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Cruise industry: $25 tourist tax risks deterring ships

1 Sep 2017  By Paul Yandall

Jennifer Marmanillo, Adam Armstrong, and Paul Mifsud at the NZ Cruise Conference in Auckland. Image: TT

Senior cruise line executives have given the Labour Party’s plans to implement a $25 tourist tax short shrift.
At the NZ Cruise Association’s annual conference, held this week at Auckland Museum, the four executives representing some of the biggest brands in the industry were quick to point out the consequences such a tax could have on the sector.
“Really, another tax?” asked Adam Armstrong, managing director of Australia & New Zealand for Royal Caribbean Cruises.
“We’ve got a new biosecurity levy of about $20, a new tourism tax of $25, Tasmania has just doubled its port charge and Sydney port prices have just gone up as well. So, very quickly, there’s $100 that has just been added in taxes.”
There’s a misconception that we can just absorb that, said Armstrong.
“Well, we don’t. The price gets passed on to the guest. So, prices go up and [customers] might not come.”
He said the implementation of a tourist tax in Alaska, where “the state got too greedy”, saw a drop in cruise vessels going to the region.
“They only started going back when the tax was dropped,” said Armstrong. “I would just be very cautious. People want to come to New Zealand but don’t make it more expensive than it already is.”
Royal Caribbean had recently removed its Voyager of the Seas ship from Australasia, partly because of costs.
“When we lined up the cost structure of Voyager in Australia and New Zealand versus  Singapore, where she will now go instead, two things were more expensive: fuel and taxes,” said Armstrong. “We like coming to New Zealand but it is more expensive so we have to keep those costs under control.”
Jennifer Marmanillo, director of Itinerary Planning at Norwegian Cruise Line Holdings, said making a region more expensive for global operators could see that region cut from itineraries.
“We put things said-by-side so, once you start adding additional costs and you are comparing two different products, then it could make it or break it,” said Marmanillo.
“If [the $25 tax] is per person, then for a family of four that’s $100. That is a large amount especially when they still have to pay for airfares and want to stay in a hotel and are taking a cruise and spending money onboard – you’re just adding to that cost.”
The tourist tax in Alaska was a good example of what could happen, said Marmanillo. “They put it in and we started taking [the region] out until they removed the tax and we started adding it back in.”
Paul Mifsud, director of Port Operations at Carnival Australia, said making a region more expensive – and New Zealand was already considered expensive by global standards – could deter the company’s ships from visiting.
“Ultimately, at the itinerary planning stage, it goes into the contribution model and if the model does not make sense, the ships won’t come.”
Timothy Littley, director of Deployment & Itinerary Planning at Seabourn Cruise Line said: “I’m sure your regional competitors will thank you for this tax.”

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