Cruise Study

December 2005

Ministry of Tourism, Government of India

Workable solutions to help you make the difference.

Final Report

Cruise Tourism Potential & Strategy Study

CRISIL Limited

Workable solutions to help you make the difference.

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

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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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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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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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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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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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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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- 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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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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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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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

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

• 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.

• 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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India has a negligible share of this rapidly growing market Internationally cruise tourist arrivals constitute 1.4 % of the international arrivals. In India in the year 2000 we had around 0.056 million cruise visitors representing 2.11% of the 2.65 million international tourists who visited India. This was an impressive increase of 133% in cruise tourist arrivals in India in that year. However the 9/11 WTC incident in the US and the SARS incident 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 constitute less than 0.5% of the country’s foreign arrivals though 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. Cruise tourism potential for India is high India today is poised for making a significant mark in the international tourism scenario. 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. To realise this growth target, it would be essential for India to explore all avenues escalating tourism activity in the country including the extremely attractive area of cruise tourism in which the country has much to offer. • 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.

Average Cruise Liner calls at Indian Ports

30

0.56x

17

1996- 2001 2001 & 2002

56

19 122000 2001 2002

Indian Cruise Arrivals In ‘000s

2% of India’s Int’l Tourists, 0.6% of World Cruise Tourists

2511 222003 2004 2005

Average Cruise Liner calls at Indian Ports

30

0.56x

17

1996- 2001 2001 & 2002

30

0.56x

17

1996- 2001 2001 & 2002

56

19 122000 2001 2002



2511 222003 2004 2005

56

19 122000 2001 2002



2511 222003 2004 2005

India’s vibrant economy supports growth in cruising • Buoyant disposable incomes • Increasing outbound travel –6.8% cagr in last 5

years • Business travel important part of outbound travel –

29% # • India’s 309 million domestic tourists formed

43.9% of global tourist arrivals in 2003 India’s Demographic features significant • “Middle class” over 150 Mn in 2004 • Rupee Millionaires > 2,00,000 • 22% Indians spend > USD 2000 per trip abroad • Indians rank 9th on Singapore's visitor arrivals, are

3rd highest revenue-generating market


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Exhibit 3 : Global Lessons

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.

- 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


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◊ 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 US$ 45 per port (as against the international average of 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 earnings from cruise tourists & crew during the period from 2005-06 to 2030-31 is estimated at US$ 599 million (Rs. 26980 millions). 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 justifiable. 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.

2010-11

411

Rs In million2030-31

27106.59 x

CUMULATIV E TOTAL EARNINGS FROM CRUISE TOURISTS & CREW DURING THE

PERIOD FROM 2005-06 TO 2030-31 IS ESTIMATED AT US$ 599 MILLION (RS. 26980

2010-11

411

Rs In million2030-31

27106.59 x

CUMULATIV E TOTAL EARNINGS FROM CRUISE TOURISTS & CREW DURING THE

PERIOD FROM 2005-06 TO 2030-31 IS ESTIMATED AT US$ 599 MILLION (RS. 26980


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◊ 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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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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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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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: Connectivity through small and feeder aircrafts Connectivity through river cruises and exploiting inland waterways Connectivity through road transport where distances are not prohibitive


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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

5. Making Private participation happen Like the new civil aviation policy, the cruise tourism policy of India should stress the need to ‘change the traditional concept of terminal development, ownership and operations’ and underline active ‘participation’ of all private stakeholders. 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. 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.

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.

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.

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.

The State departments of tourism would have responsibility for tourism development within the State including State level marketing efforts & coordination for creation of circuits.

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

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.

Possible private developers who would be ready to get involved in developing cruise terminals, may be any one or a combination of the following:

Cruise Lines/Cruise Operators Cruise Terminal Operators Port Operators Hoteliers/hospitality players Large entrepreneurs in Tourism/other

businesses Private Airlines

Other private stakeholders


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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, coral islands, forests, mangroves etc, it is imperative that India should have a clear policy on developing cruise terminals & hinterland tourism products in environmentally sensitive areas, such as Lakshadweep, Andamans & Nicobar, Sundarbans etc. while ensuring environmentally protective measures within the Indian territorial coastal limits. 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. 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: Streamline clearance of tourist and baggage at Customs Immigration officers can board at previous port of call and finish formalities enroute Visa requirements may be done away with – eg Colombo, Singapore Expedite issue of passes 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:

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

• 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


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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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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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• 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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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

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

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


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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

Exhibit 10 : Global Seasonal Trends – April to September

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

October-March

The Mediterranean

Western Mexico

Asia-Pacific

Indian Ocean

South America

Caribbean

October-March

The Mediterranean

Western Mexico

Asia-Pacific

Indian Ocean

South America

Caribbean

April-September

Mediterranean

Western Mexico

Alaska

Atlantic Europe

Asia PacificCaribbean

April-September

Mediterranean

Western Mexico

Alaska

Atlantic Europe

Asia PacificCaribbean


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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

Carnival Corporation

Royal Caribbean

Cruises

P&O Princess

Star Cruises Group

USA and Canada

Europe Asia

Carnival Cruise Lines (CCL)

Royal Caribbean /international (RCI)

P&O Star Cruises Clipper Cruises Royal Olympic Cruises (ROC)

Louis Cruises Indian Ocean Cruises

Holland America Line (HAL)

Celebrity Cruises

Swan Hellenic

Norwegian Cruise Line (NCL)

Silver sea Cruises Star Clippers

Festival Cruises NYK Cruises

Windstar P&O (Australia)

Orient Lines Crystal Cruises

Saga Cruises Mitsui OSK

Costa Crociere

Princess Cruises

Disney Cruises

Airtours Sun Cruises

Japan Cruise Line

Cunard Aida Cruises Radisson Seven Seas

Thomson Cruises

Hyundai


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Seabourn Cruise Line

Residen Sea Fred Olsen 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

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

19%

32%21%

17%11%

OthersCarnival CorporationRCCP&O PrincessStar Cruises


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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

Total Fleet Order Book Group/Cruise Lines

NS GT GT/Berth Berths NS GT GT/Berth Berths Minor Cruise

Lines 18 508,944 52.3 9,728 3 203,000 66.7 3,044

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 Cruisers

% Of Cruising

Days

% Of First

Timers

Age Median Income (Us$)

Features

Restless Boomer

33 17 59 25 to 50 58000 Interested in experiencing different types of vacations, wants a family planned, fun filled vacation, travels mostly in the mass cruise market

Enthusiastic Boomer

20 15 46 25 to 50 55000 Interested in being comfortable, 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 Shopper

16 20 20 55 60000 Looking for the best cruise value, 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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Type % Of Cruisers

% Of Cruising

Days

% Of First

Timers

Age Median Income (Us$)

Features

mass and premium markets Luxury Seeker

14 18 30 95000 Willing to spend for luxurious 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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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)

1980 2003

%Growth

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

1980 2003

%Point change

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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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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Exhibit 21 : Global Fleet Deployment

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

20%3%

53%

7%17%

OthersSouth Pacific/AustarliaMediterranean/Caribbean/AlaskaAsiaWorld


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o 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

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

%Capacity deployed per global region in 2002 Region

Carnival %

RCI %

Princess Cruises %

Norweg-ian Cruise Line %

Celebrity Cruises %

Holland America %

Disney Cruise 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, activities, access, accommodation, amenities. The words "luxury" and "pampering" are found in all cruise brochures, and every cruise line proudly highlights these five aspects to market its product. Cruising is now well established as one of the most service-intensive sectors in the world, 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

5 A’s of Cruising•Attraction•Activities•Access•Accommodation•Amenities


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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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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 lacks limitations -- such as low bridges and offers opportunity for plying large ships.

Operators tend to traditionalise both itineraries and onboard environment apparently targeting an older, more sedentary traveller.

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

Exhibit 23 : Viking River Cruise

The ship Viking Century Sky of Viking River Cruise sails the Yangtze River in China. The ship features 153 all-balcony cabins, a restaurant, observation lounge & bar, coffee bar, gym, sauna, business centre, sun deck, shops, and a beauty salon.


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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, caters to multinational clientele Windstar – specialized luxury product Holland America – luxury segment Seabourne – Super luxury end of the market, generally couples above 35 years of age P&O Princess Group – large British customer base who take 14 day cruises Aida – Mainly German passengers under the age of

Royal Caribbean is a moderately priced cruise line, and rates vary by itinerary. In 1997, Royal Caribbean purchased Celebrity Cruises—a premium line to appeal to an upscale audience—for a total fleet of 25 ships and a capacity of more than 40,000 berths. Royal Caribbean is a good middle America, middlebrow choice, particularly if for active travellers.


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Star Cruises Disney Cruises

Good option for family cruising Short-length itinerary segment Majority passengers are Asian and Australian

The two-ship Disney Cruise Line is the ultimate family option and is basically targeted towards family vacations. Singles, couples, and families of all ages find Disney Cruises appealing.

Destinations

Exhibit 25 : Profile of Destinations

Carnival Corp Royal Caribbean International Bahamas Canada Caribbean Mexican Riviera New England Panama Canal Alaska Hawaii Europe South Pacific South America Asia Central America Mediterranean Baltic Norwegian Fjords Atlantic Islands Indian Ocean Far East Canary Islands New Caledonia Vanuatu Fiji

Alaska Bahamas Bermuda Canada/ New England Caribbean Europe Pacific Northwest Mexico Panama Canal Transatlantic


Malaysia Thailand Singapore Hong Kong

Nassau, Bahamas Castaway Cay Caribbean 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 with Private Balcony Mini-Suite with Private Balcony Outside Double with private balcony Standard Outside Stateroom Standard Inside Stateroom

Suite ◊ Royal Suite ◊ Owner’s Suite ◊ Royal Family suite ◊ Grand Suite ◊ Junior suite

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


Super Star Virgo Cabins ◊ Executive Suite ◊ Junior Suite ◊ Ocean view Stateroom with Balcony ◊ Oceanview Stateroom with Windows ◊ Inside Stateroom

Super star Gemini Cabins ◊ Executive Suite ◊ Junior Suite ◊ 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

Suite ◊ Royal Suite with Verandah ◊ Two Bedroom suite with Verandah ◊ One Bedroom Suite with Verandah

Deluxe family staterooms with verandah: Deluxe stateroom with verandah Deluxe ocean view stateroom Deluxe inside stateroom Standard Inside stateroom


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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: 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.

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.

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.

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.

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:

Classic Golf on its carefully designed golf courses Bird watching especially on the Dubai Creek 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. Photographic opportunities galore, elegant mosques, sumptuous palaces, brightly dressed children,

majestic camels, ancient windtowers, dusty villages and dramatic sunsets. Historical Sites especially the Dubai Museum Shoppers malls & experiences which make Dubai a shoppers paradise 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 origin

Leisure/ Holiday

Joining family

Visiting friends

Employ-ment

Business Religion Studies Other Total

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

Pradesh 18.1 5.9 25.4 17.8 22.9 2.1 2.7 5.1 100.0

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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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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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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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.


63

Exhibit 31 : Top 5 Overseas destinations for Indian Tourists

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


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.

2715

4738

17

Singapore Europe Dubai Thailand Malaysia

%

2816

100 100

21

South Asia Europe North America South America China/Japan

%


64

Exhibit 33 : Attractiveness of different Holidays for Foreign and Domestic Tourists


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


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.

Foreign Domestic

Figs on right represent Overall Mean Scores


65

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


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.


66

Exhibit 36 : Popular Cruise Destinations for Domestic Tourist


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


67

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

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.

Foreign Domestic



68

Exhibit 39 : Rating of the Ports by Domestic Tourists


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


1

1 4

3 0

3 6

2

3

1 2

4 8

3 7

5 0

1

1 3

2 9

2 3

1 7

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1

1 1

3

1

1

5

5

5

7

1

1

8 8

7 8

4 2

5

1 4

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

C O C H IN

G O A

M U M B A I

C H E N N A I

M A N G A L O R E

T U T IC O R IN

1

1 4

3 0

3 6

2

3

1 2

4 8

3 7

5 0

1

1 3

2 9

2 3

1 7

1 2

4

1

1 1

3

1

1

5

5

5

7

1

1

8 8

7 8

4 2

5

1 4

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

C O C H IN

G O A

M U M B A I

C H E N N A I

M A N G A L O R E

T U T IC O R IN

C O C H IN

G O A

M U M B A I

C H E N N A I

M A N G A L O R E

T U T IC O R IN

1 2

1 3

1 8

3 0

5 7

3 2

3 4

2 7

3 8

4 0

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4 1

3 7

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6

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7

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3

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E x c e lle n t G o o d Av e ra g e B e lo w Av e ra g e P o o r D o n 't K n o w / C a n 't S a y

G O A

M U M B A I

C O C H IN

C H E N N A I

M A N G A L O R E

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1 3

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3 2

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2 7

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7

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4

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E x c e lle n t G o o d Av e ra g e B e lo w Av e ra g e P o o r D o n 't K n o w / C a n 't S a y

G O A

M U M B A I

C O C H IN

C H E N N A I

M A N G A L O R E

T U T IC O R IN

G O A

M U M B A I

C O C H IN

C H E N N A I

M A N G A L O R E

T U T IC O R IN


69

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

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

4.36

3.96

4.24

3.88

3.96

4.16


70

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

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

Foreign Domestic

1 6

3 7

2 3

4 4

1 4

3 7

2 6

2 7

3 7

3 8

5 2

6 4

7 5

3 5Ha ve s ta te -o f-th e -a r t c r u is e

lin e r s

Br ing in in te r n a tion a l c r u is eb r a n d s

P u t in p la c e fa s t lin k a g e s &c on n e c tivity to fa c ilita te

in te r n a l tra ve l

M a r k e t In d ia n c r u is eto u r is m to d om e s tic &

fo r e ig n to u r is ts

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

M a k e In d ia m o r e to u r is tfr ie n d ly

Bu ild in te r n a tion a l c r u is ete r m ina ls

Foreign Domestic

1 6

3 7

2 3

4 4

1 4

3 7

2 6

2 7

3 7

3 8

5 2

6 4

7 5

3 5Ha ve s ta te -o f-th e -a r t c r u is e

lin e r s

Br ing in in te r n a tion a l c r u is eb r a n d s

P u t in p la c e fa s t lin k a g e s &c on n e c tivity to fa c ilita te

in te r n a l tra ve l

M a r k e t In d ia n c r u is eto u r is m to d om e s tic &

fo r e ig n to u r is ts

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

M a k e In d ia m o r e to u r is tfr ie n d ly

Bu ild in te r n a tion a l c r u is ete r m ina ls

Foreign DomesticForeignForeign DomesticDomestic


-1 -1 -1 -1 -3-2 -2 -3 -4 -6 -7-18 -22 -23 -23

-30-36

-52 -45-50

-41

-46

-44

-27 -31-23

-31

-17-10

-0%

-20%

-40%

-60%

-80%

-100%

-Cochin-Goa--Lakshadweep-

-Male

-Mumbai-Colombo--Singapore

-Mumbai-Chennai--Colombo--Andamans

-Mumbai-Cochin--Goa-Gujarat

-Cochin-Kerala-Backwaters-Goa-

-Mangalore

-Mumbai-Colombo--Cochin-Maldives

-Not Attractive At All -Not Very Attractive -Attractive

-Quite Attractive -Extremely Attractive

-1 -1 -1 -1 -3-2 -2 -3 -4 -6 -7-18 -22 -23 -23

-30-36

-52 -45-50

-41

-46

-44

-27 -31-23

-31

-17-10

-0%

-20%

-40%

-60%

-80%

-100%


-Male





-Mangalore


-Not Attractive At All -Not Very Attractive -Attractive

-Quite Attractive -Extremely Attractive


71

Exhibit 44 : Rating Cruise Circuits by Foreign Tourists

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?

-2 -1-8 -7 -7-3 -3 -5-5 -7 -5-7 -6 -2

-11 -10 -8-19 -23

-42

-37 -38 -42

-36

-61-35

-21-27 -27

-33

-7-15 -18

-11 -11

-0%

-20%

-40%

-60%

-80%

-100%


-Mangalore



-Male




-Don't Know / Can't Say -Not Attractive At All -Not Very Attractive

-Attractive -Quite Attractive -Extremely Attractive

-2 -1-8 -7 -7-3 -3 -5-5 -7 -5-7 -6 -2

-11 -10 -8-19 -23

-42

-37 -38 -42

-36

-61-35

-21-27 -27

-33

-7-15 -18

-11 -11

-0%

-20%

-40%

-60%

-80%

-100%


-Mangalore



-Male






No39%

Yes61%

Domestic Tourists

Yes86% DK/CS

5%

No9%

Foreign Tourists

No39%

Yes61%

Domestic Tourists

Yes86% DK/CS

5%

No9%

Foreign Tourists


72


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

Exhibit 47 : Rating Indian Cruises by Foreign Tourists

-1 -4 -1 -3 -3-2 -2 -2 -5 -3 -4-5-10

-10-18 -15 -10

-10

-14

-28-29

-25 -29 -40

-38

-55

-34

-40-39 -41 -31-52

-24 -25-15 -12 -9 -12

-0%

-20%

-40%

-60%

-80%

-100%

-Goa Sea &-River Cruises

-Kerala-Backwater

-Cruise

-Sundarbans-Cruise

-Ganges Cruise -Gujarat Coastal-Cruise

-Godavari-Cruise

-Mangalore-Coastal Cruise



-1 -4 -1 -3 -3-2 -2 -2 -5 -3 -4-5-10

-10-18 -15 -10

-10

-14

-28-29

-25 -29 -40

-38

-55

-34

-40-39 -41 -31-52

-24 -25-15 -12 -9 -12

-0%

-20%

-40%

-60%

-80%

-100%


-Kerala-Backwater

-Cruise

-Sundarbans-Cruise

-Ganges Cruise -Gujarat Coastal-Cruise

-Godavari-Cruise




-15

-66

-90 -94 -94-85

-1

-2

-2

-2-3 -3

-1

-2

-2

-2

-1-1

-6

-32

-18

-2-2

-9

-28

-42

-8-3 -3 -4

-63

-7 -4 -2 -1

-0%

-20%

-40%

-60%

-80%

-100%

-Kerala-Backwater

-Cruise


-Ganges Cruise -Sundarbans-Cruise

-Gujarat Coastal-Cruise

-Godavari-Cruise




-15

-66

-90 -94 -94-85

-1

-2

-2

-2-3 -3

-1

-2

-2

-2

-1-1

-6

-32

-18

-2-2

-9

-28

-42

-8-3 -3 -4

-63

-7 -4 -2 -1

-0%

-20%

-40%

-60%

-80%

-100%

-Kerala-Backwater

-Cruise


-Ganges Cruise -Sundarbans-Cruise

-Gujarat Coastal-Cruise

-Godavari-Cruise





73

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 (in millions)

Increase in Cruise Tourists

International Arrivals (in

millions)

Cruise Tourists as a % of

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.


74

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.


75

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

PERIOD

MUMBAI COCHIN MORMUGAO NEW MANGLORE TUTICORIN

Total Tourists

Vessels

Tour-

ists

Vessels Tourists

Vessels Tourists Vessels Tour-

ists

Vessels Tour-

ists

1996-97

20871 24 11601 17 9270 19 N.A - - - -

1997-98

20871 30 7638 21 14064 18 N.A - - - -

1998-99

16854 33 7141 21 9713 23 N.A - - - -

1999-00

23992 20 5657 23 18335 20 N.A - - - -

2000-01

40827 34 14831 34 11864 25 10493 14 3639 - -

2001-02

19318 17 9115 22 5637 11 3329 5 1032 3 205

2002-03

12424 10 7040 11 1090 10 3720 1 291 1 283

2003-04

24908 18 11421 18 8862 12 4625 n/a n/a

2004-05

21824 16 9233 19 9517 11 3074 n/a n/a

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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◊ 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


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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 arrivals

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

%

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

for the period 1996-97 to 2000-01, because this period reflects the actual growth trend at which the Indian cruise market was growing and was subsequently affected only due to a one-off incident (attack on World Trade Centre), which

05000

10000

15000200002500030000

3500040000

1996-1997 1997-1998 1998-1999 1999-2000 2000-2001

India


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

Exhibit 54 : Cruise Tourist Trend Forecast for 2001-2031

0

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700000

2002-2003

2005-2006

2010-2011

2015-2016

2020-2021

2025-2026

2030-2031

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

Year Cruise Tourists in N. America

1989 3,290,000 1991 4,000,000 1993 4,480,000 1995 4,400,000 1997 5,050,000 1999 5,890,000 2000 6,880,000

0

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1989 1991 1993 1995 1997 1999 2000

North America


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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

Year Cruise Tourists in Europe

1989 530,000 1991 700,000 1993 880,000 1995 970,000 1997 1,360,000 1999 1,790,000 2000 1,950,000

CAGR (%) 12.57 %

0

500000

1000000

1500000

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2500000

1989 1991 1993 1995 1997 1999 2000

Europe

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


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Exhibit 58 : Forecast of Cruise Tourist in India

0

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2000-2001 2005-2006 2010-2011 2015-2016 2020-2021 2025-2026 2030-2031

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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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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 arrivals (in million) 2.73 3.32 4.61 6.41 8.91 12.38 17.20

Potential market for Cruise Tourism (1.4%)

38,164 46,491 64,599 89,759 124,720 173,298 240,796

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

0

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2003 2006 2011 2016 2021 2026 2031

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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 million) 236.470 269.598 309.038

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

2010-11 to 2020-21

2020-21 to 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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Tourists (in million)

Cruise Tourists (in million) 0.005 0.007 0.018 0.028 0.064 0.100 0.158

Exhibit 68 : Number of Cruise Tourists within Domestic Indian Travellers

020000400006000080000

100000120000140000160000180000

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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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 Tourists 5.35 6.51 9.05 12.6 17.45 24.23 33.65

2. Leisure & Holiday Tourists (17%) 0.91 1.11 1.54 2.14 2.96 4.12 5.72

3. Business Tourist (29.1%) 1.56 1.90 2.63 3.66 5.08 7.05 9.79

4. Considering only 50% of Business Tourist for analysis

0.78 0.95 1.32 1.83 2.54 3.53 4.90

5. Outbound tourists enjoying leisure facilities abroad (2+4)

1.69 2.06 2.85 3.96 5.51 7.64 10.62

• 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

(in million) 1.69 2.06 2.85 3.96 5.51 7.64 10.62

Potential market for Cruise Tourism (10%) 0.17 0.21 0.29 0.40 0.55 0.76 1.06

Projected no. of outbound tourists opting for Indian cruises (1/5th)

33,764 41,116 57,096 79,287 110,102 152,894 212,317


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Exhibit 72 : Projected Indian Outbound tourists cruising from India

0

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2003 2006 2011 2016 2021 2026 2031

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• 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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Exhibit 74 : Performance of Star Cruises in India

^ 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

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.


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Exhibit 75 : Impact of Cruise Shipping Services

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

Ship ServicesPassenger Operations

Public Transport

Cruise Lines

•Terminal Hire•Berth Fees•Customs•Other Fees

Navigation•Pilots•Tugs•Boats•Mooring•Gangways

Supplies•Pilots•Tugs•Boats•Mooring•Gangways

Passenger Services•Security•Luggage handling

Other Services•Agents•Crew handling•Medical•Telephones

Transit Passengers•Tours•Shopping•Meals•Entertainment•Entrance Fees•Miscellaneous

Post/Pre Cruise•Hotels•Tours•Shopping•Meals•Air Fares•Entertainment•Miscellaneous

Urban Services

•Electricity•Cleaning•Communications•Escalator/lifts•Air-conditioning•Management•Others

•Buses•Taxis•Trams•Rails•Airways

Ship ServicesPassenger Operations

Public Transport

Cruise Lines

•Terminal Hire•Berth Fees•Customs•Other Fees

Navigation•Pilots•Tugs•Boats•Mooring•Gangways

Supplies•Pilots•Tugs•Boats•Mooring•Gangways

Passenger Services•Security•Luggage handling

Other Services•Agents•Crew handling•Medical•Telephones

Transit Passengers•Tours•Shopping•Meals•Entertainment•Entrance Fees•Miscellaneous

Post/Pre Cruise•Hotels•Tours•Shopping•Meals•Air Fares•Entertainment•Miscellaneous

Urban Services

•Electricity•Cleaning•Communications•Escalator/lifts•Air-conditioning•Management•Others

•Buses•Taxis•Trams•Rails•Airways


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- 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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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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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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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 Cruise tourism, USP of the port

• Beaches, monuments, museums, world heritage sites, renowned eateries, shopping & entertainment facilities; proximity of exotic 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 cruise liners

Mumbai Port handles 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.

Infrastructure & support facilities for cruise ships

The dedicated cruise terminal building at the Ballard Pier Extension, has a concourse hall and two upper floors spread over an area of 6000 sq. mts. 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 & amenities for cruise

The terminal for reception of passengers and completing Customs / 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 providing clearances / approvals

• Separate counters for customs examination, immigration procedures

• Police & security arrangement at terminal

Uninterrupted entry / exit permitted at gates

Airport accessibility & Linkages

Mumbai is the main International Gateway of India.

• 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 interest in vicinity

The Gateway of India, Marine Drive (Queen’s Necklace), Elephanta 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.


• Sun, sand & beautiful beaches;

• Lush countryside, exotic locales, swaying palms, seafood & 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


• No dedicated passenger berth available. Priority handling of cruise 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


• There is no dedicated passenger terminal at present. The bare minimum amenities that can be made available are provided for the comfort of the tourists by making temporary arrangements in sheds.

Facilities & amenities for cruise tourists

• Facilities provided include toilets, shopping, medical aid, tour operators, traditional Indian Style welcome

• Arrangements for parking of coaches, taxis etc. with proper signage in the vicinity of the berth for convenience of cruise tourists are planned


• Facilities for immigration & custom clearance

• Security at the terminal


• A domestic airport at Dabholim services Goa. The airport also receives several international chartered flights.

• Goa is well connected through National Highways & Konkan rail connectivity to rest of the country


• Visits to the Beaches – Anjuna, Baga, Benaulim, Calangute, Colva, 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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76o19’E, about 900 kms south of Bombay. It is a natural harbour and has comparatively calm & sheltered waters.


• Ayurveda & Yoga, rejuvenation therapies, spices & seafood, lagoons & backwaters, hill stations

• Souvenirs & artifacts, traditional dance & art forms

• Beaches, Churches & Synagogues, monuments, local arts, Chinese Fishing nets & village, tea & coffee plantations, dense forests etc.


• There is no dedicated passenger berth or terminal. The cruise vessels are handled at a clean container / cargo berth. Requisite facilities are temporarily created at the berth during the cruise vessels stay.


“Cruise cell” constituted to cater exclusively to cruise traffic. The officers of cruise cell liaise with officials, crew and cruise tourists to provide quality services and address specific requirements.


• Tourist information centres, curio stalls, emergency medical support, Pre-paid taxi services & Parking space are provided

• Traditional Indian style welcome

• Leading star hotels of international repute & city centre are within walking distance


• Single window clearance for customs and immigration

• Cruise Cell officers coordinate with officials of allied agencies such as Customs, Immigration, Port Health office etc. to ensure hassle free and speedy services / clearances.

• Port security is provided


• Kochi has a domestic airport and international airport offering easy connection to cities internationally & in India.

• Proximity to Railway station, National Highways & inland waterways offer a good option for transportation into the hinterland


Alleppey backwaters, Munnar, Periyar Wild Life Sanctuary, Jewish 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.


• Proximity to historical heritage temples of Hampi

• Vibrant green forests, paddy fields, gigantic monolithic statues, 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


• The port does not have a dedicated berth for cruise liners. It uses a bulk cargo berth for berthing of cruise vessels.


• The port does not have a dedicated passenger terminal. A temporary passenger shed is erected for the convenience of passengers.


• Facilities provided include tourist information centre, toilets, shopping, medical aid, tour operator counters, traditional Indian style welcome


• The port does not have an Immigration Check-post. As a result, cruise tourists are permitted out only for local sight seeing and cannot embark/ disembark in another port of the west coast circuit, the cruise tourist cannot join back on the ship at this port.


• Mangalore has a domestic airport with connectivity to Mumbai & other regional cities

• Mangalore is connected with National Highways and Konkan Railway to the hinterland areas


• Surrounding hills & beaches – Kudremukh, Madikeri, exquisite 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 8o45’N and longitude 78o13’E on the South 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.


• The 1000-year old temples at Thanjavur, a World heritage site, Kanniyakumari – the southernmost tip of India symbolizing confluence East & West and Kancheepuram – a temple town.

• Gateway position to India’s culture and heritage

• Proximity to International Sea routes


• A multi-purpose berth has been earmarked for handling Passenger Liners. A newly constructed berth with 370 mts quay length and 10.7 mts draft is made available for handling larger cruise liners.


• A new passenger terminal developed recently includes separate enclosures for embarking / disembarking passengers

• Five hectares of paved area available for reception of passengers, organizing cultural events & erecting temporary shopping arcade etc.

• Fuel Bunker facilities


• Seating arrangements for 300 passengers

• Drinking water, cafeteria, Duty Free Shopping, foreign currency exchange counters, Communication facilities, Banks, tour operators

• Parking for luxury coaches


• Customs Examination, Immigration Department & Health Officials desk within port

• 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.


• Nearest airport is at Madurai, about 135 kms away. Madurai is directly connected to Mumbai & Chennai


• Thanjavur, Kanniyakumari, Kancheepuram, historical temples, 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.


• Rich heritage, vibrant social & cultural ethos, variety of cultural and art forms

• Bustling metropolis, ancient temples, clean sea front, international hotels

• Famous for silk shopping


• -


• Chennai is connected by a passenger liner to Port Blair (Andaman Islands)

• A dedicated terminal has been developed with capacity to accommodate 500 people.


• Terminal to have duty-free shops, handicraft and handloom showrooms, Food courts etc.

• Tour operators will develop facilities for ticketing & sightseeing trips


• The port will provide facility for customs and immigration clearance by respective departments


• Chennai has domestic and international airports, providing excellent 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


• Chennai city sight seeing, Chepauk Palace, Mahabalipuram, 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

Cruise Berth

(In mts.)

Approach Channel Port

Length (LOA)

Depth (Draft)

Length from entrance

Depth (In mts.)

Width (In mts.)

Turning Circle

(In mts.)

Mean High

Water (In mts.)

Mean Low Water (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 Mangalore

200 10.3 7.5 Km 15.40 245 570 1.50 3.25

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

No. Facilities Mumbai Goa New Mangalore Cochin Tuticorin Chennai

1 Berth

2 Gangway

3 Terminal Building

4 Traditional Indianwelcome

5 Passenger Lounge

6 Luggage Counter 7 Tourist information centre 8 Drinking water 9 Toilets/ Showers / Lockers

10 Foreign Exchange Counter/ Bank / ATM

11 Medical Aid

12 Internet Café /Communication Centre

13 Cafeteria / Restaurant

14 Duty free / souvenir shops

15 Excursion facility / TourOperator

16 Taxi service

17 Coach transfers / shuttle 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

25 Local police / TerminalSecurity


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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 (USA)

Sydney (Australia)

Seattle (USA)

Dover (UK)

Dubai Singapore Port Everglades(Florida)

1 Berth

2 Gangway

3 Terminal Building

4 Passenger Lounge

5 Luggage Counter

6 Tourist information centre

7 Drinking water 8 Toilets/Shower/ Lockers

9 Money Exchange Counter / Bank ATM

10 Internet Café/ Communication Centre

11 Cafeteria / Restaurant

12 Duty free shop / Souvenir

13 Excursion facility/Tour Operator

14 Taxi service

15 Coach transfers/shuttle bus

16 Parking facility

17 Domestic Airport

18 International Airport

19 Medical Clinic

20 Custom clearance counter

21 Immigration check 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

29 Entertainment Centre, Movie Theatre

30 Air Conditioned

31 Post Office

32 Aero-Bridge from 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 Operators

Coach transfers / shuttle bus 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 building

Duty free shopping Gift / Souvenir / Artifact & 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 zone

Conference Room

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:

The only terminal in the world operated by the State Department of tourism

The world's first to receive the ISO-9002 certification

The only port between Europe and Asia to have earned the IMS security rating certification

Won the ‘Most Improved Port Facilities’ award and ‘Best New Terminal Building’ award at the recently concluded Seatrade Cruise Shipping Convention in Miami,

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:

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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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.

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:

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.

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.

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.

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.

The Singapore Cruise Centre was officially opened on 18 June 1992, comprising two terminals.

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.

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:

Best Turnaround Port Operations

Most Efficient Terminal Operator

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

Airconditioned Arrival and Departure Halls Terminal-to-Ship Linkbridges Passenger Gangways Portable Baggage Conveyor Belt Forklifts Pipeline Freshwater Supply Shore-to-Ship Telephones Baggage Carousels Travolators Facilities for the Handicapped

B. Passenger Services Limousine Taxis Free Baggage Trolleys Duty-Free Shopping Food and Beverage Outlets Moneychangers Banks Supermart Convenience Store Pharmacy Post Office Chinese Medical Hall Medical & Dental Clinics

SERVICES FOR REGIONAL FERRIES A. Terminal Services

Airconditioned Arrival and Departure Halls Overnight Mooring Freshwater Supply for Overnight Mooring Facilities for the Handicapped B. Passenger Services Limousine Taxis Free Baggage Trolleys Duty-Free Shopping Food and Beverage Outlets Moneychangers Banks Super-mart Convenience Store Pharmacy Post Office Chinese Medical Hall Medical & Dental Clinics Courier Service VIP Lounge (TMFT only) Conference Room (TMFT only) 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 system, trucks & trolleys for baggage

- 7.05

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, Showers, Lockers, Public address system, Escalators / Elevators, signboards, terminal map, wheel chairs, shuttle bus coaches, telephone & fax equipment

- 2.37

8. Service counters for Bank services, foreign exchange services, communication areas, tourist information centre, luggage counter, postal services, Customs / Immigration / security check areas

3,750 sq. mts. 3.45

9. Shopping areas, restaurants, cafeteria, medical clinic, Internet café, Laundromat, Entertainment centres, tour operators, Ship agents office

3,750 sq. mts. 2.63

10. Miscellaneous facilities including X-ray Machines, bunker storage facilities, garbage disposal facilities, water supply facilities, maintenance & repair facilities

- 0.65

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. Crores)

Cruise Terminal on renovated 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 ◊ Spending attributable to port services (S

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.

◊ Spending on supplies (SSUPPLIES)

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 per tourist per port

US$

Year Study Undertaken by

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, USA)

95 1999 McDowell Group - Research Based Consultant

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

Port of Queensland (Australia)

110 - 140 2005 Queensland Tourism Authority

Antigua (Caribbean) 86.8 2000 PricewaterhouseCoopers Consulting (PWC)

Average $ 94

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

USA Europe Average Breakdown

(%) (%) (%)

-- Accommodation 30.0 30.4 30.2

-- Restaurants 25.0 34.0 29.5

-- Shopping 30.0 22.0 26.0

-- 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

USA Europe Average Breakdown

(%) (%) (%)

-- Sightseeing trips 44.0 41.4 42.7

-- Shopping 22.4 36.2 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.

◊ On-Land crew spending (SCREW)

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.

42.7

29.3

17.55

10.45

-- Sightseeing-- Shopping-- Restaurants-- Others

30.25

26

14.25

29.5

-- Acco mo datio n

-- Res taurants

-- Sho pping

-- Others


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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



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Equity IRR 17.06% 16.00% 14.83%


Subsidy requirement for concession period of 30 years for change in Capex (renovated berth)11


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%


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

Capital Expenditure Sensitivity (new berth)



Equity IRR 12.65% 11.43% 10.30%


Revenue Sensitivity (new berth)

10% decrease 20% decrease 30% decrease


Equity IRR 13.38% 12.48% 11.50%


Subsidy requirement for concession period of 30 years for change in Capex (new berth)


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%


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

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:

Ministry of ShippingPort Authorities

Ministry of Tourism Department of Tourism

Funding Approach to Cruise Terminals/Tourism Development

•Master planning, pre-feasibility studies

•Land acquisition•Development of off-shore facilities – dredging and berth development

•Port level marketing efforts

•Tourism related urban infrastructure

•Sector level marketing, positioning, publicity

•Viability gap funding for terminal development

•Coordination for any interstate circuit development

•Hinterland/regional tourism development

•Human resource training capacity building

•Circuit development within the concerned state

•State level marketing efforts

•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

Private DevelopersPrivate Sector

Ministry of ShippingPort Authorities

Ministry of Tourism Department of Tourism

Funding Approach to Cruise Terminals/Tourism Development

•Master planning, pre-feasibility studies

•Land acquisition•Development of off-shore facilities – dredging and berth development

•Port level marketing efforts

•Tourism related urban infrastructure

•Sector level marketing, positioning, publicity

•Viability gap funding for terminal development

•Coordination for any interstate circuit development

•Hinterland/regional tourism development

•Human resource training capacity building

•Circuit development within the concerned state

•State level marketing efforts

•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

Private DevelopersPrivate Sector


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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 Arrangement

Description

Build Own Operate (BOO)

In the ‘BOO’ concession structure, privatisation is total with the onus for investment & operation along with asset rights being handed over to the private operator. Government 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 Operate and Transfer (BOOT)

The ‘BOOT’ structure varies from ‘BOO’ only to the extent that the concession would be for a specified period at the end of which the land and the assets thereon would ‘transferred’ back to the Government at the end of the concession period as per the terms of the concession contract. As such Government’s interest in the land would be protected. The 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 Transfer

In the ‘BT’ structure the construction of the facility would be financed and carried out by 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 Transfer and Operate (BTO)

The ‘BTO’ structure would differ from the ‘BT’ structure in that the facility would be financed and constructed by the private sector and handed back to the Government after which the operational rights would be given either to the same private developer or to some other operator depending on the structure of the contract. This structure may be relevant in 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 Operate and Transfer (BOT)

The ‘BOT’ is the typical and most widely used concession contract and offers the flexibility to be structured either on the basis of a lease or a license. The facility is financed, designed and built by the private operator in return for which he is given the ‘concession’ to operate the project, either on the basis of a lease of land or a license to operate, for a specified 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 and Transfer (BLT)

In the ‘BLT’ structure the construction of the facility would be financed and carried out by the private sector after which the entire facility would be given on lease to the Government for the purpose of operations. This structure is used in sectors where the operations of a certain service have not been fully privatized, such as in the Railways. Hence only finance


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Contractual Arrangement

Description

& 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 Transfer and Lease (BTL)

The ‘BTL’ offers great flexibility in structuring a project such that the two phases – construction and operations – are bifurcated. In this structure the facility would be financed, constructed and pre-marketed by the private sector and handed back to the Government - the 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 Venture (JV)

In a ‘JV’ structure, the project would be implemented by a Joint Venture Company, (JVC), in which both the private developer and the Government would have shareholding. The 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 PSP Structure

Government Objectives

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:

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.

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.

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.

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:

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. 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 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. 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. 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. 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 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 :

Itinerary Types of Cruise Accommodation 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 considered as the rich man’s option. Resultantly, cruise ships have come to be regarded as “sailing resorts” 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 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

CRUISE VESSELS

CRUISE TOURISTS

DESTINATION INDIA

CRUISE CYCLE

CRUISE VESSELS

CRUISE TOURISTS

DESTINATION INDIA

CRUISE CYCLE


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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:

Connectivity through small and feeder aircrafts Connectivity through river cruises and exploiting inland waterways 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:

Developing cruise terminals & hinterland tourism products in environmentally sensitive areas, such as Lakshadweep, Andamans & Nicobar, Sundarbans etc.

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 Levy

State/ Centre

Issues

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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State/ Centre

Issues

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 Services

Hotels Centre Levied @ 10.2% Incidence of double taxation in cases wherein

F&B related taxes are charged in conjunction with service tax

Service Tax on Tour Operators

Transport Centre Levied @ 10.2%

State Taxes on Tourist Transport Vehicles

Transport Centre Comprises of Road tax, Passenger tax and Permit 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 & Beverages

State Different rates for different categories viz. Food, 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 &

Beverages State Same as above

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 Imported Liquor

Food & Beverages

Centre Very High

Other Charges

Passenger Service Fee (PSF)

Transport Centre PSF is levied at Rs. 200 in the nature of a fee from which Rs. 130 accrues to Bureau of Civil Aviation Security and Rs. 70 accrues to the airport operator(AAI)

Monument Entrance Fee-ASI

Miscellaneous

ASI The dollar charges for certain monuments are very high

Often a cause of concern to foreign tourists on account of discrimination

Issues of dual pricing Monument Entrance Fee-Others

Miscellaneous

State High charges in some instances

Other Taxes

12 Source: FHRAI


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0%

5%

10%

15%

20%

25%

30%

35%

Singapore Malaysia Thailand HongKong

India(High)

Car Rentals Accommodation Meals F&B


State/ Centre

Issues

Property Tax-Hotels Hotels State/ Local

NA

Stamp Duties on land purchased for hotels

Hotels State/ Local

NA

Bar License Fee/Permit Fee paid by Hotels

Food & Beverages

State/ Local

NA

Corporate taxes paid by Hotels

Hotels Centre NA

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

Head Singapore Malaysia ThailandHong Kong

India (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%

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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Exhibit 116: Corporate Taxes in competing tourist destinations

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

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 related

Accommodation related

Food & Beverage related

Car rentals related

Total Taxes

Rank

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 related

Accommodation related

Food & Beverage related

Car rentals related

Total Taxes

Rank

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 Highest rates 7.66% 20.00% 20.00% 33.22% 24.25% 5215

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 Shipping

• Exercise Port State Control over the ship • 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 Shipping

• Merchant Shipping Act, 1958

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

• Provides details of Embarking & Disembarking tourists, transit tourists, day tourists & crew at port-of-call.

• Filed with Customs, Immigration & Port

Health Officials by agent of cruise line.

• Advance requisition for berthing at the port • Submitted to port authorities by agent of

cruise line.

• Payment of berth hire charges, port dues, Pilotage & lighthouse dues

• Agent makes the payment to Port authority &

Customs

• Declaration as per WHO norms is made with respect to cruise vessel coming from yellow fever zone etc.

• Agent or Master submits declaration to Port

Health Officials

• As cruise vessel enters the port area, the Pilot boards the vessel at channel entrance and ensures safe berthing with help of towing tugs

• Request for services of Pilot are made by

agent to Port Authority

• Involves health clearance for tourists by checking their vaccination certificates for yellow fever, communicable diseases etc.

• Port Health Officer boards the ship at

channel entrance to save on time

Filing of berthing application

Filing of Passenger Manifest

Payment of dues, charges

Maritime declaration of health

Pilotage & Towage for berthing

Health Clearance


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

• Tourists disembarking for sight seeing / day trip at a port require Shore Passes

• Tourists disembarking for longer tours 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

• Checking of passport & visa documents of disembarking tourists

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

• Baggage clearance of disembarking tourists & declaration of bond stores

• Customs formalities may be completed at port or enroute during ships voyage from previous port of call.

• The DG Shipping Office undertakes check on cruise vessels as with other vessels calling at the port to ensure that the vessel is not in contravention of any international law

• After tourists receive the Shore Pass / Transit Pass; the ship’s agents, tour operators, taxi & coach service providers act to transport the tourists for day trips / to airport / to hotel etc.

• Ship chandlers & provision suppliers obtain clearance and meet requirements of vessel.

• Clearance is given by customs official for supply of provisions

• Cruise vessels may collect large amount of garbage during a trip. Ports may cater to the requirement of vessels as a value added service.

Immigration Check of disembarking

tourists

Issue of Shore Pass / Transit Pass

Customs Clearance of Baggage / Bond

Port State Control Check

Ground handling & support

Supplies & stores

Disposal of garbage

Continued


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• Embarking cruise tourists present their passports for immigration clearance prior to departure from country

• Cruise tourists embarking into the ship from the port are required to obtain Customs clearance for their baggage

• Cruise tourists, who have taken day trips at the port are required to obtain immigration clearance prior to boarding vessel

• Cruise tourists are required to undergo security checks prior to boarding to ensure overall security of cruise passengers.

• Local Police / Security agency provides the clearance

• The Pilot finally boards the cruise vessel to escort it safely to deep waters at channel entrance

• After all cruise tourists & crew have boarded the vessel, clearance from customs and port authority is required before the ship can sail.

Baggage clearance of embarking tourists

Immigration Clearance for

embarking tourists

Immigration clearance of Transit

Tourists

Security clearance of tourists

Pilotage & Towage for berthing

Clearance for Sailing

Continued


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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 Concerned

Action By Formats / Applications

Port Ship agent

• Berthing application • Application for payment of Port charges • Application for Pilotage services • Application for sailing

Ship Agent • Passenger manifest filing • Application for payment of Light House charges • Bond stores declaration

Customs

Cruise Tourist • Currency declaration form under FEMA, 1999 Ship Agent • Passenger manifest filing Immigration Cruise Tourist • Govt. of India Disembarkation card - Arrival

• Shore pass for passengers • Temporary Landing Permit • Government of India Embarkation Card - Departure

Ship Agent

• Passenger manifest filing • Maritime declaration of health • Port call list

Port Health Officer

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.

Disembarking tourists may be issued day shore passes which are unique from TLP

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.

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

STAKEHOLDERS Awareness

of the Cruise

Industry

Soft Skill Computer Security Hospitality Management

Skills Public

Relation

Case Study

Training

F&B Training

First Aid

Training

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

STAKEHOLDERS Awareness

of the Cruise

Industry

Soft Skill Computer Security Hospitality Management

Skills Public

Relation

Case Study

Training

F&B Training

First Aid

Training

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 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

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 Centre

: Counter for imparting information or providing assistance to cruise tourists on their arrival to the port. The counter is generally manned by the State / Central tourism officials

Excursion facility / Tour operator

: City sightseeing and excursion trips to tourist centres around ports form an integral part of the cruising experience. Provisioning of facility for organizing these day trips through authorized tour operators

Coach transfer / Shuttle bus service

: Coaches or buses dedicated to the cruise terminal. Used by cruise 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 Board

: A map giving the location details of different facilities within & outside the terminal building within the port area

Crew Lounge : Resting & comfort area specifically dedicated for crew members of the cruise

Artifact & Curio Shop

: Shop selling antique and local art & handicraft items

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 / Gaming zone

: Area for leisure and fun activity provisioned for cruise tourists during 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 system

: Automatic conveyor belt within the terminal for luggage movement 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 arrangements

: Wire ropes or chains used to hold the ship in place besides the berth.

Ship Coordination Centre

: Command Centre for coordinating with ship from their arrival to 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.

Documents

Cruise Study