Södertörns Högskola SÖDERTÖRN UNIVERSITY Statutory Declaration
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S¨odert¨ornsUniversity j School of business studies Master's Dissertation 30 ECTS j Spring Semester 2012 Cruise tourism on the Baltic Sea and implications of water quality legislation A case study on balancing the interests of the cruise industry and local economies with long-term environmental sustainability Author: Sandy R. Polack Supervisor: Dr. Anders Steene södertörns högskola SÖDERTÖRN UNIVERSITY Statutory declaration "I declare in lieu of an oath that I have written this Master thesis myself and that I have not used any sources or resources other than stated for its preparation. I further declare that I have clearly indicated all direct and indirect quotations. This Master thesis has not been submitted elsewhere for examination purposes." Date: June 12th 2012 Signature: 2 Acknowledgements First of all I would like to thank my parents for continuous support and opportunity to pursue my desires for personal growth! I express sincere gratitude to Anders Steene at S¨odert¨ornUniversity for the opportunity of writing this dissertation under his professional guidance. Your feedback during our personal meetings and in numerous emails was always of high quality, to the point and a source of motivation and new ideas. Of course I would like to thank all that contributed with their opinions and responses to the investigative component of this research; Mr. Thomas Johansson, Mrs. Stina Paulin, Mr. Dan Lindstedt, Mr. Nicholas Rose, Mr. James Van Langen and Mr. Olof Olsson. I would like to thank my sister Jessy, for helping me out around the house for the duration of this project! And lastly I would like to thank Bart, Iris and Erik. Bart for never ending support and relentless proof-reading. Erik and Iris for cheering mommy up in the moments she needed it most, with a laugh, a drawing or a song! Sandy R. Polack 3 Table of Contents Abbreviations and organisations 10 Abstract 13 1. Introduction 14 1.1. Background................................... 14 1.2. The structure of this dissertation....................... 17 2. Theoretical framework 18 2.1. Background: the cruise industry....................... 18 2.1.1. Relevant terminology.......................... 18 2.1.2. The Cruise Industry.......................... 19 2.1.3. Definition of a Cruise......................... 21 2.1.4. Cruise ships and cruise ship classes.................. 21 2.1.5. Economic significance of cruise tourism for ports.......... 21 2.1.6. Cruise Ships and their environmental impact............ 23 2.1.7. Laws, Regulations and Incentives................... 24 2.1.8. Magnitude of cruise traffic on the Baltic Sea 2006-2010....... 25 2.1.9. The Cruise Baltic project....................... 25 2.1.10. Cruise Ship Tourism in the Baltic - threats............. 26 2.1.11. Stockholm as a Cruise Destination.................. 28 2.1.12. Swedish organisations relevant for the Baltic Sea environment... 31 2.2. Background: the environment......................... 31 2.2.1. Relevant terminology.......................... 31 2.2.2. Sustainable tourism.......................... 32 2.2.3. Oceanography of the Baltic Sea.................... 33 2.2.4. MARPOL Annex I on ship generated oil waste........... 36 2.2.5. MARPOL Annex IV on ship sewage................. 36 2.2.6. MARPOL Annex VI on emissions.................. 36 2.2.7. EU Strategy and Action Plan for the Baltic Sea Region (EUSBSR) 37 2.2.8. HELCOM................................ 37 2.2.9. Waste water management....................... 41 2.2.10. Waste water treatment onboard cruise vessels............ 42 2.3. Background: marketing............................ 45 2.3.1. The 4 P's of marketing......................... 45 2.3.2. Influencing behaviour using cost and price.............. 46 4 2.4. Problem analysis and research questions................... 46 2.4.1. Problem analysis............................ 46 2.4.2. Research questions........................... 47 3. Methodology 48 3.1. Research method................................ 48 3.1.1. Desk research, qualitative and quantitative methods........ 48 3.1.2. Case study............................... 49 3.1.3. Expert interviews............................ 50 3.2. Advantages and disadvantages of the chosen methods............ 51 3.2.1. Validation and reliability....................... 52 3.3. Researched stakeholders............................ 53 3.4. Interview questionnaires............................ 54 3.5. Survey of general public............................ 55 4. Results and analysis 57 4.1. Response overview............................... 57 4.2. Organisations' response............................ 57 4.2.1. Response from Swedish Agency for Marine and Water Manage- ment (Havs och Vattenmyndigheten)................. 57 4.2.2. Response from Swedish Maritime Administration (Sj¨ofartsverket). 60 4.2.3. Response from Ports of Stockholm (Stockholms Hamnar)..... 62 4.3. Cruise industry's response........................... 64 4.3.1. Response from Birka Cruises..................... 64 4.3.2. Response from Carnival........................ 66 4.3.3. Response from Royal Caribbean................... 69 4.4. Facebook survey on willingness to pay for responsible sewage handling on the Baltic.................................... 73 5. Conclusion, critical review and suggested future research 76 5.1. Conclusion................................... 76 5.2. Research question: state of cooperation for long-term competitiveness?.. 76 5.3. Research question: how to deal with increased cost?............ 78 5.4. Closing remarks and personal opinion.................... 78 5.5. Validation, limitations and critical review.................. 79 5.6. Future Research................................ 81 References 82 List of URL's..................................... 83 A. Appendix: Cruise lines calling on Stockholm in 2012 86 B. Appendix: Cruise Tourism on the Baltic Sea Statistics 88 C. Appendix: Economic theory on price elasticity 91 5 D. Appendix: Economic theory on costs 94 E. Appendix: Example of questionnaires sent to various stakeholders 96 E.1. Example of questionnaire sent to the Swedish Agency for Marine and Water Management (Havs och vattenmyndigheten)............. 96 E.2. Example of questionnaire sent to Royal Caribbean Cruise Lines...... 97 E.3. Example of customised questionnaire sent to Tumlare Sweden AB.... 99 F. Appendix: Baltic Ports Organisation (BPO) on HELCOM guidelines for sewage discharge 100 F.1. BPO comments to HELCOM guidance on technical and operational as- pects of sewage delivery to Port Reception Facilities............ 100 G. Appendix: Comments from CLIA on PRF's 103 G.1. Technical problems related to port reception facilities............ 103 G.1.1. Comments from the CLIA and the ECC............... 103 6 List of Figures 2.1. The biggest cruise operators by market share in 2011. Adapted from: www.cruisemarketwatch.com/blog1/home/................. 20 2.2. Royal Caribbean International's Oasis of the Seas, designed for 5400 pas- sengers, entering the port of Nassau, Bahamas................ 22 2.3. Snapshot of ship traffic in the Baltic Sea on April 8th 2009, Source: HEL- COM AIS, accessed via www.helcom.fi/stc/files/shipping/Overview%20of% 20ships%20traffic updateApril2009.pdf.................... 25 2.4. Number of ships crossing predefined AIS lines 2006-2009. Source: HEL- COM AIS.................................... 26 2.5. Cruise Baltic statistics on passenger numbers on cruises longer than 60 hours (source: www.cruisebaltic.com/media(1544,1033)/Cruise Baltic Market Review 2012.pdf)................................ 27 2.6. Cruise Baltic statistics on top 5 ports for cruises longer than 60 hours (source: www.cruisebaltic.com/media(1544,1033)/Cruise Baltic Market Review 2012.pdf)................................ 27 2.7. Left: Stockholm cruise vessel calls per year. Right: Stockholm cruise passengers (000's) per year. The 2012 figures are estimates. Source: Cruise Baltic, appendixB).......................... 29 2.8. The Baltic sea basin (source: www.baltex-research.eu)........... 34 2.9. Algal blooming in the Baltic Sea on 27-07-2008, source: University College London, Dept. of Space and Climate Physics (Source:www.ucl.ac.uk/ mssl/imaging/research)............................ 35 2.10. Delivered sewage (in tons and m3) to the PRF compared to calls at a port. Source: HELCOM Baltic Sea Environment Proceedings No. 123 (2010)....................................... 40 2.11. Typical steps in a waste water treatment system.............. 43 4.1. Survey results: how much would you be willing to pay additionally per day to have your sewage treated instead of dumped in the Baltic...... 74 4.2. Example of a cruise operator (TallinkSilja) implementing a fuel surcharge to deal with varying fuel prices that were not included when prices for the season were set. A similar approach to sewage surcharge is not rec- ommended (see text). www.digipaper.fi/tallinksilja/75337/........ 75 B.1. Cruise passenger numbers per port. Source: Cruise Baltic www.cruisebaltic. com/media(1560,1033)/Cruise Baltic statistics 2000-2012.pdf....... 89 7 B.2. Cruise vessel calls per port. Source: Cruise Baltic www.cruisebaltic.com/ media(1560,1033)/Cruise Baltic statistics 2000-2012.pdf.......... 90 C.1. (Fictitious) demand curve for the number of consumers (x-axis) willing to pay the price for a 5-day-cruise (y-axis) to satisfy their 'need for a break'. 92 8 List of Tables 1.1. The various 'special areas' under IMO.................... 16 2.1. Examples of different sizes (classes) of cruise ships and their tonnage. Adapted from Morgan