terms of targeting international cruisers,
Carnival has purchased 29.5% equity interest in Airtours to enter into the European and Canadian
markets.
Carnival’s strategy focused on the "Fun Ship" concept, beginning with the Mardi Gras, which targeted
people of all ages. In recent years the driving force behind why a person needs to take a vacation has
changed. Today vacationers look to get away from everyday stress, and opt for a stress-relieving
cruise.
The Company’s current strategy is to attract more repeat cruisers and new cruisers of different
segments by offering different types of packages. Such differences include choice of shorter or longer
cruises, a low to moderate price for affordable cruises for middle class, and longer luxury cruises for
affluent classes. As part of the company’s plan, Carnival is "going global" through a joint venture
with Hyundai Merchant Marine to the Asia market.
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Carnival entered into the Asian market through a 50-50 joint venture with Hyundai Merchant Marine,
one of the world’s leading marine shipping companies with knowledge of Asian Market, in order to
expand its market worldwide.
1.6.2 Royal Caribbean
Founded by three Norwegian shipping companies in 1969 as Royal Caribbean Cruise Line, this
company is one of two affiliates of Royal Caribbean Cruises, the second-largest cruise operator in the
world. The line's first new build, Song of Norway, entered service in 1970, and today, RCI operates a
fleet of modern super and mega-liners, among them the three largest passenger ships ever built, the
137,300 gt Voyager of the Seas, Explorer of the Seas and Adventure of the Seas. Royal Caribbean's
signature Viking Crown Lounge is a familiar sight in almost all parts of the world, and the company
has a strong presence not only in the Caribbean, but also in Europe, Alaska, and other "exotic"
destinations.
History
Royal Caribbean Cruise Line (RCCL) has been around since 1969 and currently operates 17 ships. In
1997, Royal Caribbean purchased Celebrity Cruises—a premium line to appeal to an upscale
audience— with a fleet of 29 modern ships and a passenger capacity of approximately 60,500. Royal
Caribbean is a moderately priced cruise line, and rates vary by itinerary.
Royal Caribbean's 142,000-tons Voyager-class ships are some of the largest passengers ships in the
world. The cruise line has 3 classes of ship to suit all tastes, from the smaller intimate super-yachts of
Vision Class and Radiance Class to Voyager Class which has some of the best equipped cruise ships
in the world. It represents a sound middle America, middle-brow choice, particularly for active
travellers.
The company plans to introduce 2 more ship by the end of 2007, when it will have a total passenger
capacity of approximately 66,800. The ships operate worldwide with a selection of itineraries that call
on approximately 160 destinations.
Royal Caribbean typically appeals to couples and singles in their 30's to 50's as well as families of all
ages. The median age is in the low 40's on seven-night cruises and in the 30's on three-and four-night
cruises, passengers 50-55 and over tend to dominate ten day and longer cruises. Royal Caribbean
attracts passengers that are looking for an affordable, active vacation.
Some Facts and Figures
The sales figure of Royal Caribbean Cruise Ltd for the year 2004 was $ 4.555.4 million with a 1-year
sales growth of 20.4 %. In 2004 the net income was $ 474.7 million with a 1 year net income growth
of 60.1 %. The employee strength for 2004 was 38,870 with a one year employee growth of 6.1 %
1.6.3 Star Cruises
Star Cruises was incorporated in September 1993, representing a bold initiative to tap Asia-Pacific’s
potential as an international cruise destination. Today, Star Cruises has fulfilled regional aspirations to
establish the cruise industry in the Asia-Pacific region, bringing increased tourism traffic into the
countries around Asia-Pacific. Asian holidaymakers now see cruising as an exciting and value-for-
money vacation. Simultaneously, it also started the influx of travellers from North America, Europe
and Australia, who joined Star Cruises holidays for a glimpse of the various sights and sounds of
Asia-Pacific. Within 10 years since its inception, Star Cruises has become the world’s third largest
cruise company.
History
Star Cruises was incorporated in September 1993, representing a bold initiative to tap Asia-Pacific’s
potential as an intern offering three classes of ship to suit all tastes, from the smaller intimate super-
yachts of Vision Class and Radiance Class to Voyager Class which has some of the best equipped
cruise ships in the world.

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Today, Star Cruises epitomizes the fulfilment of regional aspirations to establish the cruise industry in
the Asia-Pacific region, bringing increased tourism traffic into the countries around Asia-Pacific.
Asian holiday-makers now see cruising as an exciting and value-for-money vacation. Simultaneously,
it also started the influx of travellers from North America, Europe and Australia, who joined Star
Cruises holidays for a glimpse of the various sights and sounds of Asia-Pacific.
Within 10 years since its inception, Star Cruises has become the world’s third largest cruise company.
The Fleet
Star Cruises is a global cruise brand with a combined fleet of 20 ships in service and under
construction, with approximately 29,000 lower berths, cruising to destinations and islands in Asia-
Pacific, North and South America, Hawaii, Caribbean, Alaska, Europe, Mediterranean, Bermuda and
the Antarctica under the Star Cruises, Norwegian Cruise Line, NCL America, Orient Lines and Cruise
Ferries brands.
Vessels operated under the Star Cruises' brand in Asia-Pacific are SuperStar Virgo, SuperStar Gemini,
Star Pisces, MegaStar Aries and MegaStar Taurus.
The NCL group has a fleet of sixteen ships in service and under construction under three brands:
Norwegian Cruise Line, Orient Lines and NCL America. The NCL fleet includes the Norwegian
Dream, Norwegian Majesty, Norwegian Sea, Norwegian Wind, Norwegian Sun, Norwegian Dawn,
Norwegian Star, Norwegian Crown and Norwegian Spirit. NCL America currently operates the Pride
of Aloha, which will subsequently be joined by the Pride of America in June 2005. The Norwegian
Jewel and the Pride of Hawaii are scheduled to be delivered in August 2005 and April 2006
respectively with two more newbuilds presently under construction. Orient Lines is an award-winning
single ship line with the Marco Polo offering niche destination-focused cruises.
Both NCL and Orient Lines market primarily in North America but also extensively in the UK,
Europe, South America and Asia whilst NCL America offers inter island cruises in Hawaii.
The Cruise Ferries brand, which was launched in 2001 presently, comprises the m.v. Wasa Queen.
A World-Class Brand
Star Cruises has played the leading role in shaping the cruise industry in Asia-Pacific by offering new
and luxurious megaships and exciting itineraries. The company also made important investments in
marketing, operations, information technology, reservations systems, safety and infrastructure.
Star Cruises made it to the Top 50 Asian Brands in 1999 and is the second leading brand that has the
“Greatest Upward Movement Potential”. It achieved the top brand name in the leisure category for
“Top 50 Asian Brands League”. (Source: Top Asian Brands, Asian Brand News, March 1999)
New and enhanced products and services provided by Star Cruises have set new standards of cruising
in Asia-Pacific. Ships like SuperStar Virgo now represent the best and most exciting vacation
experience option to both the Asian holiday maker and experienced cruiser from America, Europe and
Australia.
Star Cruises is also committed to developing the growing meetings and incentive segment of the
cruise MICE market in Asia-Pacific. SuperStar Virgo is able to cater to meeting and incentive groups
of various sizes with their world-class food and beverage, entertainment and recreation facilities.
Fly cruise programmes will be intensified to capture the medium to long haul markets, and provide
wider marketing opportunities. Currently, Star Cruises is developing its fly cruise hubs located in
Singapore, Port Klang (Malaysia), Hong Kong and Bangkok (Thailand).
Star Cruises' award-winning product is noted for its excellent service standards and the highest crew-
to-passenger ratio (1:2) of any major cruise line, reflecting the high standards of the hospitality
industry in Asia-Pacific.
Star Cruises is represented in more than 20 locations worldwide with offices in Australia, China,
Germany, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, New Zealand, Norway, Philippines,
Singapore, Sweden, Switzerland, Taiwan, Thailand, United Arab Emirates, United Kingdom and the
United States of America.

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In addition the Star Cruises Terminal in Port Klang and the Jetty Terminal on Langkawi Island,
Malaysia have been awarded Statements of Compliance under the ISPS Code. The code, which came
into mandatory effect in July 2004, sets out a framework involving cooperation between contracting
governments, government agencies, local authorities as well as members of the shipping and port
fraternity to detect and assess security threats and to take preventive measures.
Star Cruises Limited, a member of Genting Group, is listed on the Hong Kong Stock Exchange with a
market capitalisation of over US$1 billion as at 31 January 2005.
One of the top cruise ship operators in the world, the company offers cruises to more than 200
destinations worldwide on its fleet of 20 ships (which operate under the Star Cruises, Norwegian
Cruise Line, and Orient Lines names). Ships range from the "SuperStar Virgo" (2,000-passenger
capacity) to the "MegaStar Taurus," designed for private charters.
The family of Lim Goh Tong, head of Malaysian conglomerate Genting, controls nearly 55% of the
company, which was founded in 1993.
1.6.4 Disney Cruise
The Disney Cruise combines the magic of a Walt Disney resort vacation with the romance of a sea
voyage. Reminiscent of classic ocean liners, Disney vessels have two stacks and interiors that follow
an Art Deco theme. Whimsical accents cleverly incorporate the images of Mickey Mouse.
Disney genuinely offers one of the most unique cruise experiences afloat. The two-ship Disney Cruise
Line is the ultimate family option. The 1,750-passenger Disney Magic and Disney Wonder (that's a
double occupancy figure, by the way; a truer head count is its maximum, which can handle up to
3,325 folks if every berth is occupied) are sister ships and carry the same basic themes throughout
with different individual touches along the way. Disney Magic, for instance, has an art-deco theme
while Disney Wonder is more art-nouveau.
Both ships are based in Port Canaveral Florida but offer very different itinerary options. Disney
Magic sails seven night Caribbean trips (alternating Eastern and Western); Disney Wonder handles
the three-and four-day trips and limits its forays to the Bahamas. Both stop at Castaway Cay, Disney's
fabulous private island, complete with family -- and adult-only beaches. Passengers have the option to
include a land-stay at the theme resort.
With these ships, Disney has introduced a number of innovations. Chief among them is its cabins with
a bath-and-a-half, a rotating dining room schedule in which passengers eat at three different
restaurants, albeit with the same table-mates and wait-staff. It was the first cruise line to launch the
"soda card concept," an idea that has been picked up by competitors. Equally distinctive is what
Disney ships don't have: neither a casino nor a library.
Disney has said it plans to expand its line beyond the original two ships.
The following section studies the main features of the mentioned Cruise Operators.
Target Segments
Exhibit 24 : Profile of the Segments Targeted

Carnival Corp Royal Caribbean International


Costa – mass tourism product for European market, Royal Caribbean is a moderately priced cruise line,
caters to multinational clientele and rates vary by itinerary.
Windstar – specialized luxury product In 1997, Royal Caribbean purchased Celebrity
Holland America – luxury segment Cruises—a premium line to appeal to an upscale
audience—for a total fleet of 25 ships and a capacity
Seabourne – Super luxury end of the market, of more than 40,000 berths. Royal Caribbean is a good
generally couples above 35 years of age middle America, middlebrow choice, particularly if
P&O Princess Group – large British customer base for active travellers.
who take 14 day cruises
Aida – Mainly German passengers under the age of

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40

Star Cruises Disney Cruises


Good option for family cruising The two-ship Disney Cruise Line is the ultimate
Short-length itinerary segment family option and is basically targeted towards family
vacations. Singles, couples, and families of all ages
Majority passengers are Asian and Australian find Disney Cruises appealing.

Destinations
Exhibit 25 : Profile of Destinations

Carnival Corp Royal Caribbean International


Bahamas Alaska
Canada Bahamas
Caribbean Bermuda
Mexican Riviera Canada/ New England
New England Caribbean
Panama Canal Europe
Alaska Pacific Northwest
Hawaii Mexico
Europe Panama Canal
South Pacific Transatlantic
South America
Asia
Central America
Mediterranean
Baltic
Norwegian Fjords
Atlantic Islands
Indian Ocean
Far East
Canary Islands
New Caledonia
Vanuatu
Fiji

Star Cruises Disney Cruises


Malaysia Nassau, Bahamas
Thailand Castaway Cay
Singapore Caribbean
Hong Kong Mexico

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Accommodation Facilities
Exhibit 26 : Profile of Accommodation Facilities

Carnival Corp Royal Caribbean International


Grand Suite with a Private Balcony Suite
Suite with Private Balcony ◊ Royal Suite
Mini-Suite with Private Balcony ◊ Owner’s Suite
Outside Double with private balcony ◊ Royal Family suite
◊ Grand Suite
Standard Outside Stateroom
◊ Junior suite
Standard Inside Stateroom
Balcony
◊ Superior Oceanview Stateroom
◊ Deluxe Ocean View Staterooms
Interior
◊ Superior Interior Stateroom
◊ Promenade Stateroom
◊ Family Inside Stateroom
◊ Large Interior Stateroom
Oceanview
◊ Family Oceanview Stateroom
◊ Large Oceanview Stateroom
◊ Oceanview Stateroom

Star Cruises Disney Cruises


Super Star Virgo Cabins Suite
◊ Executive Suite ◊ Royal Suite with Verandah
◊ Junior Suite ◊ Two Bedroom suite with Verandah
◊ Ocean view Stateroom with Balcony ◊ One Bedroom Suite with Verandah
◊ Oceanview Stateroom with Windows Deluxe family staterooms with verandah:
◊ Inside Stateroom Deluxe stateroom with verandah
Super star Gemini Cabins Deluxe ocean view stateroom
◊ Executive Suite Deluxe inside stateroom
◊ Junior Suite
Standard Inside stateroom
◊ Ocean view Stateroom with window
(Double)
◊ Ocean view Stateroom with Window
(Twin)
◊ Inside Stateroom
Star Pisces Cabin
◊ Executive Suite
◊ Junior Suite
◊ Admiral suite
◊ Deluxe Stateroom
◊ Inside Stateroom- 8.2sq meters
◊ Inside Stateroom 6.8sq meters

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1.7 ASIA CRUISE TOURISM MARKET
While global trends are relevant, the developments in the neighbouring regions would be much more
relevant to India. In this Section we present an overview of the cruise sector in Asia, duly highlighting
some key developments.
1.7.1 Growth in the region
The Asia-Pacific region experienced a growth of 134% during the 1992-2001 period. In 2001 it
reached a figure of 2.1 million nights and a global market share of 3.5%. Traditionally the region is
divided into four sectors: South Pacific (Australia, New Zealand, Solomon Islands, Indonesia, Papua
Asia and New Guinea, etc.), Southeast Asia (Malaysia, Philippines, Singapore, Vietnam, Cambodia,
Thailand, etc.), Far East (Japan, Republic of Korea, Democratic People's Republic of Korea, China,
etc.) and Trans-Pacific (Hawaii, Guam, Fiji, French Polynesia, etc.). The distribution in 2001 by sub-
region was as follows: Far East (0.215 million nights), Southeast Asia (0.430 million), Trans Pacific
(0.067 million) and South Pacific (1.16 million). In spite of its distance from the US, the effects of
September 11th were noticed briefly, given the high demand from the US. Nevertheless, the local
source market was hardly affected by the events.
According to the WTO, the real potential for the Asian market lies in selling products designed by
Asians for Asians. It is very different from the European market, especially with regard to the
demographic profile of demand, however, increasingly young Asians are following the example of
their US counterparts when it comes to lifestyle, which is a guarantee of success for cruise holidays.
1.7.2 Market Highlights
The potential of the Asian cruise market is amply demonstrated by the following facts:
Ž Singapore is one of the fastest growing ports in the world. The increase in cruise visitors in the
period from 1991 to 1996 was spectacular, going from 130,000 to 750,000 cruise passengers,
thanks to the new Singapore Cruise Centre and its international airport, which acts as a real
connecting hub for the whole of the region. If one takes into account regional cruises of only one
night, the figure exceeded the one million cruise passenger mark in 2001, in spite of the Asian
economic crisis.
Ž Singapore has been investing heavily in new facilities. In 1998 its new cruise centre opened. The
total investment was 13.8 million dollars and it can accommodate cruise ships of up to 300 metres
total length. The work undertaken included: the extension of three mooring docks (from 245 to
300 m, from 190 to 250 m, from 150 to 180 m), and the high-quality regeneration of the cruise
and regional ferry terminals. Combined with Thailand and Bangkok it offers itineraries for the
Conferences and Incentives segment, with short three-day cruises.
Ž The Middle East/Arabian Gulf/Indian Ocean represent the strongly emerging regions, marking a
growth of 88% in 200, though it only represents 0.38% of world night stays growing from around
0.10% in 1992. The main port is Dubal (United Arab Emirates); from where 7-day and 14-day
cruises set sail. It has a new cruise terminal measuring 3,300 sq meter, which was opened in
March 2001 at a cost of 2.8 million dollars. Its major international airport and its close links with
Cunard/Seabourn are playing a major role in its development. Another important destination is
Oman, with ports in Muscat, Salalah and Khasab in the Musandam, which has had a cash
injection of 26 million dollars.
Ž Asia’s strength lies in its many destinations and it is estimated that in the near future it will have
the critical mass of world category ports, enough to be able to offer its great cultural diversity.
Apart from the previously mentioned multi-million dollar investment in the Port of Singapore,
other notable investments include the ports of Port Klang (Kuala Lumpur), Penang (Malaysia) and
Langkawi (Malaysia). In addition to the diversity of destinations, Southeast Asia also has a
temperate climate, which allows it to offer cruises throughout the year.
Ž Star Cruises, with its headquarters in Singapore, absolutely dominates the Asian market. With an
order book of 1.28 billion dollars, it is expected to have exceeded 34,000 berths in 2004, taking its
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place as fourth in the world. It’s the main operator in Asia, with NYK, Princess, RCI and Cunard
some way behind.
1.7.3 Cruise passenger traffic at key ports
The following Exhibit captures the Cruise passenger traffic in the key Asian ports in 2001:
Exhibit 27 : Cruise Passenger Traffic in the main Asian Ports in 2001
Port Sector Port Calls Cruise Passengers*
Singapore SE Asia 168 231,522
Hong Kong (China) Far East 106 179,158
Port Kelang SE Asia 110 139,510
Phuket SE Asia 114 132,516
Bangkok SE Asia 85 61.016
*Does not include very short cruises and regional cruises Source: WTO Report

According to the WTO Tourism 2020 vision, “… the tourist demand in Eastern Asia and the Pacific is
that which exhibits the highest growth levels of all” stating that "there are three key development
areas within the sphere of transportation", with air traffic being the obvious one, but another being
"the growth of the cruise business, not only in the Caribbean but throughout the world, and above all
in the Far East and Europe".
Exhibit 28 : Dubai Cruise Tourism Market

Dubai has always had a strong marine positioning thanks to its excellent location on the southern Arabian
Gulf. Its shores has for generations attracted seafarers and traders for commerce, being a principal Gulf Coast
port and an important Trading Centre called the City of Merchants and famous throughout the region for its
courtesy and hospitality.
With over 282 hotels, more than 91 airlines connecting to over 132 destinations, experienced ground
operators, modern seaports and most importantly a government dedicated to creating a sound social and
economic infrastructure for the tourism industry, Dubai integrated its strengths by creating a cruise terminal
of international quality standards and is a relatively new entrant into the cruise market.
Opened in 2001 at Port Rashid and able to handle up to two ships simultaneously, the Dubai Cruise terminal
has an unique 'mobile' design to enable customization of passenger and baggage flows, with other thoughtful
features including special facilities for the physically challenged like electric golf carts for transportation,
duty-free shops, internet access, money exchanges, information centre, beautiful palm gardens, Arabian
heritage and cultural exhibits, a Cafe and much more.
Its interesting that it cruise market is spearheaded by its Department of Tourism and Commerce Marketing
(DTCM) with the objective of making Dubai the favorite tourist sport of the millennium. An increasing
number of cruise ships are already choosing Dubai as an ideal and unique destination.
Dubai offers the following to its tourists:
Ž Classic Golf on its carefully designed golf courses
Ž Bird watching especially on the Dubai Creek
Ž Arabian Experiences, including
o Desert Safaris, dune driving and wadi-bashing.
o Moonlight Arabian barbecues in thr street complete with traditional entertainment.
o Camel Racing and falconry.
o Cruises exotic of traditional wooden dhow or modern cabin cruiser on the Dubai Creek and
into the Gulf.
o The exotic sights and sounds of traditional commerce in the bustling souks and on the
Quays of the Creek.
Ž Photographic opportunities galore, elegant mosques, sumptuous palaces, brightly dressed children,
majestic camels, ancient windtowers, dusty villages and dramatic sunsets.
Ž Historical Sites especially the Dubai Museum
Ž Shoppers malls & experiences which make Dubai a shoppers paradise
Ž Archaeological sites

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1.8 FUTURE GLOBAL GROWTH TRENDS
With some 339 cruise ships plying the international waters, competition remains fierce in the cruise
industry. That means ships and their products are in a constant state of evolution. We summarize
below some of the key expected trends in 2005:
◊ Increasing embarkations from “close-to-home” ports : The market is expected to see a
marked increase in the number of ports playing an active role as embarkation terminals.
This would imply that, in addition to the main cruise ports, the other domestic ports
would also play supportive roles. This would make access more convenient and cheaper
for tourists to drive instead of fly to the nearest port. For eg. where Florida once reigned
supreme as home port of choice, now more than 30 North American cities like Norfolk,
Tampa, Baltimore, Boston, Philadelphia and San Diego boast cruise ship embarkation
terminals.
◊ Greater focus on family and family travel : Cruise ships reportedly carried more than one
million children last year. This has led to increasing focus on children in the upgradation
and expansion of kids’ facilities on cruise ships. For eg. Holland America offers “kids-
only” shore excursions in Alaska that include treasure hunts, tram rides and hikes. The
Disney Magic and Disney Wonder have all-new teen-dedicated spaces in addition to age
specific programmes for the very young and the pre-teens.
◊ Increase in choices & flexibilities offered to passengers: Cruise ships are moving away
from rigidity offering flexible dining times, open seating, alternative restaurants. Carnival
“Fun Ships” have expanded dining options to include 24-hour pizzerias, New York-style
delis, sushi bars and steakhouse-style supper clubs. A few cruise lines also allow guests to
pre-reserve shore excursions and spa treatments online. Holland America is adding a
couple’s massage room to all its ships. Princess has taken its new custom-developed
Lotus Spa program fleetwide, with new treatment options such as Chakra Stone Therapy
and Wild Strawberry Back Cleanse. Several Carnival ships have installed “virtual
bicycles” allowing road warriors to “tour” various routes such as mountain pathways or
snow-covered trails. Products are being made increasing exclusive and tailored for each
tourists preferences.
◊ Exotic locales and itineraries: In response to passengers continued demand for more and
more new places to visit, cruise lines are looking for new and exotic locales to woo their
customers. This has resulted in an explosion in itineraries with the cruise-lines today
vying with one another in offering exotic cruise destinations. Radisson Seven Seas
Cruises visit remote islands in Micronesia and Husavik in Iceland, whale-watching capital
of Europe. Crystal Cruises can take you to Ho Chi Minh City or Split, Croatia. Cunard’s
Queen Elizabeth 2 docks at the Canary Islands and Dakar, Senegal.
◊ Growing Variety of Ships: While on the one hand several mega-monster cruise ships
carrying as many as 2,600 passengers apiece have been launched, there is also a trend
towards a wave of small ships limited to between 100 and 250 passengers, such as
“exploration” cruise-ships (capable of entering small coves), sleek vessels such as of the
Windstar Cruises, and a number of other smaller and elite ships. Though the small new
ships aren’t very competitive in pricing, they’re generally less expensive than the larger
luxury ships whose standards they emulate. Thus, the trend is now moving towards a
choice of tiny, small, medium-sized, large, and monstrous vessels in just about any
reasonable price range.
◊ Growth in Drive Market Cruises: Following 9/11 many cruise lines have adjusted their
itineraries to allow more ships to depart from drive-friendly ports to accommodate
travellers who prefer not to fly. This has enabled the cruise lines to tap into an eager
market who’d rather drive over than fly before hopping aboard a ship.

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◊ Rebirth Of The Passenger-Carrying Freighter: There’s yet another cruise alternative.
Having all but disappeared about a decade ago, freighter sailings have made a remarkable
comeback and are now available on no fewer than forty vessels going to all inhabited
areas of the world. The reason behind this is increasing computerization of freighter
operation that has lessened the need for crew and made their cabins available for
passengers, at rates that can run as low as $80 a day per person, but more usually hover
around $100 to $110 still making it attractive for passengers.
◊ Boom in Theme Cruises: Along with the expansion in itineraries has come a vastly
greater schedule of activities at sea, almost always at no extra charge to the basic tariff.
Movies have been joined by full-scale stage shows; ocean skeet shooting now takes a rear
seat to spa-style aerobics and yoga meditation; and “theme” cruises—extra heavy
attention to styles of music, historical periods, food specialties, murder-mystery, square
dancing, lectures by athletes, chefs, poets, and inspirational psychologists—are numbered
in the dozens.

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2 INDIAN CRUISE TOURISM SCENARIO

India today presents a largely unexplored cruise tourism market with almost 100% of its potential
waiting to be explored. With new itineraries and exotic locales becoming more and more important
for the survival of competing cruise lines, a country like India with its globally recognized heritage
and natural wealth, its exotic and attractive locations, its beautiful destinations can strategize to
position itself on the itinerary of most cruise companies.
In this section we have analyzed the Indian cruise tourism market to see the trends, the potential and
the possible growth direction.

2.1 INDIAN TOURISM MARKET SCENARIO


The Indian Tourism sector has shown remarkable buoyancy in the past five years.
2.1.1 Indian Tourist Trends
India witnessed a doubling of the foreign tourist arrivals from 1.23 million in 1991 to 2.64 million in
2003 with the tourism earning increasing by 228.7% from Rs.431.8 million in 1991 to Rs. 1419.5
million in 2002. As on 2003 the size of the tourism industry in India was US$ 4 Billion.
Exhibit 29 shows the statistics of Tourists in India
Exhibit 29 : Statistics of Indian Tourists : 1999-2003
(in millions)
Period International Arrivals Outbound Tourists Domestic Tourists
1999 2.48 4.11 190.67
2000 2.65 4.42 220.11
2001 2.54 4.56 236.47
2002 2.38 4.94 269.60
2003 2.73 5.35 309.03
2004 3.36 N/a N/a
Source: www.indiastat.com
The period 1999 to 2003 has shown an impressive Compounded Annual Growth Rate of 12.83% for
domestic tourists and a CAGR of 6.79% for outbound tourists. In respect of International arrivals, it is
well known that this is largely linked to global event especially events in South East Asia and to some
extent, events happening in North America/ Europe since most of the tourist traffic originates from
that part of the globe. Thus the 9/11 effect and the SARS effect can be seen very clearly in the fall in
tourist arrivals for the years 2001 and 2002. However, total international tourist arrivals in India has
bounced back in 2003 and steadily increasing over the past decade which proves that India has a lot of
appeal in the international market.
WTTC projects India’s travel and tourism industry to grow at CAGR of 7.5% upto 2014 much above
the expected growth in South East Asia and the world aggregate level. The WTO projects an annual
average growth rate of 6.2% in South Asia over a larger timeframe till 2020.
The buoyancy in the Indian Tourism market will undoubtedly have a positive impact on the cruise
tourism potential in the country, as cruise tourism forms one of the very attractive tourism options and
would compete favourably with the other offerings.
2.1.2 Indian Tourism Market Dynamics
Several dynamics and trends can be identified that have attributed to this increase in tourism in the
country. These have been covered in this section:
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Buoyant economy has contributed to larger disposable incomes among Indians


India’s economy has been one of the fastest growing in the world during the last 13 years. Economic
progress has helped to create a proportionately small but absolutely quite large “middle class”
estimated at a number between 75 and 150 million people in 2004. Of these, research suggests that
around 25 million have incomes which are sufficient for them to travel abroad should they wish to do
so, and it also appears that this group in increasing numerically quite rapidly.
An important driving force has been the steady move towards economic liberalisation in India. There
have been considerable foreign investment; some high technology industries have made substantial
inroads into India’s employment scene, especially in the area of information technology but also in
areas such as communications and pharmaceuticals. Such developments have resulted in an
emergence of a well-educated and well-remunerated young “technocrats” of the IT industry. In
addition there has also been an upsurge in prosperity on the part of other groups such as small, self-
employed businessmen and traders who have benefited directly from economic liberalisation. This
latter category has emerged as a key element in Indian tourism circuit, both to short- and long-haul
destinations reflecting the potential in the Indian markets for the tourism sector.
With this background, India presents a tremendous potential for a sizable segment that would venture
into different facets of the tourism industry, including the latest Cruise Tourism sensation.
Positive social & demographic factors are creating an avid travel segment in India
Economic liberalisation and other economic drivers mentioned earlier have had a remarkable effect on
the social profile of Indians. Some of the factors that have positively influenced travel abroad include
the following:
◊ A steady rise in personal incomes, due to the booming economy and a rise in dual income
families. This has led to a rise in outbound travel, which is increasing by nearly 20% every year.
There are around 25 million people in India with incomes sufficient for them to travel abroad.
Educated professionals, self-employed businessmen & traders are now indulging in overseas
travel, which was once considered to be the domain of the very rich.
◊ Young Indians are exposed to much greater degree of international influences, especially through
television with an increasing exposure to international brands and consumer products. This has
brought with it demand for and an increased awareness of such brands and lifestyles within India
itself.
◊ As a country of 1 billion people, even a small percentage of rich Indians make a sizeable figure in
absolute terms. It is estimated that the number of rupee millionaires in India exceeds 2,00,000.
With India’s close knit family society this is creating a demand for more family leisure travel.
◊ The double income households, where the raising of a family is postponed and two people are
able to generate income, has created a new category of leisure travellers.
Exhibit 30 gives a profile of the outbound travellers in India. The greatest volume of travel abroad is
generated by the main metropolitan cities coupled with upcoming metros like Bangalore and
Hyderabad. Substantial number of travellers also belongs to the trader community from Gujarat and
Rajasthan, who combine business and leisure travel.
Exhibit 30 : Trip purpose of outbound travel by major generating regions, 1996-97 (% Of total)

Region of Leisure/ Joining Visiting Employ- Business Religion Studies Other Total
origin Holiday family friends ment

Maharashtra 26.8 12.7 18.2 13.4 21.6 1.4 3.3 2.6 100.0
Delhi 16.8 7.6 24.0 9.4 34.8 1.5 4.1 1.8 100.0
Kerala 7.5 21.9 20.9 20.7 21.4 3.2 1.4 3.0 100.0
Tamil Nadu 14.7 13.4 10.7 12.0 31.8 0.6 1.6 15.2 100.0

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West Bengal 29.7 7.9 32.9 3.5 20.9 2.6 0.0 2.5 100.0
Assam 7.6 4.5 20.6 5.0 60.3 0.3 1.4 0.3 100.0
Karnataka 14.6 11.0 13.4 11.3 43.0 1.5 2.4 2.8 100.0
Punjab 8.0 8.8 38.9 15.5 26.9 0.0 1.3 0.6 100.0
Uttar 18.1 5.9 25.4 17.8 22.9 2.1 2.7 5.1 100.0
Pradesh
Gujarat 10.1 18.2 15.0 19.1 34.1 1.1 0.8 1.6 100.0
All regions 17.0 12.7 20.3 13.4 29.1 1.5 2.4 3.6 100.0
Source: Crisil Research and Times Research Group

Indian travel trends point towards a healthy rise in outbound travel


Trends suggest outbound travel in India has not suffered from the turmoil of recent political
uncertainties, including the ongoing conflict with Pakistan.
The following trends are significant :
◊ The average length of stay of Indians for long haul is 21 days, while short-haul travel to
Thailand and Singapore is 11 days, up from the previous six days.
◊ Indians travelling abroad spent around $1.15 billion in 1998, up an average of 10 percent
during each of the past four years.
◊ Business travel has notched a steady 40 percent growth rate.
◊ According to American Express, of the Indians travelling, 71 percent list shopping a priority,
while 22 percent spend more than $2,000 per trip. While Indians rank ninth on Singapore's
visitor arrivals chart, they are the third highest revenue-generating market. As avid shoppers,
Indians comprised the highest per capita visitor spend in 1998 at S$1,713 (US$1,000).
◊ Trends in shopping have changed. Designer goods, crystal, specialty foods and latest
electronic gadgets are in vogue as against low-value items popular earlier.
◊ Arctic cruises and other forms of "soft adventure" travel, such as white-water rafting and hot-
air ballooning, are fast becoming favourites. In Thailand, spas are becoming more popular
among the upper-income Indians
◊ India's corporate incentives and conferences business travel to Thailand also are on rise.
As per a leading National Tourism Organization present in India, following trends are seen among
Indian travellers:
◊ First time travellers prefer short- to medium-haul destinations. Southeast Asian countries
including Thailand, Singapore and Malaysia appear predominantly on itineraries. First time
travellers prefer cheap packaged holidays.
◊ Frequent travellers prefer long-haul destinations, such as the United States and Europe.
◊ There has been an upsurge in niche holidaying, which includes soft adventure travel.
◊ Seasoned travellers are looking for new holiday destinations such as South Africa, Kenya,
New Zealand.
◊ Honeymooning abroad is getting popular
Business travel has become an important contributor to outbound travel
The trader class that primarily visited countries in South East Asia for business purposes previously
dominated this segment. Professionals from the salaried sector have now supplemented it. The
growing economy has resulted in the success of many Indian companies with international clientele
resulting in expansion of their businesses overseas. This coupled with the presence of many
multinational groups in India has resulted in the flourishing of international travel. Nowadays, it is
very common to find professionals attend meetings and training seminars overseas. This is especially
from the ‘Silicon Triangle’ of Bangalore, Hyderabad and Chennai and other commercial hubs –
Mumbai and more recently, Delhi. Also, incentives in the form of overseas vacations to dealers as a

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reward for meeting or surpassing sales targets and staff incentives to motivate performance and build
loyalty are concepts that are getting more popular by the day.
Leisure Travel is becoming an increasing preference among Indians
Increase in foreign exchange allowance, economic boom, increased salaries and the emergence of
nuclear/ double-income families led to a rapid rise in the demand for leisure travel overseas which
was previously confined to the very rich.
This segment depicts a set pattern. First time travellers generally prefer destinations that offer greater
degree of familiarity and comfort in terms of culture, food and drink and recreation. Going forward,
they are more willing to explore destinations with probably a lesser extent but still some degree of
similarity as their resident country. Thus, countries in South East Asia become a preferred choice in
this stage. After a couple of trips, travellers feel comfortable enough to venture out to countries like
USA, Europe or Australia and New Zealand. Experienced travellers venture out to unconventional
destinations like Israel, Netherlands or go in for niche tourism products like soft adventure or cruising
in Alaska.
Most travellers go in for package tours wherein they can cover different countries or most prime
tourist hubs in a single tour.
This segment can be further divided into the following categories:
◊ Family market : Indian families being more tightly-knit than their Western counterparts,
family travel includes not only the immediate family but also the extended family or close
family friends. Also, with rise in incomes and with the youngest end of the consumer
market having a fair say, more parents are including children in overseas travel. In fact,
quite a few travel circuits are determined, keeping in mind the preferences of children.
◊ Double-income families : Quite a few couples have started following the Western trend
of concentrating on their careers and delaying the start of a family until their early 30s.
This group tends to be more sophisticated, well-educated with good pay packages and
have generally had an experience of travelling abroad for work purposes. This group
termed as “dinks” i.e. double income-no kids, originates from the commercial hubs of
Mumbai, Bangalore, Hyderabad, Chennai and Delhi.
◊ Single, well-educated women : Rise in the number of women professionals with jobs in
good management positions and good pay packages as well as a shift from the regular
school of thought that ‘marriage before the age of 25 is necessary to attain a respectable
social status’ has led to the emergence of this segment. Currently, such groups are in the
first or the second stage of the leisure travel concept. Thus, they are more into quasi-
domestic destinations. However, it will not be long before they start exploring
destinations like the USA, Australia or New Zealand. Interestingly, no such group of
single male travellers appear to have made a mark on the travel circuits.
◊ Retired couples : Though this segment ideally fits into the category detailed below i.e.
‘Travel to visit friends and relatives’, a growth has been seen in the Leisure travel
segment too. This comes from retired couples who have sufficient savings to indulge in
such travel and are encouraged by their children (who fit into the other travel segments).
They generally opt for package holidays.
◊ Honeymooners :It is becoming increasingly fashionable to go for an overseas
honeymoon. This category tends to opt for single destinations.
Travel to visit friends and relatives an important motivation
With a large number of Indians settling abroad permanently and with a growing tribe of professionals
working abroad on long-term contracts, there are now large Indian communities in countries like UK,
USA, Middle East, Canada and South Africa. Thus overseas travel to visit friends and relatives has

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Ministry of Tourism, Government of India
been on the rise, especially among the senior citizen class. Such travel tends to be of a longer duration
and invariably, a leisure travel package gets added on to the main purpose of travel.
Travel for educational purposes
Education abroad, being a matter of great prestige, there are quite a few students who go in for post-
graduate studies in the USA, UK and Australia. While this segment was previously dominated by the
ultra-rich, availability of grants and student loans has seen a rise in the proportion of children from
middle-class families. Currently, Indians constitute the largest number of foreign students in USA.
Also, the student population grows on to form part of the professional tribe working abroad and in
many cases, settling abroad permanently.
In conclusion while the above-mentioned characteristics talk about the demographic profile of
outbound tourists in totality, cruise tourists, more or less, follow a similar pattern. Thus we have an
increasing number of corporates organizing conferences on board cruise ships as also motivating/
rewarding employees and dealers in the form of cruise tours. We have a growing population of cruise
tourists in the leisure travel segment. In fact, Star Cruises, which caters to the cruise segment in Asia,
designs its itineraries including on-board activities keeping in mind the South-East Asian culture.
Thus, casinos and cabaret shows are not as prominently included as they are in cruise ships catering to
the North American/ European market. On the same lines, the concept of Disney Cruises will generate
more audience in the Indian market.

2.2 INDIAN CRUISE INDUSTRY


Cruising is still in its infancy in the Indian Tourism market – however it is picking up in an impressive
fashion. What is more important is that Indians have demonstrated a significant preference for this
product in the past five years as is evident from the fact that ‘Star Cruises’ have been an immediate
success with the Indian tourists. The marked and increasing interest that Indians have shown in
tourism activities over the past decade combined with the various socio economic factors as has been
set forth in the section above, Indian travellers present a formidable potential that can be favourably
exploited by any tourism product if the strategies are well addressed.
In this section we present an overview of the Indian cruise industry towards understanding where we
stand and in what direction we may take the development forward.
2.2.1 Target Tourism Segment for the Indian Cruise Sector
Four distinct tourism segments can be identified as presenting distinct potential for the Indian cruise
tourism sector.
◊ Foreign tourists comprising International Arrivals in India would form an immediate
and most certain target. Cruise tourism would not only benefit from the existing foreign
tourists but by itself would lead to an augmentation in this tourism segment because we
would have foreign tourist ‘flying into India’ to take the cruises. Cruise tourism would
also enable the country to extend the stay of foreign tourist in the country by offering a
value added tourism platter.
◊ Indian tourists comprising Outbound Travellers would form the second and natural
target, especially if the Cruises from India also offer the chance of touching foreign
shores. Indians who today fly to Singapore to take a cruise would naturally opt to take a
cruise form India and reach Singapore.
◊ Indian tourist who today form the Domestic Travellers would form the third important
segment because it is only circumstance which constrains them to travel within the
country and if availability, accessibility and affordability were addressed the high value
domestic tourists would happily added cruises to their tourism itinerary choice.
◊ Cruise Tourist arrivals in India, representing dedicated cruise travellers who have been
coming into India through various ports till date. It is expected that as India offers better

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Ministry of Tourism, Government of India
infrastructure and destinations, other cruise liners will come to India bringing enhanced
levels of cruise tourist
Thus it must be underlined that, in addition to international arrivals the outbound tourists as well as
the domestic tourists (both of which have been steadily rising over the past decade) also present a
key potential segment for cruise tourism. Cruises being a substitute tourism choice to any other
tourism product, its availability, accessibility and affordability in India itself will be key factors in
enabling a choice in its favour being made both by the current outbound tourists and by the domestic
tourists
2.2.2 Current Trends of Indian Cruise Tourists
It is understood that approximately 50,000 Indians set sail every year on different cruises every year7.
Nishit Saxena, country head, Princess Cruises quoted “Cruise vacation concept is being accepted very
quickly in India, with the growth rate of 20-25 per cent year-on-year boasted by most cruise
companies being represented in India”. The following section gives an overview of the trends in the
Indian Cruise market currently and in the recent past.
Cruising –‘Picking up with Indians’
Credit for increased awareness about cruises in India is attributed to Star Cruises. Star Cruises booked
8,000 Indians in 1999, and around 20,000 Indians cruised with them by the end of 2000 marking an
increase of 150% in a single year. Singapore remains the top destination of the first-time traveller,
who is attracted by the Star Cruises' $390 three-night, four-day packages. Royal Caribbean Cruises
also plans to open sales offices in Asia. The group is reportedly looking at introducing a ship on Asian
seas to tap into this new and lucrative market. Cruises do not generally form a sole-vacation for the
Indian heading to a specific destination. They tend to get clubbed with a land holiday, as airfares to
the United States and Europe are expensive.
Booking Patterns
Indians do not like to book far in advance of taking a holiday, partly through an innate tendency not to
commit themselves until they need to and partly through a desire not to commit resources before
absolutely necessary. For travel to Singapore in 1999, for example, Indians booked just 3.6 weeks in
advance and to Hong Kong the equivalent figure was 1.2 months. A decision to make a trip may in
fact be made up to a year in advance, but still it is likely that the booking will not be made until a
month of two before the time of travel.
Recent booking trends have reflected a positive increase in demand. In 2004 Princess Cruises had
seen 80 per cent of its enquiries being converted to bookings. Nishith Saxena, country head, Princess
Cruises said “The first quarter booking pattern of 2004 has shown a clear sign that passengers are
inclined to book longer duration cruises in exotic destinations like Alaska, Mediterranean, Baltic,
Panama Canal etc”. Further, Gautam Chadha, India representative of Royal Caribbean Cruises said,
“This year during January 1- May 15, we have booked more passengers than we had in the entire
calendar year of 2003”.
Awareness, availability, affordability - key deterrents for Cruises among Indians
Out of the total outbound travellers estimated at around 5.8 million annually (2004 saw a 20-25 per
cent growth in outbound travel), only around 40,000 travellers take cruise vacations, despite the fact
that Royal Caribbean entered the market a decade ago. According to Naresh Rawal, senior manager
marketing, Star Cruises India, "The slow growth is due to the fact that cruising is still a developing
holiday option in India and the gap will reduce as people become aware of the benefits of a cruise
vacation." While Nishith Saxena, country head, Princess Cruises attributes the absence of an
affordable cruise along the Indian coastline to be definitely be a reason for the lack of popularity of
cruises among masses. Others are of the opinion that the availability crunch is a factor because

7
Source: CRISIL Market interactions
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Ministry of Tourism, Government of India
Europe, Alaska and Mediterranean cruises are seasonal - only five months a year. In fact, Star Cruise
owes its popularity in India because it is the only cruise liner that offers a year-round itinerary. Three
critical factors – awareness, availability, affordability – have all be identified as reasons why cruising
has been relatively low key tourism activity among Indians thus far & which is being changed by Star
Cruises.

2.3 PRIMARY SURVEY RESPONSE TO INDIAN CRUISE TOURISM


2.3.1 Objective of the Survey
To support the secondary aspects of the study and provide qualitative inputs, a primary study will be
commissioned. The objective would be to appreciate the ‘on the ground perceptions’ and viewpoints
of foreign & domestic tourists to cruise tourism as a tourism product and other critical aspects. The
survey covered 100 Foreign tourists arriving into India and 100 domestic tourists, the focus being on
the high value tourist segment. The survey instrument was be a ‘multiple-choice’ questionnaire,
suitably designed for each segment with a view to eliciting the information and views desired. The
study essentially covered the following aspects:
Perception of India as a cruise tourism destination
Ranking of their preferred cruise ports
Critical facilities they would look for on board the cruise liner
Key facilities they would look for in the ports and terminals
Their ranking of & response to selected Indian Cruise Circuits
Any other aspect that may evolve during the course of the study
2.3.2 Profile of Respondents
A sample size of 200 respondents was covered for the following research from the cities of Mumbai
and Cochin. As part of the screening before administration of questionnaire it was ensured that the
selected respondents were:
- Those who have travelled on a holiday at least once a year
- Those that have travelled to a foreign destination at least once in the last 5 years
- Those who are the decision makers in their family regarding the destination of holiday &
means of travelling
2.3.3 Primary Survey Response
We summarize below the results of the primary survey. The responses received are important from
the point of view of the strategies evolved for developing cruise tourism in India and have been duly
considered.
Top 5 Foreign Destinations for Indians
As per the Survey results Singapore emerged as the most frequently visited country with 47%
domestic tourist visitors. In Europe, UK was the most frequently visited with 38% of the respondents
visiting the country. The other popular destinations that followed were Dubai, Thailand and Malaysia
respectively.
It is clear that including one or more of these foreign destinations to the Indian Cruise Circuits would
increase the attraction of the cruise to Indians making it more marketable.

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Ministry of Tourism, Government of India
Exhibit 31 : Top 5 Overseas destinations for Indian Tourists

%
47
38
27
17 15

Singapore Europe Dubai Thailand Malaysia

Source: CRISIL - AC Nielsen ORG-MARG Survey, 2005

Top 5 Foreign Destinations for Foreign Tourists


Survey results indicate that 100 % of the respondents had visited South Asia and Europe. In South
Asia, Thailand emerged as the most popular. The other popular destinations were North America,
South America, and China/Japan respectively as shown in the Exhibit below.
Inclusion of some of the destinations in South Asia in the Indian Cruise Circuit would make the
Indian cruise products more attractive reflecting a cruise potential for both the Indian tourists as well
as foreigners visiting India.
Exhibit 32 : Top 5 Foreign Destinations for Foreign Tourists in India

% 100 100

28
21 16

South Asia Europe North America South America China/Japan

Source: CRISIL - AC Nielsen ORG-MARG Survey, 2005


Attractiveness of Type of Holiday
The survey revealed that travelling overseas followed by a beach holiday was the most sought after
type of holiday for both domestic as well as foreign tourists. The Cruise Liner was the 3rd most
preferred type of holiday as far as the domestic tourists go followed by a holiday on mountain and an
adventure holiday. On the other hand for the foreign tourists a holiday on a mountain, adventure
holiday were more preferred to the cruise holiday.
The cruise market study shows that all the mentioned holiday types can form a part of the cruise
vacation depending upon individual preferences. When the cruise ships call at a port, there are land
excursions, arranged, so depending on the type of places around, the geography and connectivity a
combination of the above can be offered as a package for e.g. a beach excursion, a mountain and
adventure package, visiting foreign ports-all these would cater to each of the preferences below.
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Ministry of Tourism, Government of India
Exhibit 33 : Attractiveness of different Holidays for Foreign and Domestic Tourists

Figs on right represent Overall Mean Scores

Foreign Domestic

Source: CRISIL - AC Nielsen ORG-MARG Survey, 2005


Cruising Trends : Actual Cruisers
Survey results show that 22 % of the Indian respondents had been on a cruise while only 3 % of the
foreign tourists in India had actually been on a cruise.
Exhibit 34 : Actual Cruisers among Domestic and Foreign Tourists

Source: CRISIL - AC Nielsen ORG-MARG Survey, 2005

Intentions to go on a Cruise Holiday among domestic and foreign tourists


The trend among domestic tourists showed that 81% of them would want to go on a cruise holiday
while 3 % of them couldn’t make their minds up and the remaining were sure they would never go.

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Ministry of Tourism, Government of India
The trend among foreign tourists in India reflected that 46 % of them would like to go on a cruise
holiday while 19% were not sure and the remaining 33 % were not interested at all.
The above finding reveal that while 46 % of the international arrivals in India are interested in going
on a cruise, only 3 % of them had actually been on a cruise, thus leaving us with a great potential of
foreign tourists who could be tapped for a cruise holiday. Within the domestic market it was clear that
81 % of them would like to on a cruise vacation while only 22 % of them had actually been on one.
There is a small section of both markets that is not very sure on whether they would like to go on a
cruise, so the main aim should be :
- Providing the ones that want to go with opportunity to cruise while appealing to their taste
and class
- Converting the ones that are not sure towards attractive packages so that they would want to
cruise
- Make the ones that are not interested aware of the attractiveness and the appeal of cruise as a
vacation option so that they atleast think twice before saying a ‘NO”
The above can be achieved through making them aware of the existing circuits, facilitates,
connectivity, activities through various promoting and marketing strategies, through tour operators
and other government initiatives. Also building a brand, emphasizing quality assurances, providing
demand driven information, competing at a global level, collaborating on international and regional
platforms to create a highly visible platform for this industry would play an important role.

Exhibit 35 : Intention to go on a Cruise among Domestic and Foreign Tourists

Source: CRISIL - AC Nielsen ORG-MARG Survey, 2005


Popular Cruise Destinations for Domestic Tourists
The survey conducted on the most popular cruise destination for domestic tourists revealed that Hong
Kong and Singapore were the most popular accounting for 35 % and 30 % respectively, reflecting
once again their priority for visiting South Asia and the need to actively include these in the Indian
Cruise Circuit itineraries.

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Ministry of Tourism, Government of India
Exhibit 36 : Popular Cruise Destinations for Domestic Tourist

Source: CRISIL - AC Nielsen ORG-MARG Survey, 2005


What attracts tourist while on a Cruise
The survey revealed that the foreign and the domestic tourists shared the same preferences by giving
priority to seeing many places followed by the pleasure of travelling through sea as the most attractive
features of a cruise.
This proves that offering many destinations through carefully chosen ports of call, and through
attractive excursion packages would make the cruise a desirable vacation. The tourists’ preference
also reveals that the “Cruise Ship is not being accepted as a Destination in itself, but more so for its
feature that offers visits to different places through the sea route”.
It is therefore necessary to consider the marketing and promotion aspect of Cruise Tourism wherein
more emphasis should be laid on the cruise as a Floating Resort, with its entire gamut of activities and
entertainment, which has been dealt in detail under the market features and trends.
For foreign tourists, destination at the ports is more important to attractions on the cruise, revealing
the importance the foreign tourists give to the ports of call. Thus if India wants to woo the foreigners
who visit India to take a cruise, there should be a focus on the shore excursions and on the quality of
destinations that can be effectively linked at each port.
For domestic tourists the destination at ports seems to be of least importance, and attractions on the
cruises seem to be more attractive, proving that Indians give more preference to the services offered
on the ship rather than those at ports.
Exhibit 37 : What attracts tourists while on a Cruise

Foreign Domestic

Source: CRISIL - AC Nielsen ORG-MARG Survey, 2005

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Ministry of Tourism, Government of India
Aspects considered important while on a Cruise
On the dimension covering the importance of different aspects while going on a cruise, survey results
showed that the two market segments i.e. Domestic Tourists and the Foreign Tourists had a striking
difference in their list of priorities, thus bringing out the Indian likes and their market preferences.

Exhibit 38 : Relative importance of different aspects

Foreign Domestic
Source: CRISIL - AC Nielsen ORG-MARG Survey, 2005
It is clear that for domestic tourists the food/cuisine rates on top of the list. Accommodation,
entertainment/ leisure facilities and ship liner more or less have been given the same importance while
informality onboard and convenience while disembarking hold least priority confirming the fact that
Indians tourists do not give too much priority to the port facilities. This would be particularly of use
while formulating the marketing and promoting strategies that are suitable for the Indian markets.
On the other hand the foreign tourists in India give the ship liner itself top priority followed closely by
food, accommodation, informality on board and convenience while disembarking, which hold more or
less the same rating. It is therefore important that if we want to convert the foreign tourists visiting
India to cruisers then we have to get more ship liners that have an international grading, improve our
port facilities and work toward making India a hub for cruise tourism.
Rating of Ports by Domestic Tourists
The respondents were asked to rate the ports that have been selected for cruise tourism in India.
Results reveal that Goa got the highest rating wherein 57 of them found it excellent 34 found it good
and only a minimal number rated it as average. Mumbai followed closely after Goa with 30 giving it
an excellent rating and 40 a good rating. The other ports that were rated in the order of priority were
Cochin, Chennai, Mangalore and Tuticorin.
As seen earlier the domestic tourists give least preferences to the ports, so the rating here mostly
reveals the destination popularity rather than in terms of the port infrastructure facility. Nevertheless,
if domestic tourists are to be converted to cruise tourists then these factors need to be considered
strongly from all aspects of the ports including the infrastructure facilities, wherein some ports which
have got a poor rating, like Tuticorin and Mangalore need to be upgraded.

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Ministry of Tourism, Government of India
Exhibit 39 : Rating of the Ports by Domestic Tourists

GOA 57 34 6 3

M UM BAI 30 40 23 3 4

C O C H IN 18 38 32 10 11

CHENN AI 13 27 38 17 5

M ANG ALO R E 12 34 37 7 9 1

T U T IC O R IN 3 32 41 14 6 4

E x c e lle n t Good A v e ra g e B e lo w A v e ra g e Poor D o n 't K n o w / C a n 't S a y

Source: CRISIL - AC Nielsen ORG-MARG Survey, 2005


Rating of Ports by Foreign Tourists
Ratings given by the foreign tourists were found to be contradictory to the ones given by domestic
tourists where Cochin was given the top priority with 36 of them rating it excellent and 50 rating it
good. Goa followed Cochin closely with 30 giving it an excellent rating and 37 a good rating. The
other ports rated in the order of priority were Mumbai, Chennai, Mangalore and Tuticorin.
According to the foreign tourists ports services and infrastructure hold importance thus revealing that
the Tuticorin and Mangalore ports are below average with regards to the same.
Exhibit 40 : Rating of Ports by Foreign Tourists

C O C H IN 36 50 12 11

GOA 30 37 17 11 14

M UM BAI 14 48 23 3 7 5

CHENN AI 1 12 29 11 5 42

M ANG ALO RE 3 13 1 5 78

T U T IC O R IN 21 4 5 88

E x c e lle n t Good A v e ra g e B e lo w A v e r a g e Poor D o n 't K n o w / C a n 't S a y

Source: CRISIL - AC Nielsen ORG-MARG Survey, 2005

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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
Importance when Disembarking from a Cruise
The survey sought to find out which services and facilities at the ports hold importance while
disembarking from a cruise. The Exhibit below shows the results graphically.

Exhibit 41 : Aspects considered important while disembarking from the Cruise

4.24

3.88

3.96

4.16

4.36

3.96

Source: CRISIL - AC Nielsen ORG-MARG Survey, 2005


As indicated earlier it is found that the foreign tourists rate these conveniences while disembarking as
an important determining factor. While disembarking it is revealed that fast immigration and transit
through ports and positive attitude of personnel at ports hold top most priority for them. The other
factors like interesting places to see at ports, shopping/entertainment facilities and conveniences at
port terminal, fall second in place and are rated at an equal level.
In respect of domestic tourists, 91 domestic tourists rate immigration and transit through ports as top
priority, but unlike the foreigners, 86 of the domestic tourists rated good hospitality facilities at the
terminal and 82 of rated interesting places to see at the ports as important determining factor. Good
hospitality facilities are of least priority for Indians tourists.
The above preference is a clear indication that the tourists, both domestic and foreign, feel that their
immigration procedures and clearances should be smooth, hassle free and least time consuming. As
studied in the procedures section, the Indian system at ports should aim at a speedy clearance of
immigration and probably look at ways of clearing it before the cruise liner calls at its respective
ports.
The survey also reveals that hospitality management is necessary and that regular human resource
development and training must be conducted for the personnel at the port terminals.
Initiatives considered important to Position India as a Cruise Destination
The survey questioned domestic and foreign tourists on the priority that they would place on various
initiatives that must be taken to position India as a cruise destination.
According to 75 foreign tourists and 37 domestic tourists building an international cruise terminal was
most important, thus substantiating the recommendation that cruise terminals of an international
standard must be set up at the identified ports in order to get the major cruise operators to our ports.
64 of the foreign respondents are of the view that India needs to be more tourists friendly. A step
towards this could be training all the stakeholders, and those in the tourism sector, conducting
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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
workshops for them in hospitality management etc, which has been dealt with in detail in the HR
module.
Cruise Industry is said to be a supply driven industry wherein if adequate facilities, services and
infrastructure are provided, that will in turn attract more and more cruise operators to the Indian
shores, so if initiatives are taken by the concerned authorities in all these respects, India as a cruise
destinations stands a great potential owing to its continental spread and the culture/heritage offerings.
Another initiative that was thought to be of importance by the foreign tourists and domestic tourists
was creating good destinations at the ports of call.
Exhibit 42 : Initiatives rated important to develop Cruise Tourism in India

B u ild in te r n a tio n a l c r u is e 75
te r m in a ls 37

M a k e In d ia m o r e to u r is t 64
fr ie n d ly 14

C r e a te g o o d d e s tin a tio n s a t 52
p o r t o f c a ll 44

M a r k e t In d ia n c r u is e
to u r is m to d o m e s tic &
38
fo r e ig n to u r is ts 23

P u t in p la c e fa s t lin k a g e s &
c o n n e c tivity to fa c ilita te 37
in te r n a l tr a ve l 37

B r in g in in te r n a tio n a l c r u is e 27
bra nds 16

H a ve s ta te -o f-th e -a r t c r u is e 26
lin e r s 35

Foreign Domestic

Source: CRISIL - AC Nielsen ORG-MARG Survey, 2005


Rating Cruise Circuits by Domestic Tourists
The following Exhibits capture the rating of cruise circuits by by both domestic and foreign tourists
Exhibit 43 : Rating Cruise Circuits in India

-100%
-10
-17
-27 -23
-31 -31
-80%

-44
-60% -46
-50
-52 -45 -41
-40%

-36
-20% -30
-23 -23
-18 -22
-7
--21 --31 -4 -6
-0% -2 -1 -1 -3
-Cochin-Goa- -Mumbai-Colombo--Mumbai-Chennai- -Mumbai-Cochin- -Cochin-Kerala -Mumbai-Colombo-
-Lakshadweep- -Singapore -Colombo- -Goa-Gujarat -Backwaters-Goa- -Cochin-Maldives 70
-Male -Andamans -Mangalore

-Not Attractive At All -Not Very Attractive -Attractive


-Quite Attractive Foreign-Extremely Attractive Domestic
CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India

Exhibit 44 : Rating Cruise Circuits by Foreign Tourists

-100%
-7 -11 -11
-15 -18
-33
-80%
-27 -27
-21
-35
-61
-60%

-36
-37 -38 -42
-40%

-42
-20% -19 -23 -11 -10
-8
-7 -5 -7 -5
-6 -2
--23 -5 -8 -7 -7
-0% -3 -1
-Cochin-Kerala -Mumbai-Cochin- -Cochin-Goa- -Mumbai-Colombo--Mumbai-Colombo--Mumbai-Chennai-
-Backwaters-Goa- -Goa-Gujarat -Lakshadweep- -Cochin-Maldives -Singapore -Colombo-
-Mangalore -Male -Andamans
-Don't Know / Can't Say -Not Attractive At All -Not Very Attractive

-Attractive -Quite Attractive -Extremely Attractive

Source: CRISIL - AC Nielsen ORG-MARG Survey, 2005


The survey accordingly reveals that among domestic tourists the Cochin-Goa-Lakshadweep-Male
circuit has been given the top rating with 27% and 52% giving it a rating of extremely attractive and
quite attractive respectively. This is followed closely by Mumbai-Colombo-Singapore circuit.
Among foreign tourists the Cochin-Kerala-Backwaters-Goa-Mangalore has been given the top rating.
This is probably because of the strong marketing positioning of Kerala among foreign tourists.
Rating the potential of River Cruises in India
Both Indian and Foreign Tourist consider river cruises as offering high potential, as has been captured
in the following Exhibit:
Exhibit 45 : Does India have good River Cruises to offer?

Domestic Tourists Foreign Tourists

No
39% No
Yes 9%
86% DK/CS
5%
Yes
61%

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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India

Source: CRISIL - AC Nielsen ORG-MARG Survey, 2005


Rating Indian Coastal and River Cruises
Both Indian and Foreign Tourist were asked to rate purely Indian cruises which were a combination of
both sea and river cruises. The following exhibits capture the response:
Exhibit 46 : Rating Indian Cruises by Domestic Tourists

-100%
-12 -9 -12
-15
-24 -25
-80%
-52 -31
-39 -41
-40
-60% -34

-55
-40%
-25 -29 -40
-38 -29
-28
-20%
-14 -18 -15
-10 -10
-10
-10 -5 -2 -5 -3 -4
-2 --12 -4 -1 -3 -3
-0%
-Goa Sea & -Kerala -Sundarbans -Ganges Cruise -Gujarat Coastal -Godavari -Mangalore
-River Cruises -Backwater -Cruise -Cruise -Cruise -Coastal Cruise
-Cruise
-Don't Know / Can't Say -Not Attractive At All -Not Very Attractive

-Attractive -Quite Attractive -Extremely Attractive

Exhibit 47 : Rating Indian Cruises by Foreign Tourists

-100% -4 -2 -3 --12 -4
-7 -3 -3 -3
-8 --21
-2 -9
--11
-80% -18
-42
-63 --22
-60%

-90 -94 -94


-85
-40%
-32 -66

-28
-20% --22

-15
-6
-0% --21
-Kerala -Goa Sea & -Ganges Cruise -Sundarbans -Gujarat Coastal -Godavari -Mangalore
-Backwater -River Cruises -Cruise -Cruise -Cruise -Coastal Cruise
-Cruise
-Don't Know / Can't Say -Not Attractive At All -Not Very Attractive

-Attractive -Quite Attractive -Extremely Attractive

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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
Source: CRISIL - AC Nielsen ORG-MARG Survey, 2005

The most striking fact that emerges is that Foreign Tourists are mostly unaware of the Indian Coastal
and river because, with the exception of the Kerala Backwater cruise their response has been ‘Don’t
know-Cant say’ for most of the other circuits. Form the 63% who have rated Kerala Backwaters as
‘extremely attractive’ it can be seen that the other circuits also have the potential to be well positioned
among Foreign Tourists if the right initiatives are taken.
In respect of Indian tourists the Goa Sea and River cruise finds the top place followed by the Kerala
Backwater Cruise. Here too it is clear that lack of proper positioning and marketing has led to the
relative lower interest in the other crusies.

2.4 INDIA AS A CRUISE DESTINATION


Cruise Tourism is relatively new in India, but an emerging sector in the Indian shipping horizon. India
by the way of its history, unique culture and pristine natural beauty offers an unmatched potential as a
destination of choice for cruise tourists. In India, Cruise Tourism is a niche market and is primarily
associated with hospitality and entertainment, therefore having a great potential to encourage
economic growth and employment opportunities, due to its spin off benefits.
2.4.1 Cruise Tourist arrivals in India
As we have seen in Chapter 1, World Cruise Industry is globally the fastest growing segment of the
tourism industry for more than a decade and has reached a growth of 8% per annum in the recent past.
In line with international trends the sector holds significant potential in India too.
Exhibit 48 presents cruise tourist arrivals in India between 1999 and 2005.
Exhibit 48 : Cruise Tourists Arrivals in India – 1999:2005
Year Cruise Tourists Increase in International Cruise Tourists
(in millions) Cruise Tourists Arrivals (in as a % of
millions) International
Arrivals
1998-99 0.017 2.48 0.69%
1999-00 0.024 41.18% 2.65 0.91%
2000-01 0.041 70.83% 2.54 1.61%
2001-02 0.019 -53.66% 2.38 0.80%
2002-03 0.012 -36.84% 2.73 0.44%
2003-04 0.025^ 108.33% 3.36 0.74%
2004-05 0.022^ -12.00% 3.73* 0.59%
Source: www.indiastat.com & information received form Cochin Port

^ Based on information available for Mumbai, Cochin and Goa Port only
* Based on information available of 1555883 foreign tourist arrivals in the first five months of 2005

The year 2000-01 shows an impressive increase of 70.83% in cruise tourist arrivals in India with
cruise tourists being around 1.61% of International Arrivals. The next two years results are largely
linked to the events in South East Asia since cruises are headed to most South East Asian destinations
and, to some extent, events happening in North America/ Europe since most of the cruise traffic
originates from that part of the globe. Thus the 9/11 effect and the SARS effect can be seen very
clearly in the fall in cruise tourist arrivals for the years 2001-02 and 2002-03. However, it is
heartening to note the process of reversal happening in the year 2003-04 which saw a positive trend.
The fact that international tourist arrivals in India have shown a steady increase over the years proves
that India has a lot of appeal in the international market. It is indisputable that this would have a
favourable impact on the Indian cruise tourism market.
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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
2.4.2 Indian Cruise market scenario
We highlight below the main aspects of the Indian cruise market scenario.
India as a Port of Call
In the Cruise Industry, India presently serves essentially as Port of Call, which is port wherein ships
call in their schedule and which usually serves as an attraction for marketing of their respective
cruises. The following five ports usually receive ships during the months October to May:
◊ Mumbai
◊ Cochin
◊ Mormugao
◊ New Mangalore
◊ Tutitcorin
India as a Turnaround Port
A turnaround port is essentially a port where the cruise ship, either on its onward or return journey,
allows its passengers to embark or disembark. Sometimes all the passengers disembark and the ship
picks up the passengers who had disembarked during the previous call. Thus, a cruise ship at a
turnaround ports sees a change in its passenger profile.
There are very few ships that use the Indian port as a Turnaround Port. A few examples of ships
taking world cruises wherein regional passenger board the ship at an India port. Sometimes the Indian
Ports have been used as turnaround ports for winter deployment options, or to take seasonal advantage
mainly for the world cruises.
Vessels Visiting Indian Ports
Exhibit 49 shows details of some of the cruise vessels that visited the Indian Ports during 2004-2005
Exhibit 49 : Some Cruise Vessels that visited Indian Ports (2004-05)
Name of the Cruise Ship
Star Flyer
TSS the Topaz
Silver Cloud
Minerva II
Black watch
Oriana
The World
Aid Acara
Royal Princess
Hebridean Spirit
Island Sky
Astoria
Seven Seas Voyager
M.V Deutschland
Source: Mumbai Port Trust
Current Demand Trends at Indian Ports
Currently the Cruise vessels call at the Indian Ports only between October and May each year. As a
result of the short stay of these cruise vessels the occupancy of berths is as low as 8% to 12 %.
Statistics of cruise arrivals has been detailed in Exhibit 50 below.
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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India

Exhibit 50 : Cruise Arrivals and Tourist Statistics at different Ports : 1996-2005


PERI MUMBAI COCHIN MORMUGAO NEW MANGLORE TUTICORIN
OD
Vessel Tour- Vessels Touris Vessels Tourists Vessels Tour- Vessels Tour-
Total
s ts
Tourists ists ists ists
1996- 20871 24 11601 17 9270 19 N.A - - - -
97
1997- 20871 30 7638 21 14064 18 N.A - - - -
98
1998- 16854 33 7141 21 9713 23 N.A - - - -
99
1999- 23992 20 5657 23 18335 20 N.A - - - -
00
2000- 40827 34 14831 34 11864 25 10493 14 3639 - -
01
2001- 19318 17 9115 22 5637 11 3329 5 1032 3 205
02
2002- 12424 10 7040 11 1090 10 3720 1 291 1 283
03
2003- 24908 18 11421 18 8862 12 4625 n/a n/a
04
2004- 21824 16 9233 19 9517 11 3074 n/a n/a
05
Source: Mumbai Port Trust
The following conclusions can be drawn from the above table:
◊ During the period 1996 – 2001, there were 30 average calls made per year by the
cruise liners.
◊ In advent of the terrorist attack on the World Trade Centre at New York on 11th
September 2001-2002 experienced a steep decline with only 17 cruise vessels visiting
the Indian Ports.

2.5 GOVERNMENT INTIATIVES


The Government of India has launched its ‘Incredible India’ campaign to promote India as the tourist
destination. The campaign showcases the diversity of India and offers to the tourist everything from
beaches, deserts, wildlife to heritage trains and royal retreats to wellness and spiritual centres.
Extending this further, it has recognised cruise tourism as a thrust area. Cabotage laws have been
relaxed for a period of five years (December 2003 onwards). This will allow foreign cruise ships to
carry Indians from one Indian port to another, without having to touch a foreign port in between. Port
tariffs have been reduced by 33%. In fact, in the National Tourism Policy, 2002, the Central
Government has proposed to develop Cochin and Andaman & Nicobar islands as international cruise
destinations. It is also exploring the concept of an integrated Indian cruise circuit comprising of six
identified ports – Mumbai, Mormugao, New Mangalore, Cochin, Tuticorin and Chennai.
To chart out a course of action in this regard, the following committees have been formed:
◊ National Committee on cruise shipping constituted under Chairman, Mumbai Port Trust
(MPT) – to explore potential of cruise tourism and ascertain infrastructural requirements
at the identified ports.
◊ National Committee under Director General of Tourism – to address marketing related
issues.
◊ Port-level committees under respective chairmen with representatives of all relevant
service providers- to address and resolve issues at port level, monitor requirements of
cruise vessels and tourists.
◊ Standing Committee under Secretary, In-charge of Tourism of respective State
Government with stakeholders – to develop and monitor requisite tourist related services
at places of tourist interest.
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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
◊ Committee constituted under Chairperson, MPT - to review rules and regulations
applicable to cruise tourism and recommend suitable amendments to make them tourist
friendly.
Consequent to the deliberations of the National Committee, Ports have taken following actions:
◊ Each port has drawn up a status paper of existing infrastructure including facilities for
tourist reception lounge, baggage handling, communication centre providing telephone,
internet, fax, transport arrangements etc.
◊ In consultation with State Govt & tour operators, each port has prepared half day & full
day excursion tours in and around the port cities which can be packaged as part of cruise
for the tourists. Tourist attractions easily accessible at other places in the country have
also been identified.
◊ Immigration facilities at ports have been discussed with immigration authorities & to
some extent procedures streamlined for speedy clearance of passengers.
◊ Each port has appointed a nodal officer for coordination with all agencies involved & for
prompt redressal of any difficulty to tourists/ cruise liners.
Other Initiatives:
◊ The Mauritius Tourism Department and Blue Safari Submarine in its effort to strengthen
relationships with India, plans to introduce it’s submarine cruises to India. Negotiations
are in progress with the tourism department of Gujarat, through the patronage of the
Gujarat Gas Company, the organisation instrumental in approaching the organisation in
Mauritius.
◊ The National Committee on Cruise Shipping participated in the Annual Sea trade Cruise
Conference in Miami, Florida held in March 2003. Promotional material like CDs,
brochures to meet the requirements of international clientele was prepared and the
potential of India as a cruise destination was showcased at the conference.

2.6 CRUISE MARKET POTENTIAL


India's GDP is growing at almost seven per cent, which means the rupee would remain strong. It is
estimated that India would emerge as one of the biggest source markets for various cruise companies
by 2010. The reason cited is that the current trend shows first time cruisers who would traditionally
opt for a two to four day cruise, are now willing to opt for a seven-day or even longer cruise vacation.
"Over 53 per cent of our guests return on a cruise with us and each time they bring more family and
friends with them," says Gautam Chadha, India representative of Royal Caribbean Cruises.
To estimate the Cruise tourism potential in India, we have employed an empirical analysis on various
tourist segments and the potential demand they can generate. We expect the growth in demand for
cruise activity to follow cruise tourism growth observed Internationally& trends for overall growth
projected for tourism in India.
The total cruise passenger demand would be the sum total of potential demand arising from the
following segments:
A. Cruise Tourist arrivals in India: Dedicated cruise tourists, who have been coming into India
through various ports till date also.
B. International Tourist arrivals in India: International tourists coming into India primarily
through various airports. As observed globally, these tourists offer a latent demand for
undertaking short exploration cruises in and around the country as part of their overall travel
plans.
C. Domestic Indian Tourists: India has a large percentage of domestic tourists undertaking
different tourism activities. In the absence of infrastructure and facilities, these tourists have
hardly been exposed to the concept of ‘cruise tourism’. With development in infrastructure, this

76
CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
segment would comprise a significant percentage of the cruise tourists, with primary interests in
undertaking both domestic and international cruise circuits.
D. Indian Outbound Tourists: Recent progress in the economic indicators of the country has given
rise to a category of upper class Indians visiting international destinations regularly for leisure
purposes. This category offers an attractive potential for cruising through Indian ports, with their
interests primarily centred around cruise circuits that include international destinations.
In the following sections, we extrapolate the potential demand from each of the above tourist
segments.
2.6.1 Potential arising from Cruise Tourist arrivals in India
Although lacking even basic Cruise-related Infrastructure, Indian ports have been able to attract
substantial number of cruise vessels and tourists in recent years.
This trend of cruise tourist arrivals, mainly since 1996, has grown each year. However, the years
immediately after year 2000-01 show a marked decline. This is similar to trends observed
internationally. This sharp drop is attributable to a socio-political event, the terrorist attack on World
Trade Centre in New York that rendered widespread uncertainty and spoiled the overall tourism
sentiment. Other less important but factors that contributed to this fall were spread of SARS disease
and Iraq war.
It is in light of these circumstances that we analyse and apply the past growth trends to forecast the
prospective cruise tourists coming into the country

Approach 1 - Analysis based on past Cruise tourist arrivals in India


- A detailed understanding of past data on cruise tourists in the country indicates that majority of
the traffic has been through Mumbai & Cochin Port. The past combined passenger data for
Mumbai & Cochin is considered and compounded annual growth rate (CAGR) is calculated and
shown in Exhibit 51 below:
Exhibit 51 : Number of Cruise Tourist arrivals in India (1996-2001)

Cruise Tourist 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 CAGR


arrivals
%
Mumbai 11,601 7,638 7,141 5,657 14,831
Cochin 9270 14,064 9,713 18,335 20,197
Total 20,871 21,702 16,854 23,992 35,028 13.82%
Source: Report of National Committee on Cruise Shipping

Exhibit 52 : Cruise Tourist Trend in India during 1996-2001

- The CAGR is considered only 40000


for the period 1996-97 to 35000
2000-01, because this period 30000
reflects the actual growth 25000
trend at which the Indian 20000
cruise market was growing 15000
and was subsequently 10000
affected only due to a one-off 5000
incident (attack on World 0
Trade Centre), which 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001

India 77
CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
expectedly would not occur again.

- The growth % thus calculated is employed on the total Cruise tourist data for all Indian ports,
considering 2002-03 as the base year.
Based on the above the potential arising from the cruise tourist arrivals in India has been forecast as
shown in Exhibit 53 & Exhibit 54 below:
Exhibit 53 : Potential Cruise Tourist Forecasts (2003-2031)

2002-03 2005-06 2010-11 2015-16 2020-21 2025-26 2030-31


Number of
16,157 23,824 45,510 86,935 166,068 317,231 605,990
Cruise Tourists

Exhibit 54 : Cruise Tourist Trend Forecast for 2001-2031

700000
600000
500000
400000
300000
200000
100000
0
2002- 2005- 2010- 2015- 2020- 2025- 2030-
2003 2006 2011 2016 2021 2026 2031

India

From the above analysis, it can be concluded that India will have nearly 0.6 million-cruise tourist
arrivals at its ports by the year 2030-2031.

Approach 2 – The above cruise tourist arrivals is also forecasted in the following manner utilising
international cruise industry growth rates.
- Cruise Tourists data for North America is considered for the period 1989-2000. The compounded
annual growth rate for the period is calculated. The benefit such long term data offers is that it
includes minor declines and sudden peaks attributable to reasons other than ‘real’ growth. The
CAGR for N. America during the period was 6.94%.
Exhibit 55 : Number of Cruise Tourists in North America

Cruise Tourists in
Year
N. America 8000000

7000000

6000000

1989 3,290,000 5000000

4000000
1991 4,000,000 3000000

1993 4,480,000 2000000

1000000
1995 4,400,000 0
1989 1991 1993 1995 1997 1999 2000
1997 5,050,000
North America

1999 5,890,000
2000 6,880,000
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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
CAGR (%) 6.94 %
Source: WTO Report on Worldwide Cruise Ship Activity

- Similarly, Cruise Tourists data for Europe too was considered for the period 1989-2000. The
CAGR for growth in number of cruise tourists for Europe during the period was 12.57%.

Exhibit 56 : Table – Number of Cruise Tourists in Europe

Cruise Tourists in
Year
Europe
2500000

2000000
1989 530,000
1991 700,000 1500000

1993 880,000 1000000

1995 970,000
500000
1997 1,360,000
0
1999 1,790,000 1989 1991 1993 1995 1997 1999 2000

2000 1,950,000 Europe

CAGR (%) 12.57 %


Source: WTO Report on Worldwide Cruise Ship Activity

- Thus we see that the growth trend over the period 1989-2000 in North America and Europe was
6.94% and 12.57% respectively.
- N. America is the world’s largest and most mature market with respect to the cruise tourism
industry. At the same time, Europe is a developing market in the cruise industry terms. It can be
expected that India too would follow a similar growth pattern as exhibited by the cruise industry
in Europe. But to be on the conservative side, we assume a lower growth rate arrived at by using
an average of the CAGR for N. America and Europe. This growth rate will be 9.76% (average of
6.94% & 12.57%).
• The growth % thus arrived at is employed on the total Cruise tourist data for all Indian ports. The
base year is considered 2000-01 because the decline and increase trends even out over a longer
period, as considered herein. Now applying this compound annual growth rate to the Indian
Cruise Market, the forecast of the future cruise passengers has been presented below:

Exhibit 57 : Forecast of Cruise Tourists in India (2003-2031)

Year 2000-01 2005-06 2010-11 2015-16 2020-21 2025-26 2030-31

Number of
49,160 78,295 124,697 198,599 316,299 503,755 802,308
Cruise Tourists

79
CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
Exhibit 58 : Forecast of Cruise Tourist in India

900000
800000
700000
600000
500000
400000
300000
200000
100000
0
2000-2001 2005-2006 2010-2011 2015-2016 2020-2021 2025-2026 2030-2031

India

From the above approach, it can be concluded that India will have nearly 0.8 million-cruise tourist
arrivals at its ports by the year 2030-2031.
• Hence, even on a conservative basis India will have approximately 0.6 million dedicated cruise
tourist arrivals at its ports by the year 2030-2031.
• The total cruise tourist numbers estimated above reflect only the increases estimated from
increased demand resulting into increased port-calls at Indian Ports. In case an Indian Port
emerges as a ‘Home Port’ or ‘Turnaround Port’, the number of cruise tourist would increase
substantially.

2.6.2 Potential arising from International Tourist arrivals in India


A percentage of International tourists arriving into a country are generally interested in undertaking
short exploration cruises in and around the country as part of their overall travel plans. However, due
to practically non-availability of facilities for cruise activity in India, this segment has been untapped
as yet. The total International Tourist arrival in India for the period 1990-2003 is considered for
analysis.
Exhibit 59 : Table – Number of International Tourist arrivals in India

Year International Tourist arrivals in India


(In million)
1990 1.707
1991 1.678
1992 1.868
1993 1.765
1994 1.886
1995 2.124
1996 2.288
1997 2.374
1998 2.359
1999 2.482
2000 2.649
2001 2.537

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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
2002 2.384
2003 2.726
Source: Indian Tourism Statistics 2003: Report of Ministry of Tourism, Government of India & Times Research Group
Report
• At present India’s share of International Arrivals is 2.726 million as against the 694 million
international arrivals worldwide.
• ‘Tourism 2020 Vision’ is the World Tourism Organization's (WTO) long-term forecast and
assessment of the development of tourism in the first 20 years of the new millennium. An
essential outcome of the Tourism 2020 Vision are quantitative forecasts covering a 25 years
period, with 1995 as the base year and forecasts for 2000, 2010 and 2020. In-spite of the irregular
evolution of tourism in the last few years due to international developments that affected the
travel, WTO maintains its long-term forecast and believes that the underlying structural trends of
the forecast have not significantly changed.
• WTO forecasts that international arrivals are expected to reach 1.0 billion by 2010 and over 1.5
billion by the year 2020. We have applied a similar growth rate to project the International
arrivals at the World level till 2030-31.

Exhibit 60 : WTO forecast for International arrivals

• In the Tourism 2020 Vision document, WTO forecasts for India that India has the potential to
reach nearly 8.9 million by 2020. In our analysis, we continue the trend observed from 2002-03 to
2020-21 to arrive at projections for 2030-31.

Exhibit 61 : Forecast of International Tourist arrivals (2003-2031) In Millions

Description 2002-03 2005-06 2010-11 2015-16 2020-21 2025-26 2030-31


Arrivals Worldwide 694 799 1010 1277 1614 2040 2579
Arrivals in India 2.73 3.32 4.61 6.41 8.91 12.38 17.20
Source: WTO Report: Tourism 2020 Vision & CRISIL Analysis
• A WTO study indicates an average of 1.4% of all international arrivals across the world are cruise
tourists. Considering, that once cruise facilities are developed in India the same % would be
applicable, we have arrived at the potential market for cruise tourism.

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Exhibit 62 Forecast of International Tourist arrivals in India taking cruises (2003-2031)

Description 2002-03 2005-06 2010-11 2015-16 2020-21 2025-26 2030-31


International Tourist
2.73 3.32 4.61 6.41 8.91 12.38 17.20
arrivals (in million)
Potential market for
Cruise Tourism 38,164 46,491 64,599 89,759 124,720 173,298 240,796
(1.4%)

Exhibit 63 : Projected potential Cruise market arising from International Tourist arrivals in India

300000

250000

200000

150000

100000

50000

0
2003 2006 2011 2016 2021 2026 2031

India

From the above projections, it can be estimated that India will host 17.2 million International tourist
arrivals by 2030-31, of which about 2.4 million tourists will cruise from Indian ports.
2.6.3 Potential arising from Domestic Indian Tourists
A large population of Indians undertake annual vacations primarily to Indian destinations. This travel
is due to variety of reasons including business& trade, social, religious pilgrimage & Leisure &
Holiday activity. In the absence of infrastructure and facilities, these tourists have hardly been
exposed to the concept of ‘cruise tourism’. With development in infrastructure, this segment would
comprise a significant percentage of the cruise tourists in India.
Considering the diverse demographic profile of Indian domestic tourists, it can be assumed that the
tourists would be interested both domestic and international cruise circuits. To arrive at the percentage
of such domestic tourists interested in cruise activity the following methodology is applied:
• The data for total domestic Indian tourists is given below. The working group on tourism for the
Ninth Plan had projected domestic tourism to grow at 9.5% over the period 1997-2002. Although
exceeded in recent years, for analysis we consider the same growth figure.

Exhibit 64 : Data for Domestic Indian Tourists (2001-2003)

Description 2001 2002 2003


Total number of tourists (in
236.470 269.598 309.038
million)
Source: Indian Tourism Statistics 2003, Report of Ministry of Tourism, Government of India

• Cruise tourism is an expensive activity and hence in our analysis, we consider only the higher
income urban tourists who travel for Leisure & Holiday purposes.
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• A demographic survey undertaken by NCAER in 2002 indicates that of the total domestic
tourists, about 27% comprised urban residents while the rest were rural residents. This is in line
with the India’s urban-rural divide, with urban households contributing to about 27% of all Indian
households and the rest being rural. However, as urbanisation in India is growing, number of
urban travellers is expected to increase too. Considering past decadal urban growth numbers &
future projections by NCAER, the urban tourists as % to overall tourists is taken as 30% & 33%
for the decade starting 2010-11 and 2020-21.
• Currently, only about 5% of the tourists were from the higher income brackets while the rest were
either from middle income or lower income groups. With growth in Indian economy and higher
disposable incomes, the higher and middle-income households are increasing. Thus, the number
of tourists in higher income bracket is taken as 7.5% & 10% for the decade starting 2010-11 and
2020-21.
• Furthermore, as per the NCAER study only about 8.7% tourists undertake travel for Leisure &
Holiday purposes. This filtered segment forms the target market for the cruise industry.

Exhibit 65 : Demographic Segmentation of Domestic Indian Tourists

Description Basis used for estimation


2002-03 to 2010-11 to 2020-21 to
2010-11 2020-21 2030-31
A Total Indian Domestic Tourists Growing with CAGR of 9.5%
B Urban Tourists 27.0% of (A) 30.0% of (A) 33.0% of (A)
C Higher Income Group Tourists 5.0% of (B) 7.5% of (B) 10.0% of (B)
D Travel for Leisure & Holiday (L&H) 8.7% of (C) above
• This number of domestic tourists travelling for Leisure & Holiday (L&H) is extrapolated till the
year 2030-31 using a CAGR of 9.5%.

Exhibit 66 : Table – Projection of Cruise tourism market within Domestic Indian Travellers (2003-2031)

(All numbers in million)


Description 2002-03 2005-06 2010-11 2015-16 2020-21 2025-26 2030-31
Total Domestic Tourists 309.0 405.7 638.7 1,005.5 1,582.9 2,491.9 3,922.9
Urban Tourists 83.4 109.6 191.6 301.7 522.4 822.3 1294.6
Higher Income Tourists 4.2 5.5 14.4 22.6 52.2 82.2 129.5
Leisure & Holiday Tourists 0.36 0.48 1.25 1.97 4.54 7.15 11.26

• Taking into account the WTO study indicating that about 1.4% are cruise tourists we have
considered the same to arrive at the Domestic Cruise Tourist numbers.

Exhibit 67 : Number of Cruise Tourists within Domestic Indian Travellers (2003-2031)

2002-03 2005-06 2010-11 2015-16 2020-21 2025-26 2030-31


Leisure & Holiday 0.36 0.48 1.25 1.97 4.54 7.15 11.26
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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
Tourists (in million)
Cruise Tourists (in
0.005 0.007 0.018 0.028 0.064 0.100 0.158
million)

Exhibit 68 : Number of Cruise Tourists within Domestic Indian Travellers

180000
160000
140000
120000
100000
80000
60000
40000
20000
0
2003 2006 2011 2016 2021 2026 2031

India

• From the above approach, it can be concluded that India will have about 11 million domestic
Indian tourists travelling for Leisure & Holiday purposes. The cruise tourist potential that can be
realised would be 157,677 in 2030-31.

2.6.4 Potential arising from Indian Outbound Tourists


Recent progress in the economic indicators of the country has given rise to a category of upper class
Indians visiting international destinations regularly for leisure purposes. Several visitors within this
category take cruises internationally. The development of Cruise infrastructure & Indian Cruise
circuits, this segment of tourists would find it attractive to undertake “Cruise-Fly” or “Fly-Cruise”
trips as it would save time and costs, while fulfilling their goal of international travel.
Hence, this category offers an attractive potential for cruising through Indian ports and if targeted can
generate an attractive number of cruise tourists.
• The Indian outbound tourist statistics for past 5 years is considered for analysis. The compounded
annual growth rate (CAGR) for the period 1999-2003 is calculated as 6.79%
Exhibit 69 : Indian Outbound Tourists (1999-2003)

Year Number of Tourists


1999 4,114,820
2000 4,415,513
2001 4,564,477
2002 4,940,244
2003 5,350,896
CAGR (%) 6.79 %
Source: Indian Tourism Statistics 2003, Report of Ministry of Tourism, Government of India

• This number of tourists travelling abroad is extrapolated till the year 2030-31, using the CAGR of
6.79%. However, within this group, only tourists travelling for Leisure & Holiday purposes would

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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
form the market for cruise tourism. As per a PATA report - Indian Outbound, about 17% of
outbound tourists undertook travel for Leisure & Holiday purposes.
• Also, a noticeable trend in Indian outbound business travellers is their combining business and
leisure. Conferences aboard cruise ships form a substantive percentage of such leisure-cum-
business activity. As per the PATA report, about 29.1% of outbound tourists undertook travel for
Business purposes. For our analysis, we apply a factor of 0.5 to arrive at the potential outbound
market undertaking leisure activity.

Exhibit 70 : Forecast of Indian Outbound Tourists enjoying leisure facilities abroad (2003-2031)

(All numbers in million)


No. Description 2002-03 2005-06 2010-11 2015-16 2020-21 2025-26 2030-31

1. Indian Outbound
5.35 6.51 9.05 12.6 17.45 24.23 33.65
Tourists
2. Leisure & Holiday
0.91 1.11 1.54 2.14 2.96 4.12 5.72
Tourists (17%)
3. Business Tourist
1.56 1.90 2.63 3.66 5.08 7.05 9.79
(29.1%)
4. Considering only
50% of Business 0.78 0.95 1.32 1.83 2.54 3.53 4.90
Tourist for analysis
5. Outbound tourists
enjoying leisure
1.69 2.06 2.85 3.96 5.51 7.64 10.62
facilities abroad
(2+4)

• Of these outbound tourists enjoying leisure facilities abroad, we estimate that about 10% would
be interested in undertaking cruising. Of this percentage, the Indian cruise market is estimated to
attract 1/5th of the tourists ie. a mere 2% of Indians travelling abroad for leisure related activity.
This number is quite conservative and would be potentially much higher with development of
infrastructure for Cruise tourism in the country.

Exhibit 71 : Forecast of Indian Outbound Tourists taking cruises from Indian Ports (2003-2031)

Description 2002-03 2005-06 2010-11 2015-16 2020-21 2025-26 2030-31


Outbound tourists enjoying
leisure facilities abroad 1.69 2.06 2.85 3.96 5.51 7.64 10.62
(in million)
Potential market for Cruise
0.17 0.21 0.29 0.40 0.55 0.76 1.06
Tourism (10%)
Projected no. of outbound
tourists opting for Indian 33,764 41,116 57,096 79,287 110,102 152,894 212,317
cruises (1/5th)
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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
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Exhibit 72 : Projected Indian Outbound tourists cruising from India

250000

200000

150000

100000

50000

0
2003 2006 2011 2016 2021 2026 2031

India

• From the above analysis, it can be concluded that there will be about 33.65 million Outbound
tourists by the year 2030-31, of which 212,317 will undertake cruise activity from Indian ports.

2.6.5 Total Cruise Tourism Potential


From the above analysis, we can infer at least the following number of cruise tourists by the year
2010-11 and 2030-31
Exhibit 73 : Total Cruise Tourism Potential

Years 2010-11 2015-16 2020-21 2025-26 2030-31


Foreign Tourists
64,599 89,759 124,720 173,298 240,796
Cruise Tourists 45,510 86,935 166,068 317,231 605,990
Domestic Tourists 18000 28000 64000 100000 158000
Outbound Tourists 57,096 79,287 110,102 152,894 212,317

Total 185,205 283,981 464,890 743,423 1,217,103

Upside of the analysis


• It may be noted that the above analysis represents the base minimum number of cruise tourists
that would embark / disembark from Indian Ports. The actual movements may be higher
depending on the infrastructure developed and the marketing efforts undertaken to promote cruise
tourism in India.

Downside of the analysis


• The analysis has been undertaken as a standalone exercise without considering the effects of
technological, social and economic developments on tourism globally. For example, falling prices
of international air travel may completely change the way tourism and cruise tourism is
undertaken.
• Incidents similar to terrorist attack on World Trade Centre can never be foreseen. Their positive /
negative impact and the extent of the same too remains unknown and cannot form a part of the
above forecasting exercise.
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Ministry of Tourism, Government of India
Exhibit 74 : Performance of Star Cruises in India

Performance of Star Cruises in India^


Credit for increased awareness about cruises in India is attributed to Star Cruises. Even before staring
formal operations in India, Star Cruises booked 8,000 Indians in 1999, and around 20,000 Indians cruised
with them by the end of 2000 marking an increase of 150% in a single year. This was perhaps behind
their decision to make Mumbai a home port for exclusive India based operations.
Starting operations on the 25th of September 2005, Star Cruises redeployed ‘Super Libra’ an 18 year old
ship from Norwegian Cruise Lines having 1500 passenger capacity. Today the following three cruise
itineraries are offered:
o Four night cruise covering Mumbai-Lakshadweep-Goa-Mumbai
o Two night cruise covering Mumbai-Goa-Mumbai
o Evening cruise covering Mumbai-nowhere (to the open sea)
As per the feedback received from JM Baxi & Co, who are their shipping agents in Mumbai, the response
to Star Cruises has been ‘very good’. The cruise ship which is making 3 calls per week out of Mumbai is
averaging around 800-900 passengers per sailing, which amounts to a capacity utilization of around 60%
thus far. They also achieve 100% capacity on many occasions when the ship is chartered by a single
party. It is understood that, during the holiday season of Diwali, the cruises were heavily overbooked.
Considering the fact that they are the first players in India in this market, it is widely opined that the
performance of Star Cruises is creditable and sets a healthy trend for Cruise tourism in this country.
However, the operations are still at an early stage, with the company still consolidating its marketing
efforts. It would be appropriate to wait for at least a year to be completed before any conclusions are
arrived at.

^ Since Star Cruises are in the very nascent stages of their operations in India and consequently information
on their performance or strategy is considered extremely confidential and not readily shared.

2.7 IMPACT OF GROWTH IN CRUISE SHIPPING SERVICES


Like other areas of tourism, the increase in cruise shipping services would have the following impact,
which in each case would be multi-layered.
- Economic Impact
- Environmental Impact
- Socio-cultural impact
As in other areas of tourism development, the impact would be both positive and negative. The
constant objective would be to endeavour to see how the positive impacts may be maximized and the
negative impact minimized.
2.7.1 Economic Impact
The development of cruise tourism and related development would have a major economic impact. In
India developing the sector would demand major capital investment in terms of cruise terminal and
other related cruise port infrastructure development. It is well known that tourism development has a
direct impact on revenue and employment with the economic benefits having a cascading effect
flowing down to different levels of society. Every one million rupees invested in the tourism sector
translates into 47.5 direct jobs and 40 indirect jobs8 having a direct impact on the revenue earning
potential of the local community.
Exhibit 75 captures the multi-layered economic impact of cruise ships while at the Ports

8
WTO estimates
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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India

Exhibit 75 : Impact of Cruise Shipping Services

Cruise Lines

•Terminal Hire
•Berth Fees Public Transport Urban Services
•Customs •Buses •Electricity
•Other Fees •Taxis •Cleaning
•Trams •Communications
•Rails •Escalator/lifts
•Airways •Air-conditioning
•Management
•Others
Passenger Operations Ship Services

Transit Passengers Post/Pre Cruise Navigation Supplies Passenger Services Other Services
•Tours •Hotels •Pilots •Pilots •Security •Agents
•Shopping •Tours •Tugs •Tugs •Luggage handling •Crew handling
•Meals •Shopping •Boats •Boats •Medical
•Entertainment •Meals •Mooring •Mooring •Telephones
•Entrance Fees •Air Fares •Gangways •Gangways
•Miscellaneous •Entertainment
•Miscellaneous

The economic benefits derived would be from cruise ships and shipping services in the form of
expenditure by the cruise line, passengers and crew on goods and services once in port leading to the
creation of jobs, new local business and rejuvenation of the local economy The most significant areas
of expenditure would include
- Shore excursion product
- Retail
- Ship Supplies and bunkers
- Transport
- Ancillary services
When a cruise ship arrives at a Port of Call several services are put into order and each one of them
has a revenue implication. These may be in the nature of direct charges that the cruise lines are
required to pay to the port authorities or may arise from the activities of the passengers in transit or in
the pre-post cruise phase outside the port. Several shipping & related services would also come into
play. Port based ancillary services provided by the urban local government would also be demanded
and paid for. These together would create an economic activity that would intensify with the arrival of
every Cruise ship at Port. In case of a Home Port, the impact in terms of local employment would be
greater because the Cruise ship would be anchored at the would require repairs, servicing and other
miscellaneous services during this time.
2.7.2 Environmental Impact
As detailed in Section 1.3.2, environmental aspects form a key concern when dealing with Cruise
Ships. Apart from the several hazardous impact of the cruise ships while on high seas, cruise ships
which are anchored at the port give equal cause for concern. The negative impact may arise due to one
or more of the following:
- Concern arising from increase in air pollution, damage to local fish, shellfish and water
mammal populations
- Concern regarding unloading and disposal of solid waste
- Concern over the impact of the cruise ship’s discharges and their cumulative effect
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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
- Concern that smaller pocket cruise vessels may pose greater environmental threats than larger
ships
As pointed out in Section 1.3.2, internationally a severe view it taken of such negative environmental
impact and global environmental interests are protected by organizations such as the International
Council of Cruise Lines (ICCL) whose members have unanimously adopted mandatory environmental
standards for all of their cruise ships. These standards are based on principles that include: designing
and constructing cruise ships to be as environmentally friendly as possible, embracing new
technology, complying fully with international and U.S. environmental laws, minimizing waste
production, and maintaining cooperative relationships with the regulatory community.
All ICCL member cruise ship operators implement the adopted standards, which include effectively
dealing with the following areas:
◊ Graywater and Blackwater discharge.
◊ Hazardous chemical waste such as photo processing fluid and dry-
◊ Cleaning chemicals.
◊ Unused and outdated pharmaceuticals.
◊ Used batteries
◊ Burned out fluorescent and mercury vapor lamps.
The cruise industry’s commitment to protecting the environment is demonstrated by the
comprehensive spectrum of waste management technologies and procedures employed on its vessels.
ICCL members are committed to:
◊ Designing, constructing and operating vessels so as to minimize their impact on the
environment;
◊ Developing improved technologies to exceed current requirements for protection of
the environment;
◊ Implementing a policy goal of zero discharge of MARPOL, Annex V solid waste
products (garbage) by use of more comprehensive waste minimization procedures to
significantly reduce shipboard generated waste;
◊ Expanding waste reduction strategies to include reuse and recycling to the maximum
extent possible so as to land ashore even smaller quantities of waste products;
◊ Improving processes and procedures for collection and transfer of hazardous waste
◊ Strengthening comprehensive programs for monitoring and auditing of onboard
environmental practices and procedures in accordance with the International Safety
Management Code for the Safe Operation of Ships and for Pollution Prevention
(ISMCode).
Each ICCL cruise vessel operator has agreed to utilize one or more of the practices and procedures
contained in the attached “Cruise Industry Waste Management Practices and Procedures” in the
management of their shipboard waste streams. Recognizing that technology is progressing at a rapid
rate, any new equipment or management practices that are equivalent to or better than those described,
and which are shown to meet or exceed international and federal environmental standards, will also be
acceptable. Member lines have agreed to communicate to ICCL the use of equivalent or other
acceptable practices and procedures. As appropriate, such practices and procedures shall be included
as a revision to the attached document. As an example, when improved systems for treating
blackwater and graywater are perfected and shown to meet the requirements for MSDs and accepted
by appropriate authorities, the new systems and associated technology will be included in the
attachment as a revision.
Thus, India would need to insist that cruise lines operating in the country and touching the Indian
ports are compliant with such guidelines and have adopted the internationally accepted environmental
practices. This may form part of the stipulations for granting permission for cruise vessels to land at
Indian ports.

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Ministry of Tourism, Government of India
2.7.3 Socio-Cultural Impact
As in all other tourism activity Cruise Tourism too would have a striking socio-cultural impact on the
local community. While the immediate impact will be the form of increased revenue generation for
the local communities, the impact would continue to be in the form of strong opportunities for the
business communities, the local artisans, the self employed etc to grow, job opportunities for the local
communities and women, increased awareness among the local population arising out of interactions
with the foreign and domestic tourists.
As against the positive impact, certain negative aspects have also been perceived such as:
- Increase in migration to port communities, creating problems associated with
overcrowding and congestion
- Increased noise pollution
- Increasing exposure of the local communities to large amounts of tourists on a consistent
basis thus creating tension among locals who feel they have lost their privacy.
- A feeling of alienation among the local community who feel threatened by the large
influx of outsiders
- Loss of ability to preserve traditional cultural behaviour.
- Perceived health risks caused by cumulative legal discharging.
However, the benefits far outweigh the disadvantages, which would need to be strategically managed
through effective education and interaction with the local community who are the principal
stakeholders of this development.

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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India

3 INFRASTRUCTURE & LINKAGES

Development of tourism is closely involved with the providing of the necessary core infrastructure &
ensuring that all linkage infrastructure is in place. The development of Cruise tourism would place
additional demands for dedicated infrastructural support especially in terms of the critical Port related
infrastructure which would form the nucleus infrastructure imperative.
This chapter deals with the critical appraisal of the preparedness of the Indian port industry to respond
and meet the demand potential for cruise tourism assessed in the previous chapter. The module
focuses on a micro level analysis of the proposed ports and their infrastructure, of the facilities
available and the gaps vis-à-vis the expected facilities to enable a closer understanding of the practical
aspects of developing a vibrant cruise tourism market in the country.

3.1 CRUISE TOURISM PORTS


3.1.1 Roles Ports play in cruise tourism
Types of Cruise Ports
With respect to cruise ships, Ports may act as a ‘Port of Call’ or as a ‘Home Port’.
◊ As a Port of Call the port would act as the transit and receiving ports to national and
international ships that touch several destinations as part of their cruise circuit. Travellers
who disembark at the port visit destinations either close at hand or may sometimes even
fly to distant destinations. At times travellers who disembark at a particular port may
embark the ship at some other port closer to he destination they have chosen to visit.
◊ As a Home Port or Hub Port, the port would act as the base for a cruise ship, which
would take passengers around a cruise circuit and then come back to the homeport to
berth. Travellers would either ‘fly in’ or ‘drive in’ to the homeports to take their cruise.
Roles Ports Play
Whether as a post of call or as a home port, Ports play a vitally significant role in cruise tourism to
understand which it would be necessary to appreciate different aspects of this role which may be set
forth as follows:
◊ Infrastructure Role: Ports provide the sea based and land based core infrastructure for
ships to arrive and berth comfortably and safely. They are to ships what airports are to
aircrafts and, accordingly, the nature, extent and sufficiency of the port infrastructure
facilities would determine the size, frequency and type of vessels which come in.
◊ Hospitality Role: For visiting ships, Ports provide the vital entry point and the first
exposure of the tourist to the destination. Similarly for outgoing tourists, ports would be
the exit point. The manner of receiving the tourists and the tourist amenities and facilities
provided would determine the tourism popularity of the concerned port.
◊ Connectivity Role: Since ports are the transit locations for incoming as well as outgoing
tourists, the efficiency of the ports in terms of effective linkages to airports, railways etc
and fast connectivity to popular tourism destinations in the State and the country would
be critical.
Considerations for a Port of Call
As a Port of Call for cruise ships, the following would be the important considerations
◊ The port should be located near tourist centres / economic hubs / large cities, that offer suitable
sight-seeing options in a day / half-day trip

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◊ Excellent linkages, especially air, with Indian & international cities is a pre-requisite to enable
cruise tourists the option of touring the country prior to / after their cruise.
◊ The port should be in proximity to international sea routes, so that cruise ships do not have to take
a big detour in the course of their voyage between international destinations.
Considerations for a Home Port
As a Home port the following would the important considerations
◊ The port should have proximity to major/attractive tourism markets so as to offer attractive cruise
circuits. Ability to link a few foreign destinations along with domestic destinations would be an
added attraction
◊ Accessibility to the rest of the country in terms of fast and effective road & airline connectivity to
be attractive both to ‘drive in’ and ‘fly in’ cruise component.
◊ Quality and availability of port infrastructure and services including capacity of the port to
accommodate and process high volumes of passengers efficiently, space to accommodate support
services such as transport to and from the ship and other amenities, provisioning and bunkering
capability etc.
3.1.2 Identified Ports for Cruise Tourism in India
India is ranked as the ninth most popular tourist
destinations9 in the world and is today considered as a
preferred cruise destination. The government of India
has recognized Cruise tourism as a thrust area and
initiated a number of positive measures to promote the
cruise industry and position India as a global cruise
destination.
India has over 7,500 km of coastline, peppered with
places of great interest for the cruise guest. Along the
coastline, India also has 12 Major Ports and 184 minor
ports. To encourage cruise shipping, Major ports, which
are managed by the Central Government, have been
encouraged to create facilities for cruise shipping.
Since most major ports on the western coast in India
meet the requisites of a port of call, a nascent trend of
cruise ships calling at Indian ports at regular intervals
has started recently in the cruise industry. This has led to
the ports of western coast of India figuring on the
itineraries of International Cruise Ships.
Government of India, as part of its Cruise Tourism development initiatives has identified 6 Indian
ports to be developed as ‘world class cruise terminals’ and to be promoted as ‘integrated Indian cruise
circuit.’10 These identified Ports include
◊ Mumbai
◊ Goa
◊ Cochin
◊ New Mangalore
◊ Tuticorin
◊ Chennai (added recently in January 2005)
It would therefore be relevant to focus on these ports and analyse their preparedness for fulfilling the
role identified for their development.

9
Report of the Committee constituted to Review Rules & Regulations applicable to Cruise Vessels & Cruise Tourists in India
10
Report of the Committee constituted to Review Rules & Regulations applicable to Cruise Vessels & Cruise Tourists in India
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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
3.1.3 Analysis of the key Cruise Tourism Ports
We present below an analysis of the key ports identified for development as cruise terminals in India
with a view to understanding their readiness.
Mumbai Port
Exhibit 76 : Analysis of Mumbai Port

Port-of-call Mumbai City, adjacent to port Mumbai


Brief details of City Popularly known as “The city that never sleeps”, Mumbai is a vibrant city
with a long history and culture lasting several decades. Besides being,
India’s financial and commercial capital, Mumbai is a leading
transportation and manufacturing hub and one of the four metropolitan
cities in the country.
Brief details of port Mumbai Port is a Major Port with a natural harbour. It is a well-protected
all-weather port, with facilities for handling containers, general cargo,
liquid cargo & passengers. It lies at latitude 18o54’N and longitude
72o49’E.
Major drivers for • Beaches, monuments, museums, world heritage sites, renowned
Cruise tourism, USP eateries, shopping & entertainment facilities; proximity of exotic
of the port tourist locales in the vicinity too enhances its attraction
• Mumbai has many gothic architecture heritage buildings, a reminder of
the glorious past of the city in conjunction with tall skyscrapers
indicating its importance in India’s commerce & trade.
• Excellent air connections to other cities makes it an ideal boarding /
destination point for passengers doing the regional cruise circuit
• A variety of tourist options, moderate climate, and international
standard hotels in a cosmopolitan & safe environment, make it among
the most preferred tourist destinations in the country.
Berthing facilities for Mumbai Port handles Cruise vessels at the Ballard Pier Extension Berth.
cruise liners The earmarked berth is capable of handling large cruise vessels of up to
70,000 GRT having length 800 feet and requiring a draft of 33 ft.
Infrastructure & The dedicated cruise terminal building at the Ballard Pier Extension, has a
support facilities for concourse hall and two upper floors spread over an area of 6000 sq. mts.
cruise ships Two side halls of about 3000 sq. mts. are used for baggage handling.
• Provision for gangways, forklift, mobile crane, tractor
• Baggage handling facilities, including battery operated trucks for
movement of baggage trolleys as at airports
• Supply of provisions for ship’s consumption, disposal of garbage from
ships
Facilities & The terminal for reception of passengers and completing Customs /
amenities for cruise immigration formalities provides following facilities:

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tourists • Passenger Lounge for resting with modern amenities and piped music
• Toilets, drinking water, car parking, etc.
• Counters for baggage handling, foreign currency exchange counters,
tour operators, taxi services, etc
• Internet, telephone, email, fax, net-phone communication facilities
• Tourist Information Centre
• Stalls for curios & artefacts, carpets, handicraft items
Traditional Indian style welcome
Services for • Separate counters for customs examination, immigration procedures
providing clearances
• Police & security arrangement at terminal
/ approvals
Uninterrupted entry / exit permitted at gates
Airport accessibility Mumbai is the main International Gateway of India.
& Linkages
• It has both domestic and international airports with excellent
connectivity to major international and Indian cities
• Mumbai is well connected by Railways & National Highways to the
rest of the country
• Local Taxi services and City Bus services enable movement between
port and various places within city.
Places of tourist The Gateway of India, Marine Drive (Queen’s Necklace), Elephanta
interest in vicinity Caves, CST Station Heritage Building, Home to Bollywood: Indian
Cinema Industry, Juhu Beach, Chowpatty Beach, Karnala Bird Sanctuary,
Harbour cruises, Ajanta & Ellora Caves etc.

Goa Port
Exhibit 77 : Analysis of Goa Port

Port-of-call Mormugao City, adjacent to port Goa


Brief details of City Goa is located on the western coast of India in the coastal Konkan region.
It is among the most favored destinations on the itinerary of international
tourists visiting India, for its unique combination of beautiful beaches,
great outdoors and tourism-friendly environment.
Brief details of port Mormugoa Port is among the oldest Indian Ports on the West coast of India
with a fine natural harbour. It is located at the mouth of River Zuari and is
the premier iron ore exporting port of India. It lies at latitude 15o25’N and
longitude 73o47’E.
Major drivers for • Sun, sand & beautiful beaches;
Cruise tourism, USP
• Lush countryside, exotic locales, swaying palms, seafood &
of the port
architectural splendors of its churches, convents and old houses
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• Key offerings of serenity, relaxation & parties
• A meeting point of religions and cultures of East and West over the
centuries, Goa has a multi-hued and distinctive lifestyle quite unique
from the rest of India
Berthing facilities for • No dedicated passenger berth available. Priority handling of cruise
cruise liners vessels on general cargo berth. Berth is cleaned prior to arrival of
passenger vessel. Smaller cruise vessels also handled at inner
anchorage where passengers are transported to shore through ship
tenders. Additional berths being constructed to enable cruise traffic to
be handled at the existing berths in a pollution free environment
Infrastructure & • There is no dedicated passenger terminal at present. The bare
support facilities for minimum amenities that can be made available are provided for the
cruise ships comfort of the tourists by making temporary arrangements in sheds.
Facilities & • Facilities provided include toilets, shopping, medical aid, tour
amenities for cruise operators, traditional Indian Style welcome
tourists
• Arrangements for parking of coaches, taxis etc. with proper signage in
the vicinity of the berth for convenience of cruise tourists are planned
Services for • Facilities for immigration & custom clearance
providing clearances
• Security at the terminal
/ approvals
Airport accessibility • A domestic airport at Dabholim services Goa. The airport also receives
& Linkages several international chartered flights.
• Goa is well connected through National Highways & Konkan rail
connectivity to rest of the country
Places of tourist • Visits to the Beaches – Anjuna, Baga, Benaulim, Calangute, Colva,
interest in vicinity Dona Paula; churches, temples, and historical places in & around
Panaji, Vasco; Forts – Aguada, chapora & Cabo de Rama, Rivers –
Mandovi & Zuari

Cochin Port
Exhibit 78 : Analysis of Cochin Port

Port-of-call Cochin City, adjacent to port Cochin (Kochi)


Brief details of City Kochi lies in the State of Kerala. Kerala has been named, as one of the 50
must see destinations of a lifetime by the National Geographic Traveller. A
natural harbour and enchanting backwaters that encompass historical and
traditional treasures, make Kochi among the most beautiful cities of India.
Kochi has been the gateway to India, since the arrival of Vasco-De-Gama
in 1498 and is known as the “Queen of Arabian Sea”.
Brief details of port The cochin port is one among the 12 Major ports in India. The Cochin Port
is situated on the south-west coast of India at latitude 9o58’N and longitude
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o
76 19’E, about 900 kms south of Bombay. It is a natural harbour and has
comparatively calm & sheltered waters.
Major drivers for • Ayurveda & Yoga, rejuvenation therapies, spices & seafood, lagoons
Cruise tourism, USP & backwaters, hill stations
of the port
• Souvenirs & artifacts, traditional dance & art forms
• Beaches, Churches & Synagogues, monuments, local arts, Chinese
Fishing nets & village, tea & coffee plantations, dense forests etc.
Berthing facilities for • There is no dedicated passenger berth or terminal. The cruise vessels
cruise liners are handled at a clean container / cargo berth. Requisite facilities are
temporarily created at the berth during the cruise vessels stay.
Infrastructure & “Cruise cell” constituted to cater exclusively to cruise traffic. The officers
support facilities for of cruise cell liaise with officials, crew and cruise tourists to provide
cruise ships quality services and address specific requirements.
Facilities & • Tourist information centres, curio stalls, emergency medical support,
amenities for cruise Pre-paid taxi services & Parking space are provided
tourists
• Traditional Indian style welcome
• Leading star hotels of international repute & city centre are within
walking distance
Services for • Single window clearance for customs and immigration
providing clearances
• Cruise Cell officers coordinate with officials of allied agencies such as
/ approvals
Customs, Immigration, Port Health office etc. to ensure hassle free and
speedy services / clearances.
• Port security is provided
Airport accessibility • Kochi has a domestic airport and international airport offering easy
& Linkages connection to cities internationally & in India.
• Proximity to Railway station, National Highways & inland waterways
offer a good option for transportation into the hinterland
Places of tourist Alleppey backwaters, Munnar, Periyar Wild Life Sanctuary, Jewish
interest in vicinity Synagogue, beaches, temples & churches, specialized resorts for
Ayurveda, shopping bazaars for spices etc.

New Mangalore Port


Exhibit 79 : Analysis of New Mangalore Port

Port-of-call New Mangalore City, adjacent to port Mangalore


Brief details of City The city is a major port town of Karnataka. It enjoys historical importance
due to its trade connections with Arabian Gulf & European Countries.
Mangalore is an ideal gateway to explore the rustic & traditional charm of
Southern India. Serene hills, placid lifestyle and a cool, windy climate best
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describe Mangalore.
Brief details of Port Mangalore is the Gateway Port of Karnataka catering to the growing needs
of its vast hinterland covering the whole of Karnataka and parts of Andhra
Pradesh and Kerala. It handles a wide mix of cargo including containers. It
lies at latitude 12o55’N and longitude 74o48’E.
Major drivers for • Proximity to historical heritage temples of Hampi
Cruise tourism, USP
• Vibrant green forests, paddy fields, gigantic monolithic statues,
of the port
sunbathed beaches, exquisite temples, mild sandalwood, traditional
buffalo races & conventional red-tiled roof houses
• Lush hills surrounding Mangalore offer scenic views of the Arabian
Sea
Berthing facilities for • The port does not have a dedicated berth for cruise liners. It uses a bulk
cruise liners cargo berth for berthing of cruise vessels.
Infrastructure & • The port does not have a dedicated passenger terminal. A temporary
support facilities for passenger shed is erected for the convenience of passengers.
cruise ships
Facilities & • Facilities provided include tourist information centre, toilets, shopping,
amenities for cruise medical aid, tour operator counters, traditional Indian style welcome
tourists
Services for • The port does not have an Immigration Check-post. As a result, cruise
providing clearances tourists are permitted out only for local sight seeing and cannot
/ approvals embark/ disembark in another port of the west coast circuit, the cruise
tourist cannot join back on the ship at this port.
Airport accessibility • Mangalore has a domestic airport with connectivity to Mumbai & other
& Linkages regional cities
• Mangalore is connected with National Highways and Konkan Railway
to the hinterland areas
Places of tourist • Surrounding hills & beaches – Kudremukh, Madikeri, exquisite
interest in vicinity temples, Karakala Giant Monolithic statue, Kemmanagundi,
Monuments of Hampi, Nandi Hills, Tea & coffee plantations, Nilgiri
Hills, Banerghatta National Park, Hassan, Halebid, Bellur etc.

Tuticorin Port
Exhibit 80 : Analysis of Tuticorin Port

Port-of-call Tuticorin City, adjacent to port Tuticorin


Brief details of City Tuticorin lies on the southern-most tip of India and is a major industrial
and commercial centre. It is a gateway to the traditional charm of Tamil
Nadu and a major Port city. It is well known as a pearl diving and fishing
centre, and is popularly referred to as the “Pearl city of India”.

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Brief details of Port Tuticorin Port lies at latitude 8 45’N and longitude 78o13’E on the South
o

Eastern coast of India, strategically close to the East-West International sea


routes. It is located in the Gulf of Mannar & lies only 140 nautical miles
North of Colombo, Sri Lanka.
Major drivers for • The 1000-year old temples at Thanjavur, a World heritage site,
Cruise tourism, USP Kanniyakumari – the southernmost tip of India symbolizing confluence
of the port East & West and Kancheepuram – a temple town.
• Gateway position to India’s culture and heritage
• Proximity to International Sea routes
Berthing facilities for • A multi-purpose berth has been earmarked for handling Passenger
cruise liners Liners. A newly constructed berth with 370 mts quay length and 10.7
mts draft is made available for handling larger cruise liners.
Infrastructure & • A new passenger terminal developed recently includes separate
support facilities for enclosures for embarking / disembarking passengers
cruise ships
• Five hectares of paved area available for reception of passengers,
organizing cultural events & erecting temporary shopping arcade etc.
• Fuel Bunker facilities
Facilities & • Seating arrangements for 300 passengers
amenities for cruise
• Drinking water, cafeteria, Duty Free Shopping, foreign currency
tourists
exchange counters, Communication facilities, Banks, tour operators
• Parking for luxury coaches
Services for • Customs Examination, Immigration Department & Health Officials
providing clearances desk within port
/ approvals
• State Police Department & CISF ensure terminal security
Two X-ray machines for screening of baggages have been erected, one by
the Port and another by Customs Department.
Airport accessibility • Nearest airport is at Madurai, about 135 kms away. Madurai is directly
& Linkages connected to Mumbai & Chennai
Places of tourist • Thanjavur, Kanniyakumari, Kancheepuram, historical temples,
interest in vicinity Churches and ancient structures around Tuticorin, Madurai, Ooty,
Kodaikanal, Tanjore, Kovalam.

Chennai Port
Exhibit 81 : Analysis of Chennai Port

Port-of-call Chennai City, adjacent to port Chennai


Brief details of City Chennai is located on the Eastern Coast of India in the State of Tamil
Nadu. Chennai (Madras) is among India’s 4 metropolitan centres and has
had a long tradition since the days of British as an important cultural, social
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& historical centre of Southern India.
Brief details of Port Chennai Port is among the 12 Major Ports in India and is located adjacent
to the southern metropolitan city of Chennai. It lies at latitude 13° 06’ N
and longitude 80° 18’ E.
Major drivers for • Rich heritage, vibrant social & cultural ethos, variety of cultural and art
Cruise tourism, USP forms
of the port
• Bustling metropolis, ancient temples, clean sea front, international
hotels
• Famous for silk shopping
Berthing facilities for • -
cruise liners
Infrastructure & • Chennai is connected by a passenger liner to Port Blair (Andaman
support facilities for Islands)
cruise ships
• A dedicated terminal has been developed with capacity to
accommodate 500 people.
Facilities & • Terminal to have duty-free shops, handicraft and handloom
amenities for cruise showrooms, Food courts etc.
tourists
• Tour operators will develop facilities for ticketing & sightseeing trips
Services for • The port will provide facility for customs and immigration clearance
providing clearances by respective departments
/ approvals
Airport accessibility • Chennai has domestic and international airports, providing excellent
& Linkages connectivity to Indian & International cities
• It is connected through National Highways, State Highways &
Railways to the hinterland and other cities
• Taxi services and intra-city bus services are available for travel around
the city
Places of tourist • Chennai city sight seeing, Chepauk Palace, Mahabalipuram,
interest in vicinity Pondicherry, Kancheepuram, Thanjavur, Madurai, Chidambaram and
Tiruchy.

3.1.4 Facilities provisioned for Cruise Ships at the prospective Ports


Exhibit 82 identifies the infrastructural facilities that are provided for ships at the prospective ports:

Exhibit 82 : Infrastructure Facilities at identified Cruise Ports

Port Cruise Berth Approach Channel Turning Mean Mean Low


Circle High Water (In
(In mts.)
(In mts.) Water (In mts.)
Length Depth Length from Depth Width mts.)
(LOA) (Draft) entrance (In mts.) (In mts.)

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Mumbai 243 10 9.6 Km 8.5 350 500 4.4/2.28 5.94/4.8
Mormugao 250 10 5.0 Km 13.7 250 480 2.3/1.1 -
New 200 10.3 7.5 Km 15.40 245 570 1.50 3.25
Mangalore
Cochin 350 10.75 10.5 Km 13.20 200 500 1.00 1.00
Tuticorin 340 11.9 4.0 Km 12.80 183 488 2.58 3.35

Source: Indian Cruise Conference Brochure

3.1.5 Benchmarking of facilities at the Indian Ports


To obtain an assessment of the infrastructures provisioned for the cruise industry internationally, a
benchmarking of the various facilities at the ports is discussed in the following table. Exhibit 83
presents a benchmarking of the Indian cruise ports in terms of facilities expected generally at cruise
ports.
Exhibit 83 : Benchmarking of Facilities at the identified Cruise Ports

New
No. Facilities Mumbai Goa Cochin Tuticorin Chennai
Mangalore

1 Berth
2 Gangway
3 Terminal Building
Traditional Indian
4 welcome
5 Passenger Lounge
6 Luggage Counter
7 Tourist information centre
8 Drinking water
9 Toilets/ Showers / Lockers
Foreign Exchange Counter
10 / Bank / ATM
11 Medical Aid
Internet Café /
12 Communication Centre
13 Cafeteria / Restaurant
14 Duty free / souvenir shops
Excursion facility / Tour
15 Operator
16 Taxi service
Coach transfers / shuttle
17 bus service
18 Parking space for vehicles
19 Domestic Airport
20 International Airport
21 Custom clearance counter
22 Immigration check
23 Security check counter
24 Port Health Officer
Local police / Terminal
25 Security

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3.1.6 Study of international ports with respect to their infrastructural aspects


Exhibit 84 presents a matrix of facilities & infrastructure provided at major international cruise ports
is presented herein. The methodology involved studying facilities at 7 international major locations as
a desk-based study. This matrix enables a better understanding of the facilities provisioned for cruise
vessels and cruise tourists and thus provides a benchmark for Indian ports to emulate.
It however must be remembered that the service levels of international ports is of extremely high
standards, when taken in context of:
◊ The available Quantity (size, numbers), of each facility or infrastructure and
◊ The Quality of the facility or infrastructure, of similar levels as expected at airports and premium
hotels
Exhibit 84 : Infrastructure Facilities at Key International Ports
No. Description Miami Sydney Seattle Dover Dubai Singapore Port
(USA) (Australia) (USA) (UK) Everglades
(Florida)
1 Berth
2 Gangway
3 Terminal Building
4 Passenger Lounge
5 Luggage Counter
Tourist information
6 centre
7 Drinking water
8 Toilets/Shower/ Lockers
Money Exchange
9 Counter / Bank ATM
Internet Café/
10 Communication Centre
11 Cafeteria / Restaurant
Duty free shop /
12 Souvenir
Excursion facility/Tour
13 Operator
14 Taxi service
Coach transfers/shuttle
15 bus
16 Parking facility
17 Domestic Airport
18 International Airport
19 Medical Clinic
Custom clearance
20 counter
Immigration check
21 counter
22 Security check counter
23 Port Health Officer
24 Local police
25 Wheel Chair
26 Escalator / Elevator
27 Terminal Map
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28 Harbour Cruise Facility
Entertainment Centre,
29 Movie Theatre
30 Air Conditioned
31 Post Office
Aero-Bridge from
32 Terminal-to-Ship

3.1.7 Listing of standard facilities desirable at Cruise Ports


Exhibit 85 to Exhibit 89 encapsulate the facilities and infrastructure that is required to be provided at
cruise ports. Ports, dependent on an increase in cruise traffic or self phased development plans, create
these facilities for cruise activity. Basic definitions and descriptions of the facilities including the
reasoning for their desirability is included as Annexure to the report.
Facilities for Cruise Tourists
Primary Facilities: These facilities are desirable for meeting the basic requirements of cruise tourists
coming to the shore.
Exhibit 85 : Primary facilities for Cruise Tourists

Passenger Lounge Luggage Counter Tourist Information centre


Public address system Drinking water Toilets / Showers / Lockers
Foreign exchange counters Bank service counters / ATM Wheel chairs for disabled, old
Communication centre Cafeteria Trolleys for baggage
Taxi service Excursion facility / Tour Coach transfers / shuttle bus
Operators service
Parking Space for vehicles Linkage/shuttle service to the
Airport/ Railway Station

Secondary Facilities: These facilities within the terminal are desirable for creating an ambience to
international standards. Many of these facilities being commercial, in addition to lending a class to the
terminal, can also possibly act as money-spinners for the port.
Exhibit 86 : Secondary facilities for Cruise Tourists

Terminal Map / Sign Boards Escalators / Elevators Crew lounge


Air-conditioning for terminal Duty free shopping Gift / Souvenir / Artifact &
building Curio shop
Restaurant Postal service Internet café
Medical Clinic Ice cream Bar Magazine / Book store
Florist Yacht Parking Facility Harbour Cruise Facility
Laundromat Entertainment Centre / Gaming Conference Room
zone

Facilities for Cruise Vessels

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These facilities are desired by cruise vessels so that they can extend safety and convenience for their
passengers and crew. Supplies to cruise vessels are generally a premium activity, which enhance the
commercial viability for the ports.

Exhibit 87 : Facilities for Cruise Vessels

Facilities for cruise vessels

Terminal Building Gangway Aerobridge


Trucks for handling baggage Baggage Conveyor system Agents Office
Embarkation Balcony Ship Chandelling Water Supply
Fuel Bunkering Garbage disposal facility

Port & Port related infrastructural facilities


These facilities are desired by cruise vessels so that they can extend safety and convenience for their
passengers and crew. Supplies to cruise vessels are generally a premium activity, which enhance the
commercial viability for the ports.

Exhibit 88 : Port & Port related infrastructural facilities

Berth Pilotage Towage


Mooring Arrangements Navigation Facility Ship coordination centre
Administration Office Maintenance & Repair

Facilities for entry-exit checks / clearances


Cruise tourists arriving into / departing from the port are subject to certain checks and clearance
procedures by law. Officials from specific government departments are deputed to extend the
clearances. Considering the short stay nature of cruise vessels at the port-of-call and sensitive nature
of international cruise tourists, the clearance procedure should be quick and hassle-free. The port
authorities should create adequate infrastructure to enhance the efficiency of the departments. The
facilities to be provisioned by the port at the cruise terminal include:

Exhibit 89 : Facilities for Entry-Exit Checks/Clearances

Custom clearance counter Immigration check Security check counter


Port Health Officer Local police / Terminal Security

3.1.8 Gap Assessment of Infrastructural aspects at Indian Ports


An analysis of the facilities provided at Indian ports yields the following:
◊ Most Indian ports lack dedicated facilities for cruise tourism, yet are handling cruise vessels on a
make-shift basis at cargo berths

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◊ Some ports lack even core facilities such as cruise berths, terminal buildings, gangways and
passenger & luggage-handling areas. Mumbai Port has taken a lead by provisioning dedicated
facilities for cruise tourism. Tuticorin & Chennai too have opened new passenger terminals.
◊ The facilities provisioned by Indian ports do not meet even the basic standards, less the amenities
expected from a cruise terminal. Many ports lack drinking water fountains, toilets, tourist
information centres, medical aid, communication centres & money exchange counters.
◊ Cruise tourists prefer to shop at the ports-of-call during their stopovers. This shopping mainly
comprises artefacts, gift articles, curios and local specialties. Many ports do not have facilities for
shopping or restaurant / cafeteria within the terminal areas.
◊ City sightseeing and excursion trips to tourist centres around ports form an integral part of the
cruising experience. Tour operators, taxi services, airport accessibility and shuttle transfers are
hence an important requirement. The Indian ports do not fully meet the infrastructural
requirements on these accounts.
◊ Although, Indian ports have created some facilities for clearances required by the cruise tourists,
no attention is paid to the provisioning of a hassle-free experience for the tourist. The
infrastructure for security checks, baggage clearance needs to be suitably enhanced.
◊ It is important to understand that although Indian ports have created make-shift or basic facilities,
these are far below the standards set by even minor cruise ports or passenger ferry piers. Cruise
passengers generally comprise higher socio-economic tourist groups with expectations for more
than basic facilities. To truly market the ports as a preferred port-of-call, amenities and facilities
far exceeding the basic aspects should be provisioned.
◊ It is however, important to realise that whilst international ports are far higher on the maturity
cycle of the cruise industry, the Indian cruise industry would be nascent. Hence, infrastructure
development at Indian ports needs to precede demand to provide an impetus to the industry.
◊ Indian Ports have been handling passenger vessels and cruise liners for many years. However, at
none of the ports there is provision for a passenger aero-bridge that can allow direct
disembarkation from the ship into the terminal. This causes great inconvenience to the tourists,
particularly the aged, whose percentage within cruise tourists is quite high.
◊ A major impediment in the growth of cruise passenger traffic is lack of world-class physical
infrastructure for passenger cruise lines and passengers. Being high-class passengers they are
quite demanding and choosy. They not only need convenience by way of passenger amenities but
also expect courteous, facilitating and hassle free environment.
◊ In line with leading international cruise terminals, air-conditioning within the terminal building
area would be desirable. This is more so considering the warm / tropical Indian climate.
Following basic infrastructure is required in Phase I development of cruise terminals:
◊ Clean berth with length about 250 to 300 m and draft about 8 to 10 m
◊ Telescopic gangways, aerobridge
◊ Air-conditioned passenger lounge for cruise tourists with clean environment, furniture, toilets,
drinking water fountains, public address system, comfortable ambience etc
◊ Lounge for customs, immigration clearance & security check area
◊ Counters for baggage, currency exchange, bank counters, tourist information, tour operators,
Internet café etc.
◊ Stalls selling curios, carpets, handicraft items, duty free shops, Restaurants, Communication
centre with facilities for STD, ISD phone etc.
◊ Shuttle service from port to important destinations such as airport / railway / hotels etc. and
adequate Parking space for coaches, taxi service etc.
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We have in this report recommended that cruise terminals should be developed as destinations by
themselves going beyond the mere amenities to become a centre where the heritage and culture of
India would be showcased. The cruise terminals would have comprehensive tourism related facilities
like food courts, bazaars and shopping malls, entertainment facilities, landscaping and gardens etc.
While estimating the financial requirements we have assumed some tourist related facilities at cruise
terminals but not comprehensive facilities. These would be business decisions that would be taken by
the investor based on his business model.
Based on an analysis of the present facilities at the respective ports and the standard facilities
desirable at a port, financial estimations have been worked out as set out in Section 3.2.

3.2 PROFILING DUBAI AND SINGAPORE CRUISE TERMINALS


Dubai and Singapore are the two key competitors to India in Cruise Tourism. It would be important
for India to understand how these two cruise terminals have been developed. In this section we
present a profile of these two cruise terminals, while highlighting how India may benefit from a
proactive relationship with these countries towards synergizing greater potential for the region as a
whole.
3.2.1 Dubai Cruise Terminal
Long established as an excellent maritime city with geographical advantages, excellent infrastructural
facilities, ports and logistics, Dubai started looking at developing cruise tourism very late compared
with other destinations. However, the emirate utilized its relatively late entry into cruise tourism
sector to its advantage by creating better facilities and services than others in the near and far.
Opened in March 2001, the state-of-the-art Port Rashid cruise terminal complex has the following to
its credit:
Ž The only terminal in the world operated by the State Department of tourism
Ž The world's first to receive the ISO-9002 certification
Ž The only port between Europe and Asia to have earned the IMS security rating certification
Ž Won the ‘Most Improved Port Facilities’ award and ‘Best New Terminal Building’ award at
the recently concluded Seatrade Cruise Shipping Convention in Miami,
Ž The only dedicated passenger complex in the Arabian Gulf port region
Dubai has seen an impressive growth in cruise tourist arrivals since the start of the Dubai Cruise
Terminal. From a mere eight calls by cruise liners in 1996, the landmark facility played host to 12,771
cruise tourists between 2001 and 2003. Cruise tourists from across the world are expected to be
around 12,000 in 2005, up from an approximately 8,000 visitors in 2004. As many as 15 cruise ships
are scheduled to arrive in Dubai in 2005, witnessing over 33 % growth in cruise passengers compared
with the previous year.

Key Features
Located on the southern shore of the Gulf, between 55° 16 East and 25°16 North, Dubai's strategic
location midway between Europe and Asia, makes for easy accessibility. London is seven hours away
by air, Frankfurt six, Cairo four and Hong Kong eighThe Dubai Cruise Terminal at Port Rashid has
the following notable features:
Ž Designed to handle up to two ships simultaneously with a unique 'mobile' design to enable
customization of passenger and baggage flows.

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Ž The deep basin gives cruise lines the option of bringing in larger ships that can look at a
destination other than Europe or the Mediterranean that is perfect year round.
Ž Supported by other key tourism infrastructure - over 282 hotels and more than 91 airlines
connecting to over 132 destinations

Cruise Facilities & Services:


The Department of Tourism and Commerce Marketing (DTCM) under took extensive research on the
needs of the cruise lines to arrive at the following facilities and services provided on its Terminal

Exhibit 90 : Facilities & Services at the Port Rashid Cruise Terminal, Dubai

Extensive docking facilities


Spacious 3,300 sq.m. ultra-modern cruise terminal.
335m of Quay with a Quay apron of 35m.
11.m Draft for ships of all sizes.
Entire site surrounded by a perimeter fencing with security system.
Well-equipped in-terminal services
Highly efficient reception check-in.
Competent information center with concierge service.
Luxurious VIP lounge
Pleasant relaxation zone and a delightful cafe.
Rest rooms with handicap access toilets.
Special conveniences for the physically challenged (wheel chairs/electric carts/ramps).
Big screen entertainment center.
A world-class Duty Free and retail shops.
Heritage and culture exhibits.
A beautiful Arabian palm garden.
Excellent communication and business assistance
Authorised money exchange.
Convenient computer terminals and an Internet center.
Post office and other communication facilities.
Conferences facilities and business center.
Well-developed transportation network
Personal & baggage security screening.
Semi-Automated Baggage Handling System
Covered baggage handling area.
Ample parking for tour buses as well as a taxi stand.
Efficient Support Facilities
No passenger handling fees for maiden calls.
Passenger clearance via manifest system with swift immigration procedures and no
visa problems for visitors.
Professional and certified tour guides.
Capable shipping agent and ship handlers.
Excellent ship repair facilities and marine supplies and services.

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Home Port and Port of Call


Dubai Terminal has made its mark both as a Port of Call and as a ‘Home Port’. 15 ships including MV
Astoria, Seven Seas Voyager, Queen Elizabeth II, Hebridean Spirit, Silver Cloud, Seabourn Spirit, TS
Albatross, Europa, Hanseatic, Silver Shadow, MV Deutschland, Nautica, MV Astoria, have called at
the Port Rashid in 2005.
Parallelly, ‘Abou Merhi Cruises’ has made an investment of US $40 million investment to launch its
Dubai-based ‘Orient Queen’ cruise ship. Unlike most ships, which stop off in the Gulf on their way to
and from other destinations, the Orient Queen cruises solely between regional ports. Through May
2006, the Orient Princess is slated to operate two round trip cruises a week, stopping off at Bahrain,
Qatar and Oman. During the fall and winter season the Dubai Cruise Terminal will be the home port
for the 6,916 tonne, 12 deck cruise ship, which has 336 staterooms, 56 suites, sports facilities and duty
free shopping. During the spring and summer periods, Lebanon will be the homeport for the Orient
Queen, which will cruise between Mediterranean destinations, including Cyprus, Greece, Istanbul and
Port Saeed.

Procedures
The procedures at the Dubai Cruise Terminal are extremely friendly and convenient, with minimum
bureaucracy, easy immigration, clearing of passengers by manifests, professional ground handling
with excellent tourist support infrastructure.
Visa requirement
All visitors except AGCC nationals (Bahrain, Kuwait, Qatar, Oman and Saudi Arabia) require a visa
sponsored by a local entity such as a hotel or tour company. There are two types: transit visas for 14
days and visit visas for 30 days (renewable). Airlines may require confirmation that the sponsor is
holding a valid visa for incoming visitors. Visas are easily obtainable for other visitors except Israelis
and travellers whose passports bear Israeli stamps. There are several types of visas for visitors to
Dubai:
Ž Entry Service Permit, for commercial purposes, valid for use within 14 days from the date of
issue, non-renewable, permitting holder to enter and depart the U.A.E through any airport.
Ž Visit Visas, for tourists who wish to spend more than 14 days in Dubai, requiring the
sponsorship of any U.A.E. resident or any company or hotel licensed, valid for 60 days and is
renewable for a total stay of up to 90 days.
Ž Tourist Visas, for individual tourists, entitling its holder to a 30 day stay and is non-
renewable. Multiple-Entry Visas, availed to business visitors who have a relationship with
either a multinational or other reputable local establishments, and who are frequent visitors to
the UAE. Valid for six months the duration of each stay is upto 30 days.
Ž 96-hour Visa for Transit Passengers : Transit passengers stopping at Dubai International
Airport for a minimum of 8 hours are eligible for obtaining a 96-hour transit visa.
Health Requirements
No health certificates are normally required for entry to Dubai.
Customs
No customs duty is levied on personal effects entering Dubai. Dubai Duty Free has a sales outlet in
the Arrivals Hall (but alcohol may only be purchased on departure).

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3.2.2 Singapore Cruise Terminal
Singapore, the third busiest shipping port in the world, has been built and positioned to attract large
cruise vessels that use the island-state as a year-round hub for voyages to Indonesia, Malaysia,
Thailand and other parts of the Asia- Pacific region. The increase in cruise visitors in the period from
1991 to 1996 was spectacular, going from 130,000 to 750,000 cruise passengers, thanks to the new
Singapore Cruise Centre and its international airport, which acted as a real connecting hub for the
whole of the region. When the cruise terminal was opened, the Port of Singapore Authority recorded
more than 190,000 cruise passengers passing through its international terminal with 350 ship calls in
1992, a substantial increase over 1991. WTO reports an arrival of 168 international vessels with
231,522 international cruise tourists (not taking into account the very short cruises and regional
cruises) in 2001.
The cruise terminal at Singapore called the ‘Singapore Cruise Centre’ was built and developed by the
Port of Singapore Authority (PSA) at a cost of $50 million to promote Singapore as the Cruise
Gateway to the Asia-Pacific.
Ž The Singapore Cruise Centre was officially opened on 18 June 1992, comprising two
terminals.
Ž The International Passenger Terminal (IPT) with two berths of lengths measuring 300 metres
and 250 metres respectively and with drafts of up to 12 metres, catering to international sea-
borne travelling.
Ž Regional Ferry Terminal (RFT) with six berths for regional ferries plying between Singapore
and the Indonesian Riau Islands, and Malaysia.
Recently the Singapore Cruise Centre (SCC) was upgraded at a cost of S$22.5 million. The
completion of the upgrading coincided with the 5th Seatrade Asia Cruise Convention 1998. Delegates
had the golden opportunity to view the new facilities in December 1998, which spearheaded the SCC
into the Mega Ship era. At the same time, the SCC also launched its new logo, which visually
expresses a strong directional movement, symbolising SCC's thrust towards success in the next
millennium and to promote a whole new image as the number one Asian port destination for
international cruising. The Singapore Cruise Centre clinched a record of three awards for 2003 as the:
Ž Best Turnaround Port Operations
Ž Most Efficient Terminal Operator
Ž Most Efficient Port Services
The Singapore Cruise Centre has grown from just another interesting "port of call" to become the
most important international cruise destination and hub in the Asia Pacific region.
To additional to its international cruise terminal, Singapore has established the Tanah Merah Ferry
Terminal (TMFT) in August 1995 to cater the regional passenger traffic between Singapore,
Indonesia (Batam and Bintan), and Malaysia ( Sebana Cove). Facilities at this terminal include 4
berths, a computerised check-in system, air-conditioned arrival and departure halls, baggage check-in
and porterage services and a public information display system. Passengers have an interesting time
exploring the many stores TMFT has to offer. The duty-free shops, sundry goods shops, money
changer, cafeteria and travel/resort agencies are all strategically located at the terminal for the
convenience of arriving and departing visitors alike.

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Exhibit 91 : Services and facilities at the Singapore Cruise Centre

SERVICES FOR INTERNATIONAL CRUISE SHIPS


A. Terminal Services
Ž Airconditioned Arrival and Departure Halls
Ž Terminal-to-Ship Linkbridges
Ž Passenger Gangways
Ž Portable Baggage Conveyor Belt
Ž Forklifts
Ž Pipeline Freshwater Supply
Ž Shore-to-Ship Telephones
Ž Baggage Carousels
Ž Travolators
Ž Facilities for the Handicapped
B. Passenger Services
Ž Limousine Taxis
Ž Free Baggage Trolleys
Ž Duty-Free Shopping
Ž Food and Beverage Outlets
Ž Moneychangers
Ž Banks
Ž Supermart
Ž Convenience Store
Ž Pharmacy
Ž Post Office
Ž Chinese Medical Hall
Ž Medical & Dental Clinics
SERVICES FOR REGIONAL FERRIES
A. Terminal Services
Ž Airconditioned Arrival and Departure Halls
Ž Overnight Mooring
Ž Freshwater Supply for Overnight Mooring
Ž Facilities for the Handicapped
Ž B. Passenger Services
Ž Limousine Taxis
Ž Free Baggage Trolleys
Ž Duty-Free Shopping
Ž Food and Beverage Outlets
Ž Moneychangers
Ž Banks
Ž Super-mart
Ž Convenience Store
Ž Pharmacy
Ž Post Office
Ž Chinese Medical Hall
Ž Medical & Dental Clinics
Ž Courier Service
Ž VIP Lounge (TMFT only)
Ž Conference Room (TMFT only)
Ž Smokers' Lounge (RFT only)

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Procedures
Most of the procedures required for entry into the Singapore Cruise Centre can be filled on-line via
the internet. Such completion of procedures on line enables both the cruise ship and the passengers to
enter the port with minimum harassment and delay. It also facilitates the procedures to be completed
much before the ships arrival, thus making it convenient for the port authorities to complete the
formalities with minimum delay.
Singapore also has mutual understanding with certain other countries such as Thailand, Bangkok etc
wherein visa requirement has been done away with, to ease and facilitate seamless travel.

3.3 FINANCIAL IMPLICATIONS


Developing cruise tourism in India would demand financial investment in creating the necessary port
infrastructure facilities. At the same time such investment would have revenue implications in terms
of increased tourism activity leading to increase in spending and tourism income that would accrue.
In this section we have made a broad assessment of the financial implications of developing cruise
tourism, in terms of the investment estimates and the estimated earnings from passenger spends.
3.3.1 Investment Estimation
As part of its endeavour to promote cruise shipping, Government of India has short-listed 6 major
ports for the development of cruise facilities. The ports include Mumbai, Mormugao, New Mangalore,
Cochin, Tuticorin and Chennai. Currently, all ports except Mumbai handle cruise vessels at cargo /
multipurpose berths and do not have dedicated facilities. The following analysis discusses the cost
estimates and potential investment involved in the development of dedicated cruise terminals at Indian
Ports.
Background
◊ Mumbai Port has a dedicated berth for handling Cruise vessels, at the Ballard Pier Extension
Berth. The earmarked berth is capable of handling large cruise vessels of up to 70,000 GRT
having length 800 feet and requiring a draft of 33 ft.
◊ All other ports handle cruise vessels on container / general cargo / multipurpose berths. The berth
is simply cleaned prior to arrival of passenger vessel. Though the cargo berth for cruise vessels is
earmarked and priority berthing is provided to cruise vessel.
◊ Considering the high-profile nature of cruise tourism it is imperative that basic but permanent
facilities including dedicated berths and terminal buildings are developed. The basic facility
requirements have been covered in the previous section
Assumptions & basis used for cost estimation
The following assumptions and basis has been employed in arriving at the cost estimates for
development of various facilities towards developing a model cruise terminal.
1. The berth development costs considered herein include only base costs. The overall costs would
depend on the port’s location and draft required.
◊ Dredging costs vary widely depending on the geotechnical features of the port site.
◊ Also, the proposed location of the berth within the port ie. sheltered / open to sea is an
important aspect in determining the cost. An unsheltered location would require
development of breakwaters and additional capital expenditure on the same.
◊ In addition, the port’s strategic intent to provide a Ro-Ro facility in conjunction with the
cruise berth will be a determinant factor in the berth’s cost.

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◊ The berth is assumed to have adequate back-up land for development of the terminal
building. Upfront land costs or lease rentals due to the port authority have not been
considered as part of the capital expenditure estimation.
2. At present, most ports identified for development of cruise facilities do not have much passenger
traffic. To enhance feasibility of the cruise terminal projects, instead of developing new berths,
renovation of existing berths can be undertaken as a short-term option. This coupled with
development of a basic terminal building will go a long way in providing at least comfortable
facilities for cruise travelers, if not, amenities.
3. For the model cruise terminal plan, a terminal building with facility area measuring 15,000 sq.
mts is proposed.
◊ Since, the facilities provisioned at a modern cruise terminal are same as at airport
terminals; hence, a standard aviation norm of 15 sq. mts. per person has been considered
for planning the terminal building.
◊ Thus, the model cruise terminal would be able to cater to 1,000 cruise tourists at a time.
This would be exclusive of all peak tourist, visitor and service personnel movements.
This building size would be required at the initial stage itself considering that larger cruise ships
are being built and commissioned. In case a port develops into a ‘home port’, an even larger
facility would be required to cater to total number of disembarking / embarking, tourists and crew.
4. Public address system, Escalators / Elevators, signboards, terminal map, wheel chairs have been
factored in the cost estimation. Although costing a fraction of the overall costs, they provide
enhanced comfort and ambience within the terminal building to cruise tourists, thus creating a
good image for the port.
5. The service counters for providing various facilities such as Bank services, foreign exchange
services, communication areas, tourist information centre, baggage counter, security check, agents
office etc. have been considered in the cost estimation exercise.
◊ The counters are considered to vary in size and furnishing details. Only services required
by large percentage of tourists would require large areas.
6. The furnishing costs for various facility areas have been considered at different scales. This is
considering the fact that not all areas would require a high degree of furnishing. Areas not in
direct contact with tourists may not require a high degree of furnishing as opposed to direct
interaction areas. Implementing such aspects at the design stage would help the ports in lowering
the development cost of the terminal building considerably.
7. The area split-up between the Lounge areas, Service counters and Commercial and shopping areas
has been split up on the ratio of 50%, 25% and 25%. The facility areas thus created at the terminal
would lend an ideal combination of quality service and attractive ambience. The Commercial and
shopping areas will also yield additional revenues as lease rentals for the port, enhancing the
viability of the terminal project. A larger terminal building size if developed, could increase the %
dedicated to commercial areas but would require a higher tourist throughput to render the
shopping areas viable for investment by private players.
8. A detailed design and estimation study based on fieldwork needs to be undertaken to assess the
cost estimates, which would vary widely for the different locations. Keeping all dimensions
parameters same, even the quality of facilities provisioned can have a significant bearing.
9. All facilities desirable for cruise activity have been considered as integral to the model cruise
terminal, and the cost estimation is based thereupon. However, the Port may implement many of
the facilities through Private Sector Participation (PSP). Facilities implemented through PSP
means would lower the costs incurred by the Port. The various models for PSP have been
discussed as part of Module 3 of this report. In case of the entire terminal being developed
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through PSP, land area and waterfront rights could potentially be the contribution of the port
authority.
Broad Estimates for development of a model cruise terminal
Exhibit 92 : Broad Estimates for developing a cruise terminal

No. Description Dimension Rs.


crores

1. Development of Cruise Berth 300 mts. length with 10 m draft 40.00


2. Renovation of existing berth 300 mts. length with 10 m draft 8.00
3. Aero Bridge, telescopic Gangway, Baggage conveyor - 7.05
system, trucks & trolleys for baggage
4. Terminal building construction Facility area – 15,000 sq. mts. 13.50
5. Air-conditioning for Terminal Building Facility area – 15,000 sq. mts. 6.00
6. Passenger Lounge, Crew Lounge, Embarkation Balcony 7,500 sq. mts. 14.70
7. Passenger amenities like Toilets, Water fountains, - 2.37
Showers, Lockers, Public address system, Escalators /
Elevators, signboards, terminal map, wheel chairs,
shuttle bus coaches, telephone & fax equipment
8. Service counters for Bank services, foreign exchange 3,750 sq. mts. 3.45
services, communication areas, tourist information
centre, luggage counter, postal services, Customs /
Immigration / security check areas
9. Shopping areas, restaurants, cafeteria, medical clinic, 3,750 sq. mts. 2.63
Internet café, Laundromat, Entertainment centres, tour
operators, Ship agents office
10. Miscellaneous facilities including X-ray Machines, - 0.65
bunker storage facilities, garbage disposal facilities,
water supply facilities, maintenance & repair facilities
11. Levelled area for parking 5000 sq. mts. 0.25

Investment required for development of a cruise terminal


Based on the above cost estimates, the following would be the investment required for development
of a cruise terminal at any of the Indian Ports.

Exhibit 93 : Cost Estimates for each Cruise Terminal

Cruise Terminal on new berth (Rs. Cruise Terminal on renovated


Crores) berth (Rs. Crores)
Gross Investment required 90.60 58.60
Contingency cost (5%) 4.53 2.93
Total Investment required 95.12 61.52

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The total investment required is approximately Rs. 95 crores for a cruise terminal with
development of new berth and approximately Rs. 61 crores, in case of renovation of an
existing berth.
The approximate earnings from the activity have been studied under the spending estimate
patterns of cruise tourists and crew. Considering the tremendous boost that cruise activity
would provide to the domestic GDP through increased spending on various aspects, the one-
time investment on creation of cruise facility would be truly viable.
To provide impetus to the Indian Cruise Shipping Industry investment in dedicated facilities
at the six identified ports of Mumbai, Mormugao, New Mangalore, Cochin, Tuticorin &
Chennai is required. Additional basic facilities may also be developed at minor but important
centres such as Porbander, Vishakapatnam & Calcutta. India should also consider providing
the necessary infrastructure in exotic Indian locations like Andamans & Nicobar Islands and
in Lakshadweep which present ideal cruise destinations.
3.3.2 Earnings from passenger spends:
Cruise Tourists coming into a country provide an impetus to the local economy by availing of services
and in return spending on local activities. The country benefits from receipts in form of various taxes,
charges / levies and goods & services sales.
In the following analysis, we attempt to project spends that may accrue to the country as a result of
development of cruise facilities. Although, even the World Tourism Organisation (WTO) recognises
that great disparity between figures published by ports and tourist organisation along with lack of
sufficient information causes such an exercise to be non-definitive. The exercise herein merely
attempts to provide an approximate basis for undertaking financial assessment of the industry.
Spending category grouped by heads
The WTO defines the total spending by the Cruise Industry through the following equation
STOTAL = (SPORT) + (SSUPPLIES) + (SON-LAND) + (SCREW) … … … … … … … … … … … (1)
Where,
• STOTAL is the total spending by cruise tourist, and
• SPORT - Spending attributable to port services
• SSUPPLIES - Spending on supplies
• SON-LAND - On-Land passenger spending
• SCREW - On-Land crew spending
S
◊ Spending attributable to port services ( PORT)
This head includes all charges paid for by the cruise vessel and its agency for the basic services
provisioned by the port. This would include berthing charges, pilotage & towage dues and other port
dues. These dues are often subsidised / discounted to make the port a preferred port-of-call by the
cruise line.
The head also includes the various taxes paid for by the cruise vessel or its tourists for entry-exit
procedures, Customs levy, light house dues etc. Some destinations internationally have also started
levying cruise tax, a small per passenger fee to enhance their earnings from the cruise industry. The
amount collated would vary for different ports depending on their tariff structures.
S
◊ Spending on supplies ( SUPPLIES)
This head includes service dues paid by the cruise vessel and its agency for value added services
provisioned by the port. Spending under this head would include the dues paid to ship chandellers,
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provisions suppliers, water, fuel bunkers & other services provided by local agencies to cruise ship
operators. Spends under this head would depend on the quality of services & supplied provisioned at
the port, and may vary as many of these products are acquired abroad and therefore do not have an
effect locally.
◊ On-Land passenger spending (SON-LAND)
This head includes the estimated average spending by cruise tourists at a port. This includes the
spending on various activities, which a cruise tourist may participate in such as on-land restaurants,
sightseeing trips & excursion, accommodation, shopping & other miscellaneous activities.
To understand the spending per tourist per port, we have considered the outcomes of similar exercises
conducted by leading cruise industry associations presented as Exhibit 94.
Exhibit 94 : Average spends per cruise tourist per port
Port & Country Spending Year Study Undertaken by
per tourist
per port
US$
Miami Port (USA) 89 2004 Business Research Economic Advisor (BREA)

Florida (USA) 90 1994 Florida-Caribbean Cruise Association (F-CCA)

US Ports 109 2001 Cruise Lines International Association (CLIA)

Ketchican Port (Alaska, 95 1999 McDowell Group - Research Based Consultant


USA)
St John (Canada) 77.7 2004 Department of Economic Development, Tourism &
Culture, City of St. Johns

Port of Queensland 110 - 140 2005 Queensland Tourism Authority


(Australia)
Antigua (Caribbean) 86.8 2000 PricewaterhouseCoopers Consulting (PWC)

$ 94
Average
Source : CRISIL Analysis
The cumulative average of these previous studies is calculated to arrive at an approximate spending
by cruise tourists at a port, around the world. The international average works out to $ 94 per cruise
tourist per port. However, an analysis of cruise tourist spends at Cochin Port for the period from 2000-
01 to 2003-04 yields an average spend of $ 45. This may be primarily due to two reasons – higher
Purchasing Power Parity (PPP) or lesser avenues for spending by cruise tourists.
In the analysis, it is worthwhile considering that the number would vary widely depending on whether
the port is a ‘home port’ or ‘secondary port’. A cruise tourist at a secondary port-of-call would not
spend on accommodation, thus reducing the total spending considerably.
To better understand the key spending areas, we analyse the spending pattern of cruise tourists at base
ports and secondary ports. We look at the average data for USA & Europe. It is expected that
spending patterns at Indian ports too would remain same, depending on whether they are base ports or
secondary ports.

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Exhibit 95 : Cruise Passenger Spending at Base Port

Breakdown USA Europe Average


(%) (%) (%)
14.25 -- Ac c o m o da tio n
-- Accommodation 30.0 30.4 30.2 30.25
-- R e s ta ura nts
-- Restaurants 25.0 34.0 29.5
26 -- S ho pping
-- Shopping 30.0 22.0 26.0 29.5 -- Othe rs

-- Others 15.0 13.6 14.3

Source: World Tourism Organization Report


As seen in the table above, the major spending at a base port is on accommodation, followed by food
and shopping.
Exhibit 96 : Cruise Passenger Spending at Secondary Port

Breakdown USA Europe Average


(%) (%) (%) 17.55 -- Sightseeing
42.7 -- Shopping
-- Sightseeing trips 44.0 41.4 42.7 -- Restaurants
10.45 -- Others
-- Shopping 22.4 36.2 29.3 29.3

-- Restaurants 08.8 12.0 10.4


-- Others 24.8 10.4 17.6
Source: World Tourism Organization Report
On the other hand, major spending at a secondary port is on sightseeing trips followed by shopping,
other related activities and food.
S
◊ On-Land crew spending ( CREW)
As per WTO estimates, about a third of the crew takes advantage of a port-call to disembark. This
equates to roughly 15% of passengers, taking into account that the crew / cruise passenger ratio is
between 2 and 2.5 to 1. The average crew spending at a port-of-call is nearly $ 30 per port-of-call.
The key spending areas for crew are on-land restaurants, transportation, souvenir shopping etc.

3.3.3 Potential Economic Impact of the Cruise sector for India


Taking into account the potential demand and cruise arrivals projected for India, we have in this
section worked out the economic impact in terms of revenue for the country, taking into account the
average spending by cruise tourists and crew, as explained above. However, spending on port services
and supplies would vary widely and hence has not been considered in our analysis.
The analysis is based on the following:
• An average spend by cruise tourist per port in India has been taken at $ 45 while that for the
cruise crew member is taken at US $ 30.

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• The number of cruise tourists arrivals as projected in Section 2.6 has been is considered to arrive
at total spends by cruise tourist and crew.
• Crew are estimated at 15% of cruise tourists.

Exhibit 97 : Estimation of total cruise tourist & crew spending for 2010-11 and 2030-31

Description 2010-2011 2030-2031

No. of Cruise tourists 184,710 1,216,780


◊ Spending per cruise tourist (US $) 45 45
◊ Annual spending at Indian ports by Cruise tourist (US $) 8,311,924 54,755,109
No. of Cruise crew members 27,706 182,517
◊ Spending per crew member (US $) 30 30
◊ Annual spending at Indian ports by Cruise crew members
(US $) 831,192 5,475,510
Total cruise tourist & crew spending (US $) 9,143,117 60,230,620
Total cruise tourist & crew spending (Rs. million)* 411. 44 2710.37
* US $ 1 = Rs. 45/-

Conclusions
• On extrapolating the numbers, for the entire period from 2005-06 to 2030-31 the total spending by
cruise tourists is estimated at US$ 545 million (Rs. 2452.66 crores) and by cruise crew at US$
54.5 million (Rs. 245.27 crores).
• The total earnings from cruise tourists & crew during the period from 2005-06 to 2030-31 is
estimated at US$ 599 million (Rs. 2698 crores).
• Considering the world average spending of US$ 94 per tourist per port, India’s average at US$ 45
is extremely low. There is immense scope for increasing the average spends & total spends by
providing facilities for cruise and allied activities.

3.3.4 Viability of Cruise Terminals


Cruise terminals would need to demonstrate viability of operations in the long run. This would be
important not only for ensuring sustainability but also to bring in private sector participation into the
development of such terminals.
In this section we present an analysis of viability for Cruise terminals.
Assumptions for Viability Analysis
• Viability has been presented for the cruise terminal with assumptions of new berth as well as a
terminal constructed on a renovated berth. The project cost has been accordingly assumed as per
cost estimations presented in Section 3.2.1. Berth development/renovation includes only base
costs. Dredging costs, which depend on geotechnical features, & any additional land acquisition
costs that may be required has not been considered, as these are port specific and would vary from
port to port.
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The project cost assumptions are presented below:
Exhibit 98 : Project Cost for a Cruise Terminal

Project Cost Renovated Berth New Berth


Terminal Building 5059.50 5059.50
New Berth - 4000.00
Renovated Berth 800.00 -
Project Construction Cost 5859.50 9059.50
Contingencies @ 10% 585.95 905.95
IDC 355.34 549.40
Total Project Cost 6800.80 10514.90

• The Terminal facility area is proposed to comprise an area of 15,000 sqm. For this the standard
aviation norm of 15 sqm per person has been assumed, as a terminal would resemble an airport
largely. For the purpose of this analysis it is assumed that the Terminal would cater to a volume of
1,000 cruise tourists at a time. Passenger amenities, service counters, shopping areas, restaurants,
cafeteria, medical clinic, Internet café, Laundromat, Entertainment centres, tour operators/ship
agents offices , miscellaneous facilities & parking have been considered as part of the terminal
development.
• The tourist numbers has been assumed as per the market potential forecast presented in Section
2.6. Taking into account the fact that each ship may touch at-least 2 to 3 Indian ports, it is
assumed that atleast 45% of the potential traffic will be attracted to a particular terminal in the
initial years. The number of tourists is expected to increase as per the projections from 185205 in
2010 to 1217103 in 2031, at annual compounded growth rate of 9.4%. The completion of the
cruise terminal will be close to 2009. Hence the arrivals figures pertaining to the corresponding
year have been taken into account.
• The passenger spending is as per the estimations presented in Section 3.2.2, wherein it has been
considered that a cruise tourist will spend an average US$ 45 per day per port in India and the
crew member will spend on average US$ 30 per day. However, it has been assumed that, out of
total tourist spend, only 40% will accrue to the concerned port terminal. Accordingly, the tourist
spend per day is assumed at Rs. 984 and crew spend per day is Rs.656. The terminal owner will
realize this revenue from facilities like hotels & restaurants, shopping malls & complexes and rent
by sub-letting of infrastructure & facilities. Annual escalation of 5% is used for estimating tourist
spend in the future years.
• Other sources of income from commercialization of space available like advertising, lease
rental of sub-letting the berth facilities, sale of goods & merchandise, supplies to the ship has
been considered at around 15% of the income form tourists.
• The financing of the terminal facility has been assumed through a mix of Debt and Equity in the
proportion of 30:70. The interest rate on debt raised is assumed at 12% and the loan is assumed to
be repaid in ten equal annual instalments, with an initial moratorium period of 2 years.
• The Operating & administration expenses would include staff expense, repairs & maintenance
expenses, services & utilities and rents & insurances. As per the annual reports of Munich
Airport, Greater Toronto Airports Authority, Narita (Japan) Airport and Sydney Airport,
operating and administration expenses as percentage of operating revenue ranges from 20% to

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76%. Taking an average of operating expenses of all these four airports, it has been assumed that
operating and administration expenses will be 44%.
• The commercial useful of the cruise ship, berth and terminal is assumed to be 50 years and project
cost of these components has been amortised uniformly over over either the useful life or the
concession period, whichever is less. Depreciation rate for income tax purposes has been assumed
to be 10% under written down value method.
• Corporate tax rate of 33.66% (30% plus surcharge plus education cess) and Minimum Alternate
Tax rate of 8.42% (7.5% plus surcharge plus education cess) has been assumed. Also, as the
Cruise terminal would be an infrastructure project, tax benefit under Section 80IA has also been
taken into considerations.
Financial Analysis Output
Based on the assumptions outlined above, the results of the financial viability analysis, undertaken for
a period of 30 years (till 2035), are summarized in the following table.
Exhibit 99 : Key Viability Parameters (Base case)

Financial parameters Renovated Berth New Berth


PIRR (for 30 years) 17.89% 14.32%
EIRR (for 30 years) 18.24% 14.21%
Concession Period 28 years Beyond 30 years
Min DSCR 1.47 0.96
Avg DSCR 3.60 2.34

Sensitivity Analysis
The sensitivity scenarios for the above have been undertaken to assess the robustness of the project
cash flows to sustain unforeseen setbacks. Sensitivity analysis has been conducted for changes in the
following parameters.
• Ten, twenty and thirty percent increase in Base Project Cost
• Ten, twenty and thirty percent reduction in Tourist Numbers affecting project revenues
We have also presented the viability gap funding (subsidy) that may be required under each of the
sensitivity scenario to bring the project back to acceptable level of viability. The results of the
sensitivity analysis are presented in the following Exhibit:
Exhibit 100 : Sensitivity of a Cruise Terminal constructed on Renovated Berth

Capital Expenditure Sensitivity (renovated berth)


10% increase 20% increase 30% increase

Concession Period (yrs) Beyond 30 years Beyond 30 years Beyond 30 years


Equity IRR 16.31% 14.76% 13.52%
Average DSCR 2.97 2.50 2.14
Revenue Sensitivity (renovated berth)
10% decrease 20% decrease 30% decrease
Concession Period (yrs) Beyond 30 years Beyond 30 years Beyond 30 years

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Equity IRR 17.06% 16.00% 14.83%
Average DSCR 3.23 2.87 2.52
Subsidy requirement for concession period of 30 years
for change in Capex (renovated berth)11
10% increase 20% increase 30% increase

Subsidy (Rs. Lac) 477.06 1,123.72 1,821.67


Subsidy (%) 5.80% 11.40% 15.70%
Equity IRR 18.03% 18.06% 18.11%
Average DSCR 3.02 2.37 1.98

Exhibit 101 : Sensitivity of a Cruise Terminal constructed on New Berth

Capital Expenditure Sensitivity (new berth)


10% increase 20% increase 30% increase
Concession Period (yrs) Beyond 30 years Beyond 30 years Beyond 30 years
Equity IRR 12.65% 11.43% 10.30%
Average DSCR 1.94 1.64 1.40
Revenue Sensitivity (new berth)
10% decrease 20% decrease 30% decrease
Concession Period (yrs) Beyond 30 years Beyond 30 years Beyond 30 years
Equity IRR 13.38% 12.48% 11.50%
Average DSCR 2.11 1.88 1.65
Subsidy requirement for concession period of 30 years
for change in Capex (new berth)
10% increase 20% increase 30% increase

Subsidy (Rs. Lac) 2,289.62 3,817.07 4,551.75


Subsidy (%) 17.80% 25.60% 26.00%
Equity IRR 18.01% 19.67% 18.11%
Average DSCR 1.76 1.70 1.44

Observations on Cruise Terminal Viability


It can be clearly seen that cruise terminals have only a marginal viability and moreover this viability is
extremely sensitive to critical aspects such as project cost and revenue accruals arising from tourist
arrivals and tourist spend. A fluctuation in any of these factors would seriously impact on the project
financial performance and viability. Projects may also see losses in the initial years.
To protect the projects from such risks and also to attract the necessary private sector participation
into the construction of cruise terminals, it may be necessary to extend a one time viability gap

11
Introduction of subsidy will result in reduction of outflow from equity sources of fund, while the debt will remain at 30% of the project
cost.
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funding for these projects. The exact percentage of this assistance may be arrived at after port specific
feasibility has been undertaken and arrived at.

3.4 DEVELOPING CRUISE TERMINALS IN INDIA


India would need a planned and integrated approach to developing and financing cruise terminals. In
this regard the role of the ‘primary stakeholders’ in the cruise tourism industry would need to be
identified and underlined.

3.4.1 Primary Stakeholders


The frontline stakeholders are as follows:
• Ministry of Shipping including the concerned port authority
• Ministry of Tourism – Central & State
• Private agencies, including
o Cruise Lines & Cruise Operators
o Ship Agents
o Tour Operators
o Ship Chandlers / Provision suppliers
o Taxi Operators
Each of these could play a significant role in developing cruise terminals.
The responsibility of the Ministry of Shipping & the concerned port authority would arise from their
direct involvement in and jurisdiction over the port area and would cover the following:
• Prepare port specific cruise terminal development plans
• Institute feasibility studies for the cruise terminal
• Identify land requirement
• Initiate land acquisition measures
• Obtain necessary project related approvals
The responsibility of the Ministry of Tourism would arise from their understanding of the tourism
demands of cruise terminal and responsibility towards synergistic tourism development to support
cruise terminal development. It would essentially cover the following:
• Inputs towards preparation of cruise terminal development plans
• Institute a dedicated fund towards
o Hinterland tourism development
o Tourism related Infrastructure and linkages
o Viability gap funding support, where needed
• Market the cruise terminal as a cruise destinations
• Take responsibility for training the secondary stakeholders
The role of the Private Agencies would arise from their close understanding of the cruise tourism
sector and their ability to successfully fund and manage the cruise terminal while taking the necessary
investment risk. Private developers would do the following:
• Develop cruise terminals
• Operate and manage the facility.
In addition to the above the Ministry of Environment and Forests would play an important role to
positively enable the development of Cruise terminals. This is because cruise terminal development in
many areas (such as Andamans & Nicoar islands, Lakshadweep Islands, other beaches & coastal
areas) would demand clearances on account of various environmental regulations pertaining to the
‘coastal regulation zones’, the reserved forests, national parks and sanctuaries etc. The role of the
Ministry would be to:
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• Develop an approach/policy which is sensitive to the need to develop cruise terminals in
environmentally sensitive areas
• Provide the approvals etc subject to meeting certain basic environmental standards & stipulations
3.4.2 Funding approach
The funding strategy for cruise terminals and the wider cruise offering would essentially be linked to
the stakeholders as described above. Each of the stakeholders could form a link in putting together the
infrastructure and linkages necessary to support the development in the sector. As with the
responsibility described above, the funding approach too would be broadly as shown in the exhibit
below:
Exhibit 102 : Broad Funding Approach

Funding Approach to Cruise Terminals/Tourism Development

Ministry of Shipping Ministry of Tourism Department of Private Developers


Port Authorities Tourism Private Sector
•Master planning, pre- •Tourism related urban •Hinterland/regional tourism •Cruise Terminal Development
feasibility studies infrastructure development •Cruise ship/Lines operations
•Land acquisition •Sector level marketing, •Human resource training •Operation and management of
•Development of off-shore positioning, publicity capacity building all facilities
facilities – dredging and •Viability gap funding for •Circuit development within •All tourism related
berth development terminal development the concerned state infrastructure in the hinterland
•Port level marketing •Coordination for any •State level marketing efforts •Tourism related services –
efforts interstate circuit development restaurants, hotels, other
accommodation, travel and
trade, communication

While the key responsibility would lie with the stakeholder as shown above, it need not be underlined
that each Government Stakeholder can explore the involvement of the last group viz the private
sector. For example, the port authorities could seriously explore the development of off shore cruise
port/berth related infrastructure development to be bundled into the cruise terminal development as
part of the privatization structure. Similarly, ministry of tourism could bundle the hinterland tourism
related infrastructure development with large commercially viable projects in the region to be
developed by the private sector under a suitable PPP structure. This will essentially depend on the cost
of development vis-à-vis the viability of the concerned cruise terminal development which will in turn
depend on its commercial potential. Where the cruise terminal is strongly viable all key components
can be bundled into the privatization initiative whereas were viability is an issue, the MOT will have
to step in with viability gap funding or the port authority will have to take responsibility for the core
berth development. The nature and extent of private sector participation which can be explored in
each of these cases has been in Section 3.4.3.
3.4.3 Options for ‘Private Sector Participation’
The development of cruise terminals and dedicated facility required thereon can ideally be achieved
through effective private sector participation. Such private participation could be for the entire
terminal or for individual facility / infrastructure packages. The structure, nature and extent of the
private participation could also be strategically structured taking into account aspects such as
development requirements, viability of the development, security & clearances considerations, land
availability and status etc.
Private Sector Participation (PSP) Options:

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There are many well know models for ‘public-private partnerships’ (PPP) including the JV (joint
Venture), the build-operate-transfer (BOT), build-own-operate-transfer (BOOT), build-operate-lease-
transfer (BOLT) and design-build-finance-operate-transfer (DBFOT). Each model varies depending
upon the extent of sharing of risk and returns along with ownership rights as defined in the
‘concession agreement’ entered into between the Government and the private developer.
Generally in most of these structures, financing and construction is the sole responsibility of the
private developer. Equally all these structures pre-supposes the charging of ‘user fee’ by the developer
as return for his investment.
Some of the alternative PSP structures have been shown in Exhibit 103 below:
Exhibit 103 : PSP Models
Contractual Description
Arrangeme
nt
Build Own In the ‘BOO’ concession structure, privatisation is total with the onus for investment &
Operate operation along with asset rights being handed over to the private operator. Government
(BOO) would have no financial or commercial obligations. Essentailly the transfer back of the land
to the government does not take place, and the project company continues to operate the
facility as though owned by it. The underlying land is either sold or leased to the project
company (with a continuous roll-over option for extension of lease).
Build Own The ‘BOOT’ structure varies from ‘BOO’ only to the extent that the concession would be
Operate for a specified period at the end of which the land and the assets thereon would ‘transferred’
and back to the Government at the end of the concession period as per the terms of the
Transfer concession contract. As such Government’s interest in the land would be protected. The
(BOOT) onus for investment & operation would be with the private operator with Government
having no financial or commercial obligations. However, ownership rights during the
concession would rest with the operator and he would be in a position to securitize these for
raising finances – with the attendant risk that in case of default the financiers would have the
right take over the facility including the land.
Build and In the ‘BT’ structure the construction of the facility would be financed and carried out by
Transfer the private sector after which the entire facility would be handed over to the Government.
Hence, it would be very limited privatisation, and the entire ownership with responsibility
for operations, management and marketing would rest with the Government. This would
imply that the consequent commercial and marketing risk would lie with the Government.
Build The ‘BTO’ structure would differ from the ‘BT’ structure in that the facility would be
Transfer financed and constructed by the private sector and handed back to the Government after
and which the operational rights would be given either to the same private developer or to some
Operate other operator depending on the structure of the contract. This structure may be relevant in
(BTO) cases where the Government ownership of the land and assets thereon may be crucial and
statutorily required such as in projects implemented on reserved forestland. The private
operator would have only operational rights with responsibility for operations, management
and marketing and would bear the related risk thereon.
Build The ‘BOT’ is the typical and most widely used concession contract and offers the flexibility
Operate to be structured either on the basis of a lease or a license. The facility is financed, designed
and and built by the private operator in return for which he is given the ‘concession’ to operate
Transfer the project, either on the basis of a lease of land or a license to operate, for a specified
(BOT) number of years. The private developer operates the project for a specified period bearing
all the commercial and marketing risks and at the end of concession he is required to hand
over the facility to the government as per the terms of the contract. Ownership remains with
the Government during and after the concession period.
Build Lease In the ‘BLT’ structure the construction of the facility would be financed and carried out by
and the private sector after which the entire facility would be given on lease to the Government
Transfer for the purpose of operations. This structure is used in sectors where the operations of a
(BLT) certain service have not been fully privatized, such as in the Railways. Hence only finance
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Contractual Description
Arrangeme
nt
& technical expertise would be sourced from the private sector with responsibility for
operations, management and marketing resting with the Government. This would imply that
the consequent commercial and marketing risk would lie with the Government. At the end
of the concession the facility would be transferred back to the government as per the terms
of the concession contract.
Build The ‘BTL’ offers great flexibility in structuring a project such that the two phases –
Transfer construction and operations – are bifurcated. In this structure the facility would be financed,
and Lease constructed and pre-marketed by the private sector and handed back to the Government - the
(BTL) facility would then be leased out to the various operators on terms decided in the contract.
The operators would have only operational rights with responsibility for operations,
management and marketing and would bear the related commercial risk thereon.
Joint In a ‘JV’ structure, the project would be implemented by a Joint Venture Company, (JVC),
Venture in which both the private developer and the Government would have shareholding. The
(JV) Government would invest in the project and, as shareholder, would be part owner and
consequently bear all the related commercial and marketing risk arising out of the project.
The financial returns to the Government would accrue in the form of ‘dividends’ and exit
option would be available only through the divesting of Government shareholding in the
JVC.

In determining the privatization mode for the cruise terminal, the option of entering into sub-
concessions will be explored. In all cases, flexibility will be given to the private developer to structure
and arrange for sub-concessions, to enable the development of the project sub-components such as
provision of linkages, better airline connections and good hotels. The appropriate variant would be
selected, which addresses the twin issues of risk mitigation and Government objectives. Equally
critical in designing a PSP framework would be bankability and clarity on financial and other State
Support obligations.
Government Objectives vis-à-vis PSP
PSP in a cruise terminal can exist at various levels:
1. Concession for undertaking development & operations of the terminal on a BOOT / BOT /
DBO basis etc.
2. Concession to undertake operations of the terminal
3. Joint Venture arrangements between Port Authorities and cruise liners/operators who are
major stakeholders
4. Port authority to build and manage the terminal through an SPV, with areas leased to private
players for development of hospitality related facilities
While identifying the policy for PSP, the Government would ideally aim to achieve its pre-defined
objectives. An indicative list of such objectives associated with the various contractual structures is
presented in Exhibit 104 below:
Exhibit 104 : PSP Structure vis-à-vis Government objectives
Elements of the Government Objectives
PSP Structure
Build / Finance • Overcome financial constraint on the State Government / Agency
• Exploit private sector design and technology capabilities
• Exploit private sector financing and risk taking ability
Operate/Manage • Introduce efficient & high standard of operating procedures & practices
• Bring in private sector operational efficiencies
Transfer • Assets being of a strategic nature, to revert to government

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• Government desires to retain flexibility to re-bid project at a later time
• Introduces the element of efficiency as the private operator has limited time to
recover his investment
Joint Venture • Land value significant constituting a key component of project cost
• Assets being of a strategic nature, preference to hold majority stake, yet allowing
flexibility
• Private sector desirous of reducing risks through introduction of government as
partner
• Sector is a politically sensitive issue, requiring token participation of government

Although the structure would be project specific based on the infrastructure / facility to be developed,
Build Own Operate Transfer (BOOT) seems as an appropriate implementation structure in the context
of development of port infrastructure. The advantages of a BOOT type of structure is that the port can
benefit from advances in construction technology and modern management through O&M practices
introduced by the private sector. From the private developer’s perspective, the BOOT structure would
enable complete control over the project, by reducing the risk profile of the venture. The structure
also, would probably be more acceptable to financiers and tenants. The structure might however
require government’s intervention in evolving regulatory mechanisms to ensure that the private
partner fulfils his commitments.
Till date, three ports namely, Mumbai, Mormugao and New Mangalore have initiated & finalized
their plans to develop additional / greenfield facilities for cruise industry by involving private sector
participation. Cochin, too has made some progress in this area with about 5 entrepreneurs filing their
expression of interest to develop the terminal. These plans have been made for development on a BOT
basis for a concession / lease period of 30 years.
Creating a ‘bankable’ PSP framework
While creating a robust PSP framework, Government should ensure that the privatization structure is
bankable (ie acceptable to financiers and bankers) wherein the concerns and risks of all the parties –
the Government, the private sector & the lenders – are suitably addressed. The private partner should
be able to deliver the expected requirements of the concession agreement. One alternative is that the
government adequately addresses the concerns of the prospective bidders through an acceptable bid
structure which addresses the following aspects:
Ž Commercial terms of the bid
The various means of selecting a preferred bidder for participation in the project include:
1. Bidder who agrees to pay the highest royalty on an NPV basis
2. Bidder who requests the lowest (or highest negative) viability gap funding from the port
authority
In the above two methods, the port may lose out on the opportunity that it may expect from
the business while the bidders too maybe very conservative due to the nascent nature of the
crusie industry in India. An option for avoiding this would be for the government to specify
sharing of revenue based on a certain minimum number of passenger – ship movements. In
this scenario the bidder will define a base amount payable to the port authority for a specified
number of tourist movements through the terminal. If there is an increase in the number of
tourist movements, the port receives a higher share of the revenue and if there is a lower
movement the port receives a specified ‘floor’ payment or alternatively shares in the loss.
This enhances the viability of the facility for the private sector at the same time ensuring the
port authority’s objective of having created a bankable and viable PSP structure.

Ž Viability gap funding


It is envisaged that traditional revenue sources may not support the entire project investment;
hence it is pertinent that the project has to be appropriately phased and packaged to attract

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investors and lenders. The viability gap funding support could hence be provided to the
project to enhance viability of the project / package, which may not be financially viable in
the absence of such support. The ‘viability gap funding’ would essentially refer to the
financial support through ‘capital subsidy’ that would be required to ensure the desired level
of returns to the investor within a stipulated period. In case of developing cruise terminals,
provision for viability gap funding should be the responsibility of the tourism department.

Ž Contribution by project stakeholders


To enhance viability of project and attract private entrepreneurs, the various beneficiaries
from the development involved from the design stage could be attracted to contribute to the
project’s capital cost. Such participation would enable easy tie up of funds for the private
partner making the project bankable and viable.

Ž Extension of the Concession / Lease period


Generally port projects undertaken through private sector participation involve a 30-year
concession period, during which the private operator is able to recover his investments, with
adequate returns. Investments made in developing infrastructure for the cruise industry
require a longer time period for adequate returns to be generated due to two key reasons, a)
The “off-season” period for cruise movement during the monsoons and b) the small base of
India’s cruise industry. Hence, the period of 30 years is expected to be short for generating
requisite returns on the investment to be made by the operators. To make the project viable
and feasible independently, the concession / lease period may be suitably increased.
3.4.4 Identifying possible Private Sector Partners
The new civil aviation policy which stresses the need to ‘change the traditional concept of airport
development, ownership and operations’ stating that ‘participation of state governments, urban
local bodies, airline/aircraft operators, other private investors’ may be encouraged in
development, up-gradation and management of small airports/airstrips’.
This same approach would also work in case of cruise terminal development. Since the development
of the cruise terminals in each region would be closely linked to tourism development and circuits in
the region, it would be possible to develop a viable model wherein development of the cruise
terminals could happen through participation of the stakeholders including the cruise shipping
services providers, hoteliers, tourism project developers, tour operators etc. all of whom would benefit
from the development.
While it would be difficult and improper at this stage to name possible private developers who would
be ready to get involved in developing cruise terminals, we have listed a few examples of such players
below:

Ž Cruise Lines/Cruise Operators


The most potential private sector player who would be interested in developing and operating
cruise terminals would be the cruise lines themselves. For example, Star Cruises which has
undoubted prominence in the Asia region has invested heavily in the ports of Port Klang (Kuala
Lumpur), Langkawi (Malaysia) and Phuket (Thailand). This group which has already started
operations in India, would be the most natural choice to approach.
Royal Carribbean International (RCI) which has sound interests in India, would also be an
option. As per the WTO Report “The presence of RCI stands out in the Indian source market,
selling 20,000 cruises per year in the country”. The Princess Group also have stake in Asia and
may wish to take advantage of the Indian potential.
Ž Cruise Terminal Operators

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Parties who have set up cruise terminals in other countries could also be interested in exploring
the potential in India. For example the Dubai Cruise Terminal would benefit from setting up of a
cruise terminal in India which could synergise with its own operations in Dubai

Ž Port Operators
Operators of private sector ports in India could also be keen to explore the synergy of having a
cruise terminal. For example, Adani Ports which has a base in Gujarat may look at a container
terminal opportunity there or anywhere else.

Ž Hoteliers/hospitality players
Big groups engaged in hotels/ hospitality business, like the Taj Group, the Oberoi Group, Leela
Palaces and Resorts etc. would explore the synergies of building cruise terminals in the region in
which there presence is the strongest.

Ž Large entrepreneurs in Tourism/other businesses


Large entrepreneurs also interested in the tourism business would also like to consider investment
in a cruise terminal especially close to their tourism projects. For example, the Muthoot Group,
which is today one of the largest business groups in South India with interests in varied sectors
including hospitality with many fine resorts and hotels in Kerala, wold be keen to look at
investment in a cruise terminal in any of the southern states, especially Kerala.
Similarly Reliance Group, which is trying to diversify its businesses, may actively look at a
cruise terminal in Mumbai or Gujarat.

Ž Private Airlines
There are a large number of private airlines in India operating in many regions. Each of these may
be interested in exploring the potential of cruise tourism and using their position in the cruise
ports as terminal operators to create backward integration & captive passenger base for their
suitably positioned airlines operations. For example the Sahara Group/Kingfisher Group may
be interested in setting up cruise terminals

Ž Other private stakeholders


Smaller stakeholders like tour operators, travels agents, shipping services agent etc would also be
interested in participating in cruise terminal development, however, they may not have the finance
to take it up independently. Accordingly, their participation must be explored in a consortium
model where they tie up with the larger player in the investment while gaining special privileges
in the development.
Other funding sources
In addition to private sector participation the following additional funding options may also be
considered:
Levy of Fee: The Government may consider the levy of special fee for Cruise Terminal
Development or alternately set aside a portion of an identified fee collection for the purposes of
cruise terminal development. This approach has been successfully followed in developing airports
and may be considered.
Institutional Funding: Indian Financial Institutions like HUDCO, IFC etc. extend structured
financial assistance for infrastructure development especially in the areas of urban development,
including the development of cruise terminals. The Cochin airport was funded by HUDCO
against securitization of the assured revenue resources. Such structured funding options may also
be explored.

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4 DEVELOPING CRUISE TOURISM IN INDIA :


STRATEGIES & IMPERATIVES

This section covers the strategies and imperatives necessary to develop the cruise tourism sector in
India. The critical areas for success would include the following:
◊ Creating an appropriate positioning for cruise tourism and marketing the product effectively so as
to create the awareness and generate necessary interest among the domestic and foreign tourist
◊ Developing the product offerings that India may put on its cruise tourism platter so as to position
India as an exotic and unique cruise tourism destination
◊ Creating an enabling environment in terms of the taxes and other procedural aspects so as to
improve the ease and efficiency of the system and provide necessary incentives to the sector
◊ Provide the training and institutional facilities to create the human resource necessary to support
the development of the sector

4.1 POSITIONING APPROACH


In exploiting the potential offered by the global cruise tourism market and positioning India as an
attractive cruise destination the following important aspects would have to be underlined:
4.1.1 Need to develop India as a single national brand
India offers relatively a small market compared to the global industry. Accordingly, there would be
considerable merit in positioning India as a single India-branded cruise experience that fully
integrates and complements the relative strengths and distinctive value propositions of each of the
states. This will enable the country to sell a strong integrated brand while at the same time by selling
India as the principal destinations all the states will benefit as cruise lines seek diversity in itineraries.
This would also help the Ports to work as complementary to each rather than as competitors.
4.1.2 Need to address the requirements of varied segments
In developing the Indian Cruise Sector, there are essentially four tourists segments that India would
need to actively target and exploit. These have been identified in section 2.2.1 and 2.6 and would
essentially cover the international foreign tourist arrivals, the Indian outbound tourists who travel out
of India, the Indian domestic leisure tourists and the current cruise tourists, both international and
Indian. In developing the product, positioning and marketing strategy, India would need to study and
address the demands and expectations of each of these segments towards creating cruise itineraries
and products.
4.1.3 Need to create port wise & region wise destinations
It is well known that in Cruise Tourism it is the destinations rather than the ports, which attract
tourists and liners. It would therefore be imperative to create attractive, varied and exotic destinations
at every state that can be linked to the cruise ports and highlighted as cruise offerings. While this
would be essential to position the ports as effective ‘ports of call’ it would be equally important for
creating a ‘drive in’ market for the ‘home ports’ where domestic and foreign tourists visiting the
destinations would build the cruise into their itinerary and suitable packages may be offered.
4.1.4 Need to position Indian Cruises for the youth and for families
World over, traditionally, cruises have been thought of as meant only ‘for the newly weds or nearly
dead’ with cruises being filled principally with retired or honeymooning travellers. This profile is fast
changing and India would need to take advantage of this trend to position Indian cruises for the
‘youth’ and for ‘families’ both of which constitute an important component of Indian tourism
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4.2 PRODUCT APPROACH
It is clear from the above that Cruise as a product needs to be developed for two separate markets –
the Indian market and the International market. While Indians thus have been taking cruises that have
itineraries/ on-board facilities similar to what is offered to the North American/ European passengers;,
it is a fact that Indians like travelling with families and would need family related features to be
included aboard the cruise liner.
The product offerings aboard a cruise liner have been discussed in detail as part of Chapter 1. The
components that form part of the ‘Cruise product’ mainly comprise of the following :
Ð Itinerary
Ð Types of Cruise
Ð Accommodation
Ð On-board facilities
Each of these components would need to be addressed and designed independently taking into
account the segment being targetted.
Aspects such as accommodation and on board facilities would be largely decided by the cruise
operators and liners and would be extremely specific to the positioning of the particular cruise. Hence
we cover in this section the broader aspects of types of cruises which would demand a strategic focus.
4.2.1 Itineraries
Itineraries refer to the detailed programme of a cruise liner comprising of the various ports of call the
cruise liner will be touching and the destinations that the cruise travellers would be able to access en-
route. Within the overall region of operations, itineraries would largely be decided based on the
nature of the particular cruise, its duration and pricing. A short duration cruise would plan its
itinerary so as to link the closely located ports while the longer duration cruises would have greater
flexibility in determining the ports of choice.
World over, the demand for short duration cruises is on the rise. Studies indicate that the Indian
market is likely to follow the same trend. Star Cruise, the leading cruise line in Asia-Pacific, has
itineraries for one night to five nights, which are very popular. Taking this as a benchmark, the Indian
cruise industry should work on short duration itineraries. In addition short duration cruises would be
very important from the point of view of making the cruise ‘available’ and ‘affordable’ to a larger
population.
In fixing the itineraries, the cruise circuit could be an exclusively ‘Indian’ circuit covering only the
Indian ports or a combination of Indian and international ports. This would be largely dictated by the
target segment.
4.2.2 Designing Cruise Circuits
Before designing cruise circuits and itineraries it would be important to have an idea of the various
ports and destinations that may be connected. Maps of Cruise Destinations in the South East Asia, the
Indian Ocean and the Ports in the South of Asia presented in the Exhibits below give an excellent idea
of the number of cruise ports available in the region that can be effectively linked so that the regional
potential can be exploited to Indian advantage. While some of these destinations can be linked
through shorter cruises the others would demand longer cruises due to the distances involved.
However, they could be planned for in the long term as the cruise industry integrates in India and is
well accepted by the tourists.

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Exhibit 105 : Map showing Cruise Destinations in the South East Asia

Exhibit 106 : Map of Cruise Destinations in the Indian Ocean

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Exhibit 107 : Map of Ports of South Asia

4.3 PROPOSED CRUISE CIRCUITS


We detail below some of the cruise circuits that can be developed . However, the list is not exhaustive
and independent cruise operators may develop many more circuits based on their business and
marketing plan.
4.3.1 Rejuvenation Cruise
1. Goa- Mangalore-Cochin (Kerala Backwaters)-Male
Goa –Magalore-9hrs
Mangalore-Cochin- 10 hrs -Kerala (Backwaters)
Cochin – Male- 10.5 hrs (approx)
The primary survey conducted on the attractiveness of cruise circuits revealed that the Cochin –Kerala
Backwaters-Mangalore circuit was given top priority, with 33% foreign tourists & 17% Indian tourists
rating it ‘extremely attractive’, while 36% foreign tourists and 46% Indian tourists thought it was
‘quite attractive’. Keeping this in mind the above circuit has been designed including an international
destination too which Indian tourists have wanted.
Concept
Goa and Cochin are especially well known for their Ayurveda therapy. Ayurveda’ as an alternative
healing therapy has become very popular. Many westerners have made Ayurvedic spas their annual
retreat, combining a relaxing holiday with cleansing of their bodies. In fact, most cruise ships these
days have trained wellness experts on board who offer relaxing treatments.
India scores high on this parameter since it is the birth place of Ayurveda. There are a number of
ayurvedic resorts in Kerala that can be easily accessed from Cochin, the famous ones being Coconut
Lagoon, Kumarakom, Taj Garden Retreat at Kumarakom and Thekkady and Somatheeram, Kovalam.
Other well-known spas include the Indus Valley Ayurveda Centre at Mysore, the Park Hyatt Goa
resort and spa and the Golden Palm resort and spa, Bangalore.
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A theme designed on wellness of mind and body with such centres as destinations is bound to attract a
sizeable international audience as also the crème de la crème of the Indian society since ‘spirituality
and wellness’ has become the ‘in thing’ these days.
4.3.2 Discover India’ Cruise
2. Mumbai-Goa-Cochin-Tuticorin
3. Cochin –Goa-Mumbai-Porbander
The following distance-time matrix can be used to chalk out different itineraries covering major
Indian ports.
Exhibit 108 : Distance Time Matrix between Key Cruise Ports
D-Distance in Nautical miles, T-Time in hours
Porbander Mumbai Goa Cochin Tuticorin
D T D T D T D T D T
Mumbai 315 16 - - 223 11 580 29 816 41
Goa 502 25 223 11 - - 376 19 642 32
Cochin 853 43 580 29 376 19 - - 236 12
Tuticorin 1144 57 816 41 642 32 236 12 - -
Porbander - - 315 16 502 25 853 43 1144 57
Source: Mumbai Port Trust

As an example, a six-day itinerary Mumbai-Goa-Cochin-Tuticorin based on the ‘Discover India’


theme could thus be as follows:
Exhibit 109 : Discover India Circuit Itinerary

Day Destination Arrival Departure


First Mumbai - 8.00 a.m
First Goa 7.00 p.m -
Second Goa - 3.00 p.m
Third Cochin 10.00 a.m 7.00 p.m
Fourth Tuticorin 7.00 a.m 3.00 p.m
Fifth - - -
Sixth Mumbai 8.00 a.m -

Based on the market demand, the itinerary could be remodelled working out a number of
permutations and combinations on the stopover time at each destination as also the destinations to be
included in the circuit.
The other cruise ports at Mangalore and Chennai could also be included to create new themes.
Concept
The Government of India has successfully launched its ‘Incredible India’ campaign. This has brought
India into the limelight as an exotic destination. Taking this one step ahead, it could come out with a
‘Discover India’ cruise theme. This would target an itinerary with major Indian ports as port of call.
Thus, the cruise ship could have stopovers at Mumbai, Mormugoa, New Mangalore, Cochin,
Tuticorin and Chennai. Shore/land excursions to places of interest around each port would form an
intrinsic part of the itinerary. Ministry of Tourism should also look at developing the required
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infrastructure at more exotic Indian locales like Lakshadweep or Andaman & Nicobar Islands. Cruise
operators are keen on including these destinations as port of call; however in absence of basic
infrastructure it is impossible to do so.
This would be an ideal package for travellers who would like to visit different Indian destinations and
also experience the novelty of a cruise and can typically be targeted at the foreign tourist.
4.3.3 ‘Shopper’s Bonanza’ Cruise
4. Mumbai-Porbander-Dubai
5. Cochin-Mumbai-Dubai
From the time and distance matrix given below and itineraries can be designed to suit the time frame.

Exhibit 110 : Distance Time Matrix between Mumbai-Porbander-Dubai

Mumbai Porbander Dubai


D T D T D T
Mumbai - - 315 16 1151 58
Porbander 315 16 - - 869 43
Dubai 1151 58 869 43 - -

Concept
This theme could be built in an itinerary that would have stopovers at Dubai, Porbander and Mumbai
especially designed for Dubai shopping Festival period.
The Dubai shopping festival lasts for a month from January to February. Over 2,300 retail outlets
participate in this festival, offering goods and services ranging from gold, jewellery, electronics, and
cars to cosmetics, textiles and handicrafts, at big cash discounts.
From Porbunder the passengers can take land excursion packages to Jaipur, which would add variety
into the shopping by giving it an ethnic touch. Some of them could also opt for an Agra visit for the
Taj Mahal.
The State Tourism departments could organise similar shopping festivals in and around the port areas.
Handmade artefacts, hand-embroidered garments, ethnic Indian jewellery are a rage in markets
abroad. Foreign tourists visiting Mumbai generally go to Chor Bazaar – an antique hunter’s delight.
The Zaveri bazaar nearby famous for its gold, silver and diamond jewellery, Colaba Causeway – a
good bargain for clothes, Breach Candy and Kemps corner – for more trendy and slightly expensive
clothes are areas frequented by foreign tourists.
In Goa, the Anjuna flea market, the Mapusa Friday market, the Arpora Saturday night bazaar and
Ingo’s Saturday night market at Haystack are bazaars visited by tourists. Cochin is well known for
handicrafts like camel-bone carvings, woodcarvings, articles made of coconut shells, ethnic hand-
woven textiles and the very famous Spice market. Chennai is famous for its silks and traditional
merchandise like bronze and brass castings, traditional jewellery, metal works and stone carvings.
4.3.4 Heritage Cruise
6. Mumbai-Goa-Cochin-Colombo
7. Mumbai-Mangalore-Cochin-Columbo
Heritage destinations have been a source of attraction for most tourists. Some monuments in India fall
under the World Heritage List. Few among them like Elephanta caves and Chhatrapati Shivaji
terminus, churches and convents of Goa, monuments at Mahabalipuram and Hampi are quite

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accessible from the ports of Mumbai, Mormugoa and Cochin respectively. One-day excursions can
also be arranged to other famous Indian heritage sites like Taj Mahal, Humayun’s tomb, Qutb Minar.
In Colombo there are many significant places of historical an archaeological interest which should not
be missed; for e.g a visit of Sri Maha Bodhi (Sacred Bo-Tree), which is the city's holiest site, and was
grown from the tree under which Buddha achieved enlightenment, then there is city tour of Kandy,
the last capital of Sri Lankan kings and is a World Heritage Site, then there is also the Nuwara Eliya
which is called - The "Little England" of Sri Lanka and many more destinations of this nature.
Other international regional destinations like Malaysia, Thailand also have monuments included in the
World Heritage list can also be included in this itinerary at a little later probably in the stage 2 of
cruise circuit development, when the cruise tourism has set off in India.
4.3.5 Sunshine Cruise to Beaches
8. Cochin-Goa-Lakshadweep-Male
9. Chennai-Colombo-Andaman–Chennai
10. Chennai-Colombo –Male –Cochin-Dubai
11. Cochin-Lakshadweep-Mangalore-Dubai
12. Chennai-Andamans-Vishakapatnam-Paradip
13. Vishakapatnam-Calcutta- Andamans
Concept
This cruise has been specially designed after a survey was conducted of 200 people, on which was the
most attractive type of holiday. The survey revealed that 69 foreign tourists and 92 domestic tourists
rated beach holiday as being the most attractive, thus proving that this could be very popular theme if
combined with a cruise itinerary
Concept of this cruise itinerary is to market the cruise based on the season, which is most appropriate
for the sea-dipping and beach activities. This cruise basically targets those people who are the beach
goers and want to visit different types of beaches along the Indian coast, bask in the sun, just relax in
special message centres on the beach or go for land excursions.
The beaches of Goa are the highlights of travel in this state, making Goa the premier beach vacation
destination. The first beach stop over in Goa is Anjuna beach also famous for its flea market and rave
parties, then visit Baga and Dona Paula beaches that can make any beach holiday a memorable one.
All in all Goa's 100-km long coastline gives an enthusiastic beach lover an opportunity to discover
new secluded beach sites every day. In addition there is also a traditional carnival, which is a part of
Goa’s rich Potuguese heritage
900-km length of the Kerala coast is lined with sandy beaches, rocky promontories and coconut palms
that definitely merit a visit in every tourist itinerary
The beaches of Lakshadweep are a paradise for divers offering exotic diving spots. Male too has its
own beauty and charm to offer.

4.3.6 Nature Lovers Cruise


14. Mumbai –Goa- Mangalore- Lakshadweep-Mumbai
15. Mumbai-Vizag-Paradeep-Kolkatta

Concept
India, being a peninsular country is endowed with a seaboard of 8,129 km around the mainland and
the many large and small islands in the Bay of Bengal and the Arabian Sea. The coasts are
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intercepted with several bays, back and brackish waters, lagoons, mudflats, tidal creeks and estuaries
making it most suitable for nature and eco cruises.
As the name suggests this cruise itinerary is designed for nature lovers. Indian geography has a
continental spread, with varied and diversified ocean and coastal ecology. Those interested can
actually study and see these eco systems on this cruise. Learning these can be made fun by combining
them with various activities
Snorkel over some unique corals in Lakshadweep
Paddle Canoes around the shallow foreshores rich in marine-life
Ride the boats into the rich backwaters of Kerala
Explore the wilderness of uninhabited islands, secluded bays & aqua waters, home to dolphins,
dugongs & turtles in Goa
History and Commentary about the Local Marine Life, Aboriginal Culture, and Sailing
Adventures
At the same time coastal ecology of coastal areas can be learnt.
4.3.7 Party Cruise
16. Goa (Sea and river Cruises) –Cochin (Kerala Backwaters)-Goa
17. Vishakapatnam-Kolkatta-Sundarbans River Cruise
Concept
A survey conducted on attractiveness of cruise destinations and circuits revealed that Goa and Kerala
appeared to be the most popular and got the highest rating among both markets i.e., domestic tourists
and foreign tourists.
As per the primary survey 63% foreign tourists and 52% domestic tourists found Kerala Backwaters
extremely attractive, rating it as one of the top destinations. Keeping these preferences in mind this
special cruise has been designed to specially cater to very short duration cruise of 2-3 days, having the
‘Party’ theme. The cruise would be have various theme parties on board as well as at these
destinations on beaches like the Goan Carnival theme and cruising in moonlight on Kerala
backwaters.
4.3.8 High seas cruise or ‘Cruise to Nowhere’
18. Chennai –Andaman- High Seas
19. Cochin-Lakshadweep-High Seas
20. Vishakapatnam-Paradeep-Andamans-Highseas
A popular type of cruise in the Southeast Asian market is a ‘no where cruise’ where the itinerary is
designed purely for the pleasure of cruising with no stopovers at any port of call. Thus, tourists who
have already visited destinations in and around India but who have not yet experienced the novelty of
a cruise would be the target audience. This could be an ideal weekend cruise. Here, the emphasis
would be on the on-board facilities and entertainment offered in the cruise ship.

It must be emphasized that while each of these themes could be promoted as an exclusive package,
there could also be a combination of different themes, which probably might attract more cruise
tourists. For example, a rejuvenation cruise by itself might not find many takers. However, if a high
seas cruise with just one stopover in, say Cochin, is planned or if a rejuvenation and heritage theme is
combined, more tourists would like to go in for it. Similarly, a high seas cruise could be combined
with the Kerala backwater river cruise to give an exotic experience.

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4.4 CRUISES TO FOREIGN DESTINATIONS
Following from our study of the Indian Tourism market the potential for outbound tourism is high and
this can be taken advantage of in promoting cruise tourism. As detailed in Section 2.1.2 and Section
2.6.4 the outbound tourists represent a very attractive segment being nearly double of our
international arrivals and showing an impressive growth of 6.79% between 1999 and 2003. While
these numbers represent the historical fact, the future for outbound and foreign travel is blooming
given the various demographic and other trend that have been elaborated in the Indian tourism market
dynamic detailed in Section 2.1.2.
Linking foreign destinations would be both desirable and the final objective of any cruise tourism
development. However, in the first phase of development, the primary objective of developing cruise
tourism in India would be to position India as a cruise destination so as to increase tourism arrivals to
the country and bring in the attendant benefits of tourism growth and the multiplier growth effects
within the country. To that extent, we would first focus on developing the Indian cruise circuits,
probably exploring the option of linking a couple of close by foreign destinations to increase
attractiveness.
Long cruises to foreign destinations from India can only be targeted in the second phase of cruise
tourism development, when the market has grown sufficiently to justify long travel and a greater than
10 days cruise programme. It would also demand an increasing shifting of domestic tourists to opting
for foreign travel which can happen if the cost of cruising to foreign destinations is hugely cost-
competitive when compared to the more traditional modes of travel. One approach to creating cruise
circuits to foreign destinations would lie in developing synergistic relationships with out neighbouring
cruise destinations such as Singapore and Dubai which would facilitate mutually beneficial cruise
circuits to be developed between and among the countries.
In this connection the following international cruise circuits may be proposed:
4.4.1 Eco Cruise across high seas
21. Mumbai-Cochin-Colombo-Maldives-Mumbai
22. Kolkatta-Paradeep-Chennai-Colombo

The following itinerary has been worked out for Mumbai-Cochin-Colombo-Maldives-Mumbai


Exhibit 111 : Eco Cruise across high seas

Day Destination Arrival Departure


First Mumbai - 8.00 a.m
Second Cochin 1.00 p.m -
Third Cochin - 10.00 p.m
Fourth Colombo 6.00 a.m 10.00 p.m
Fifth Maldives 3.00 a.m 10.00 p.m
Sixth - - -
Seventh Mumbai 7.00 p.m -

This cruise would enable the full benefits of cruising on the high seas to be enjoyed along with
ecotourism in Colombo and Maldives. Both these are very attractive foreign destinations which are
also sufficiently close by so as to be linked competitively without unduly increasing operational costs.

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4.4.2 Shoppers’ Bonanza
23. Dubai-Mumbai-Hong Kong
24. Mumbai-Dubai-Singapore-Mumbai
25. Cochin – Dubai - Singapore

These circuits would be very attractive circuits duly organized taking into account the shopping
festival organized at these destinations. These would be itineraries designed for the ‘Shopper’s
Bonanza’ theme. Owing to the considerable distances between each of the three ports, the duration
would be slightly longer. Thus a nineteen day cruise would be as scheduled. If market survey reveals
that a nineteen-day itinerary would have no takers, operators may design the itinerary such that the
tourists can fly back from Singapore to their respective destinations.
Exhibit 112 : Long shopping Cruise to Mumbai, Dubai, Singapore

Day Destination Arrival Departure


First Mumbai - 12.00 p.m
Second - - -
Third Dubai 10.00 a.m -
Fourth - - -
Fifth Dubai - 12.00 p.m
Sixth - - -
Seventh Mumbai 10.00 a.m 12.00 p.m
Eighth - - -
Ninth - - -
Tenth - - -
Eleventh - - -
Twelfth Singapore 12.00 p.m -
Thirteenth - - -
Fourteenth Singapore - 9.00 p.m
Fifteenth - - -
Sixteenth - - -
Seventeenth - - -
Eighteenth - - -
Nineteenth Mumbai 10.00 p.m

4.4.3 International Heritage Cruise


26. Mumbai-Chennai-Penang-Phuket-Mumbai
27. Paradeep-Vishakapatnam-Colombo
This could be an itinerary designed for the ‘Heritage’ theme since all the destinations on this circuit
are known for monuments, which are in the official World Heritage list. Thus a sixteen-day itinerary
could be as follows
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Exhibit 113 : Heritage Cruise

Day Destination Arrival Departure


First Mumbai - 12.00 p.m
Second - - -
Third - - -
Fourth Chennai 1.00 a.m -
Fifth - - -
Sixth Chennai - 11.00 a.m
Seventh - - -
Eighth Penang 6.00 a.m -
Ninth Penang - 10.00 p.m
Tenth Phuket 10.00 a.m -
Eleventh Phuket - 10.00 p.m
Twelfth - - -
Thirteenth - - -
Fourteenth - - -
Fifteenth - - -
Sixteenth Mumbai 10.00 a.m -

4.5 DEVELOPING ‘RIVER CRUISES’


The Ministry of Shipping has identified the development of Inland Water Transport (IWT) as a thrust
area. In this connection three waterways have been notified as National Waterways, namely, the
Ganga as National Waterway No. 1(1986), the Brahmaputra the National Waterway No.2 (1988) and
the West Coast canal as National waterway No.3 (1993). Apart from development of three National
Waterways, the Inland Water Authority of India (IWAI) has conducted techno-economic studies on
several other waterways, namely, East Coast Canal integrated with Brahmani river, Kakinanda-
Mercaunam Canal integrated with Godavari and Krishna rivers, Barak river, DVC canal, extension of
NW-3, Sunderbans waterways. All these waterways have the potential of IWT infrastructure
development. In addition, several small rivers of the country have the potential of developing small
length waterways. Various riverine states such as, Assam, Andhra Pradesh, Bihar, Orissa, Tamilnadu,
Uttar Pradesh, West Bengal etc., have tremendous potential for IWT development. Besides
development for cargo transport, the ministry has also stressed that waterways can also developed for
passenger ferries, river cruises, water sport and tourism related activities. A detailed note on this has
been placed at ANNEXURE III:.
River and canal cruises would offer a great potential, especially in the Indian context. The factors
driving this would be:
India has a network of canals, rivers and inland waterways that may be suitably exploited to create
a powerful cruise tourism niche product.
Like Europe, India has destinations in its interiors many of them which are connected by beautiful
rivers. Developing River cruises that connect these destinations would not only create the access
that is so important for cruise tourism, but would also enable India to strongly position its tourism
destinations and its exotic heritage.
Linking cruise terminals to river cruises that connect significant destinations would stimulate
cruise ships to touch India for the destination. For example, Sarnath, the key Buddhist pilgrimage
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destination, lies on river Ganges. Offering this as a river cruise would be a powerful stimulus to
the large base of Buddhist tourists who come to India from Asia. Linking this to one of the cruise
terminals would ensure that the cruise ships from the Buddhist countries – especially Japan, China
- come to India.
The primary survey results indicate that 61% of the domestic tourists and 86% of the foreign
tourist consider that river cruises offer high potential.
The development of river Cruises in India will have to be planned in sync with the larger IWT
development plan of the Ministry of Shipping. However, the development will have to be related to
the lager tourism potential and proposed cruise terminal development.
4.5.1 Potential River Cruises
The concept, duration and nature of river cruises will depend on the depth of the river, the features of
the river course, the destinations connected, the size of the cruise ship/boat/floaters that would be
feasible to ply on it. The connectivity of the river and nature of tourist traffic that have access to it
would also determine the approach to the concept development.
While a detailed study would have to be undertaken to determine the feasibility and potential of each
of the river cruises, the following river cruises are recommended for development consideration:
o Sundarbans Cruise in West Bengal
o Brahmaputra Cruise in Assam
o Ganges Cruise in Bihar/West Bengal
o Mandovi river cruise in Goa
o Srisailam-Nagarjuna Sagar Cruise on river Krishna in Andhra Pradesh
o Basar – Rajahmundry – Dholeshwaram cruise on river Godavari Andhra Pradesh
o Kerala Inland Waterways and Backwater Cruise
o Cauvery Cruise in Karnataka
Some of the river cruises could be linked to adventure activities like rafting, sailing, river crossing etc.
while certain other river cruises could offer other entertainment elements, refreshment, pleasure trips,
floating restaurants or guesthouses, local sightseeing, nature watching, safaris across forests,
sanctuaries etc.
As many of the rivers in India link to interior villages, rural areas, exotic locations, forests, sanctuaries
etc. river cruises in India could be linked to ecotourism and rural tourism, both of which form a
priority area for tourism development in India.

4.6 MARKETING CRUISE TOURISM


The marketing of cruise tourism has to be undertaken as a multi-pronged effort. The channels for
promotion and marketing avenues has to be tailor made to the target segment, the marketing objective
and the positioning proposed to be adopted with reference to that segment. The recent campaign
conducted by the Ministry of Tourism, where India as a destination was promoted under the brand of
‘Incredible India’, was a huge success. It won recognition in the form of more tourists (especially,
international ones) coming to India to seek out its diversity; and a host of awards too. A similar
strategy needs to be worked out to create a brand for the cruise tourism industry in India.
A Cruise Tourism Strategy should be designed to attain 2 key goals:
i. To maximize the value added from tourism rather than focusing on the volume of cruise
tourists visiting the island; and
ii. To maximize the rate of conversion of cruise tourists to stay-over tourists.
The questions to be asked to develop the strategy range from:
o What product is India selling to the cruise lines?
o What model of development should be adopted for the India?
o How should the Indian Cruise Tourism industry promote sustainable working relationships
with all partners for the mutual benefit of all?
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4.6.1 Marketing Approach
The approach to the market would consist of several steps as has been outlined below. These would
be measures undertaken at the macro level
Understand the market :
This can be done through continuous collection of data, facilitation of market research and
constant monitoring of industry and consumer trends.
Choose the right target audience
Analysis of market demand and consumer trends will help to choose the right target audience.
Once this is done, the right marketing campaign for the target audience can also be worked at.
Have an active Media Plan
The positioning and promotion efforts would have to be supported through a proactive media
plan which would cover both domestic as well an international markets. While in the
development and implementation stages, media exposure would be restricted to
announcement of plans and projects, major media activities would wait the completion of the
circuit. The Media Plan will cover audio-visual presentations and films, out-door advertising,
organizing events & exhibitions, preparing attractive brochures, leaflets, posters, hand-outs,
TV inserts etc. The department of tourism would need to identify the media requirements and
provide for a suitable yearly budget for this activity.
Participate in International Forums
Effective promotion would demand representation in international forums including road
shows, trade fairs, exhibitions, seminars etc and entering into tie-ups with proper bodies.
Remove hindrances
Analysis of feedback received would help to identify obstacles that create difficulty in tourist
arrivals and can be subsequently removed or reduced to the maximum extent. This is where
the role of various stakeholders assumes importance.
Develop the product
Cruise as a product is well established in international markets; however Indian cruise tourism
would be a novelty. The product would need to be revamped based on market analysis and
feedback and keeping in mind the varied audience it would cater to.
Monitor & Improve
The key agencies will need to monitor the effectiveness of the implemented program and
improve marketing efforts based on the results.
Target key audiences
Key audiences that need to be targeted in this segment are:
- Cruise Operators
- Cruise Tourists
4.6.2 Strategy by the Apex Tourism Bodies for Cruise Operators
The marketing strategy would need to focus first on those responsible for decision-making
with respect to itinerary planning. To maximise returns in the short term, the MoT would need
to narrow down on those cruise lines that can make a difference. Once the Indian cruise
tourism concept has been effectively sold to them, they would themselves assume the role of
marketing India as a cruise destination to the cruise tourists.
The critical action points would be:

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- The MoT should extend its ‘Incredible India’ campaign to promote India as an integrated
brand offering diverse cruise destination and encourage home porting.
- All cruise ports in India should be projected as a single package to cruise operators and
their major attractions showcased in such a manner that they complement each other. A
central marketing body for all ports should be set up for developing strategies, liaisoning
with cruise operators, working on promotional requirements etc.
- An officer should be appointed as the nodal contact point at each port so cruise operators
have an interface to direct their queries and can receive prompt response.
- The major Indian ports should enter into tie-ups with neighbouring ports so a circuit
comprising of Indian and international ports can be developed.
- The MoT should appoint a good marketing agency to work on promotional requirements.
It should develop a web-site providing information about destinations and itinerary
planning. Other promotional materials like CDs, brochures and selection of media – TV,
Radio, Newspapers, Magazines etc. should be worked at.
- A committee comprising of representatives of major Indian ports and authorities from
State and Central Tourism departments should be formed to work exclusively on the
cruise tourism segment. They should attend international Seatrade Shipping conferences
and conventions, trade shows and organise promotional fairs to promote India to the
cruise-line industry. A presentation showcasing the diverse nature of India and its
coastline can be made and promotional material like brochures and CDs can be
distributed at such venues.
- The committee should make separate representations to leading cruise lines like Carnival
Corporation, Royal Caribbean, Star Cruises etc.
- The MoT should explore the possibility of private participation from the leading cruise
liners. Since Star Cruise is currently the only operator catering to the Asian market, the
MoT should also look at the possibilities of collaborating with them to develop cruise
terminals and related projects.
- A familiarity tour should be arranged for representatives of these leading cruise liners.
This would help them to get a first hand feel of Indian ports and the circuits being
suggested.
- The MoT/Port Authorities should actively participate in international exhibitions,
conferences and tradeshows to showcase Indian Ports and Cruise destinations as well as
communicate India’s readiness to send and receive cruise tourists. For example the
Annual Seatrade Cruise Conference at Miami or the bi-annual Cruise Conference at
Singapore would provide an ideal forum for launching India’s marketing efforts.
- Indian Government, in the long run, should aim to develop a greater ‘ Indo-Asian’
alliance to attract cruise shipping to the region and enhance the marketability of India. A
sustained objective should be to create a larger ‘Indo-Asian’ cruise product that combines
the Indian cruise experience with the experiences of strategically valuable neighbouring
countries. To this end feasibility of establishing formal alliances should be explored. The
benefits of regional partnerships would include access to different tourism products to
incorporate into regional packages, access to other expertise and processes in Port
management and services, development of consistent management policies and quality
assurance processes across key regional ports to control the cruise line experience. Such
an experience will have considerable positive branding implications.
Strategy by the Major ‘Cruise’ Ports Trust Authorities
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The next lead should be taken up by the major Port Trust Authorities to showcase the
infrastructural strength and various amenities available at their respective ports. The Port
Trust Authorities can work on the lines of the ‘Six S’ framework of India’s National Tourism
Policy i.e.
- Swagat : Create a good first impression by having a unique traditional welcome at each
port. Maintain clean and hygienic surroundings. Train manpower on efficient discharge of
duties.
- Soochna : Develop and maintain a separate web-site to highlight the port strengths.
Provide detailed information on land excursions from that port showcasing the uniqueness
of tourist hubs nearby – heritage sites, shopping areas, scenic beauty etc. Also, maintain
tourist kiosks at each terminal where tourists can receive information in English and other
major European languages.
- Suvidha : Work on a unified tariff scheme and a One-stop clearance for all Indian ports
so the cruise ship can be saved the bother of paper work at different ports. Provide
services like pre-paid taxi counters, curio stalls, restaurants and rest rooms at all
terminals.
- Suraksha: Deploy Tourism police at each terminal and at every tourist hub (especially
those included as part of land excursion in the itinerary). Have well trained guides who
can take the cruise tourists on land excursions.
- Sahyog: Co-ordinate with State Authorities and other local bodies including tour
operators, hoteliers, taxi operators and tour guides. Work on local community
involvement at each port area.
- Sanrachna: Explore various strategies for infrastructure development including proactive
private sector participation strategies.
Strategy by Cruise Operators for Cruise Tourists
Cruise tourists need to be wooed on to Indian destination based cruise ships and also to
disembark at different Indian ports and participate in land excursions.
The groundwork to be done by the Tourism authorities would be to first develop a prioritised
list of target consumer markets both in India and abroad. Once the target audience has been
identified, they have to be made aware of the product and its features. This can be done by
tapping the media – TV, Radio, Newspapers, Magazines and the Internet. Brochures could be
mailed to potential clientele identified after undertaking a survey. While on board, separate
brochures describing the USP of the port of call and its surrounding regions, cultural shows/
exhibitions arranged near the port area should be distributed to induce the cruise tourist to
disembark.
The main job of luring cruise tourists to India would be that of the cruise operator. Cruise
operators would basically need to update their travel agents about India and the diversity it
offers and supply them with promotional material on the same, since travel agents sell at least
90% of all cruise vacations and on-line bookings are a novelty in this segment.
Though most cruise operators are well-established in the market and have their own
marketing strategies, they would need to follow a multi-pronged approach to lure potential
Indian cruise tourists. India, being a vast and varied country, one has to be sensitive to the
needs of each region individually. Different initiatives produce different results in different
regions. Thus, one cannot opt for a single national strategy on marketing.
Also, a potential target group in the Indian market would be corporates. The concept of
rewarding employees/ dealers with packaged cruise tours, organising conferences on board
cruise ships is fast becoming popular. Cruise ships have itineraries exclusively designed for
this MICE clientele. Advertisements for this segment should be done in relevant newspapers,
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magazines and TV channels. Special brochures should be sent out to identified corporate
organizations with discount offers for bulk bookings.

4.7 DEVELOPING CRUISE TERMINALS


Cruise tourism as a holiday destination is traditionally
CRUISE CYCLE
considered as the rich man’s option. Resultantly, cruise
ships have come to be regarded as “sailing resorts” CRUISE
TOURISTS
attracting an economically higher profile of tourists. The
luxury and comfort associated with cruise vessels translates
into a demand for superior infrastructure and facilities even
at the ports-of-call of the cruise vessel. A high average CRUISE DESTINATION
VESSELS INDIA
spending by cruise tourists has given the sector a high
preference in most economies that have a seacoast to offer.
The focal point of any endeavor to attain a position as an attractive cruise destination is the cruise
tourist. The holiday experience made available at the destination forms the core product that cruise
ship operators offer. Hence, the cruise ship operators demand a high quality of port & related
infrastructure to consider the ports as part of their itinerary. Similarly, they require that the whole
experience for the cruise tourist in the country be such that it creates publicity for their product
offering ie. the cruise circuits and the destinations.

4.7.1 Developing Cruise terminals into ‘Destinations’


Cruise passengers look for variety at each port of call and their expectation covers not just the port
experience but the varied tourism experience at each port. Taking this fact into account, it would be
important to develop cruise terminals that not only provide positive experience to the passengers but
also act as ‘gateways’ to the wider tourism offering in the hinterland/region. The more tourism
product a cruise terminal is able to offer within the shortest possible time, the more successful it can
be as a ‘port destinations’.
Thus, developing Cruise Terminals into ‘destinations’ essentially connotes the following two
important aspects :
Cruise Terminals should provide a holistic and positive experience to the visitors
Cruise terminals represent the entry point of the cruise tourists into the country. Besides providing the
facilities and amenities that would be essentially from the point of view of tourist facilitation, it would
be an important strategy to make the cruise terminals themselves into mini tourism destinations much
like a tourist village showcasing India’s art and handicrafts, ethnic bazaars, a small museum offering a
birds eye view of the tourist attractions of the region, food stalls with typical Indian cuisine, children’s
play area etc. In addition to being an effective promotional medium of the country’s brand it would
also increase the commercial and business potential of the terminal making it more amenable for
private sector participation.
It is of utmost importance that the world-class facilities cruise tourists are used to and look forward to
are made available at Indian Ports. Despite the fact that the investment may not yield adequate returns
in the near future, it is felt that unless this is done, it will not be possible to promote and market India
as a cruise destination. Huge investments required to develop requisite cruise infrastructure at ports
can be justified on grounds of broader economic benefits to the nation.
Quick connectivity should be established to other destinations/attractions/tourism locations
However, the cruise terminal should also act as a gateway to the tourism offering of the region, thus
becoming a destination in itself. Thus, for the cruise traveler, in addition to the cruising experience
and the infrastructure and facilities at ports during port visits, the destinations covered and the general
experience within the country/destinations visited would form a critical part of the overall product

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expectation. Hence it would be important to create links to significant destinations, heritage locations
and natural features with the port so as to enable a special and varied experience that is holistically
‘Indian’. This would also help to link the development of tourism in India to the development of
cruise tourism, helping to synergize each with the other.
For example, Mumbai port could arrange for a quick trip Agra so that the cruise visitors could also see
Taj, the world heritage monument while Cochin port could take its visitors to the Hampi heritage site
in Karnataka. While this is only an isolated example, what is important is to efficiently connect
cruises with sight seeing within the country and this should not be limited only to the nearby
destinations. Options & connectivity should be provided to link the country’s major offerings with the
visiting cruises.
The following would be essentially to provide the connectivity required to link to tourism offerings to
cruise ports:
Ž Connectivity through small and feeder aircrafts
Ž Connectivity through river cruises and exploiting inland waterways
Ž Connectivity through road transport where distances are not prohibitive

4.7.2 Strategizing Cruise Operations


Question would arise as to the feasibility of operating cruise ships from India and the viability of
commencing domestic cruise companies that could buy ships and commence cruise operations. Would
it be possible for Cruise Tourism in India to support such initiatives? This aspect is discussed in this
section
India is not ready for commencing cruise operations by purchasing large cruise ships and
operating cruise services
India is not ready at this point of time for putting on to the sea new cruise ships on the scale and
manner it has been done internationally. Top quality cruise ships today typically cost anywhere
between US $ 400 to 700 millions for a capacity above 2000 passengers (Refer ANNEXURE II: for
details of Cruise Ship costs). This would imply in rupee terms a capital investment on the ship
amounting to a minimum of around Rs.1700 Crores. Even a second hand cruise ships would range in
the arena of Rs.400 crores. A private developer who makes such massive investment would not be in
a position to recover the investment and the project would not be viable. The viability assessment
commencing cruise operations by purchasing cruise ships and operating cruise services shows that the
project Internal Rate of Returns (IRR) are negative even after 30 years of operations and project cash
flows are not sufficient to support sustainable operations. The option of purchasing large cruise ships
and starting independent cruise operations is not recommended.
India should focus on bringing the cruise ships to Indian shores
Rather than invest in new cruise ships, the recommended path for cruise tourism in India is to create
the market and the infrastructure necessary to attract the existing cruise ships to India. For this
purpose India can position its ports either as ‘Ports of Call’ or as a ‘Home Ports’. Positioned as a ‘port
of call’ the country would receive international ships that touch several destinations as part of their
cruise circuit. The cruise travellers who disembark at the port would have the linkage to visit
destinations either close at hand or may sometimes even fly to distant destinations. Positioned as a
‘home port or hub port’, the country would be the base for a cruise ship, which would take passengers
around a cruise circuit and then come back to the homeport to berth.
• Today there are around 315 vessels cruising around the world. Taking the routes into
consideration, there are around 150 ships which can ‘call’ at India ports, during the off-season in
their typical routes. Examples of such cruises would be vessels plying from
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o US West coast to Hong Kong
o Singapore to SE Asia & Gulf/Mediterranean
o South Africa to US East Coast
India’s strategy would lie in ‘pulling’ these cruise vessels to our shores by creating the
necessary attractions, positioning, linkages and affiliations.
• Similarly, India can also try to make the existing cruise operators position one or two of their
cruise ships in India, using the Indian Ports as ‘home ports’. For example, ‘Star Cruises’ starting
operations in India with Mumbai Port as the Home Port is an example of the latter. Starting
operations on the 25th of September 2005, Star Cruises redeployed ‘Super Libra’ an 18 year old
ship from Norwegian Cruise Lines having 1500 passenger capacity. Today the following three
cruise itineraries are offered:
o Four night cruise covering Mumbai-Lakshadweep-Goa-Mumbai
o Two night cruise covering Mumbai-Goa-Mumbai
o Evening cruise covering Mumbai-nowhere (to the open sea)
The example of Star Cruise proves that rather than bringing new cruise ships, the objective would be
to attract existing cruise ships, cruise operators and cruise lines to adopt India either as a turnaround
port or as a home port.
Smaller Cruises linking domestic destinations may be considered
While acquiring large cruise ships would be unviable, India could successfully consider a model of
smaller but quality cruises catering to small and niche segments. These could ply along the Indian
coast enabling international and domestic tourists to explore Indian destinations along the coast line.
In a special way, states that do not fall in the main cruise route, such as Gujarat & Karnataka in the
West Coast and Orissa, Vishakapatnam, West Bengal in the east coast would present ample
opportunities to be connected through varied and viable cruises providing access to tourist via the sea
route.
Such small scale domestic cruises could link destinations not falling in the main cruise route and
cover trips such as:
o Calcutta and/or Vishakapatnam – Andamans
o Pondicherry – Andamans
o Goa – Mangalore
o Goa – Lakshadeep
o Mangalore – Goa - Dwarka
This is only indicative and many itineraries may be drawn up. The important fact is that this would
throw up each of these states to a new set of opportunities in terms of access, linkage, destinations that
may be showcased and circuits that may be created.

4.8 ADDRESSING ENVIRONMENTAL ISSUES


A key aspect of developing cruise tourism in India would relate to carefully addressing environmental
issues. As detailed in Section 2.7.2, global consciousness exists regarding protection of the
environment and a serious view is taken of negative environmental impact. Globally environmental
interests are protected by organizations such as the International Council of Cruise Lines (ICCL)
whose members have unanimously adopted mandatory environmental standards for all of their cruise
ships that cover aspects such as design and construction of environmentally friendly cruise ships,
embracing new technology, complying international laws, minimizing waste production, and
maintaining cooperative relationships with the regulatory community. All ICCL member cruise ship
operators implement the adopted standards, which include effectively dealing the pollution and
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effluents generated by the industry. The cruise industry’s commitment to protecting the environment
is demonstrated by the comprehensive spectrum of waste management technologies and procedures
employed on its vessels.

4.8.1 Role of Ministry of Environment and Forests


However, with specific reference to India, the environmental issues would mainly relate to:
Ž Developing cruise terminals & hinterland tourism products in environmentally sensitive areas,
such as Lakshadweep, Andamans & Nicobar, Sundarbans etc.
Ž Ensuring environmentally protective measures within the Indian territorial coastal limits
including assuring the safety of the cruise passengers within our country
In this regard the Ministry of Environment and Forests would play an important role in conjunction
with the other agencies responsible for cruise tourism development. The responsibility of MoEF
would specifically relate to:
• Drawing up plans for development of cruise tourism, ecotourism, rural tourism in
environmentally sensitive areas
• Drawing up guidelines for the reference of other agencies which could be used in the
implementation of all projects related to cruise tourism
• Drawing up a system of quality certifications providing the minimum compliances for basic
certification and right to operate and further higher levels of compliances to obtain quality
certifications

4.9 TAXES & PROCEDURES


4.9.1 Taxation Aspects impacting on Cruise Tourism
Taxes in relation to the Port Sector as well as the Tourism Sector would be applicable in regard to
Cruise tourism
Applicability of tourism related taxes
This section provides an overview of the prevailing tax structure applicable to the Indian tourism
sector, which clearly demonstrates that the Indian tourism sector is being taxed by multiple authorities
at multiple levels. These have been classified as under:
First Tier Taxes: These are the taxes that are specific to the tourism sector and primarily affect the
tourism sector such as Expenditure Tax, Luxury Tax etc.
Second Tier Taxes: These are taxes that do affect the cost structures in the tourism industry but are by
nature not limited to the tourism sector alone. A policy change across any of these taxes would also
affect other sectors. For ex. Customs Duties on Liquor and other items imported by hotels etc.
Other Taxes: These are taxes impacting the tourism sector at the local body level. These would
typically be local level taxes like stamp duties and bar license fees etc.
Exhibit 114 describes all the State and Central level tourism related taxes, and issues therein, that
form part of this study.
Exhibit 114: Statement of Taxes Impacting the Tourism Industry
Tax Particulars Sector of State/ Issues
Levy Centre
First Tier Taxes
Expenditure Tax Hotels Centre Levied @ 10% on room tariff > Rs. 3000 per day
Incidence of double taxation since Luxury tax is
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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
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Tax Particulars Sector of State/ Issues
Levy Centre
similar in nature
Luxury Tax Hotels State Ranges from NIL in Orissa to 20% in Assam,
Gujarat & Tamil Nadu12
Levied on published tariff in certain states.
Starts at very low threshold limits in certain states.
Incidence of double taxation since Expenditure tax
is similar in nature
Service Tax on Hotel Hotels Centre Levied @ 10.2%
Services Incidence of double taxation in cases wherein
F&B related taxes are charged in conjunction with
service tax
Service Tax on Tour Transport Centre Levied @ 10.2%
Operators
State Taxes on Tourist Transport Centre Comprises of Road tax, Passenger tax and Permit
Transport Vehicles Charges
Very high taxes imposed by certain states
Method of collection causes harassment to tourists
Charges in UP, Rajasthan, Madhya Pradesh in
North India and Kerala, Karnataka and Tamil
Nadu in South India are high
F&B related taxes Food & State Different rates for different categories viz. Food,
Beverages Soft drinks, Local liquor, Foreign Liquor,
Carbonated Beverages etc
Ranges from Nil in Arunachal Pradesh to 60% on
Imported Liquor in Karnataka
Incidence of Double taxation in many cases
Liquor Tax Food & State Same as above
Beverages
Foreign Travel Tax (FTT) Transport Centre FTT constitutes upto 3% of the ticket price
(international air travel)
Second Tier Taxes
Levies on ATF Transport Centre ATF constitutes 30% of an airlines operating cost
Effective duty comes to around 39.2% which
increases the cost of domestic air travel
Customs Duty on Food & Centre Very High
Imported Liquor Beverages
Other Charges
Passenger Service Fee Transport Centre PSF is levied at Rs. 200 in the nature of a fee from
(PSF) which Rs. 130 accrues to Bureau of Civil Aviation
Security and Rs. 70 accrues to the airport
operator(AAI)
Monument Entrance Fee- Miscellaneo ASI The dollar charges for certain monuments are very
ASI us high
Often a cause of concern to foreign tourists on
account of discrimination
Issues of dual pricing
Monument Entrance Fee- Miscellaneo State High charges in some instances
Others us
Other Taxes

12
Source: FHRAI
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CRUISE TOURISM – POTENTIAL & STRATEGY STUDY
Ministry of Tourism, Government of India
Tax Particulars Sector of State/ Issues
Levy Centre
Property Tax-Hotels Hotels State/ NA
Local
Stamp Duties on land Hotels State/ NA
purchased for hotels Local
Bar License Fee/Permit Food & State/ NA
Fee paid by Hotels Beverages Local
Corporate taxes paid by Hotels Centre NA
Hotels
A comparative statement of applicable tax rates in India’s competing destinations is presented in the
Exhibits below and, as can be inferred, India’s tax rates are substantially higher than the other
competing destinations. Both the central and state governments need to address this issue and bring
the tax rates to comparable levels.
Exhibit 115: Tax Rates on Tourism in Competing Destinations
Hong India
Head Singapore Malaysia Thailand Kong (High)
Accommodation 4% 5% 7% 3% 30%
Meals 4% 5% 7% 0% 17%
F&B 4% 5% 7% 0% 20%
Car Rentals 3% 5% 7% 0% 5%

35%
30%
25%
20%
15%
10%
5%
0%
Singapore Malaysia Thailand Hong India
Kong (High)

Car Rentals Accom m odation Meals F&B

Source: WTTC Tax Barometer


Corporate Taxation on Tourism
The following exhibit highlights that in comparison to competing countries, the corporate tax level in
India is considerably higher. A high corporate tax level, ceteris paribus, would dampen the interest of
investors into the sector which may in the long run result in lower private investments coming into
sector. Although the examination of corporate tax, which is applicable to all industries in India, is
outside the scope of the study, recommendations on measures to reduce the effective corporate tax
rates through recommendations on tax exemptions and other incentives has been attempted in the
report.

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Ministry of Tourism, Government of India

Exhibit 116: Corporate Taxes in competing tourist destinations


40
35

30
25

20
15

10

5
0

Hongkong

Philippines

Indonesia

Thailand

Seychelles
Japan
India

Taiwan

Vietnam
China

Myanmar
Singapore

Malaysia
Indirect Taxes in Tourism
On the indirect taxes front also, India fairs poorly as compared to competing destinations. The
following exhibit showcases tourism related major indirect taxes benchmarked across comparable
locations. (Exhibit 117 provides a comparative statement of applicable tax rates to various sub-
products of tourism sector).
Exhibit 117 : Other Taxes in competing tourist destinations13

TO U R I S M R E L A TE D TA X E S I N C O M P E TI N G D E S TI N A TI O N S K u a la L u m p u r
2 0 .0 0 %
18 .0 0 % Bangk ok
16 .0 0 %
14 .0 0 %
12 .0 0 % Ho n g K o n g
10 .0 0 %
8 .0 0 %
S in g a p o re
6 .0 0 %
4 .0 0 %
2 .0 0 % N e w De lh i
0 .0 0 %

A irp o rt re la te d A c c o m m o d a tio n F ood & C a r re n ta ls T o ta l ta x e s M um bai


re la te d B e v e ra g e re la te d
re la te d

Exhibit 118 describes the tax rates prevalent in competing tourist destinations.

Exhibit 118 : Benchmarking tourism related taxes14 to taxes across comparable tourist destinations

Cities/Taxes Airport Accommodation Food & Beverage Car rentals Total Rank
related related related related Taxes
Kuala Lumpur 1.70% 4.76% 4.76% 4.76% 6.46% 7
Bangkok 1.26% 6.54% 6.54% 6.54% 7.80% 8
Hong Kong 0.72% 2.91% 0.00% 0.00% 2.18% 2
Singapore 0.94% 3.85% 3.85% 4.38% 4.98% 3
New Delhi 0.94% 16.67% 6.54% 4.76% 13.18% 19

13
Source: WTTC Tax Barometer
14
All tax percentages are percentages of the total item cost.
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Cities/Taxes Airport Accommodation Food & Beverage Car rentals Total Rank
related related related related Taxes
Mumbai 0.90% 13.79% 19.03% 4.76% 13.90% 21
Lowest rates 0.53% 0.25% 0.00% 0.00% 0.97% 1
15
Highest rates 7.66% 20.00% 20.00% 33.22% 24.25% 52
Source: WTTC Tax Barometer

The findings of the World Travel & Tourism Tax Barometer16 clearly indicate that among the
constituents of taxation in tourism viz. Meal taxes, Lodging taxes, Car rental taxes and Airport
arrival/departure taxes, India is clearly a high cost destination in respect of accommodation related
taxes and food and beverage tax, particularly in comparison with the competing neighbours.
As can be inferred from the above, accommodation and food and beverage related taxes contribute to
a large tax burden for tourists and are almost 2-3 times higher than competing destinations. Moreover,
on analysing the various sub-components, the following points clearly emerge:
◊ Tax burden in respect of accommodation and food and beverages on tourists to India are
higher than comparable destinations, reflecting in the ranking amongst destinations. The
result is higher prices and a consequent reduction in duration of stay by an average tourist.
◊ Taxes on car rentals, though comparable as a % of item costs vis-à-vis most destinations, this
has been increasing at a rapid pace. New Delhi and Mumbai have experienced 400% car
rental tax amount in US dollars since June 1994.
◊ New Delhi has the third highest tax rate on accommodation at 16.67% just behind
Copenhagen and Buenos Aires at 20.00% and 17.35% respectively.
◊ New Delhi and Mumbai score poorly on the lodging barometer with both of them being in the
top 5 highest tax charging destinations in US dollar terms.
The World Travel & Tourism Council, in its report ‘India: The Tourism Imperative’, August 2001,
has recommended, “Both Central and State governments should evolve a taxation regime, which
yields revenue but is not unduly harsh. Tourism cannot be ‘flogged’ till it becomes unremunerative.
The WTTC would like to point out that New York City has recently brought down its taxation levels
and actually sizeably increased revenues from heightened tourism activity.”
As is well known tourism supply, in the long run, is highly elastic with respect to total tourism costs.
There have been several studies on the price elasticity of taxation and tourism in several countries and
most point to price elasticity of greater than one. The price elasticity manifests itself either in the form
of greater tourist volume, higher spending or increased duration of stay or a mix of the same.
By rationalisation of the tax structure in the Indian tourism sector, the following outcome is expected:
1. Increase tourist arrivals to India.
2. Increase average expenditure by tourists visiting India.
3. Increase average duration of stay of tourist visiting India.
4. Encourage domestic tourism by adopting measures to augment average expenditure levels of
domestic tourists
5. Creation of an enabling environment for investments in tourism infrastructure
While these measures would benefit the entire tourism sector, they would be especially significant for
a nascent segment such as cruise tourism wherein any positive measures would go a long way in
creating a competitive and motivating environment.
4.9.2 Procedural Aspects impacting Cruise Tourism
Since Cruise Tourism involves travel over seas and foreign tourist arrivals, the sector is subject to
international safety regulations and other travel considerations. The procedural aspects are

15
The sample contains 52 cities with 1 being most competitive and 52 being least competitive.
16
Developed by the World Travel Tourism Tax Policy Centre
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consequently much similar to the airline industry. Since cruise tourism deals with tourists/visitors in a
sector where hospitality and tourist facilitation are considered imperative for success, it would be
important to make the tourist entry into the country as simple as possible.
In this section, we review the procedural aspects impinging on cruise tourism and assess in what
manner these may be rationalized/simplified.
Government Agencies & their activity
The regulatory role for the cruise industry is mainly assumed by the following relevant government
agencies. We describe, herein, their functions and roles:
- Port Authorities
The port authorities provide infrastructural support to cruise vessels and cruise tourists
- Customs
The Customs authorities represent the revenue department and maintain a check on the vessel,
baggage, cargo & passengers to ensure that laws related to payment of duty with respect to
bringing in of certain items are fulfilled.
At the same time they also keep a check towards preventing entry of items on the restricted
lists including contraband, arms & ammunition, drugs etc or movement of illegal items such
as endangered wildlife species, antiques. Customs clearance of all passengers & crew and
their baggage prior to entry into the country and finally when leaving a port.
- Baggage
Visitors are required to make an oral baggage declaration in respect of baggage and foreign
currency in their possession. There are two channels for clearance:
• Green Channel : For passengers not in possession of any dutiable articles or
unaccompanied baggage.
• Red Channel : For passengers with dutiable articles or unaccompanied baggage or
high value articles to be entered on the Tourist Baggage Re-Export Form (TBRE).
These articles must be re-exported at time of departure. A failure to re-export
anything listed on the TBRE becomes a payable duty levied for each missing item.
Certain routine use / tourist related items are permissible duty-free.
- Foreign Currency
Tourists are required to obtain the Currency Declaration Form from the Customs. There is no
restriction on the amount of foreign currency or travellers' cheques a tourist may bring into
India provided he makes a declaration in the Currency Declaration Form given to him on
arrival. This will enable him not only to exchange the currency bought in, but also to take the
unspent currency out of India on departure. Cash, bank notes and travellers' cheques up to
US$ 1,000 or equivalent, need not be declared at the time of entry. Conversion of currency
should be undertaken only through authorized money changers and banks.
- Immigration Check
Immigration Check is done for all passengers, Indians or foreigners, both at the time of arrival
and departure. The passports are duly stamped to mark the arrival as well as departure. No fee
is charged for the immigration check.
The process for immigration check is as under:
• Step 1: Foreign Nationals desirous of coming into India are required to possess valid
passport of their country and a valid Indian Visa. Foreign passengers should ensure that
they are in possession of valid Indian Visa before they start their journey to India.
There is no provision of 'Visa on Arrival' in India. However, there is a provision of
granting TLF (Temporary Landing Facility) / TLP (Temporary Landing Permit) to allow
entry of foreigners arriving in emergent situations like death / serious illness in the family,
without an Indian Visa on cash payment of US$ 40/- (Indian Rupee equivalent i.e. Rs.
1935/-). This facility can also be extended to transiting foreigners having confirmed
onward journey tickets within 72 hours.

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Apart from this, foreign tourists in groups of four or more arriving by Air or Sea,
sponsored by recognized Indian Travel Agencies and with a pre-drawn itinerary can be
granted collective landing permit for a specified period of time on the written request of
the Travel Agencies to the Immigration officer giving full personal and passport details of
the group members and undertaking to conduct the group as per the itinerary and an
assurance that no individual would be allowed to drop out from the group at any place.
The above mentioned provisions of TLF/TLP, however, are not available to the nationals
of Sri Lanka, Bangladesh, Pakistan, Iran, Afghanistan, Somalia, Nigeria, Ethiopia and
Algeria.
• Step 2: The immigration checks procedure requires passengers coming to India or
departing from India to fill-up D (Disembarkation) Card and E (Embarkation) Cards on
arrival and departure respectively. The following information is required to be provided
by the passengers in these cards:
i. Name and Sex
ii. Date of birth, Place of Birth, Nationality
iii. Passport details viz. number, place and dates of issue/expiry.
iv. Visa details viz. number, place and dates of issue/expiry (for arriving foreigners
only)
v. Address in India
vi. Flight number / Ship details and date of arrival / departure
vii. Occupation
viii. Purpose of visit to/from India
- Port Health Officer (PHO)
The port health officer ensures fulfillment of all Health Requirements by cruise tourists. The
checks carried out by PHO are as per World Health Organisation (WHO) guidelines.
Procedures include checking if ship has come from or through yellow fever countries / zones,
tourist must possess a valid vaccination certificate.
- Directorate General of Shipping
The DG Shipping undertakes checks to ensure that all cruise vessels visiting Indian ports
adhere to Port State Control (PSC). Port State Control (PSC) is the inspection of foreign ships
in national ports to verify that the condition of the ship and its equipment comply with the
requirements of international regulations and that the ship is manned and operated in
compliance with these rules. Many of International Maritime Organization’s (IMO's) most
important technical conventions contain provisions for ships to be inspected when they visit
foreign ports to ensure that they meet IMO requirements.
The DG Shipping also ensures that cabotage laws are complied with. The laws stipulate that
only Indian vessels with Indian crew can ply between two Indian ports before proceding to an
International port. Exceptions, require permits and licences from the DG Shipping. To
promote cruise tourism, in the absence of Indian flags sailing in this segment, the Shipping
Ministry has altered cabotage laws to allow foreign flag cruise vessels calling at more than
one Indian port to sail without obtaining permits or licences.
Interactions of Cruise Industry with the Government agencies
Exhibit 119 details the areas of activity where the cruise industry interacts with the regulatory
government agencies:
Exhibit 119 : Activity interactions of the Cruise Industry with the Government agencies
Authority Activity interactions with the cruise industry

Port authorities • Berthing for cruise vessels and facilities for embarking, disembarking
• Collection of port charges & dues
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Authority Activity interactions with the cruise industry

• Provision of pilot for berthing / sailing off


• Provision of garbage disposal
• Clearance of ship for sailing
Customs • Passenger manifest prior to berthing
• Clearance of passengers baggage
• Clearance of ships’ requirement namely provisions, fuels, water
supply
• Collection of light house dues
• Clearance of ship for sailing
Immigration • Passenger manifest prior to berthing
• Checking & stamping of Passport & Visa
• Issue of short shore passes & longer transit passes
• Immigration clearance of embarking tourists
Port Health Officer • Passenger manifest prior to berthing
• Collecting declaration of health with regards to contagious diseases,
SARS & yellow fever
• Health clearance of tourists & crew.
Directorate General of • Exercise Port State Control over the ship
Shipping • Ensure compliance of Cabotage Law on Ships

Laws & Regulations governing the Cruise Industry


Exhibit 120 details the important laws governing / regulating the industry with respect to the cruise
industry:
Exhibit 120 : Laws & regulations governing the cruise industry
Authority Important laws governing / regulating the Industry

Port authorities • Major Port Trusts Act, 1963


• Indian Ports Act, 1908
• Docks bye-laws
• Docks Scale of Rates
• Ports Scale of Rates
Customs • Customs Act, 1962
• Light House Act
• Foreign Exchange Management Act, 1999
Immigration • Foreigners Act, 1946 & rules framed thereunder
• Passport (Entry into India) Rules, 1950
Port Health Officer • Indian Port Health Rules, 1955 under Indian Ports Act, 1908
Directorate General of • Merchant Shipping Act, 1958
Shipping

Flow Chart of Activities related to cruise shipping


Exhibit 121 and Exhibit 122 show the general set of activities related to cruise industry undertaken at
Indian Ports:

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Exhibit 121 : Pre Berthing Activities

• Advance requisition for berthing at the port


Filing of berthing
application • Submitted to port authorities by agent of
cruise line.

• Provides details of Embarking &


Disembarking tourists, transit tourists, day
Filing of Passenger tourists & crew at port-of-call.
M anifest
• Filed with Customs, Immigration & Port
Health Officials by agent of cruise line.

• Payment of berth hire charges, port dues,


Paym ent of dues, Pilotage & lighthouse dues
charges
• Agent makes the payment to Port authority &
Customs

• Declaration as per W HO norms is made with


respect to cruise vessel coming from yellow
M aritim e declaration
fever zone etc.
of health
• Agent or M aster submits declaration to Port
Health Officials

• As cruise vessel enters the port area, the Pilot


boards the vessel at channel entrance and
Pilotage & Towage ensures safe berthing with help of towing
for berthing tugs

• Request for services of Pilot are made by


agent to Port Authority

• Involves health clearance for tourists by


checking their vaccination certificates for
Health Clearance yellow fever, communicable diseases etc.

• Port Health Officer boards the ship at


channel entrance to save on time

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Exhibit 122 : Activities related to Port Call and Ships at Berth

Immigration Check • Checking of passport & visa documents of


of disembarking disembarking tourists
tourists • Tourists have to complete the formalities
personally with Immigration officials.

• Tourists disembarking for sight seeing / day


trip at a port require Shore Passes
Issue of Shore Pass / • Tourists disembarking for longer tours
Transit Pass intending to rejoin at another Indian Port
require Transit Passes
• Immigration Official issue passes to single
tourists or as a group on fulfillment of
conditions

• Baggage clearance of disembarking tourists


Customs Clearance & declaration of bond stores
• Customs formalities may be completed at
of Baggage / Bond
port or enroute during ships voyage from
previous port of call.

• After tourists receive the Shore Pass / Transit


Ground handling & Pass; the ship’s agents, tour operators, taxi &
support coach service providers act to transport the
tourists for day trips / to airport / to hotel etc.

• The DG Shipping Office undertakes check


Port State Control on cruise vessels as with other vessels calling
Check at the port to ensure that the vessel is not in
contravention of any international law

• Ship chandlers & provision suppliers obtain


Supplies & stores clearance and meet requirements of vessel.
• Clearance is given by customs official for
supply of provisions

• Cruise vessels may collect large amount of


Disposal of garbage garbage during a trip. Ports may cater to the
requirement of vessels as a value added
service.

Continued

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Continued

Baggage clearance of • Cruise tourists embarking into the ship from


embarking tourists the port are required to obtain Customs
clearance for their baggage

Immigration • Embarking cruise tourists present their


Clearance for passports for immigration clearance prior to
embarking tourists departure from country

Immigration • Cruise tourists, who have taken day trips at


clearance of Transit the port are required to obtain immigration
Tourists clearance prior to boarding vessel

• Cruise tourists are required to undergo


security checks prior to boarding to ensure
Security clearance of
overall security of cruise passengers.
tourists
• Local Police / Security agency provides the
clearance

• After all cruise tourists & crew have boarded


Clearance for Sailing the vessel, clearance from customs and port
authority is required before the ship can sail.

• The Pilot finally boards the cruise vessel to


Pilotage & Towage escort it safely to deep waters at channel
for berthing entrance

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Formats / Applications related to Cruise operations


Exhibit 123 lists the formats and applications that are required in relation to cruise tourism industry.
Exhibit 123 : Applications related to Cruise Operations
Authority Action By Formats / Applications
Concerned
Port Ship agent • Berthing application
• Application for payment of Port charges
• Application for Pilotage services
• Application for sailing
Customs Ship Agent • Passenger manifest filing
• Application for payment of Light House charges
• Bond stores declaration
Cruise Tourist • Currency declaration form under FEMA, 1999
Immigration Ship Agent • Passenger manifest filing
Cruise Tourist • Govt. of India Disembarkation card - Arrival
• Shore pass for passengers
• Temporary Landing Permit
• Government of India Embarkation Card - Departure
Port Health Ship Agent • Passenger manifest filing
Officer • Maritime declaration of health
• Port call list
Cruise Tourist • Yellow fever Vaccination List

Measures to simplify procedures and taxes so as to reduce harassment & delays


- Customs
No changes are necessary in the existing acts, rules and regulations governing customs
functions. However, some changes in procedures were considered as under:
• The clearance of tourist and baggage at ports needs to be further streamlined with a view
to minimize delays. Adequate number of officers should be posted to enable speedy
clearance of tourists embarking / disembarking
• X-ray machines should be provided to facilitate quicker clearance
• Necessary executive orders should be issued permitting in-transit bond for transfer of
baggage of cruise tourists between airports and seaports
• Although, a common form exists for customs, immigration and other purposes, the same
is not used frequently. The usage of the single form that covers both immigration and
customs clearance details should be encouraged.

- Immigration
Various changes in the existing delegations of powers and procedures are considered
necessary to streamline immigration activities. This being a sensitive area with direct
implications for national security, prudent exercise of powers keeping in view the security
concerns can be introduced for quick, easy and smooth disembarking and embarking of
tourists.
• Considering that ships’ stay at Ports for short periods, between 8 hours to half a day, the
immigration clearance and issue of passes should be without any delay.

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• Immigration officers should be posted at the cruise ports and be available for the period of
stay of the cruise vessel. Immigration officials should be allowed to board vessels at
previous ports-of-call similar to customs officials and complete formalities en route
• Visa requirements
- Need to obtain visas prior to taking cruise should be done away with. Provision for
issue of visa on arrival be introduced as is being done at other cruise destinations such
as Colombo, Singapore etc.
- Immigration officers should be permitted to issue Temporary Landing Permits (TLPs)
on arrival at Port in exceptional situations depending on the merits of the case. The
formalities, procedures and fee should be made uniform at all ports and informed to
all related persons in advance.
- Although TLPs for a maximum period of 15 days are issued only under special
conditions for a charge of US$ 40, the charges should be correspondingly reduced for
TLPs of lower duration.
- Existing practice of insisting of visas should be done away with and group landing
permits be issued to tourists who undertake only day sight-seeing trips
- Currently TLPs are required to be obtained at each Port of Call. A single TLP should
be made valid for all Ports of call on the Indian circuit if the total period of stay on
the shore is less than 15 days.
- Electronic screening devices for passengers installed at cruise terminals would speed
up the screening process as also avoid the need to physically screen the passengers.

• Following are some of the measures to speed up the processes for issue of passes:
- Yellow or day passes are issued to disembarking tourists after the ship has berthed. It
should be explored if passes can be kept ready prior to arrival of ship at berth
- Issue of passes should take into consideration the status of the passengers ie. day
tourists, disembarking tourists or embarking tourists.
Ð Disembarking tourists may be issued day shore passes which are unique from
TLP
Ð Day passes or Dock entry permits are issued to cruise tourists at entry gates to
port premises. The need for issue of day passes to embarking tourists should
be done away with as they come straight to the terminal as a group and
boarding clearance and immigration clearance is done immediately on arrival
at the terminal. List of embarking passengers may be provided at entry gates
to address concerns.
Ð The need for shore passes be done away with for tourists disembarking /
embarking for day tours/ sight seeing trips as they already have visas, and
they are escorted in and out of the port premises by the tour operators
- Transit passes be issued to cruise tourists for entire duration of stay of cruise ship at
Port. Special permits be issued covering entire period of travel of that ship in the
country with permission to join the ship at any port of call in India in respect of
passengers taking over land / fly-cruise tours
- In case of group visits, Immigration officers should follow the rules identified for
visitors coming in groups provided the tour operators furnish the required
undertakings and other documentation.
In addition to the various measures stated above, it would also be important to impart training and
awareness programmes to the various officials involved in the immigration and clearances with the
objective of reducing the red-tape and corruption that is currently reported at many cruise ports.

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4.10 HR & TRAINING
Human Resource represents the backbone and core network to support cruise tourism growth. While
the ‘hardware’ of cruise tourism in the form of port infrastructure and cruise lines is important, the
‘software’ in the form of human resources is equally vital. The ‘software’ of tourism encompasses the
entire array of tourism services, tour operators, taxi drivers, local police, travel agents, tourist guides
and tourist information officers and form an important aspect of tourism development. It would be
important to focus on the creation of human resources as the ‘hospitality face’ of the cruise sector
through the creation of proper training institutions and programmes. Without this it would be
impossible to sustain the growth of the industry in the long run.
Within India, governmental laxity and corporate profit-conscious attitudes towards tourism education
and training, as well as lack of trainers and teaching staff, have been identified as some of the factors
responsible for inadequate professionalism in its tourism industry.
This section sets forth some strategies to be adopted if Indian Cruise tourism is to be in a position to
face the challenges posed by the expected growth rates and also take advantage of the market potential
as assessed.
4.10.1 Need for Training
"Training programmes are directed towards maintaining and improving job performance, while
development programmes seek to develop skills for future jobs"
Training has to start with the identification of training needs through job analysis, job description,
training areas, performance evaluation, and organizational development.
Training is a vital investment in staff. It should be strategically planned in order to provide a
meaningful learning experience for new or current employees and volunteers. Training and
development should be focused on developing the individual employee’s fundamental competencies,
so that he or she can perform current and future jobs to the highest standards.
Training should result in the development of the knowledge, skills and attitudes towards the cruise
tourism industry. Training is not only necessary at the beginning of an employment contract, but must
accompany the job throughout. Developing employees’ skills not only helps to improve performance
but it also increases the likelihood that jobs remain interesting and challenging. Training programmes
should be designed to cover all aspects of management required in cruise tourism industry. However
in these guidelines on tourism we emphasise the particular importance of training in following
broadly classified areas:
• Awareness in the field of cruise tourism
• Communication and hospitality skills
• Food & beverages etc.
• First aid
• Management & Public relations skills
• Management skills and public relation skills
• Computer literacy
• Security and law enforcement rules
• Environmental aspect
Job Analysis
The job assigned to each employee at the port must have specified and detailed job description. The
purpose of delineating each work assignment is to ensure job satisfaction for the individual and an
efficient and effective organisation overall.
Job analysis is a commonly used strategy for identifying organisational human needs and is
recommended here. It is a systematic process of determining the nature or content of a work
assignment through the collection and organisation of relevant information. The characteristics that
are typically analysed in a job analysis are listed in table below. Job analyses provide the foundation

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for most human resource management activities because they are used as reference points for various
other functions.
Human resource planning must start from the present situation. An understanding of current staffing
needs forms a baseline for determining future requirements as changes occur in the management
strategy. So, in view of this and based on the training areas listed in introduction, we have broadly
listed out the human needs based on the various stakeholders and identified the type of training
required by them in Exhibit 124 below:

Exhibit 124 : Stakeholder Vs Training Required


TRAINING

Awareness
STAKEHOLDERS Case First
of the Soft Management Public F&B
Computer Security Hospitality Study Aid
Cruise Skill Skills Relation Training
Training Training
Industry

MINISTRY OF
TOURISM
State
Central
MINISTRY OF
SHIPPING
Port Authority
Baggage Handler
Ticket Counter
Executive
Tourist Info.
Centre executive
Dock Manager
Help Desk
Executive
Private Guards
Tour Guide
Cruise Director
Shop Staff
Entertainment
Staff
Cruise Facility
Consultant
Marketer
Immigration &
Custom
Shipping Agents

LOCAL
BODIES
Municipal
bodies
Local Police
Taxi Operators
Hotels/
Restaurants
Tour guides
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TRAINING

Awareness
STAKEHOLDERS Case First
of the Soft Management Public F&B
Computer Security Hospitality Study Aid
Cruise Skill Skills Relation Training
Training Training
Industry

Media
Interface
person

Job Description
A job description is a generic written summary of the essential duties and responsibilities required of
the position. It is not intended, and should not be construed, to be an exhaustive list of all duties and
responsibilities of any position.
Thus keeping in mind the various duties and responsibilities required to be performed by the different
stakeholders in the cruise tourism industry, we try to describe the needs of proposed trainings and
what these trainings imply in our next section.
Training areas
Considering the various training areas listed earlier in this chapter, we give a general description of
each training area mentioned in the introduction.
Awareness in the field of cruise tourism : The stakeholders enlisted in the matrix under this head are
required to be provided training about the history and background of the cruise tourism industry. A
general introduction to the industry covering market structures, relationships and definitions; supply
and demand and the balance between them, globalisation, pricing and discounting and the economic
impact of cruising. They should be made aware about the international market, that is the international
cruise ports and the facilities being provided at those ports and the working style at these international
cruise ports must be taught to them. This will help these employees in understanding the cruise
tourism industry better and would mould there thought process in the same lines, for developing the
Indian Cruise Tourism industry.
Communication and hospitality skills : The employees must be training in the areas of soft
communication skills and conflict resolution skills. They should also be provided with hospitality
skills because they are going to deal with tourists of Indian and Foreign nationality. And in such
industries the better you treat your customers the more business you generate and more popularity you
gain.
Management skills and public relation skills: Management skills are required by mostly by managers
or senior level personnel for managing the varied problems arising in the course or work and taking
appropriate decision as the situation demands. These are the personnel who will be responsible for
project conceptualization, design, execution, relationship with private sector and marketing. Hence the
topics on which training should stress area project management, marketing effective communication,
tourism management, port management and specialized tourism project. When we say marketing, the
focus areas should be principles of cruise marketing and looks at ways in which the various marketing
profiles of the cruise product must be developed to best meet market needs.
Computer literacy: The computer knowledge as we know has become a basic requirement in the
current scenario. Thus, the personnel who operate computer in there regular course of work such as at
ticket counter, tourist information centre, help desks etc are required to be provided with the computer
trainings. Thus majority of the stakeholders require the computer training.
Security and law enforcement rules : The training areas should cover crisis/emergency management,
security survey, cruise terminal security, security plan preparation, disaster recovery plan, terrorism,
etc. This is required to maintain a safe and sound working environment at ports. In such trainings the
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staffs must be told how to implement these safety rules and how to react when an unsafe situation
arises.
Environmental aspect : The port staffs must be given training on how to maintain an environment
friendly atmosphere at ports. Environment has become one of the major concern areas in any industry.
Each and every industry is expected to operate in a manner that they do not pollute the environment.
Hence keeping in view the environmental aspect the staffs must also be taught the environmental laws
laid down by Indian govt.
First aid : The port employees must be given training on first aid, so that during a crisis situation the
employees would be capable enough to provide with the bear minimum first aid facility as required by
the patient.
Food & Beverages Service : The employees imbibe the art of serving food and beverages, in
combination with good grooming and social etiquettes. The work area could be a restaurant, a bar or a
banquet hall. Employees have a direct access to cost control methods and effective customer-staff
relationships.
The cruise line/port relationship: This training should discuss the nature of a deployment and market
interest in itineraries, whilst looking at a region's ability to create a worthwhile itinerary and related
topics such as port facilities, tourism opportunities, and transportation infrastructure, the role of the
pilot and the ship agent and possible marketing partnerships.
Other Training Approaches
Apart from the direct trainings as listed above, there are other methods by which training /
information can be provided to the cruise port personnel’s. These methods are:
• Cruise Workshop
• Seminars
• Trade Fairs
• International Conferences
The main focus area in these workshops, seminars, trade fair and conferences should be:
• Emerging trends for cruise lines
• Effective cruise/port partnerships
• Update on environmental issues
• Developing cruise facilities for multiple uses
• Dealing with regulatory requirements at cruise facilities
• Promoting the destination
Training Institute
The training institute available in India, which can cater the needs have been listed as followed:
• National Institute of Port Management, Chennai
• Indian Institute of Port Management, Kolkata
• Maritime training institute IMTC – The institute has variety of courses ranging from
general courses to job specific courses
• The Indira Gandhi National Open University
• Indus Cruising, Bangalore
• Food Craft Institute, Chandigarh
• Bhartiya Vidya Bhawan, Delhi – It cater the hotel & tour & travel management
• Institute of Hotel management, Bangalore
• Saptagiri College of Hotel Management, Mangalore
Some of these institutes listed above are related to port management and some of them are related to
hotel management. There can be a more exhaustive list of institute available in India, which impart
hotel management education. The reason for considering hotel management institute is that the sort of
trainings required by the various stakeholders at port matches with the type of training being provided
to hotel management students, because if we look at a broader picture both the cruise port and hotel

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industry are targeting the hospitality aspect. But, still there are few training areas which are not being
covered by these institute and which are specific to the cruise industry. These are:
• Dimensions of Services Management
• Cruise Line Management
• Leisure and Recreation Management
• Managing Cultural Diversity through Geography of Global Cultures
• Leadership in Hospitality and Tourism
• Sustainable Tourism
• Casino and Gaming Operations
Various foreign institutes are providing the above listed trainings. List of some of these foreign
institute are:
• Southern New Hampshire University
• Bremerhaven University
Hence these institutes can be referred to for laying out of the course curriculum or can even be used
for getting visiting faculties, or sending the employees for a training of short duration.
4.10.2 Performance Evaluation
Performance evaluations or appraisals provide essential information for making strategic management
decisions related to HR. The information gained through the collection, analysis and evaluation of
employees’ performance enables managers to communicate how well staff are doing, and – if
necessary – provides the reasons why changes should be made. An effective evaluation system can be
used to determine if human resource management is helping to achieve the cruise tourism aims.
The data collected for a period of six months or one year can also be used to identify future human
resource development needs, and would also validate the ways the staff are recruited, selected, trained
and paid, and generally evaluate the success of human resource training programmes.
4.10.3 Organizational Development
Organisational development is about improving the energy generated when employees work together.
Programmes that contribute to improving the quality of work life, team building and similar
objectives produce a loyal and committed employment environment. Again, while the advice given
here is general, it is also especially relevant to the challenge of dealing with tourist to cruise ports.

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5 RECOMMENDATIONS

This study has made a comprehensive analysis of the Cruise Tourism sector at the global level as well
as the Indian scenario. While the industry has reached a fair level of maturity globally it is as yet in its
infancy in India. As such India would be entering into a market already dominated by strong cruise
tourism players and markets.
However, India even as a late entrant would have important advantages:
◊ India’s reputation as an enchanting, exotic, historic and beautiful destination would
enable the country to make an instant international cruise positioning and move into the
‘cruise destination’ market. Cruise operators and liners are more than ever searching for
new destinations and itineraries.
◊ India’s long coast line and strong port positioning imparts a natural advantage to the
country to attract international cruise lines.
◊ India’s positioning in South East Asia and its proximity to already popular cruise
destinations like Singapore, Thailand, Bangkok, Colombo etc. would enable strong cruise
circuits to be created over a period of time.
◊ India’s strong domestic tourism sector would enable the country to achieve a strong
domestic cruise sector that could complement the growth and support viability.
◊ India’s impressive growth in the tourism sector would impart an important advantage to
its cruise tourism positioning. It would be important to remember that these two would
mutually strengthen each other enormously.
◊ The cruise ports selected for development are also strong tourism states, especially
Kerala, Goa and Chennai. This could provide an important platform for cruise tourism to
takeoff.
However, to benefit from the strengths as outlined above, it would be crucial for India to learn
important lessons from global precedents in the cruise sector as well as integrate this learning with
the tourism sector lessons we have derived over the past decade.
In this section we summarize the key recommendations for development of cruise tourism in India.
These have emerged from our market interactions and also from the learning we have derived from
the study.

5.1 KEY RECOMMENDATIONS TO MAKE INDIA A STRONG


CRUISE DESTINATION
At various places in the report while discussing various aspects related to cruise tourism development,
we have outlined initiatives that would need to be taken. In this section, we have selected and
highlighted the key recommendations as follows:
5.1.1 Create the Cruise Terminals
2. Develop good infrastructure at identified Ports
The first and primary objective of the government should be to provide acceptable standards of
infrastructure and passenger services at the selected ports. The development of the designated
cruise ports could be in stages as follows:
o Phase 1 :
i. Create dedicated cruise terminals at Mumbai, Cochin and Goa
ii. Upgrade port facilities at exotic locales like Lakshadweep & Andamans and
Chennai
o Phase 2 :
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i. Create dedicated cruise terminals at Chennai, Mangalore and Tuticorin
ii. Explore potential of other ports like Porbandar & Kandla in the West Coast:
and Vishakapatnam, Calcutta & Paradeep in the East Coast
Along with developing the identified cruise ports, developing exotic destinations would
greatly enhance the value of Indian Cruises and bring in the ‘exotic’ element which would be
imperative to position the Indian Cruise sector globally. Market interactions reveal that Cruise
operators are keen on including these destinations as ports of call however in absence of basic
infrastructure it is impossible to do so. Similarly, to realise the cruise potential that exists for
India over the next 26 year period, it would be necessary to identify and develop the other
Indian Ports having cruise tourism potential including the Porbandar & Kandla Port in
Gujarat, the Vishakapatnam Port in Andhra Pradesh, the Calcutta Port, the Paradeep Port in
Orissa. Each of these states has enormous tourism potential that can be effectively tapped for
cruise tourism if accessibility and availability can be ensured through creation of necessary
port based infrastructure.

Recommendations to reinforce port development


The following would constitute the key recommendations towards developing ports infrastructure:

o Cruise Terminals should be an integral part of Port Master Plans


The concerned Ports authorities should prepare detailed master plans for the development of these
ports, which should include the strategy for development through private sector participation. In
the development of the cruise terminals the Tourism department may support Port Authorities by
making available the Central Financial Assistance for large revenue generating projects and other
assistance available for Development of Tourism Circuits.
To be globally competitive and have a sound positioning in the worldwide cruise tourism market,
India should plan for dedicated cruise terminals and berths. This would represent a long term goal
but would need to figure in the master plans of the individual ports.

o Dedicated terminals would need to address security concerns and facilitation


Cruise Terminals located within Cargo Port area create security issues. In creating dedicated
terminals, this aspect has to be addressed and resolved. Also hospitality related aspects to enable
the necessary facilitation services to the cruise tourists would have to be built into the cruise
terminal development plans.

o Terminal Plans would need to be developed in consultation with key players


In finalizing the cruise terminal development plan, inputs from cruise lines, tour agents,
developers would ensure that the concerns of the key stakeholders are adequately addressed. This
would ensure the long term success of the terminal.

o Initiate Feasibility Studies


Feasibility studies for individual cruise terminals would need to take into account the port specific
developmental aspects duly incorporating capital cost towards dredging based on geographical
features of the concerned port, land acquisition costs etc. Such feasibility studies would cover the
technical and financial aspects of the terminal development and identify viability and
sustainability aspects of the development.

o Structure bankable PPP Options


Globally the development of cruise tourism has been achieved purely in the private sector with the
Government playing a supportive and strategic role. It would be important for India to follow this
precedent by creating the necessary enabling environment and giving the private sector the space
it needs to grow.
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Government would need to clearly develop bankable project structures that achieves balance risk
sharing and addresses the key concerns of the private developer and the investor along with the
Government. Based on the viability study undertaken and where necessary, Government would
need to explore support private investment into the project through financial incentives and
viability gap funding schemes. All incentives available for infrastructure projects should be made
available for cruise terminals.

Long term objectives


o Make cruise terminals into destinations by themselves
Cruise terminals represent the entry point of the cruise tourists into various tourism locations. Besides
offering the facilities and amenities that would be essentially from the point of view of tourist
facilitation, it would be an important strategy to make the cruise terminals themselves into mini
tourism destinations much like a tourist village showcasing India’s art and handicrafts, ethnic bazaars,
a small museum offering a birds eye view of the tourist attractions of the region, food stalls with
typical Indian cuisine, children’s play area etc. In addition to being an effective promotional medium
of the country’s brand it would also increase the commercial and business potential of the terminal
making it more amenable for private sector participation. Similarly, taking into account that the cruise
season (in India) is from September to March each year, the Port authorities can use integrated cruise
terminal facilities for other usage such as convention centers, symposiums, exhibitions etc

o Focus on home porting in the long term


Significant benefits can be derived from home porting. These benefits include pre-and post-cruise
transport and accommodation, increased visitor expenditure, and stores for cruise ships. India should,
as a long-term objective, emphasize in developing the Indian cruise ports as ‘home ports’ rather than
only ports of call. Government should continue to address the infrastructure requirement issues that
would support home porting.

o Focus on the ‘Drive In’ Market equally with the ‘Fly in’ Market
Increasing world over the ‘drive in’ cruise market is gaining in importance unlike the previous trends
where cruise tourist had to ‘fly in’ to take the cruise from the designated ports. This essentially means
that in addition to the main cruise ports, we would need to focus closely on the other ports along the
Indian coast which may be developed as cruise ports which may become the starting or transit stop for
cruise vessels to pick up ‘drive in’ cruisers.
It has been seen that accessibility and availability form critical aspects to popularize cruises.
Accordingly the drive in market would be extremely important for India for the following two
reasons:
- To tap the huge potential of the domestic tourists
- To make the cruises accessible to the foreign tourists who may be visiting other Indian
destinations
5.1.2 Create the Product
3. Design attractive cruise circuits
Government should design theme based cruise circuits
o Exploiting existing tourism/coastal destinations
o Linking foreign destinations depending on cruise design, theme and logistics
In developing the Indian cruise circuits the four tourists segments would need to be actively
targetted and exploited
- The Foreign Tourists who represent the International Arrivals into India
- The Indian Outbound Tourists who travel out of India.
- The Indian Domestic Leisure Tourists
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- The current Cruise Tourists (International and Indian)
The primary survey has thrown up interesting difference in perceptions, preferences and views of
the Indian and Foreign tourists. These may be used to develop suitable products and position and
market them so that India may address the demands and expectations of each of these segments
towards creating cruise itineraries and products.
This report has identified interesting cruise circuits that may be developed. Examples of key
circuits that Government should focus on would be :
o Rejuvenation Cruise : Goa- Mangalore-Cochin (Kerala Backwaters)-Male
o Discover India’ Cruise : Mumbai-Goa-Cochin-Tuticorin /Cochin –Goa- Mumbai-
Porbander
o ‘Shopper’s Bonanza’ Cruise : Mumbai-Porbander-Dubai
o Sunshine Cruise to Beaches : Cochin-Goa-Lakshadweep-Male/ Chennai-Colombo –
Andaman/ Chennai-Colombo –Male -Cochin
o Nature Lovers Cruise : Mumbai –Goa- Mangalore- Lakshadweep-Mumbai
o Goa-Kerala Party Cruise : Goa (Sea and river Cruises)–Cochin (Kerala Backwaters)- Goa
o High seas cruise : Chennai –Andaman- Open Seas

Recommendations to reinforce cruise design


The following would constitute the key recommendations towards developing ports infrastructure:

o Select circuits related to port development should be responsibility of Ministry of Tourism


The Ministry of Tourism, which best understands the tourism resources and the tourism
development strategy, should be made the agency responsible for select tourism circuits which
may be aligned to and developed concurrently with the cruise port development. For this purpose,
the Ministry should earmark a dedicated fund towards
o Hinterland tourism development
o Tourism related Infrastructure and linkages
o Viability gap funding
This would ensure that the tourism resources are effectively developed, positioned and showcased
as part of the cruise circuits.

o Quick connectivity to other destinations/ attractions/ tourism locations to increase choices


An important strategy in cruise tourism development would lie in ensuring easy, timely and quick
access to heritage locations, monuments, natural features, tourism destinations that lie in
proximity to the cruise ports. This would ensure that tourists, especially international tourists, do
not miss the opportunity to see the prominent locations that may lie. Enabling cruise tourists who
arrive at the Mumbai port the necessary air connectivity to visit the Taj, enabling those arriving at
the Mangalore/Cochin Port to see Hampi, and linking Goa port to Somnath/Dwarka are some
ideas that could be explored.

o Create port wise & region wise destinations


To ensure success the development of Cruise tourism would have to be achieved in close
coordination with the development of the larger tourism sector itself. Needless to say these
complement each other and the synergistic benefits have to be explored on a continuous basis. It
would therefore be imperative to closely link state-wise tourism development master-plans with
cruise development plans, marketing and promotion.
It is well known that in Cruise Tourism it is the destinations rather than the ports, which attract
tourists and liners. It would therefore be imperative to create attractive, varied and exotic
destinations at every state that can be linked to the cruise ports and highlighted as cruise offerings.
While this would be essential to position the ports as effective ‘ports of call’ it would be equally
important for creating a ‘drive in’ market for the ‘home ports’ where domestic and foreign tourists
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visiting the destinations would build the cruise into their itinerary and suitable packages may be
offered.

o Create and position river cruises to complement and strengthen cruise tourism development
Like Europe, India has destinations in its interiors many of them which are connected by beautiful
rivers. Developing River cruises that connect these destinations would not only create the access
that is so important for cruise tourism, but would also enable India to strongly position its tourism
destinations and its exotic heritage.
In developing River Cruise the following points may be noted:
o Linking cruise terminals to river cruises that connect significant destinations would
stimulate cruise ships to touch India for the sake of the destination. For example, Sarnath,
the key Buddhist pilgrimage destination, lies on river Ganges. Offering this as a river
cruise would be a powerful stimulus to the large base of Buddhist tourists who come to
India from Asia. Linking this to one of the cruise terminals would ensure that the cruise
ships from the Buddhist countries – especially Japan, China - come to India.
o The development of river Cruises in India will have to be planned in sync with the larger
IWT development plan of the Ministry of Shipping. However, the development will have
to be related to the lager tourism potential and proposed cruise terminal development.
o As many of the rivers in India link to interior villages, rural areas, exotic locations,
forests, sanctuaries etc. River cruises in India must be linked to ecotourism and rural
tourism, both of which form a priority area for tourism development in India and form
great attractions for foreign tourists.
5.1.3 Create the positioning : India as a ‘MUST SEA’ destination
4. Develop Brand Cruise India as an umbrella brand
India offers relatively a small market compared to the global industry. Accordingly, there
would be considerable merit in positioning India as a single India-branded cruise experience
that fully integrates and complements the relative strengths and distinctive value propositions
of each of the states. This will enable the country to sell a strong integrated brand while at the
same time by selling India as the principal destinations all the states will benefit as cruise
lines seek diversity in itineraries. This would also help the Ports to work as complementary to
each rather than as competitors.
o The key ‘brand message’ underpinning the Indian brand will be ‘diversity in
harmony’, ‘more for less’, ‘value for money’ must ‘sea’ destination underlining
Ž Value for money, for both cruise lines and passengers, given the $ and Rs
exchange rates
Ž Safe and friendly
Ž Exotic, offering a blend of heritage, natural beauty, art, culture, cuisine &
adventure
o Build destination brands into the core brand

5. Position theme based circuits targeting niche segments


World over, traditionally, cruises have been thought of as meant only ‘for the newly weds or
nearly dead’ with cruises being filled principally with retired or honeymooning travellers.
This profile is fast changing and India would need to take advantage of this trend to position
Indian cruises for the ‘youth’ and for ‘families’ both of which constitute an important
component of Indian tourism in addition to the traditional segments.
In addition, India would have to design and position the cruise circuits specifically at the
identified segments, for eg
o For domestic/outbound tourists – highlight foreign/exotic destinations
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o For foreign tourists – highlight world heritage, history, health

Recommendations to reinforce positioning


The following would constitute the key recommendations towards reinforcing the marketing and
positioning strategy:

o Develop an effective media campaign


The positioning and promotion efforts would have to be supported through a proactive media plan
which would cover both domestic as well an international markets. The Media Plan will cover
audio-visual presentations and films, out-door advertising, organizing events & exhibitions,
preparing attractive brochures, leaflets, posters, hand-outs, TV inserts etc. The department of
tourism would need to identify the media requirements and provide for a suitable yearly budget
for this activity.
While it would be desirable to adopt multi-pronged marketing strategies, it would be equally vital
to draw up focused marketing strategies to address each of the segments targeted taking into
account the unique characteristics of the segment targeted.
It would also be useful to consider appointing a specialized marketing and brand promotion
agency to draw up the marketing strategies, the media plan, the brand promotion approach etc. in
a phased manner. This would be important because this involves extensive planning and careful
strategizing and professional agencies would more effectively market the State in the long run.
This agency would also take care of advertising and promotion, events and festivals, all audio-
visual and publicity material, advising the state in participating in useful international festivals
and forums etc.

o Participate and create visibility in International forums


Effective promotion would demand representation in international forums including road shows,
trade fairs, exhibitions, seminars etc and entering into tie-ups with proper bodies. Participation in
International Sea trade Shipping conferences, conventions, trade shows, promotional fairs would
also be relevant. The objective would be to create visibility and reinforce the brand name
overseas.

o Establish dialogue with all the four key players


Government should immediately start a dialogue with the ‘big four’ players - Carnival, Royal
Caribbean, P&O Princess & Star Cruises Group - who control the cruise tourism market. Creating
a brand with these operators would go a long way in achieving the marketing objectives. The
inputs received from them in terms of terminal, product and circuit development would also be
relevant to ensure that the development happens on the right lines.

o Explore synergies with Dubai Cruise Tourism


Dubai is a relatively new entrant into the Cruise market, very close to the Indian Sub continent.
The cruise ports identified for development in India in the first phase – Mumbai, Cochin and Goa
– are all on the west coast of the country, close to Dubai. India should explore the synergies
between the two countries wherein both countries can arrive at cooperative measures to jointly
promote cruise tourism. The Dubai Department of Tourism and Commerce Marketing (DTCM)
has offices in India. Both countries can mutually cooperate to explore & exploit its proximity so
that all cruise ships that touch the west coast of India can visit Dubai and vice versa.

Long term objective

o Develop a greater ‘ Indo-Asian’ alliance to attract cruise shipping to the region


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To enhance the marketability of India, a sustained objective should be to create a larger ‘Indo-
Asian’ cruise product that combines the Indian cruise experience with the experiences of
strategically valuable neighbouring countries. To this end feasibility of establishing formal
alliances should be explored. The Asian ports and regions already form part of the South-East
Asia and Asia Pacific itinerary. There is merit in exploring the possibility of co-branding these
segments of the journey as an overall Asian experience, gaining promotion leverage from each
port and developing a consistent quality of activities and services offered. The benefits of regional
partnerships would include
- Access to different tourism product to incorporate into regional packages
- Access to other expertise and processes in Port management and services
- Development of consistent management policies and quality assurance processes across
key regional ports to control the cruise line experience enroute. Such an experience will
have considerable positive branding implications.

5.1.4 Create the Experience


6. Create ‘cruise friendly’ ports
Ports are the entry points, promotional platform and first experience of India; accordingly
positive, memorable ‘port experience’ is crucial for ensuring successful cruise tourism
development in the country. It is well known that hassle free ‘seamless’ travel would constitute an
immense positioning strength for cruise tourism and go a long way with cruise operators.

Recommendations to reinforce experience


The following would constitute the key recommendations towards creating a positive and friendly
tourism experience at the ports:

o Simplify procedures to reduce harassment at Ports


The port authorities should work towards simplifying the procedures covering immigrations,
customs, procedures, travel, linkages so as to make the port visit a pleasurable experience
remembering that ‘swagat’ and ‘suvidha’ form important policy aspects of tourism development
in the country. The primary survey undertaken clearly indicates that fast immigration & transit
through the port is the topmost priority for both foreign and domestic tourists
The regular port procedures would need to be reviewed in the context of cruise tourist as these
would be in the nature of harassment for a holidaying passenger. Some examples of such
simplification would be:
- Streamline clearance of tourist and baggage at Customs, using electronic machines
wherever possible.
- Immigration officers can board at previous port of call and finish formalities en route
- Visa requirements may be done away with – eg Colombo, Singapore
- Expedite issue of passes
- Simplify health checks and clearances
Similarly, effective bilateral relationship with other cruise destinations (especially in the region)
would be important to make travel visa/clearances quick and efficient. For example, Singapore
has understanding with Thailand whereby Thailand automatically endorses the Singapore visa
when the vessel arrives. Such arrangements need to be actively considered and pursued.

o Develop a ‘tourism’ approach (‘6S’) at ports


The Ministry of Tourism has highlighted the 6 critical aspects of tourism development as part of
its national tourism policy. These dimensions - Swagat, Soochna, Suvidha, Suraksha, Sahyog,

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Sanrachna – would be extremely meaningful at the Ports. Ports authorities would need to address
and underline these six aspects while undertaking cruise terminal development and maintenance.

5.1.5 Build the capacity


7. Focus on ‘Software’ & ‘hospitality’ face of cruise tourism
While the ‘hardware’ of cruise tourism in the form of port infrastructure and cruise lines is
important, the ‘software’ in the form of human resources is equally vital. It would be important to
focus on the creation of human resources as the ‘hospitality face’ of the cruise sector through the
creation of proper training programmes. Where formal long term training courses may be difficult
to implement, it would be desirable to structure short certification programmes/ workshops/
seminars (1-2 weeks) that would impart focused training to certain groups like police, taxi drivers,
security personnel, immigration and customs officials etc.
Capacity building will have to be addressed for different groups taking the training need for each
into consideration. The personnel to be trained would have to be identified such as:
- Ground Staff including baggage handling staff and officials in charge of various
procedures
- Other Terminal staff including shopkeepers, staff at information kiosks, tour guides,
travel agents etc
- Other interface personnel especially the police and taxi drivers
The key training areas will relate to:
• Awareness of cruise tourism & tourist
• Communication & hospitality
• Tourist safety & security
• Services Management
• Environmental aspects
Recommendations to reinforce capacity building
The following would constitute the key recommendations towards building the ‘software’ of cruise
development:
o Training responsibility may be given to the tourism department
In respect of meeting the training needs of cruise tourism, the tourism department would play a
crucial role. Since HR requirement for the tourism sector is equally important and forms a focus
with the central and state governments, the training requirements for cruise tourism should be
built into the tourism training strategy and structure. The Tourism department, therefore, may be
given the responsibility to provide the necessary training for cruise tourism and port personnel.

o Structure focused programmes aimed at awareness building and skill development


The training programmes would have to be carefully structured and focused on all aspects such
as:
- Training for immigration and customs officials
- Communication programmes for all
- General awareness building and sensitization campaigns
- Workshops to police, taxi drivers, security personnel

o Contact Foreign Universities conducting training for approach & structure


Certain select foreign universities like Southern New Hampshire University and the Bremerhaven
University, are conducting such training programmes. These may be approached for getting the
necessary structure, approach and methodology.

o Consider ‘accreditation’ as a tool to improve quality and surveillance


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Certifications to validate quality and service standards will be an effective tool to improve quality
standards while increasing comfort levels with customers. Kerala has followed this strategy in
certifying its ayurvedic resorts, house boats, restaurants and eating places etc. This strategy would
importantly demonstrate the commitment of the government to quality as well as to the needs of
the cruise passengers.

5.1.6 Create the Policy and Institutions to support development


8. Evolve a ‘national policy’ for cruise shipping.
The carefully drafted policy on cruise tourism will have to address all crucial aspects as
highlighted in this report, specially focusing on all the 6 S of tourism development. The
Cruise Policy would, inter-alia, need to specially address the following:
- Clearly demarcate roles and responsibilities of each agency/department in different
aspects of cruise tourism development, since cruise tourism spans several agencies and
departments
- Address issues that cruise lines and operators would consider important. Global market
trends indicate that Cruise liners plan their itinerary, make their bookings and chalk out
their voyage 3 to 5 years in advance. In other words most large cruise lines today are
already booked for 2008. In this scenario, Cruise lines hesitate to include destinations in
their itinerary that have uncertainly in terms of policy or other material issues. Often they
back out of a port of call because of uncertainty. For example India’s policy decision
regarding Cabotage is valid only till 2007 and market feedback indicates that several
cruise lines, which are uncertain about how the government will move after expiry of this
policy, have not included India in their itinerary for the 2008 voyage.
- Address tax related issues. In addition to tourism related taxes, a cruise vessel & its
passengers are also subject to several charges and fees. Although port charges are a small
component of the spending of the cruise industry, they are amongst the most visible
inhibitors. It is important that attractive tariff rates are provisioned to attract cruise vessels
and tourists. Simplification of payment procedures for dues and charges would create a
favourable environment with the cruise tourists. This can be explored through Combined
tariffs (single tariff for multiple port calls in a single itinerary), differential tariffs
(discounted tariffs for home cruise, frequent visits by vessels of a cruise line & high
tourist capacity vessels or vessels disembarking / embarking a certain threshold number
of cruise tourists), One stop clearance (single clearance at the first Indian port on a ship’s
itinerary for all other Indian ports). Similarly, the dollar charges as compared to Indian
charges for certain monuments are very high. This is often a cause of concern to foreign
tourists on account of discrimination, with several international tourists citing it as a turn-
off in a survey.

9. Establish a ‘national agency’ to spearhead the Initiative


Government should establish a Cruise Tourism Council/Board to reinforce Government’s
commitment and coordinate to effectively implement the Cruise Tourism Policy. Today cruise
tourism is nobody’s baby, because while it is certainly not the primary business of Ports the
Tourism department also cannot initiate independent action because of the interface with
other departmental authorities.
It is therefore imperative to create a separate agency which
o Has representatives from major ports, department of shipping, Department of
Tourism, industry stakeholders to represent all interests
o Is dedicated to the promotion of cruise tourism
o Equitably represent interests & concerns of all the agencies
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o Discharges multi-disciplinary and coordinative functions

5.2 AREAS OF RESPONSIBILITY


We have detailed below agency/department wise responsibility for implementing the
recommendations given above:
5.2.1 Ministry of Shipping
The MoS, being the apex body, would need to look at the macro level policy/approvals/incentives
issues. Its role would essentially relate to the following:
• Develop proactive policies to simplify procedures at cruise ports
• Develop suitable incentive structures for developers and operators
• Assist in giving ports the necessary support in identification and development of cruise terminals
• Spearhead the initiatives to develop river cruises as part of the inland water transport system

5.2.2 Port Authorities


Port Authorities would be directly responsible for all aspects related to the development and
operations of the Cruise Terminals. Their role would essentially relate to the following:
• Master planning, pre-feasibility studies
• Land acquisition
• Development of off-shore facilities – dredging and berth development
• Port level marketing efforts
• Developing suitable/positive measures to initiate bankable Private Sector Participation in the
development of Cruise terminals
• Initiate and take through the selection process for PSP in cruise terminals
5.2.3 Ministry of Tourism
The responsibility of the Ministry of Tourism would arise from their understanding of the tourism
demands of cruise terminal and responsibility towards synergistic tourism development to support
cruise terminal development. It would essentially cover the following:
• Inputs towards preparation of cruise terminal development plans
• Institute a dedicated fund towards
o Hinterland tourism development
o Tourism related Infrastructure and linkages
o Viability gap funding support, where needed
• Coordination for regional circuit development involving more than one State
• Development of Tourism related urban infrastructure
• Sector level marketing, positioning, publicity especially marketing the cruise terminal as a
cruise destinations
• Coordination for any interstate circuit development
• Ensure training for the secondary stakeholders by the State Governments
• Develop accreditations/certifications for quality assurance
5.2.4 State Department of Tourism
Since cruise tourism would cover various states and regions, the Department of tourism at the State
level would have responsibility for the following:
• Hinterland tourism development related to the State which services the cruise terminal
Circuit development within the concerned state
• Coordination with neighbouring states for regional/hinterland tourism circuits
• Human resource training capacity building
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• State level marketing efforts
5.2.5 Private Sector
The role of the Private Agencies would arise from their close understanding of the cruise tourism
sector and their ability to successfully fund and manage the cruise terminal while taking the necessary
investment risk. Private developers would do the following:
• Cruise Terminal Development
• Cruise ship/Lines operations
• Operation and management of all facilities
• All tourism related infrastructure in the hinterland
• Tourism related services – restaurants, hotels, other accommodation, travel and trade,
communication, publicity & marketing
5.2.6 Ministry of Environment & Forests
The Ministry of Environment and Forests would play an important role to positively enable the
development of Cruise terminals. This is because cruise terminal development in many areas (such as
Andamans & Nicoar islands, Lakshadweep Islands, other beaches & coastal areas) would demand
clearances on account of various environmental regulations pertaining to the ‘coastal regulation
zones’, the reserved forests, national parks and sanctuaries etc. The role of the Ministry would be to:
• Develop an approach/policy which is sensitive to the need to develop cruise terminals in
environmentally sensitive areas
• Drawing up plans for development of cruise tourism, ecotourism, rural tourism in
environmentally sensitive areas
• Draw up framework/guidelines for environmental compliance and also a system of certification
/grading depending on certain specifications/standards achieved
• Provide the approvals etc subject to meeting certain basic environmental standards & stipulations
• Drawing up guidelines for the reference of other agencies which could be used in the
implementation of all projects related to cruise tourism
• Drawing up a system of quality certifications providing the minimum compliances for basic
certification and right to operate and further higher levels of compliances to obtain quality
certifications

The National Agency identified above should be the focal point for representing the interests of these
agencies as well as coordinating the responsibilities identified.

5.3 ACTION PLAN


The immediate step to be taken with regard to the measures suggested in this Section area as follows:
• Evolve a comprehensive cruise policy
• Develop the Institutions needed to support initiatives
• Undertake pilot feasibility studies for identified cruise terminal development
• Develop Phase 1 projects along with cruise circuits
• Initiate dialogue with four key players – involve the players in policy and planning decisions

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The Development Plan in the short, medium and long term has been identified as follows:
Exhibit 125 : Short, medium and long term Development Plan
Activity Short Medium Long
1 - 5 years 6 - 10 years 11 -15 years
Development of Cruise Ports
Development of Mumbai, Goa,
Cochin*
Development of Chennai, Mangalore,
Tuticorin*
Development of Lakshadeep, A&N*
Development of other Cruise
terminals/facilities
Focus on ports as ports of call
Build capacity to become Home Ports
Explore cruise operations
Development of Cruise Circuits
Circuits connecting ports developed
in Phase 1
Circuits connecting ports developed
in Phase 2
Circuits connecting foreign
destinations
Marketing & Positioning
Appoint brand promotion agency
Initiate discussions with key players
Attend international meets,
conferences
Participate in international cruise
shows
Policy & procedure
Hold workshops to elicit industry
opinion
Formulate Cruise Policy
Form Separate Cruise Agency
Rationalize procedural/tax issues
Build the capacity
Formulate a training programme and
calender
Commence training of Port based
staff
Commence workshops for other
interface people
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ANNEXURE I: GLOSSARY OF INFRASTRUCTURAL FACILITIES AT


PORTS

Tourist Information : Counter for imparting information or providing assistance to cruise


Centre tourists on their arrival to the port. The counter is generally manned by
the State / Central tourism officials
Excursion facility / : City sightseeing and excursion trips to tourist centres around ports
Tour operator form an integral part of the cruising experience. Provisioning of
facility for organizing these day trips through authorized tour operators
Coach transfer / : Coaches or buses dedicated to the cruise terminal. Used by cruise
Shuttle bus service tourists for specific point transfers from port or for excursions
Trolleys for baggage : Self service trolleys, similar to those available at airports, for carting
heavy luggage from terminal building to taxi / shuttle buses
Terminal Map / Sign : A map giving the location details of different facilities within &
Board outside the terminal building within the port area
Crew Lounge : Resting & comfort area specifically dedicated for crew members of the
cruise
Artifact & Curio :
Shop selling antique and local art & handicraft items
Shop
Yacht Parking facility : Parking for sail boats & small motor boats for leisure travel within the
harbour area
Laundromat : Self-service laundry facility
Postal service : Cruise tourists prefer to send letters, gifts and specifically picture
postcards (depicting landmark sights of the port / city) to friends &
family
Entertainment centre : Area for leisure and fun activity provisioned for cruise tourists during
/ Gaming zone their stay within the port
Gangway : Stairway used between cruise ship and berth for embarkation
& disembarkation
Aerobridge : Bridge extending between the terminal building and the cruise ship to
enable cruise tourists to embark & disembark conveniently
Baggage conveyor : Automatic conveyor belt within the terminal for luggage movement
system from clearance counter to collection by tourists after disembarkation,
similar to airports.
Embarkation Balcony : Public viewing gallery for seeing off embarking passenger or receiving
disembarking passenger
Ship Chandlering : Activity of provisioning food, water & other supplies on commercial
terms for a ship during its stay at a port
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Fuel Bunkering : Activity of provisioning fuel & other related supplies on commercial
terms for a ship during its stay at a port
Pilotage : Pilots are generally called upon, to guide ships from their entry in a
harbour to the berth. They also provide assistance to the ship when it is
exiting the port.
Towage : Activity of providing directional assistance to the ship through tug
boats, when it is in the port’s harbour area
Mooring : Wire ropes or chains used to hold the ship in place besides the
arrangements berth.
Ship Coordination : Command Centre for coordinating with ship from their arrival to
Centre departure and stay within the harbour area at the port

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ANNEXURE II: DETAILS OF CRUISE PURCHASING COSTS

Details of Cruise Ship Costs presented below have been taken from Cruise2.com web site

Date Due Ship Cruise Line "GRT" Passengers Cost

2002

3/2002 Star Princess Princess 109,000 2,600 425 Mil

3/2002 AidaVita Aida Cruises 42,000 1,300 350 Mil

4/2002 European Stars First European/Festival 58,600 1,566 278 Mil

4/2002 Finnmaken Norwegian Coastal 15,000 643 N/A

4/2002 Trollfjord Norwegian Coastal 15,000 674 N/A

4/2002 World of ResidenSea ResidenSea 43,000 176 266 Mil

6/2002 Constellation Celebrity 91,000 1,950 350 Mil

7/2002 Brilliance of the Seas RCI 90,090 2,100 400 Mil

7/2002 Carnival Legend Carnival 86,000 2,124 375 Mil

7/2002 Quest 1 Canyon Ranch 25,000 320 N/A

10/2002 Carnival Conquest Carnival 110,000 2,974 500 Mil

10/2002 Coral Princess Princess 88,000 1,950 330 Mil

11/2002 Navigator of the Seas RCI 142,000 3,114 600 Mil

11/2002 Zuiderdam HAL 85,000 1,848 400 Mil

12/2002 Norwegian Dawn NCL 91,000 2,300 380 Mil

2002 Olympic Explorer Royal Olympic 25,000 836 175 Mil

2002 American Glory American 1,200 49 N/A

2002 Empress of the North American West N/A 224 N/A

2002 Libra II NCL 91,000 2,300 380 Mil

2002 Cape Cod Light Delta Queen Coastal 1,580 224 42 Mil

2002 Mistra 3 First European/Festival 58,600 1,500 285 Mil

2002 CostaEuropa (ex-Westerdam) Costa 53.873 1,494 N/A

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2003

2003 N/A (option) Carnival 80,000 2,000 400 Mil

2003 Queen of the Americas American Classic 72,000 1,900 440 Mil

2003 Island Princess Princess 88,000 1,950 400 Mil

2003 Carnival Glory Carnival 110,000 2,976 500 Mil

2003 Silver Shadow Silversea 25,000 390 200 Mil

2003 na (option) NCL 75,000 2,000 300 Mil

2003 Mariner of the Seas RCI 142,000 3,114 600 Mil

2003 CostaMediterranea Costa 86,000 2,114 350 Mil

2003 Serenade of the Seas RCI 90,090 2,100 400 Mil

2003 7 Seas Voyager Radisson 46,000 720 250 Mil

2003 Crystal Serenity Crystal 68,000 1,080 300 Mil

2003 AidaAura Aida 42,000 1,270 250 Mil

2003 MSC Symphony Mediterranean Shipping 60,000 1,600 250 Mil

2003 Diamond Princess Princess 113,000 2,600 500 Mil

2003 Mistral Class 4 First European/Festival 80,000 2,000 240 Mil

2003 Oosterdam HAL 85,000 1,848 400 Mil

2003 Superstar Sagittarius II Star 112,000 3,000 500 Mil

2003 The World 2 ResidenSea 50,000 396 280 Mil

2003 Queen Mary 2 Cunard 150,000 2,800 780 Mil

2003 Empress of the North American West N/A N/A N/A

2003 Quest 1 Canyon Ranch 25,000 320 N/A

2003 CostaFortuna Costa 105,000 2,720 400 Mil

2003 Trollfjord Norwegian Coastal 15,000 674 105 Mil

2003 N/A HAL 85,000 1,848 400 Mil

2004

2004 N/A (option) NCL 75,000 2,000 300 Mil

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2004 Westerdam HAL 85,700 1,848 400 Mil

2004 N/A SeaAmerica N/A 1,012 300 Mil

2004 Carnival Valor Carnival 110,000 2,976 500 Mil

2004 Sapphire Princess Princess 113,000 2,670 500 Mil

2004 Silver Whisper Silversea 25,000 390 200 Mil

2004 (Grand Class) P&O 110,000 2,600 500 Mil

2004 Jewel of the Seas RCI 90,090 2,100 400 Mil

2004 Crown Princess Princess 110,000 2,600 450 Mil

2004 Caribbean Princess Princess 116,000 3,100 500 Mil

2004 (Project America) American Classic 72,000 1,900 440 Mil

2004 Empress of the Pacific American West N/A 244 N/A

2004 CostaMagica Costa 105,000 2,720 400 Mil

2004 MSC Opera Mediterranean Shipping 60,000 1,600 N/A

2004 Carnival Miracle Carnival 88,500 2,124 375 Mil

2004 N/A RCI 137,300 3,114 600 Mil

2004 Quest 2 Canyon Ranch 25,000 320 200 Mil

2004 Project America 1 U.S. Lines 72,000 1,900 440 Mil

2004 Mistral Class 5 First European/Festival 80,000 2,000 240 Mil

2004 N/A Norwegian Coastal 15,000 674 105 Mil

2004 Superstar Capricorn Star 112,000 3,000 500 Mil

2005

2005 Vista Class 5 HAL 85,000 1,848 400 Mil

2005 N/A RCI 88,000 2,000 400 Mil

2005 Queen Victoria Cunard 84,000 1,968 400 Mil

2005 Carnival Liberty Carnival 110,000 2,976 450 Mil

2005 N/A First European 80,000 2,000 350 Mil

2005 Project America 2 United States Lines 72,000 1,900 459 Mil

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2005 N/A Canyon Ranch 25,000 320 200 Mil

2005 N/A 2 Canyon Ranch 25,000 320 200 Mil

2005 N/A Celebrity 85,000 1,950 350 Mil

2005 N/A Norwegian Coastal N/A N/A N/A

2005 Sagittarius II Star 112,000 3,000 500 Mil

2005 N/A NCL 93,000 2,400 395 Mil

2006

2006 Ultra Voyager 1 RCI 160,000 3,600 720 Mil

2006 Noordam HAL 84,000 1,800 400 Mil

2006 Carib Princess 2 Princess 116,000 3,100 500 Mil

2006 N/A Costa 112,000 3,000 540 Mil

2006 N/A NCL 93,000 2,400 395 Mil

2007

2007 Option RCI 160,000 3,600 720 Mil

2007 Option Radisson 49,000 700 250 Mil

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ANNEXURE III: DEVELOPMENT OF INLAND WATER TRANSPORT

Development of Inland Water Transport : Address by The Union Minister of Shipping

India is blessed with many rivers, canals, backwaters, lakes and creeks on which inland water
transport has flourished in the past. Sadly, however, the potential and the development need of the
sector was overlooked as a result of which, and with the advent of rail and road modes of transport,
IWT mode declined. In a way there had not been requisite development of infrastructure in the other
modes of transport also to the extent heeded to sustain the full development needs of the country. The
present Government, under the Prime Ministership of Shri Vajpayee, has however, taken determined
decisions to strengthen infrastructure in the transport sector. A series of decisions have been taken
regarding the development of roadways from east to west and north to south. I am here, happy to
announce to you and to share with you that the Cabinet has approved a package of policies and
decisions aimed at resurgence of inland water transport system with a view to make it an efficient and
reliable system of transportation and to supplement other modes such as road and rail. Inland Water
transport is fuel efficient, economic and environment friendly mode of transport. Development of this
mode greatly relieves pressure on other modes which face constraints of their own. One 600 T, IWT
cargo vessel can replace 60 trucks from the road. IWT also provide port-hinterland connectivity as
most of the rivers connect hinterland to ports. The Government's new policy is to create highways on
water and to maintain them. In fact the waterways are gifts of nature whereas other modes of transport
like road and rail network have to be created. Here we have god-given fairways, which need only to
be properly maintained and kept navigable in safe and efficient manner for most part of the year.
Considering this, inland water transport requires considerably lesser investment than other modes of
transport.

2. At present three waterways have been notified as National Waterways, namely, the Ganga as
national Waterway No. 1(1986), the Brahmaputra the National Waterway No.2 (1988) and the West
Coast canal as National waterway No.3 (1993). Apart from development of three National
Waterways, IWAI has conducted techno-economic studies on several other waterways, namely, East
Coast Canal integrated with Brahmani river, Kakinanda-Mercaunam Canal integrated with Godavari
and Krishna rivers, Barak river, DVC canal, extension of NW-3, Sunderbans waterways. All these
waterways have the potential of IWT infrastructure development.

3. Several small rivers of the country have the potential of developing small length waterways. Rivers
and canals can also provide alternative mode of transport in cities and metros. In addition, various
riverine states such as, Assam, Andhra Pradesh, Bihar, Orissa, Tamilnadu, Uttar Pradesh, West
Bengal etc., have tremendous potential for IWT development. North-eastern states with several
tributaries of Brahmaputra and various other rivers have to be given special emphasis for development
of inland water transport infrastructure. States like Jharkhand, which has huge mineral resources, can
utilize river Ganga as an outlet for its natural resources. Besides development for cargo transport,
waterways can also developed for passenger ferries, river cruises, water sport and tourism related
activities.

4. The new Inland Water Transport Policy approved by the Cabinet has several thrust areas. The first
one is to invite and facilitate active participation of the private sector. It has been decided to enlarge
the role of IWAI to enter into commercial / joint ventures to encourage investment in his sector. In
principle approval has been given to the policy guidelines for private sector participation subject to
the equity participation by Government/ IWAI being limited to a ceiling of 40% for BOT projects to
be worked out on case basis. Such participation will be for areas like fairway development and
maintenance, construction and operation of terminals, provision and operation of mechanized cargo
handling system, storage facilities, provision of navigational aids, pilotage and setting up and running
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up of IWT training institutions. Guidelines for private investment in IWT Sector have been
developed, a copy of which has been given to all of you.

5. One of the important policy decisions is to grant a tax holiday of ten years to this sector to be
availed of during the initial 15 years as in the case of National Highways so as to enable this sector
develop. The rate of depreciation for all vessels ordinarily operating on inland waterways is being
fixed at par with the rate of depreciation applicable to ocean going vessels (at present 25%) from time
to time.

6. In order to make optimum use of our inland waterways we need to have a fleet of vessels to operate
on a regular basis. Therefore, with a view to encouraging IWT fleet expansion, a scheme will be
operationalised providing for vessel building subsidy for ship owners for inland vessels built in Indian
shipyards. This will also enhance the capability of our shipyards to construct modern vessels. Ministry
of Shipping is in the process of formulating the vessel building subsidy scheme in consultation with
the Ministry of Finance.

7. With a view to provide relief on account of customs duty, in principle approval has bee given in
levying minimum customs duty on imported machinery for development of inland waterways to be
identified by IWAI. Details of the scheme will be finalized in consultation with the Ministry of
Finance.

8. Various countries of the world have made optimum use of their waterway but for this they have
invested over decades very substantially, which has paid them rich dividends. Private sector has
played a very meaningful role in such development and it is hoped that with the implementation of the
package of policies promoting private sector investment inland water transport, the overall investment
in this sector will increase. Inland Waterways Authority of India is also being authorized to raise
bonds to enable IWAI to borrow from the market and mobilize funds as provided for in other
infrastructure sectors.

9. In order to permit Private Foreign Direct Investment into the sector, the Government has decided to
permit automatically for direct investment up to 100% equity as applicable in other infrastructure
sectors. Apart from funds from outside the country this should also bring modern technology to up-
grade our own indigenous capabilities. IWT presents itself as an eminently suitable sector for Foreign
Direct Investment with long term benefits and I am optimistic that the sector will attract such
investment.

10. Another important initiative is to involve more actively state governments in the development of
inland water transport. Centrally Sponsored Schemes will be implemented and projects identified by
the State Governments will be extended assistance by way of loan to the extent 50% of the project
cost. I am happy at the presence of the representatives of State Governments here. This exercise can
be carried out further in the regional meeting, which are to be held shortly. Through this process
inland water transport can be developed in small segments and sectors which will be directly
beneficial for the states. One area where priority attention can be given is development of IWT for
attracting tourists through river cruises etc. We have such places of natural beauty as backwaters of
Kerala, the Sunderbans and indeed the entire streches of our rivers.

11. Some of the identified areas where private sector can invest are ownership and operation of
vessels for cargo and passengers, fairway development and maintenance, construction and operation
of river terminals or river ports, provision and operation of mechanized cargo handling system,
putting up and maintenance of navigational aids, provision of pilotage services, setting up and running
of IWT training institutions etc.

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12. There is substantial scope for technical collaboration and technical assistance with the countries
having developed IWT system. We will look forward to such technical collaboration and assistance.
This exercise can be carried forward on bilateral basis. Another important avenue, which will be
explored as a source of funding for the IWT projects, would be external funding. Development of
IWT will promote economic activities in less developed hinterland areas and will help in poverty
alleviation. This will promote trade and commerce in such areas. External funding from international
funding agencies will boost and accelerate the development of IWT sector.

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