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Ship to Shore: the Cruise Industry's Perception of Economic Risk Wendy

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Ship to Shore: the Cruise Industry's Perception of Economic Risk Wendy Ship to shore: The cruise industry’s perception of economic risk Wendy R London AB, MSLS, JD, PGDipTour (Dist) A thesis submitted for the degree of Masters of Tourism At the University of Otago, Dunedin New Zealand Date: 24 March 2010 i Abstract This thesis considers a variety of economic risks which could potentially threaten New Zealand’s position as a competitive and sustainable cruise destination. The risks are those articulated by stakeholders from the cruise, broader tourism (including port and shipping agent representatives) and government sectors. More specifically, these stakeholders include cruise industry representatives; cruise ship officers and staff; representatives from RTOs, local and regional councils; and port officials. In addition, the views of two New Zealand government representatives were also solicited. The views of these stakeholders are subsequently interpreted by the author of this thesis who is an avid cruise passenger and also involved in a commercial project to develop a website to promote New Zealand goods and experiences to cruise passengers visiting New Zealand. The economic risks considered in this thesis are those which are evaluated and factored into cruise lines’ decisions as to whether to send their ships and passengers to any given destination and the destination’s capacity to host these ships and their passengers. These risks are presented as falling into five distinct categories or phases of a cruise sector life- cycle, i.e. (a) product development; (b) infrastructure development; (c) distribution; (d) use and consumption; and (e) disposal. Each of the risks discussed is within the destination’s capacity to manage those risks if appropriate mechanisms and strategies are put into place. The cruise sector in New Zealand presents an interesting context in which to examine economic risks and a selection of countermeasures which can be implemented to manage them, thereby providing competitive opportunities and the potential for future sustainability for the sector. New Zealand is a remote cruise destination which represents only a very small proportion of the global cruise market. However, its cruise activity continues to experience rapid growth despite the recent economic downturn. According to many of the stakeholders interviewed for this thesis, this growth remains largely unmanaged because there is no apparent structured framework for the ongoing ii management and future development of “cruise” in New Zealand. Furthermore, they argue that a failure to provide an appropriately managed cruise sector means that the risks which currently face New Zealand will continue to grow and may ultimately threaten New Zealand’s goal of becoming an increasingly competitive and sustainable cruise destination. Five mechanisms or strategies for managing the current and potential risks to the New Zealand cruise sector are suggested by the author. Each of these strategies was signalled during the author’s research and further developed by her based on her own cruise experience in New Zealand waters and drawing from her previous work as a lawyer and IT professional developing best practice and risk management strategies and systems. The five strategies are the formation of a properly funded over-arching coordinating committee; the cultivation of a discernible cruise culture; implementation of appropriate education and training; the creation of a national cruise manual; and the design, development and implementation of a New Zealand cruise brand. Each of these strategies is based on an approach to risk management which calls for a positive view of risk and how it can be transformed into opportunity for competitive success. The traditional notion of risk as something to be avoided or which can be insured against or eliminated is rejected in part because it is counter-productive to treat risk in that way and also because such treatment leads to a silo approach where risks are considered individually and not how their collective influence can impact upon the whole. The silo approach precludes adopting a strategic approach to the identification and optimisation of risk. In other words, a tactical approach to risk indentification and risk management will very likely result in an underperforming and unsuccessful cruise sector. Therefore, the author concludes that a well-considered strategy needs to be adopted and appropriately funded to ensure New Zealand’s continued existence as a competitive and sustainable cruise destination. iii Acknowledgements As a child growing up in New Jersey, my late parents, Dr George and Mrs Sylvia London, would take me to the 54th Street cruise passenger terminal on the West Side of Manhattan to bid bon voyage to my aunt and uncle, the Hon Morris and Mrs Anne Barrison, who would sail off to Europe. Dressed in my prettiest, frilliest dress and black patent leather shoes, I simply couldn’t fathom how something so big would float to the other side of the Atlantic Ocean and that it could be attached to a building to let passengers and visitors (in those days) on and off. I have a vague recollection of confetti and streamers, and of course, getting all those wonderful presents from the UK and Europe when my aunt and uncle returned. My love affair with cruise indeed started when I was about six, seven or eight. Unfortunately, though, my career and lifestyle in my twenties, thirties and the start of my forties were all about flying from one place to another so it wasn’t until I was married, in New Zealand, that I became a cruise practitioner. I use that word purposely because in 2007, over lunch at the Staff Club at Otago University, one of my lecturers, Dr Hazel Tucker, suggested that I pursue cruise as my special area in my tourism studies. There was one very ominous caveat, though, and that was that “cruising would never be the same” for me again. Be that as it may, I took up Hazel’s intriguing idea and have become not just a cruise addict, but in parallel, an academic cruise addict. I completed my Post Graduate Diploma dissertation (on my very own web-based cruise project) under the extraordinarily diligent, warm and witty supervision of Eric Shelton (who provided the same signature support for this thesis), and through his and Dr Richard Mitchell’s encouragement, I will embark on my cruise-focused PhD as soon as this thesis is read and accepted. Through my research, which was in very large part was supported by a generous scholarship and moral support from the Ministry of Tourism (with special thanks to Fiona Macdonald, Ross Clapcott and Martin Švelha), I met and befriended a host of wonderful people in the cruise industry. Craig Harris, Managing Director of ISS-McKay in New Zealand; John Nell, Director of Shore Operations for Carnival in Sydney; Captain Peter Bos, Chief Officer Gerd Teensma, Hotel Manager Robert Versteeg and their wonderful iv and extremely generous colleagues onboard two voyages of the Volendam; Captain Graeme Goodway, Passenger Services Director Martin Bristow and First Purser Administration Leo Pavan onboard the Diamond Princess; and “local” New Zealanders Peter Rea (Lyttelton Port Corporation), Mike Letica (Port of Tauranga), Sean Marsh (Tourism Bay of Plenty), Sophie Barker (Dunedin City Council), Carmen Gimpl (Port Marlborough), Francis Pauwels (Marlborough District Council) and too many others too numerous to mention all gave of their time unselfishly and provided me with insights I would not otherwise be privileged to gain. Amongst my Australian research friends, a special thanks goes to Stephen Hite, CEO of Burnie (Tasmania) Sports and Events whose care for ships, their crews and their passengers makes everyone feel very special, and very welcome. However, any project in the tourism field invariably also involves travel agents and this project has certainly been no exception. Extremely heartfelt thanks are due to Tasi Afitu (Quay Travel, Auckland) who without doubt is not only my personal traveler counsellor but also a wonderful friend and to Tony Smith and Shelly Richardson (Francis Travel Marketing, Auckland) whose consideration (and patience) for my Holland America bookings are very much appreciated. But most of all, my magnificent cruising companion, my husband Terence Lealand, BDS (Otago) with whom I have shared extraordinary cruises and who has been so utterly patient and caring whilst I wrestled with documenting all of my new found knowledge (and who therefore had the time to work on the mysteries of fixing his ancient Deltahet receiver). It is to all of these people and organisations that I owe an extraordinary debt of thanks and look forward to sharing my future cruise adventures with them. v Table of contents Abstract………………………………………………………………………….. i Acknowledgements………………………………………………………………. iii Table of contents………………………………………………………………… v List of tables………………………………………………………………..……. vii List of figures………………………………………………………………….… viii List of text boxes…………………………………………………………………. ix List of abbreviations and terminology……………………………………...…… x Chapter 1: Introduction……………………………………………………… 1 1.1 Thesis objectives and research question……………………………. 1 1.2 Limitation of scope…………………………………………………. 2 1.3 Background - cruising in context….……………………………...... 3 1.4 An international perspective ……………………………………….. 6 1.5 Structure of this thesis…….………………………………………... 6 Chapter 2: Literature review and conceptual framework…...………………. 8 2.1 Definition of risk………………………………………………..….. 8 2.2 Risk standards…………………………………………………….... 10 2.3 Risk identification………….……………….………………………
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