Demand for cruse lines is expected to fall following the Costa Concordia disaster during the peak booking season.
Cruise ship disaster expected to hit regional tourism
The Costa Concordia cruise ship disaster off the coast of Italy is expected to put pressure on the industry just as the UAE is striving for the sector to play a bigger role in its tourism strategy.
"There will be a short-term impact because the first quarter is the 'wave period' for cruise bookings, and some people, especially first timers, may be put off cruising in the short term,"said Ashok Kumar, the managing director of Cruise Master Middle East, one of the region's biggest cruise agencies, which sells packages for Costa, among other major cruise lines.
The cruise industry has become an increasingly important part of Dubai's and Abu Dhabi's tourism strategy, with strong annual growth over the past decade.
In 2001, Dubai received just 6,900 passengers on a handful of cruises that stopped there.
Last year, the emirate received about 135 cruise ships with 375,000 tourists, according to figures from the Dubai Department of Tourism and Commerce Marketing.
In October, Dubai announced plans to build a big cruise terminal.
And in Abu Dhabi, MSC Cruises in the fourth quarter of last year became the first cruise ship company to use the capital as its base for sailings.
But after the Costa Concordia ran aground on rocks near Italy's Tuscan coast last Friday with more than 4,200 people on board, leaving 11 confirmed dead, there are widespread fears the industry could be dented.
"We believe there is the potential that this event could weigh on booking trends across other cruise brands," the ratings agency Standard & Poor's said.
"The timing of this event could weaken 2012 booking trends given the fact that it occurred early in the wave season, the two-to-three month period in which a substantial portion of cruise business is booked," S&P said.
"We have now also considered a scenario where there is some level of price discounting across the sector in response to weaker than anticipated wave season demand stemming from this event."
Costa was one of the first cruise lines to sail its cruises out of Dubai. The Costa Favolosa, which can carry 3,800 guests, is based in the emirate for this winter season.
Mr Kumar said this company had a couple of guests booked on the Costa Concordia for sailing this month and next month, but that they had been accommodated on other ships after the disaster. Long-term effects on the sector were likely to be minimal because "most travellers have short memories", he added.
Sunil D'Souza, the regional travel director at Kanoo Travel, agreed. "Accidents do happen with every mode of transport, and I think it's quite rare with the cruise liners," he said. "I think people will get over the negative situation and I don't think it will have an immense negative impact on our business."
Premjit Bangara, the travel manager at Sharaf Travel in Dubai, said his company had received calls from some passengers who had Gulf cruise bookings and were now apprehensive.
"What we've done is we've been focused on telling them that in any business you have mishaps and cruising still is a very safe business," he said.
Cruise tourists tend to spend more than US$300 (Dh1,100) per person per visit ashore, while crew members spend about $150, research by the Abu Dhabi Tourism Authority shows.
But some in the UAE have observed a decline in spending by cruise passengers, many of whom are from Europe, where economic conditions are weak.
"What I have seen in the past month is that the tourists are not spending like before," said Vineeth Kumar, the general manager at Delta Travel & Holidays, which provides vehicles for desert tours and other excursions for cruise passengers coming into the Emirates. "They'd rather go for a city tour, which is Dh100, Dh150, and they don't go for a desert safari, or a full day thing, which is $100."
S&P said before the Concordia disaster that its outlook for the cruise sector this year was "for minimal growth in net revenue yields", reflecting its "expectations for modest economic growth in the US and the UK, and for a mild recession in first half of 2012 in the euro zone.