CBR Odo Commentary – Opening of Cuba to US cruising could have far reaching implications

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Written by Kari Reinikainen Kari Reinikainen

Category: Top Headlines Top Headlines

Published: 18 December 2014 18 December 2014

The opening of Cuba for cruise passengers from the US could have far reaching consequences for the cruise industry in the region.

On Wednesday, the US and Cuba agreed to restore diplomatic ties for the first time since 1961 and the US agreed to ease travel restrictions between the two countries. However, it was not immediately known what this would mean in practice.

We think the cruise industry would be a major beneficiary from lifting of all travel restrictions currently imposed by the US government on its citizens.

Cuba’s tourism infrastructure would be unlikely to be able to cope with an influx of large numbers of Americans wishing to visit the country. Cruise ships would be able to overcome this be offering itineraries with overnight stays; Cuba is located only some 90 miles south of Florida, which would allow this on even short duration itineraries.

Cuba is virtually the only island in the Caribbean that can offer city destinations to visiting tourists, which could broaden the appeal of the region.

The introduction of Scandinavian style cruise ferries that carry passengers in good quality accommodations and their vehicles plus roro freight, could also be on the cards.

It is possible that the availability of berthing facilties in major locations, such as Havana, could pose some problems to cruise lines should the demand for cruises thsat visit Cuba reach a high level in a short period of time, which we think could be the case.

The opening of Cuba would, quite likely, have a negative impact of cruise tourism in the Bahamas as many lines would probably replace Nassau with Havana on their itineraries.

US, Cuba restore diplomatic ties, travel restrictions eased, cruise shipping shares gain

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Written by Kari Reinikainen Kari Reinikainen

Category: Top Headlines Top Headlines

Published: 18 December 2014 18 December 2014

The US and Cuba have agreed to restore diplomatic ties, which sent shares in listed cruise shipping groups sharply higher. However, it is not yet known what promised easing of travel restrictions would mean in practice.

The United States and Cuba agreed on Wednesday to restore diplomatic ties that Washington severed more than 50 years ago, and President Barack Obama called for an end to the long economic embargo against its old Cold War enemy, the Reuters news agency reported yesterday.

“Travel restrictions that make it hard for most Americans to visit will be eased, but the door will not yet be open for broad U.S. tourism on the Caribbean island,” Reuters said.

“Obama's announcement also will not end the U.S. trade embargo that has been in force for more than 50 years. That is codified in legislation and needs congressional approval. Obama said he would seek that approval but likely faces a struggle,” the news agency stated.

However, it was not immediately clear what the warming of relations between the two countries that are separated only by 90 miles of sea would mean in practice.

Shares in listed cruise shipping companies, however, rose sharply on the news. Norwegian Cruise Line Holdings gained 4.57% to close at $45.76, Carnival Corp rose 3.46% to $44.61 in New York, while Carnival plc in London firmed 1.1% to finish trading at £28.01. Royal Caribbean Cruises Ltd (RCCL) rallied 6.62% to $81.54 and 0.7% to NOK585.0 in Oslo. The news came late in the day in Europe, which explains the smaller gains in European listed shares than those quoted in the US.