With cruise tourism in the Philippines on an upward growth trajectory, the emergence of this sector is bringing along with it growth opportunities as well as challenges.
Tourism undersecretary Benito Bengzon Jr revealed that there were 190 cruise calls this year, up from 140 the previous year.
Boracay, for instance, is one destination that is if continued to accommodate mega cruise ships with more than 1,000 passengers, it might exceed the tourist carrying capacity which was recently imposed on the popular island.
When interviewed on the sidelines of the Kain Na (Let’s Eat) culinary tourism launch in Davao last Friday, Bengzon Jr said that Boracay’s local government has to decide whether it would continue to allow large cruise ships to dock at the island.
A Boracay-based tourism member added that other concerns the island had was the lack a proper cruise terminal, the impact on coral reefs when the ships drop anchor, and low earnings from shore excursions as cruise passengers do not stay overnight and spend lesser than longer-staying tourists.
But Travel Plus International’s sales and reservations manager Tonette De Vera offered differing views, indicating that during shore excursions, cruise passengers would usually lunch on and buy souvenirs on Boracay – and other similar island destinations – before returning to the ship in the afternoon.
Destinations should therefor roll out more creative offerings to capture greater spending from cruise visitors, urged de Vera.
Moreover, word-of-mouth endorsement and social media postings by cruise passengers to Boracay and similar destinations are valuable marketing opportunities for the country, she added.
Cruising also helps to promote new and lesser visited destinations, particularly for smaller expedition-type ships of up to 300 pax, which typically go to places inaccessible to mega ships, noted Benjie Bernal, tour operations manager of Sharp Travel Services.
For example, Kalanggaman Island in Leyte became more popular when his company included it in the cruising itinerary several years ago. Other recent additions include Calaguas Island in Camarines Norte and Batanes.
With lower fuel prices and strong economic growth, the global airline industry net profit is expected to hit US$35.5 billion in 2019, slightly ahead of the US$32.3 billion expected net profit in 2018 which saw profitability squeezed by rising costs, according to IATA forecasts.
It is expected that 2019 will be the 10th year of profit and the fifth consecutive year for airlines to deliver a return on capital to investors.
“We had expected that rising costs would weaken profitability in 2019. But the sharp fall in oil prices and solid GDP growth projections have provided a buffer. So we are cautiously optimistic that the run of solid value creation for investors will continue for at least another year. But there are downside risks as the economic and political environments remain volatile,” said Alexandre de Juniac, IATA’s director general and CEO.
The 2019 industry outlook is based on an anticipated average oil price of US$65 per barrel, lower than the US$73 recorded in 2018, following the increase in US oil output and rising oil inventories.
Fuel is expected to account for 24.2% of the average airline’s operating costs, an increase from 23.5% forecast for 2018.
Meanwhile, passenger traffic (RPKs) is expected to grow 6% in 2019, outpacing the forecast capacity (ASKs) increase of 5.8%, and remains above the 20-year trend growth rate. This in turn will increase load factors and support a 1.4% increase in yields. Passenger revenues, excluding ancillaries, are expected to reach US$606 billion (up from US$564 billion in 2018).
Asia-Pacific carriers are expected to report a US$10.4 billion net profit in 2019, up from US$9.6 billion in 2018, with net profit per passenger projected to be US$6.15 (3.8% net margin). Lower fuel costs, low levels of fuel hedging and strong regional economic growth are supporting profitability in 2019 in this region, according to IATA.