Luxury cruise lines are staying while mass market are heading offshore
Victoria’s decision to hike cruise taxes has not paid off, with cruise companies fleeing the state.
A disastrous decision by Victorian Labor to raise Melbourne port fees by 15 per cent has tourism operators begging for a resolution as the world’s best cruise companies quit the state for ports like Singapore, where it is 25 per cent cheaper to berth.
Cunard and Princess cruises have ceased homeporting out of Melbourne, meaning they no longer begin their voyages in the capital.
Because of the unexpected nature of the increase in 2023, the cruise lines could not pass on the Port of Victoria taxes to passengers — particularly to the guests who had already paid their fare, making Melbourne far more expensive than rival ports in Asia.
Virgin Voyages last year pulled out of Melbourne’s Station Pier after a brief cruise season.
Victoria’s shadow minister for ports and freight Roma Britnell on Monday said the state government had set about trying to raise money to fix the port through taxes but made the problem worse.
“They not only failed to raise money, they lost money, there is no income coming in at all,” said Ms Britnell, adding the lack of cruise ships coming into Victoria was a concern for ancillary services.
“Visitation is dropping down … it’s another example of how the Labor government does not understand how to grow Victoria.
“And, it sends a strong message to people outside of Victoria that this is not the place to do business. This demonstrates you can’t tax your way out of debt,” said Ms Britnell. The 2023 decision was “starting to play out and was only going to get worse”.
Further north, Disney Cruise Line, which was sailing out of Sydney, will exit Australia after this coming season.
Disney will decamp to Singapore where it is cheaper to operate and it will have access to a larger pool of passengers, particularly from Asia.
Regent Seven Seas vice president of sales and general manager Asia Pacific, Lisa Pile, said Singapore costs cruise companies around 25 per cent less than Australian ports. And Japanese, Korean and Chinese tourism authorities are chasing cruise companies to berth their ships.
“Asia is doing a lot of work and knocking on cruise companies’ doors,” says the Sydney-based Ms Pile. Regent Seven Seas is owned by Norwegian Cruise Line Holdings.
Her colleague, the Miami-based Steve Odell, Oceania and Regent Seven Seas senior vice president for international and consumer sales, says Disney would have elected to move to Singapore with a bigger ship and a five-year contract.
“They will have a bigger pool of customers, such as the 1.4 billion (people) Indian market,” he said.
Across the Tasman the New Zealand cruise season is down 40 per cent for the next summer, with Ms Pile noting cruise ships add tremendous economic benefits for regional tourism operators.
But, on a positive note, Mr Odell said no ultra-luxury ships had pulled out of Australia, and that’s where the growth will come from.
Ten cruise itineraries costing $40,000 a night on Regent Seven Seas Prestige recently sold out to a range of luxury buyers, including Australians, following a global launch across Sydney, London and New York.
“This is the newest, shiniest ship and people want it,” said Mr Odell.
Norwegian Cruise Line Holdings is expanding, with the addition of more ships.
The NCLH brand, the world’s third-largest, which counts Regent and Oceania as its luxury brands, described a flight to luxury among Australian cruise-goers.
While mainstream brands such as Cunard have exited Australia and the Royal Caribbean and Carnival Cruise Line -- the world’s largest -- have cut capacity, luxury cruise lines based in Australia are sourcing passengers both domestically and from Britain, Germany and the United States.
“Luxury cruising in Australia is booming,” said Mr Odell. “Luxury travellers are constantly looking for what’s next. They’re taking more trips than ever, they’re spending more than ever, and they’re staying in larger rooms,” he said, adding that the luxury traveller is demanding longer holidays, increased privacy and premium amenities.
“The older generation, those getting into their eighties don’t necessarily want to fly,” he said, adding they are happy to cruise Australian waters.
Mr Odell said he has been calling on the NSW government to fix local port infrastructure, particularly in Sydney where there is a lack of berths.
“Certainly infrastructure here needs to improve, I can remember talking about this for ten years.
“If Australia and New Zealand want to be serious players we need to look to the future,” he said. “There’s a lot of economic benefit from the cruise industry.
“Should we be resting on our laurels or accommodating the growth that is coming?”
NCLH has 13 new ships coming. These include four new Oceania ships and two new Regent Seven Seas ships. Oceania Cruises’ 1250 guest ship Riviera will sail Australia from November to next March.
“It’s about expansion, big expansion,” Mr Odell said.
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