Cruise Tourism in Scotland: Review & Sustainable Development Opportunities for VisitScotland Scottish Enterprise Highlands and Islands Enterprise Scottish Government FINAL REPORT October 2020 Cruise Tourism in Scotland: Review and Sustainable Development Opportunities Report submitted by: Susan Staiano, Richard Weaver, Richard Whitcomb, Tom Matthew, Jeremy Hanks Proof check completed by: Claire Boyle Date: 27th October 2020 Report reviewed by: Susan Staiano Date: 27th October 2020 Cruise Tourism in Scotland: Review and Sustainable Development Opportunities Contents Preface 1 1 Introduction to the research 2 About the review 2 What it covers 2 How the research was conducted 2 How the report is structured 5 2 Cruise tourism in Scotland: what we already know 7 Introduction 7 Defining cruise tourism 7 The cruise tourism market 7 Cruise tourism and sustainable tourism 11 The Scottish cruise tourism ecosystem 14 Summary 18 3 Cruise tourism: volume and value to Scotland 20 Introduction 20 Data collection 20 Scottish calls and visitor numbers 21 Port calls and passenger numbers 22 Visitor spend 24 Summary 31 4 Cruise tourism: Scottish ports 32 Introduction 32 A possible port typology 32 Significance of cruise traffic income 32 Fit with other port uses 33 Relationship between Scottish ports 33 Scottish port infrastructure 33 Infrastructure immediately surrounding ports 34 Factors attracting cruise operators to choose particular ports 35 Appetite for cruise tourism activity and development aspirations 35 Importance of sustainable development 38 Future development – opportunities and challenges for ports 38 Summary 39 5 Cruise tourism: the cruise operators and intermediaries 41 Introduction 41 The importance of Scotland to cruise operators 41 Destination attractiveness and product development 42 Cruise operator planning 43 Relationships with onshore ecosystem 46 Environmental and sustainability considerations 47 Summary 49 6 Scottish destinations and communities 51 Introduction 51 Destination attractiveness 51 Impacts and benefits 54 Concerns and challenges 58 Cruise Tourism in Scotland: Review and Sustainable Development Opportunities Future development – opportunities and challenges 61 Summary 62 7 Key challenges and inhibitors to sustainable development of cruise tourism in Scotland 64 Introduction 64 Port-specific constraints 64 Destination, social and environmental constraints 65 Destination group capacity and influence 68 Regional constraints 69 National-level strategic constraints 70 Summary 70 8 Key development opportunities for sustainable cruise tourism in Scotland 72 Introduction 72 Development opportunities 72 Summary 78 9 Conclusions and recommendations 80 Introduction 80 Conclusions 80 Economic considerations 80 Social and community/destination considerations 81 Environmental considerations 81 Taking a more joined-up, place-based approach 82 Recommendations 82 Appendices 87 Appendix 1: Cruise operator profiles 88 Appendix 2: Consulted organisations 91 Appendix 3: Method and approach to calculating value 93 Cruise value calculations 93 Detailed analysis 94 Appendix 4: Relative volume and value of cruise tourism, by region 95 Cruise Tourism in Scotland: Review and Sustainable Development Opportunities Preface ekosgen, in partnership with Reference Economic Consultants and Context Economics, were commissioned in 2019 to undertake a review of the cruise tourism opportunity in Scotland, and to provide insights and recommendations for future planning. At this time, and up until early 2020, cruise tourism was a growing industry, and the 2020 cruise tourism season was anticipated to be another significant season in Scotland. This was prior to the onset of the global pandemic. While the research, resulting analysis and reporting are informed by and based on a pre-COVID-19 context, the conclusions and recommendations flowing from the study remain relevant for future planning. Both the COVID-19 pandemic and the effect it has had on the economy and communities of Scotland is unprecedented. We are arguably only just beginning to understand the true scale of the impact on all sectors, and the change that has been – and will be – brought about as a result has yet to become clear. Tourism is one of a number of industries in Scotland that has been hit particularly hard. We know that for many businesses and sectors, the 2020 season has effectively been wiped out. For rural areas dependent on tourism for employment and economic prosperity, this has increased the socio-economic fragility. Nearly all tourism businesses in Scotland have experienced cancellations, a decline in bookings or fewer visitors. Almost 60% of tourism businesses have had to reduce staff numbers, with further losses expected. Many of the challenges are compounded by the seasonality of tourism in Scotland.1 Whilst there is currently no indication of when restrictions will be lifted and cruise operations in the UK will recommence, the 2020 cruise tourism season in Scotland has effectively been cancelled. Cruise Lines International Association (CLIA) member operators unilaterally agreed to suspend global operations in mid-March, at the beginning of the Scottish cruise season. The coronavirus pandemic has also led to the closure or scaling back of work at all the major European shipyards, with knock-on delays to refurbishments and new-builds. As of mid-April 2020, those shipyards began re-opening slowly2. More recently on the 16th August MSC Cruises’ fleet returned to the Mediterranean to implement the Company’s new COVID-19 health and safety protocol.3 However, what is apparent is that for cruise tourism, and tourism more generally in Scotland, new markets and new models of operation will come to the fore in a post-COVID-19 environment. Though the recommendations of this report were made in a pre-COVID-19 context, they anticipated the need to ensure sustainability across the wider cruise ecosystem in Scotland, and to take a place-based approach to cruise tourism. As such, the conclusions and recommendations of this report – and therefore the learnings that stakeholders can take from this research to inform future planning and decision-making – hold true in a post-COVID-19 environment. 1 VisitScotland (2020) monitoring the effects of COVID-19 on the Scottish Tourism Industry, Wave 2 Results (20-30 March 2020), at: https://www.visitscotland.org/research-insights/about-our-industry/impact-covid19 2 https://www.cruisecritic.co.uk/articles.cfm?ID=167 3 https://www.traveldailynews.com/post/msc-cruises-welcomes-back-first-guests-on-msc-grandiosa 1 Cruise Tourism in Scotland: Review and Sustainable Development Opportunities 1 Introduction to the research About the review 1.1 This review of cruise tourism in Scotland is a pan-Scotland study led by VisitScotland, Highlands and Islands Enterprise, Scottish Enterprise and Scottish Government. It has been conducted by ekosgen, in partnership with Associates Reference Economic Consultants and Context Economics. What it covers 1.2 The objectives of the study are to provide a comprehensive understanding of the Scottish cruise tourism ecosystem and the relative opportunities at individual local port, regional and national level whilst identifying pressure points and impacts on infrastructure, environment and local communities. The study should help inform future planning by providing insights to inform future sustainable development at port, regional and national level and provide the evidence base for local, regional and national cruise development assessments and strategies, aligned to Scotland Outlook 2030, the new national tourism strategy for Scotland.4 It should also consider how the changing cruise market may affect Scotland’s position in the market. 1.3 At a headline level the review has assessed the scale and scope of cruise tourism activity across Scotland. Specifically, the research: • Provides an overview of the size, shape and composition of Scotland’s cruise tourism market, including an assessment of the economic value of the sector to Scotland. The review examines the market by each port and its destination hinterland to provide insights into where cluster activity is prominent and where opportunities for niche development exist or where there is a need to better manage existing levels of activity. • Reviews the existing and newly gathered information on market demand, and identifies the most significant sustainable growth opportunities for the sector in Scotland and the implications for infrastructure and investment requirements to meet and accelerate these opportunities. The role of the public sector, private sector and landowners in meeting these requirements is also explored. • Identifies barriers impacting on Scotland’s capability to meet the infrastructure and investment requirements, providing recommendations on how these may be addressed. • Analyses how competitive and innovative the Scottish cruise tourism product offering is against destinations worldwide, identifying where Scotland has the best competitive advantage and how it can improve its position. How the research was conducted 1.4 The research has been wide ranging, seeking to achieve breadth of coverage and more in-depth sector insight. In line with the study objectives, it has sought to establish the shape and composition of the sector, how key players interact with one another and to identify growth opportunities and sector support requirements. This has been achieved through extensive primary research supplemented by desk-based research and an international