The Cruise Ship.

By Paul Nyasulu

President Lazarus Chakwera recently announced country’s plans of switching from relying on tobacco as main income earner, which rakes 60 percent of the country’s foreign exchange earnings to other alternatives.

President Chakwera argued that tobacco has no future; hence, the need for its replacements. Well, cruise tourism industry could be one of the alternatives to tobacco industry.

The cruise industry is the fastest-growing category in the leisure travel market and it has enormous potential to bring economic benefits to Malawi.

Studies reveal that the number of total annual cruise passengers globally is expected to grow from 27 million in 2018 to more than 39 million in 2027, with 106 new ships already on order to be delivered over the next ten years.

It must be mentioned that cruise tourism industry requires great investment in complex infrastructure, and expertise as well as strict regulatory compliance. However, the return on investments can be huge at both on micro and macro level.

Cruise tourism is a luxurious, all-inclusive way of traveling usually for at least 48 hours following a specific itinerary and at which the cruise ship calls on a variety of ports and their connected cities or hinterland.

Cruise tourism involves ships sailing on large water bodies like Lake Malawi, bringing large numbers of passengers to concentrated areas of destinations for brief periods.

The main players behind the industry are cruise ships and cruise lines. Cruise ships are passenger ships used solely for vacationing and typically for round trip voyages to various port of calls where passengers may go on tours known as shore excursions.

Cruise ships are not ferries like the ones we see making turn a rounds or repositioning on our beautiful lake but here we are referring to floating hotels. On “No where voyages” cruise – ship make two to three nights round trips at sea without visiting any port of call.

Cruise ships can be broadly divided into two major categories: High Seas Motor ships and River Cruise ships. The former usually sail on high seas and are built to withstand the harsh ocean voyage while the latter are specially designed to navigate in rivers and inland waterways such as Lake Malawi and have capacity for hundreds of passengers.  River Cruise Ships are perfect vessels for Lake Malawi cruises.

Cruise lines are operators of cruise ships, which sell cruises to the public. Modern cruise lines are primarily in leisure entertainment business and have ship captain heading the crew. 

Are there cruise investment opportunities in Malawi? The answer is Yes. Malawi offers best destination for all cruisers be local and international.

The country offers not only the fresh glistening water at Lake Malawi, but also numerous shore excursions including safari at selection of national parks and game reserves where all kinds of wildlife can be seen, mountain hiking, pure sand beaches, water sports and fishing just to mention a few.

There are various entities or value chains that generally participate and contribute to a successful production of cruise tourism and the cruise passenger experience. The entities or value chains create great investment opportunities.

Let us look at some of these opportunities in Malawian context. Firstly, is the investment opportunity in Cruise Line Operation. Lake Malawi offers a great investment opportunity for cruise operators willing to provide cruise experience in taking passengers to destinations.

Lake Malawi is 560 km long, 75 km wide and depth of 700 meters. The lake suffices the average requirement for the draft float of most cruise LPships.

Cruise ships on average require the excess of 10 metres to 30 metres of water from the depth of waterline to the bottom of the hull. Most cruise ships will also require the same measurements for tendering or docking at port of call.

Secondly the cruise tourism brings is an investment opportunity in the hotel and lodges industry. How? Hotels and lodges provide accommodation for cruise passengers arriving to the destination prior to the cruise, departing after the cruise or staying overnight within a multi-day port of call.

Thirdly, is the investment in shore excursions including site attraction facilities and areas visited by cruise passengers. Lake Malawi and Shire River have many ports of calls and interesting spots for shore excursions including national parks, cities, game reserves, historical cities, and mountains.

Lastly are investment opportunities in travel agencies, airports and airlines, ground transports, and water taxis. Travel Agents sell cruise tourism products to cruise passengers while ground transportation airports and airlines facilitate the arrival and departure of cruise passengers.

Water taxis and tender boats – the former is used to carry passengers to various places of attractions that can only be reached by a boat while the latter is used to transport people or supplies to and from shore or another ship when the ship is on anchor.

Where do the cruise travelers come from? Surveys show that most cruisers come from China, Western Europe, the Oceanic, North and South America countries. On continent level South Africa is a leading market for most of the African cruises. 

Malawi is also untapped market that can be easily exploited through marketing and publicity initiatives. Most of the Malawians are naive of the cruise vacations.  All this could change with cruise operators and travel agents offering the local market affordable cruise products. Good example could be special and short cruises aimed at maximizing the capacity like one-night round trip cruise at the lake.

Cruise operation is associated with large financial outlays of up to US$ 1 billion. It is this reason that no cruise operator is able to finance purchases of units with their own resources and therefore look for different solutions. Studies reveal that cruise vessels are very capital-intensive investments with returns estimated over a period of up to 30 years. The cruise operators and key players therefore usually pursue four main funding sources: i.e. private funds; bank financing; capital markets or special purpose vehicles.

Cruise operators do also raise their funds from public equities. Majority of leading cruise corporations are listed on the stock exchanges and a significant part of the funds they obtain are through public offerings. Potential local investors can opt to source funds from offshore lenders because the lending rates not just far much higher but also not flexible. In addition, an investor would also need to list their cruise entities on a money market like the Malawi Stock Exchange for publicity and public offerings.

How does the cruise industry’s future look like in this COVID 19 pandemic? The cruise industry is still navigating choppy waters but the future looks bright.

The pandemic has indeed devastated many tourism industries including the cruise travel, but it is hoped that majority of players in cruise tourism will emerge stronger. Just like in any other business the key to survive the effects of COVID 19 pandemic is for the key players and strategists to accept the reality of the situation and take big actions relatively quickly.

Studies found that cruise industry’s success depends on inherent risks of international travel and the loyalty of customers, 60% whom are repeat customers. Anti-Covid-19 measures on every cruise ship and the success of COVID-19 vaccinations have already created excitement among cruise fans that are hoping for a prospect of the full cruise industry rebound.

Cruise customers have rallied behind the industry and are ready to start sailing despite the pandemic. An independent survey of cruise customers found that when most countries briefly cancelled cruises last year, 67% of potential cruisers were planning to rebook a cruise or travel once restrictions lift.

Many cruise companies have reported higher end of historical ranges of voyage bookings for later this year. Other countries are benefiting from cruise tourism, why not us?

About the Author: Paul Nyasulu, The author is former cruise ship officer who served in esteemed world cruise liners.

Email: paulnyasulu@gmail.com

Disclaimer: The views expressed in the article are those of the author not necessarily of The Maravi Post or Editor

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