With the announcement of new tariffs from the United States, the cruise industry is starting to weigh what it means to them.
Speaking at Seatrade Cruise Global conference in Miami, Florida, Royal Caribbean Group CEO Jason Liberty joined a panel of other CEOs during the keynote "State of the Global Cruise Industry" session to address the geopolitical issues facing cruising.
It's quite early since the policy change was announced, but the question of what new tariffs and visa requirements will have on cruising.
Overall, none of the cruise line CEOs thought the tariffs would have an immediate impact.
Tariff question
One of the first questions addressed was the nature of new tariffs, but all of the cruise line CEOs said there was no direct impact from tariffs at this point.
They collectively shook their head, "no" and then talked about that tariffs will impact consumers.
Carnival CEO Josh Weinstein spoke more candidly about them, "The short answer is no, for various reasons."
"Because of how we could resource a lot locally," Mr. Weinstein said. "And we also go to different places, we're not we're not landlocked, so to speak."
But he did caution that a greater economic impact to cruises is not out of the question, "The uncertainty and the ripple effects absolutely has an impact on the industry.
"The hard part about that is that as of now, the answer is we don't know. And so anytime there's an answer, we don't know, it just takes some time for people to get comfortable with the uncertainty."
He went on to say that part of working with any government is to engage with them, "we listen well, we educate, and it's also one of the powers of our platform is it's flexible."
Ambitions to continue to grow
Mr. Liberty talked about his outlook given the recent economic woes by simply saying, "Current economic noise will not prevent our collective ambitions to grow this industry."
He pointed to the fact that all cruise lines are ordering ships further and further out, demonstrating the strong demand to build new ships.
He also pointed out that new ship growth isn't necessarily for the sake of adding new vessels.
"Because we are also looking further out, some of these ships are getting to 35 to 40 years in age, some of these (new ships) will be net replacement,” Liberty said.
That reality is paramount for Royal Caribbean as the Vision Class ships are approaching that milestone in age.
The cruise line has danced around the topic of replacing them with a new class of cruise ships, but so far there has been no official confirmation.
Destination is an important factor
One of the major topics discussed was the role of destinations, both private and traditional ports.
The moderator of the discussion alluded to recent mainstream media coverage of cruise line private destinations as, "building these to keep the money all to themselves," such as coverage by the Wall Street Journal.
Mr. Liberty dismissed this sort of coverage as missing the broader picture, "They focus on well, you must have a completely captured audience in doing that, they don't get into the experience we're trying to solve for."
What he means is new projects like Perfect Day Mexico and an array of private beach clubs are about making the guest experience better and partnering with local communities to create new jobs for them, and expose the cruise ship passenger to new opportunities.
"We're trying to elevate the experience and making sure that the end to end experience lives up to what our guests are expecting it to be," Mr. Liberty explained.
"The economic element of this is not concentrated per se in just the company. It's the broader economic activity that's happening within the area."
As an example, Royal Caribbean created an equity fund to provide fair market value of the four acres of crown land that the government contributed to the project.
There's also an investment fund to essentially buy shares in the investment fund to buy equity into the fund.
On top of all of that, a new tourism tax that will be part of this project that benefits local Bahamians, where 1% of gross profits are moved into a new tourism levy in perpetuity.
River cruises are about expanding choices for their customers
Mr. Liberty also talked briefly about the news that Celebrity Cruises will launch a river cruise division in 2027.
"We're trying to meet all of our customers, where they are, and the vacation experiences that they're seeking," he said after being asked about plans for this new venture.
Their research indicated customers wanted to try a river cruise to augment their cruise vacations.
"We look at what our guests are doing when they're not with us. One of the things that they tell us that they're looking to do, not as as a substitute for a cruise, but as an additional vacation experience is, is to go on river."
It's an opportunity to serve a need Royal Caribbean Group customers have while retaining business within their own ecosystem.
