Cuba cruising gains life after May

Cuba cruising gains life after May

The Cuban
government has extended permission for many new arrivals by Royal
Caribbean International and Norwegian Cruise Line, signaling to travel agents and suppliers that selling
Cuba cruises is expected to be an ongoing business.

Royal Caribbean announced 38 new cruises, augmenting the
four it has previously put on sale. The added cruises will all be roundtrip
from Tampa on the Empress of the Seas, with the last one scheduled for Nov. 4.

Cynthia Martinez, director of global corporate
communications for Royal Caribbean Cruises Ltd., confirmed that Cuban
authorities have already approved the cruises.

The new four- and five-day cruises will feature day and
overnight visits to Havana, along with stops in Key West and Cozumel.

Norwegian will also offer four-day cruises, all departing
from Miami. It said the Norwegian Sky will depart each Monday from Miami and
offer an overnight in Havana as well as a call on Great Stirrup Cay before
returning on that Friday.

The trips will begin in June and run through December.
Norwegian already has five May departures that include a stop in Havana.

Norwegian plans a selection of 15 half- and full-day shore
excursions in Havana that comply with the U.S. Treasury Department rules
governing Cuba travel. Guests will have the chance to savor a farm-to-table
dining experience, explore the flora and fauna of Soroa or see modern Havana in
a classic American car, among other options.

Other cruise companies have been given permission through
May to dock in Cuba. They include Pearl Seas Cruises, Azamara Club Cruises,
Oceania Cruises and Carnival Corp.’s one-ship Fathom brand.

Fathom’s vessel, the Adonia, is scheduled to revert to
service for P&O Cruises in June, but Carnival said it was working to have a
ship from another brand cleared for Miami-Cuba itineraries.

“We remain optimistic that we will be approved soon,”
said Roger Frizzell, chief communications officer for Carnival.

There remains some risk in committing to a program of Cuba
sales because the attitude of the Trump administration toward travel to the
country has yet to be defined or tested. Should Trump revise the Obama opening
on travel to Cuba the way he has changed the rules for travel for refugees and
certain Middle Eastern countries, the Cuba itineraries might face a quick
revision.

Both Royal Caribbean and Norwegian have limited their
exposure to cancellations by offering relatively short cruises, which are
easier to fill closer to departure than cruises of a week or longer.

Asked about the risks of further expansion in Cuba, Royal
Caribbean International president and CEO Michael Bayley said in a conference
call with investors that Royal would remain flexible and roll with the developments.
“We’ll just adapt to what comes toward us,” he said.

One travel agent said selling the Cuba cruises has not been
as easy as anticipated. “I thought it would be a bang-bang situation to
sell,” said Paul Casella, an agent at Master Travel and Cruises of
Wellington, Fla. “But the feedback I’m getting from my clients is as long
as [Raul Castro] is in charge, they’re not going. They want the money to go to
the people instead of the government.”

Suppliers said the handful of departures available are selling
well. Norwegian has seen “great demand” from guests, according to
president and CEO Andy Stuart.

Royal Caribbean International Ltd. chairman Richard Fain
said in the conference call that “adding Havana has generated super
booking activity for those few lucky itineraries.” But he also noted that
their contribution to the bottom line at the company is “marginal,”
and “it will be quite some time before this is even remotely material.”

John S. Kavulich, president of the U.S.-Cuba Trade and
Economic Council, said that if the Empress sails at capacity, the total number
of passengers who would visit Cuba in 2017 will be 22,700, which he estimated
would render gross revenue of approximately $29.5 million to Royal. The 11
sailings would represent 0.38% of the total passengers carried by the company
in 2016 and 0.37% of gross revenue in 2016.

He said that adding seven cruises changes the number of
passengers Royal could carry to Cuba from a potential 9,080 to 22,700 and
raises gross revenue from a potential $11.8 million to $29.5 million.

In the year just ended, the company carried more than 5.7
million passengers and had revenue of more than $8.5 billion.
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Royal Caribbean recently added 38 Cuba cruises on Empress of the Seas.

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