Cruise traffic returns to PortMiami as cruise lines and Miami-Dade invest in future growth
By Joseph A. Mann Jr.
In the early months of 2020, COVID-19 outbreaks on cruise vessels around the world prompted strict government rules on ship movements, causing companies to cancel all cruise activity and paralyzing Miami’s world-class cruise industry. The pandemic converted part of PortMiami, the world’s largest and busiest cruise port, into a ghost town, and also impacted its role as a major cargo center. Now, after more than two years away, the prodigious floating cities have returned to Miami. Since the U.S. Centers for Disease Control and Prevention (CDC) discontinued its strict COVID program for cruise ships in July 2022 and allowed cruise line companies to set their own policies for managing the disease, cruise lines working from PortMiami began scheduling routes, advertising special deals, booking passengers, and attempting to return to normal as quickly as possible.
“Cruising is back,” says Fort Lauderdale-based Kristina Cooper, an independent travel agent with Travelmation LLC who works with many clients traveling through PortMiami. “The travel business and cruising in particular are really booming now that COVID testing and vaccine requirements have been lifted.” Cooper is also the vice president of finance and administration for Travelmation, a licensed travel agency with more than 1,000 agents nationwide which also holds the title of Authorized Disney Vacation Planner. “Everybody was ready to sail and cruising really spiked in popularity. It felt like the black cloud over cruising was lifted.”
Another expert in tourism also sees a dramatic improvement in PortMiami’s cruise business. The cruise sector’s post-COVID recovery at PortMiami is “amazing,” says Patricia Drolet-Sadar, adjunct professor at Florida International University’s Chaplain School of Hospitality and Tourism. “The cruise capital of the world is back in full operation,” she says, following a difficult period when some cruise lines faced uncertain financial futures. As for PortMiami, “they have done an exceptional job of attracting new cruise lines and retaining previous [ones]. New investment and continuous improvements” by the port, Miami-Dade County, and the cruise companies are critical to the port’s current and future success.
PortMiami is a huge economic machine. The port – both cruise and cargo sides – has an economic impact of $45 billion on the state’s economy, according to a PortMiami report from fiscal year 2021. It also supports more than 334,000 jobs statewide, including direct, indirect, and induced employment. The cruise industry at PortMiami generated over 30,000 jobs in 2017, according to a study cited in November by Miami-Dade County, and had an economic impact of $5.8 billion for the county.
HOW COVID SANK THE INDUSTRY
The black cloud over PortMiami began gathering after a record year for passenger traffic in 2019. According to port figures, PortMiami handled more than 6.8 million passengers in fiscal 2019, a record for the port, up from nearly 5.6 million in FY2018, 5.3 million in FY2017 and just under 5 million in FY2016.
Owned by Miami-Dade County, the seaport operates on a fiscal year starting on October 1. For FY2020, there were nearly 3.5 million passengers before cruises were halted by the CDC’s “no sail” order on March 14, 2020, so most of this total covers the period between Oct. 1, 2019, and mid-March 2020. In FY2021, the passenger total collapsed to 252,000. At the time of GLOBAL MIAMI’s editorial close, PortMiami had not released passenger figures for FY2022. But industry and private sector sources believe it will be much higher than the previous year.
The world’s most important cruise lines sail from PortMiami. These include Carnival Cruise Line (the world’s largest cruise company), Disney Cruise Line, MSC Cruises (third largest internationally), Norwegian Cruise Line, Royal Caribbean Group (the world’s second-largest cruise operator), Viking Ocean Cruises, and Virgin Voyages. Carnival’s parent, Carnival Corp. & plc, also owns Princess Cruises, Holland America Line, Seabourn, P&O Cruises (U.K.) and Cunard. Royal Caribbean owns Celebrity Cruises and Silversea Cruises.
PENT-UP DEMAND
The lack of COVID restrictions and pent-up demand put wind in the sales of cruise companies in 2022. Major cruise lines report that recent bookings have been strong and project positive growth in calendar year 2023, despite continuing to sustain financial losses. For Dec. 31, 2022, for example, the website cruisetimetables.com said that PortMiami was expected to embark about 16,580 passengers on five ships, two from Carnival, two from Royal Caribbean and its subsidiary Celebrity, and one from Norwegian.
A Norwegian Cruise Line official said that Nov. 2022 was “the best-booked month” in the history of the company. And Norwegian’s parent, in its third-quarter 2022 SEC report, said that overall occupancy was at about 82 percent for the quarter and that the company expected “historic occupancy” figures by second-quarter 2023.
But because the massive cruise ships were idle for many months due to COVID, companies are still reporting net losses and heavy debt loads, despite receiving some financial relief from obligations to Miami-Dade County. In its third-quarter report, for instance, Norwegian posted a net loss of $295.4 million (GAAP), compared to a loss of $845.9 million in Q3 2021. It also expects a net loss in Q4 2022 even with occupancy projected at the mid-to high-80 percent range.
In its fourth quarter 2022 business update, Carnival’s parent reported a net loss of $1.6 billion on revenue of $3.8 billion, or 80 percent of 2019 revenue. Carnival said its full-year 2023 advanced bookings are “higher than its historical average at higher prices” in constant currency, and that “booking volumes during the fourth quarter of 2022 for 2023 sailings are nearing 2019 comparable booking levels, with November booking volumes exceeding 2019 levels.”
The Royal Caribbean Group logged a small profit of $33 million for Q3 2022, on revenue of $3 billion. RCG reported its load factors during the quarter were 96 percent overall, with sailings to the Caribbean at nearly 105 percent. RCG also expected strong bookings in Q4 2022 and for full year 2023, at “record pricing.”
NEW CAPITAL IS KEY
A critical sign of the cruise industry’s intentions for PortMiami is capital investment, and two major agreements were finalized over the last year that will help ensure the port’s dominant role in the sector.
In November 2022, Miami-Dade County approved a 50-year agreement with Royal Caribbean covering new port construction and development that will create thousands of cruise-related and construction jobs and generate $2.8 billion in net revenues for the county. It also extends and/or modifies existing leasing accords that provide the county with revenue.
Under this and other agreements with cruise line partners, PortMiami is now projected to receive 10.2 million passengers per year by 2031, according to the county. That’s up from FY2019’s pre-COVID peak of more than 6.8 million passengers, and means a large increase in cruise line payments to county coffers over time. The complex agreement covers a variety of areas, including:
- Construction of a new terminal (Terminal G) for Royal Caribbean and its subsidiaries, and a new berth (Berth 10). The county will initially finance this project (for up to $325 million) and Royal Caribbean will reimburse 47 to 53 percent of the costs.
- Completion of Royal Caribbean’s new world headquarters (including upgrades to existing structures) at PortMiami. The company had already spent $70 million on the headquarters project and campus before work was halted during the pandemic. This project, estimated to cost $450 million, will be financed by the county. Royal Caribbean will repay the county 125 percent of capital construction and financing costs.
- Royal Caribbean guarantees the county minimum annual payments for burgeoning passenger traffic over time. RC, like other cruise lines, pays the county per passenger fees for wharfage, dockage, and harbor services. These fees will be increased over the life of the agreement; as passenger traffic grows, the county receives more money.
MSC INVESTING $350 MILLION
Another industry leader, MSC Cruises, began work in March 2022 on a $350 million terminal (Terminal AA/AAA) at PortMiami that will be the largest cruise terminal in the United States upon completion. The four-story building, to occupy 490,000-square-feet, will be able to berth three advanced generation cruise ships at once and handle 36,000 passengers each day. Part of Switzerland-based MSC Group, MSC Cruises will use the terminal to expand its presence in the North American market. The impressive new structure is being built by Italy-based Fincantieri Infrastructure and designed by Miami-based Arquitectonica.
Carnival also inaugurated the expansion and renovation of its Terminal F in November 2022. The project cost $195 million and is the third terminal used by Carnival at PortMiami.
These outlays come on top of hundreds of millions of dollars already invested by companies like Carnival, Norwegian, Virgin Voyages, and others in a variety of projects, as well as by the port in areas like shore power technology designed to reduce pollution.
If PortMiami is to maintain its ascendancy among cruise ports, it must remain welcoming, easy to access, and user-friendly. “Cruise terminals are really the first impression travelers have on their vacation, so having a positive experience is so important,” says Cooper, who has been booking clients to PortMiami since 2017. “The terminals are an extension of the brand’s guest experience, before guests even get on the ship,” she says. “Because PortMiami is such a major player in the cruise industry, their cruise terminals are the biggest and best. I have personally helped my clients troubleshoot through a variety of different issues while embarking and disembarking cruises, but I can honestly say that none of those issues have ever happened at PortMiami. The staff is generally very helpful, and the facilities are top notch.”
Still, there is a caveat. Even as PortMiami’s cruise business is expanding rapidly under more lenient COVID protocols, potential travelers should do their homework before booking a cruise. Don’t assume that everything is back to the pre-COVID era; different companies may have different rules covering COVID testing and vaccination for adults and children. And just as important, countries visited by cruise lines have their own laws and regulations.
GLOBAL MIAMI Magazine reached out to the media relations departments and executives at Carnival, Royal Caribbean, and MSC requesting interviews with executives for this article. We were not granted any.
