TREND: Cozumel, in the Mexican state of Quintana Roo, is the third most popular cruise port in the world, behind Florida´s PortMiami and Port Canaveral. A No Sail Order, issued by the CDC, suspended operations of cruise ships in waters of US jurisdiction from April to July 24 to prevent further spread of COVID19. A gradual phase-in of less than a dozen vessels to Cozumel and its vicinity could start in August of 2020.
•The port of Cozumel saw the arrival of 4.6 million passengers and 1,366 cruises in 2019. The island benefits from advanced infrastructure for tourists. It belongs to a cluster of popular seaside destinations in the Mexican Caribbean, like Cancún, Majahual, Playa del Carmen, and Tulum. The area receives nearly 70 percent of all travelers by cruise ship in Mexico annually.
•Global economic impact of the cruise industry amounts to $134 billion in output, 30 million passengers (in 2019), and a million jobs, according to data from CLIA, the sector´s largest trade association. The value of shares of leading cruise lines has fallen by more than half. However, trip cancellations by customers demanding refunds leave companies vulnerable after reduced cash flows.
•For the first quarter of 2020, Cozumel saw a drop of nearly 20 percent of passengers (260 thousand) compared with the same period of last year. The reduction in the number of visitors until restrictions are lifted later in the Summer could triple that amount. The period from November to April is generally the busiest in the port because of northern travelers escaping from the cold. Worries to local workers, businesses, and officials come from disruption to all travel activities in the area, not just cruise ships. In Mexico, tourism represents 8.7 percent of its GDP. Tourist destinations are feeling the brunt of the impact: Quintana Roo is the state with the most jobs lost during the quarantine.
• The tourism industry in Mexico still waits for a rescue plan by the Mexican Government. Given its importance for the economy, the number of furloughed or laid-off workers, and usefulness for promoting the country´s best features, it comes as a surprise that help has not arrived sooner. The sector believes that it could compensate for some losses soon. For example, bookings have begun increasing for the rest of 2020 and 2021 after companies offered deals, onboard credits, and more flexibility for sudden changes in itineraries.
TAKEAWAY: North Americans make up half of all cruise passengers worldwide, a third of all cruises sail to in the Caribbean, and Cozumel takes advantage of both trends. The industry´s target demographic is mostly middle-aged and elderly, the latter more vulnerable to COVID19. Coordination between US and Mexican authorities, cruise lines, and complementary businesses in ports of call, is crucial for recovery. Cozumel is an example of deep integration between departure and arrival points for tourists, and where political decisions in one place influence the other.
* Riskop is a consulting firm focused on strategic intelligence and risk mitigation for investors and decision-makers in complex sociopolitical environments. It is located in Monterrey, Mexico. Twitter: @RiskopMx
