Week 2 - PEST Analysis on the Caribbean Cruise Business

The Caribbean is a major point of interest for cruise goers. The sunny weather and beaches with palm trees which stay warm even during the winter are an attraction for many. As cruise lines look to expand their business in the Caribbean, it is important to assess the opportunities and risks which would arise from such a move. To help us with this assessment, we shall use something known as a PEST analysis. PEST stands for Political, Economic, Socio-cultural, and Technological and it is used to take into account factors that are often not in the control of business so they may be aware of the risk/opportunities involved.

Political:

Cuba and the USA have recently warmed towards each other for the first time in many decades. There is less hostility and the Obama administration recently eased a travel ban for Americans vacationing in Cuba. This provides an opportunity for American cruises as passengers from the states are now allowed to visit Cuba soon. Because of the location of the Caribbean, the people who provide the most business for cruise destinations to the Caribbean are Americans as they have a relatively high quality of living compared to the rest of the region. It is important to note that admist global economic downturn, Cuba is doing well due to a 13.5% increase in American and Cuban American tourists. Thus, cruise lines should take advantage of the political situation by opening up more cruise lines to Cuba and other Caribbean destinations along the way.

Economic:

A better economy means more people are employed and have expendable income to spend on cruise experiences. Currently, the world economy is slowing in growth and many people are fearing their job security. Many Caribbean countries are dealing with slow growth rates or contractions in their economy. This may seem like a risk in doing business in the Caribbean, however, this may also be an opportunity. Countries with economies performing below standards would be more open to collaborating with cruise lines to stimulate the economy, As cruise ships get much of their business from collaborating with duty free shops in countries along the way to their destination, this would be an advantage to Caribbean cruise lines.

Socio-Cultural:

The cultural and societal norms of the places a cruise line plans to send its passengers should be factored in on whether to include the Caribbean as a stop along the cruise lines. If the country or region is mostly shut off to outsiders then they probably would not be as open to having a gigantic cruise ship pull up near its shore and a bunch of passengers coming in boats. Most countries in the Caribbean have had tourists visiting them for decades so there is a bigger chance that they would be open to making deals with the cruise lines regarding passengers visiting their country and tour guide services and such.

Technological:

The biggest technological risk of doing business in the Caribbean are all the cruise lines which have already established themselves in the lucrative market there. They have had decades of expertise running cruises and contain fleets of enormous cruise ships. A newcomer in the market would be competing with cruise ships the span of 5 football fields and the luxury of a five star resort. In order to survive in such a market, cruise lines should come up with innovative ways to make their cruise more appealing. Rather than making huge ships which take years to build, maybe try a smaller ship with amenities the big ships don't provide, such as WiFi, or something else which will attract consumers. The opportunities to create a cruise line with something different is limitless. It will be able to adapt to what consumers want since changing something on a smaller cruise ship will be much easier than changing it on a bigger one. Therefore, new cruise lines should focus on using their versatility to compete with the existing cruise ships in terms of technology. In the face of almost overwhelming competition, there still is a chance for new cruise lines to establish their unique style to outmaneuver the existing ones.

Action items for establishing a cruise business in the Caribbean:

1. Look at destinations to Cuba as a priority destination for cruises.

2. Reach out to the governments of Caribbean countries and ask if there is a process for establishing your cruise ships in their country.

3. Research what existing technologies would make your cruise ship as good as the biggest cruise ships and how to implement them in the ships.