As cruise companies continue to rake in record profits, they’re setting their sights on what could be the industry’s next big play: private islands.
Driving the news: Carnival and Norwegian Cruise Line Holdings are investing US$600 million and $150 million, respectively, to expand their existing private islands in the Bahamas, while Royal Caribbean Group is building three new private cruise destinations.
- Royal Caribbean proved the concept was a money-maker in 2019 when it opened a private island destination in the Bahamas with zip lines, water parks, and even hot-air balloons.
- Cruise lines have since spent at least US$1.5 billion to build their own private islands. Collectively, cruises own at least 15 islands and beaches in the Caribbean.
Why it’s happening: The private islands give cruise operators a bigger chunk of their passengers’ cash. Not only do they keep passengers’ spending money in house, they also avoid paying the fees and taxes they usually hand over to governments when they dock.
Bottom line: Cruises walk away with more cash and passengers skip the crowds at popular port cities, but the tourism-dependent economies of Caribbean islands are paying the price by losing out on the wallets of cruise-goers.—LA