As Caribbean destinations debate increasing cruise passenger taxes to fund infrastructure and public services, some industry leaders are warning that focusing too heavily on fees may cause ports to overlook larger economic opportunities.
Speaking during the Florida-Caribbean Cruise Association’s Leadership Series, Alexander Gumbs, CEO of the Port St. Maarten Group, argued that cruise tourism is sometimes assessed too narrowly through the lens of taxation rather than its broader economic contribution to destinations.
According to Gumbs, policymakers and tourism authorities should instead pay closer attention to how cruise passengers actually spend money during their visits — and how destinations can maximize that spending.
Cruise passengers generate significant short-stay spending
Data from St. Maarten illustrates the potential economic impact of cruise tourism. On average, cruise passengers spend about five hours on the island during a port call and generate around $163 per person in local spending.
While cruise visitors stay far less time than overnight tourists, Gumbs noted that their spending per hour can actually exceed that of stayover visitors when adjusted for time.
This perspective challenges a common perception in tourism debates, where cruise passengers are sometimes viewed as lower-value visitors due to their short stays.
Instead, the economic impact may depend less on the duration of the visit and more on the quality and diversity of experiences available at the destination.
Experiences, not taxes, may drive higher economic returns
For Gumbs, the key question for Caribbean destinations should not simply be how much they charge cruise lines or passengers in taxes, but how effectively they encourage visitors to spend money while onshore.
Investing in compelling experiences — from cultural attractions and local gastronomy to excursions and retail offerings — can naturally increase visitor spending without necessarily raising port fees.
“If someone finds something they want to do, something they enjoy or something that excites them, they will spend,” Gumbs explained during the discussion.
Without fully showcasing the depth of experiences available on an island, destinations risk “leaving the dollars on the table.”
Differentiation among Caribbean destinations
Another challenge highlighted in the conversation is the perception that Caribbean destinations are often marketed as interchangeable cruise stops.
Gumbs stressed that the region’s long-term success will depend on highlighting the distinct identity of each destination, rather than presenting the Caribbean as a single homogeneous tourism product.
“The Caribbean is not a pool of destinations that are all the same,” he said, noting that cultural diversity, local experiences and infrastructure investments can help islands stand out in an increasingly competitive cruise market.
Infrastructure and resilience remain critical
Infrastructure also plays a key role in strengthening cruise tourism’s economic impact. Ports must balance efficient passenger flows with attractive visitor environments that encourage spending and positive experiences.
For St. Maarten, resilience has already been tested. The island’s port infrastructure was severely impacted by Hurricane Irma in 2017, but the recovery process ultimately accelerated modernization and innovation.
Reflecting on the experience, Gumbs described how crises can sometimes create opportunities for strategic transformation.
A broader approach to cruise economics
As Caribbean governments and port authorities continue discussions about passenger taxes and infrastructure funding, the debate increasingly revolves around how to maximize the overall economic contribution of cruise tourism.
While fees remain one tool available to policymakers, industry leaders suggest that enhancing visitor experiences, investing in infrastructure and strengthening destination identity may ultimately generate greater long-term value for local economies.
With cruise traffic across the Caribbean expected to remain strong in the coming years, the strategic choices made by ports and tourism authorities could determine how much of that economic potential is actually captured by destinations.
One Response
I read with interest your recently published article by Alexander Gumbs, decrying potential increases in cruise ship taxes in the Caribbean. As the CEO of the Port St Maarten Group, Mr Gumbs obviously has a vested interest in cruise tourism in the region. To be fair, I should declare my opposite vested interest through my professional involvement for many years in resort development consultancy in the Greater Caribbean area.
Mr Gumbs argued that “cruise tourism is sometimes assessed too narrowly through the lens of taxation rather than its broader economic contribution to destinations and tourism authorities should instead pay closer attention to how cruise passengers actually spend money during their visits.”
As a person who spent three years of my early career as a hotel officer on board cruise ships and later was Hotel Services Vice President for four explorer cruise ships, I believe that I have a well-founded viewpoint in evaluating how passenger spend and taxation in the Caribbean applies to the cruise industry, as opposed to the stay-over visitor tourism of island hotels, condo rentals, timeshare and marinas in the region.
Today’s giant cruise ships have large scale leisure facilities on board including restaurants, bars, shops, casinos and water parks which now present a direct disincentive to spending time – and money – in Caribbean ports. Ships now ban bringing duty free liquor on board in calling ports – on “security” grounds. Ships have their own jewelry and electronics shops on board. While St Maarten is still one of the more successful cruise ship calling ports for retail outlets, even there the size of the duty free retail sector in Philipsburg has diminished considerably in recent years, thanks to direct competition from onboard shops.
Ships’ commissions for shore excursions have risen over the last few decades from 10% to 50%. That inevitably drives shore excursion prices significantly higher, as local companies struggle to operate vehicles and boats on a viable basis. The end result today is that fewer passengers actually go on excursions and more passengers never go ashore at all in many Caribbean ports. On that basis, trying to compare “spend per hour” from the reduced percentage of cruise ship passengers going ashore against the spend of longer term stay-over tourists on the islands is fanciful. The average spend per cruise ship passenger, quoted in the article at $165 (over $30 per hour ashore), also seems dubious.
Average cruise ship ticket prices have declined in real terms over recent decades, attracting more budget-oriented passengers. After having to haggle with cruise ship passengers over the fare, most taxi drivers in the Caribbean will tell you – from their personal observation – that the average purchase per person ashore is more like “two beers and a tee shirt”. How does that start to even compare with the average stay-over guest’s vast spend on island accommodation, restaurants, bars, car rental and day trips?
That brings us to the question of comparables in operating costs and taxation. Cruise ships inevitably benefit from much lower operating costs, due to their tax structures in off-shore jurisdictions and from their ultra-low direct wage costs for most of their third world sourced crew. However, island based companies in the hospitality sector pay high local taxes and employ local staff – at the very least – on a legal minimum wage basis. Those local payrolls, including income tax and national insurance contributions, have a beneficial multiplier effect across island economies on a much higher ratio than direct cruise ship revenue.
In the Caribbean cruise ships currently pay very low port taxes on a per passenger basis, contrary to the much higher taxes levied in Alaska, New England, Canada and the Mediterranean. It appears that the Caribbean genuinely needs to catch up or remain being unfairly exploited in this regard.
In the meantime, the stay-over visitor contributes to local taxation via very high taxes for airport arrivals / departures and on local air tickets themselves. Incidentally, these high airline related taxes have decimated the Caribbean’s intraregional air travel, while local airlines have marginal viability. Hotel occupancy taxes and sales / value added taxes represent further stay-over visitor contributions, as well as customs import duty on the multiple items which those visitors consume on island.
The imbalance in operating costs, taxation and profitability seems clear between the cruise industry and the Caribbean based hospitality sector. However, there is an even greater and longer-term insidious impact on the region. The Caribbean currently has the highest density of cruise ship operations in the world, particularly, in the Caribbean’s winter high season.
It is my contention that this high-volume presence acts in many ways as damaging unfair competition to the region’s onshore accommodation providers. This is particularly impactful when winter high season occupancy and room rates are critical for the financial success of Caribbean resorts – but most cruise ships reposition to other high season destinations elsewhere in the summer. Furthermore, this level of competition from the cruise sector represents a significant economic challenge to the viable development of new resorts in many islands, which already struggle with high construction costs, high energy costs and high shipping costs.
I really encourage governments in the region, as well as the Caribbean Tourism Organization and the Caribbean Hotel & Tourism Association, to re-evaluate this imbalance and adjust their policies going forward.
Robert MacLellan
Managing Director,
MacLellan & Associates
http://www.maclellancaribbean.com