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DP World chairman Sultan Ahmed Bin Sulayem welcomed the new decree, saying it is 'a very positive move that will make a tangible difference to the cruise industry in Dubai'.
Dubai currently serves as a home port for five of the world's leading cruise lines such as Costa Cruises, Aida Cruises, Royal Caribbean International, TUI Cruises and FTI Cruises. In addition, more than 20 world-class cruise lines have Dubai as a port of call in their international itinerary.
Last year Dubai catered to 396,500 cruise tourists who arrived from 108 ship calls, and the emirate is expecting that figure to rise to 420,000 cruise tourists in 2012. Looking ahead, Dubai is projecting it will receive 500,000 cruise passengers from 145 ship calls in 2015, with part of that growth being facilitated by an expansion of Port Rashid that will enable it to cater for as many as five cruise ships at one time.
Challenges abound
However, while Dubai can boast that its cruise tourism sector has achieved steady growth in recent years, it currently faces many of the same headwinds that are plaguing the cruise tourism industry worldwide, says cruise industry analyst Tony Peisley.
He told AMEInfo that cruise lines' profits are 'way down' globally due to rising fuel costs and high regulatory fees, while at the same time the sluggish economy, particularly in Europe, is forcing the operators to lower their prices. Therefore, even though passenger numbers may still be strong, many cruise liners are losing money because of the discounts that customers are getting.
He cites the recent decision by Royal Caribbean to pull its Middle East cruises out of Dubai after this winter as a reflection of the difficulties facing the market. "What is happening is that cruise lines are being less patient and are not keeping ships in places if they think they can make more money somewhere else with those ships," he said.
"So it's not just Dubai," he continued. "The fact that a ship is sailing full doesn't mean that it is sailing full as profitably as if it were sailing full somewhere else. I suppose the message from this is that the security of home ports and destinations is much less in the cruise sector than it used to be."
An even a bigger factor hampering the Dubai cruise industry is the fact that repeat demand is falling off, Peisley argued. The reason for the decline is that the other ports in the region are still not where they need to be to offer the kind of itinerary that will keep people coming back. So the problem is not Dubai, but the other ports of call in the region not doing enough to attract visitors.
"People moan about all the ports in the Caribbean being the same, but it doesn't stop them from going back because all those places provide a certain level of attractiveness despite the fact some are a bit tired. So it's generally a destination that people will keep going back to again and again, and I don't think you have that on an Arabian Gulf cruise," he said.
Strong foundation for future growth
Despite the challenges it faces, Dubai still offers a very strong proposition for cruise line operators, he maintains. "Dubai has a very good name and clearly has a strong tourist appeal, so it's not like all the ships are suddenly going to disappear," he said.
He believes the departure of Royal Caribbean is a worrying sign for the cruise tourism sector in the emirate, but it's not 'cataclysmic'.
"The ports people in Dubai will have to change their thinking. They need to drive the destination more and they'll need to be more cautious on what they build in terms of additional infrastructure," he said.
And while it is unlikely that Royal Caribbean will come back again soon, it does not mean they will never return to the emirate. "They may find they have too much capacity in some other market, in which case Dubai may become more attractive. Everywhere they go they have problems and issues, and when these issues arise they are reacting to them quicker than they used to. So that means in a couple of years they might come back," he said.
Jeff Florian, Senior Reporter
