Mumbai International Cruise Terminal

Abstract

Since its inception, the cruise industry is constrained by ships (supply) and not by the availability of passengers (demand). As a result, ships of all the major lines sail at nearly 100% capacity year-round. Cruise lines have been able to increase market penetration with the introduction of new ships with larger capacities into the fleet. Lines also increase yields by constraining l supply. However, there is a large market opportunity as the industry is very small in comparison to worldwide tourism with a penetration rate of less than 4%. In 2016, the estimated north American market penetration is 3.3% as l compared to 1.4% for Europe and 0.04% for Asia with more than 4.3 billion persons. India is the fastest-growing economy in the world today. Its GDP continues to grow l steadily at over 7% since 2014. In 2015, India overtook l China in terms of GDP growth. Additionally, the International Monetary Fund (IMF) predicts that India is likely to retain this l status until 2020. The IMF also l projects India’s growth in FY16 17 at 7.5% as compared to the global economic forecast at around 3.5%. India is a USD $2 trillion economy (at current prices). Within the Asia Pacific region India is ranked 11th in terms of international tourist arrivals (2.88%) More than l 8 million foreign tourists arrived in India in 2015 at an annual growth rate of 4.5%. Indian nationals departing for visits aboard was 20.4 million with an 11.1% growth rate and l domestic tourist visits accounted for more than 1.4 billion. Overall earnings for tourism l reached more than USD$21 billion in 2015. The expansion of e-visas for nationals of 161 countries in 2016 (up from 43 countries in 2014) has led to a sharp increase in inbound traffic with this figure rising to almost 11 million foreign tourist visitors in 2016.In 2016 with the three top drivers were 1) visiting friends and family 2) vacationing 3) business with the latter being very strong Currently due to a booming economy. Both domestic and international travel are growing very fast. International air travel will grow rapidly as unlike domestic travel where one has the option of taking l a rail or road route, going abroad means taking a flight. The cruise industry is small and will grow l extensively requiring additional berths and destinations to accommodate vessels over the next 25 years on a worldwide basis. Cruise lines are strategically l looking at where cruise vessels can be deployed as new builds come in line in greater numbers over the next 5 years. As noted above, the j penetration rate of cruise tourism for India is very low primarily because there are not cruise brands dedicated to the Indian market focusing on domestic deployments. Those that have tried have failed due to a myriad of policy and procedural issues that did not allow the brands to make revenue while homeporting from I an Indian port. The ability of India to create a cruise tourism market and more importantly to create a pivotal moment that allows for substantial growth is upon the country now. Creating a i platform for success will allow the industry to flourish. For destinations and itineraries to be successful, the cruise berths must accommodate a l variety of brands and vessel types (from large to small) and the upland tourism infrastructure issues must be addressed to grow port opportunities in the existing Indian ports and l those looking to come on line as the region expands. India will need to become a region as it is currently not recognized due to its limited consumer demand and market presently observed. Asia, the Middle East, the Caribbean, Aus./NZ, and others will be pulling cruise vessel deployments to l open new consumer markets over the next 3 to 5 years. India and particularly Mumbai must create domestic and international consumer demand, l produce higher yields, lower costs of operations and alleviate policies that negatively impact cruise line deployment and growth to become a regional cruise destination of substance with an opportunity to grow.