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Kalena S. Bailey (MBA 2005)
Saf El Mansour (MBA 2005)
Rene Silue (MBA 2005)
Denna Singleton (MBA 2005)
The tourism industry is one of the fastest growing industries in the world,
generating revenue and creating jobs in many countries. The impacts of
tourism on a location are not only positive, however. Around the world,
popular tourist destinations are faced with residual, often destructive
environmental, social and cultural impacts of the visitors. In addition, despite
the increase in tourist numbers, the local economies are not able to reap a
sufficient portion of the financial gains generated by this industry.

Sustainable tourism aims to promote a triple bottom line focused business with
an aim to provide all sectors of the industry with guidelines and criteria that
reduce the negative impacts of the industry. The cruise industry is a popular
segment of the tourism industry that uses the natural environment as its key
product. Using the cruise line industry as a case study, this paper
demonstrates the issues and challenges associated with sustainable tourism.

This paper examines the cruise line industry using a triple bottom line
approach and presents strategic recommendations for improvement based on
the current issues affecting the sector. It also provides overall
recommendations that can assist cruise lines, as well as the field of sustainable
tourism, in its efforts to foster progressive change in the tourism industry.

Publication Date

Tourism industry, cruise line industry,
sustainable tourism, triple bottom line,

2004 Kenan-Flagler Business School, University of North Carolina, Chapel Hill, NC,
USA. Reprinted by permission. Available online at This white paper was
prepared by MBA students for class MBA251B Sustainable Enterprise, taught by
professors Albert H. Segars and James H. Johnson. It is reprinted for educational purposes.
Citations and source accuracy have been reviewed, but cannot be guaranteed; clarifications
or comments may be directed to

Table of Contents

1. Executive Summary
2. Tourism Industry
3. Sustainable Tourism
4. Cruise Line Industry
5. The Cruise Line Industry and its Effect on the Environment
Waste Water and Solid Waste Discharge
Potential Impact on Coral Reefs
6. Generating Sustainability by Minimizing Environmental Impacts
Investment in Waste Management Technology
Environmental Programs
Certification Requirements
7. The Cruise Line Industry and its Effect on Society and Culture
Change of Identity and Values
Culture Clashes
Physical Influences causing social stress
Increase in Crimes Committed against Tourists
Prostitution & Sex Tourism
8. Generating Sustainability by Minimizing Social and Cultural Impacts
Community Involvement
Community Development
Development of Long Term Goals
9. The Cruise Line Industry and its Effect on the Economy
International trade
Community development opportunities
National/Regional economies
Infrastructure Investment
Direct Spending
Local economies/states
Challenges to Sustainability in the Tourism Industry
10. Generating Sustainability by Minimizing economic Impacts
Conserve resources
Community involvement
Government Action
11. Key Conclusions and Recommendations

1. Executive Summary

The tourism industry is one of the fastest growing industries in the world. It is a substantial
generator of revenue and jobs for the economies of many countries. It is also seen as a force to unite
people around the world, provide education on unique locales and enable all of humankind to
understand that, in the end, there are very small differences among us all. However, with this
increased growth, comes the respective impact on the various locations that are visited annually.
The cruise industry is one of the most popular tourism activities and uses the natural environment
as its key product. However, around the world, popular tourist destinations are constantly faced
with increasing devastation of their natural environment and exploitation of native cultures. In
addition, despite the increase in tourist numbers, the local economies are not able to reap a sufficient
portion of the financial gains generated by this industry.

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Sustainable tourism has developed as a triple bottom line-focused business, with a purpose created
to provide all sectors of the industry with guidelines and criteria that seek to reduce negative
environmental, social, and financial impacts. We will use the cruise line industry as a case study that
demonstrates the issues and challenges associated with sustainable tourism. Recent reports have
detailed instances of pollution created by cruise ships and attempts made by the industry to make
some improvements in their business practices. However, it is critical for the industry to make
even more significant changes in how it conducts business, in order to sustain the well-being of local
people and their environment.
This white paper will examine the cruise line industry by using a triple bottom line approach and
develop strategic recommendations for improvements based on the current issues associated with
each environmental, social/cultural, and economic sector. It will also provide overall
recommendations that can assist cruise lines, as well as the field of sustainable tourism, in its efforts
to move forward as stewards for progressive change in the tourism industry.
2. Tourism Industry

The tourism industry has become one of the fastest growing industries in the world. For many
countries, tourism is a large generator of revenue and jobs for the local economy. It is 3.8% of global
GDP, producing more than 74 million jobs in 2003.
With a growth rate of 5.9%, the tourism
industry stands to become the number one industry in many economies, particularly for developing
nations. This growth demands a more vigilant stance by all concerned stakeholders to protect the
environment and cultures while developing a sustainable revenue stream. In addition, the
increased focus on sustainable tourism is critical for the continued profitability of the industry while
protecting the needs of these local economies.

Figure 1

As seen in the chart above, which tracks the actual and forecasted growth rates for the tourism
industry, the fastest growth will be seen in more of the developing countries of the world. Countries
in East Asia and the Pacific, South Asia, the Middle East and Africa are forecasted to show tourism
growth rates of more than 5 percent per year. The more mature regions of Europe and the Americas

Executive Summary: Travel and Tourism Forging Ahead: The 2004 Travel and Tourism Economic Research, World
Travel & Tourism Council, 2004.
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are forecasted to show lower than average growth rates.
These trends reflect the increased focus by
travelers on new and different travel locations. Travelers have become bored with more of the
traditional countries and are seeking more unique locations which provide a connection with nature.
3. Sustainable Tourism

The development of sustainable tourism is defined as meeting the needs of the present tourists and
host regions while protecting and enhancing the opportunity for the future. It is envisaged as
leading to management of all resources in such a way that economic, social and aesthetic needs can
be fulfilled, while maintaining cultural integrity, essential ecological processes, and biological
diversity and life support systems.
Sustainable tourism enables local economies to support
themselves by focusing on the management of the economic, socio-cultural and environmental
components. Tourism, like other sectors, uses resources, generates wastes and creates
environmental, cultural and social costs and benefits in the process. It is becoming increasingly
important to develop sustainable practices and policies due to the forecasted growth in tourism.
One of the key determinants for the success of sustainable tourism has been the strong public policy
development which focuses on leading improvements in physical resource planning, consideration
of the natural environment, and the inclusion of the indigenous people of the community and
education of all parties.

With these goals in mind, the United Nations has been the lead public policy driver for change in
the tourism industry since the adoption of Agenda 21 by more than 178 countries in 2002. Agenda
21 provides a detailed plan of action to be taken globally, nationally and locally in every area where
the human race has an impact upon the environment. Several UN-affiliated organizations were
created out of Agenda 21 including the World Tourism Organization, Commission on Sustainable
Development and the UN Environment Programme. These organizations and commissions are
charged with leading public policy research and development of action plans for further integration
of sustainable practices into the tourism industry.

Figure 2

Travel & Tourism Demand,
(% Annualized Real Growth)

1. Montenegro 10.3
2. India 8.8
3. China 8.7
4. Vietnam 8.3
5. Angola 8.2
6. Laos 8.1
7. Chad 7.7
8. Guadeloupe 7.4
9. Fiji 7.3
10. Uganda 7.3
The sustainable development of tourism is important for
all countries; however, it is critical for developing nations.
As one can see by the chart to the left, tourist visits are
increasing to smaller developing nations. It is critical to
develop a global plan that applies to and can be utilized by
all countries in order to successfully address the issue.
Sustainable tourism and in particular, eco-tourism, have to
be promoted as preferred methods of operation, and this
requires cooperation by all interested parties. The most
successful programs have been those where the
government, non-governmental organizations, the private
sector and local communities have jointly developed plan
of action to successfully transform the tourism industry to
benefit all concerned.

Long-Term Prospects: Tourism 2020 Vision, World Tourism Organization, 2001.
Agenda 21 for the Travel & Tourism Industry: Towards Environmentally Sustainable Development. World Tourism
Organization. 1996.
Executive Summary: Travel and Tourism Forging Ahead: The 2004 Travel and Tourism Economic Research, World
Travel & Tourism Council, 2004.
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4. Cruise Line Industry

The cruise line industry has continued its growth during the past twenty years. In 2003, 9.8 million
people participated in a cruise vacation, generating $14.7 billion in gross revenues.
This reflects a
gross revenues growth of 3.2% over the previous year, with future growth expected to increase. It is
estimated that more than 14.2 million people will travel by cruise ships in the year 2010.

Figure 3: Global Cruise Revenues ($ millions)

The North American market, particularly the United States, dominates the cruise line industry. In
2003, 7.9 million passengers began their voyage at a North American port, with 7.1 million
passengers beginning at a U.S. port. More than 75% of the global passengers on cruise lines are U.S.
citizens. The most popular destinations is the Caribbean (including the Bahamas), followed by the
Mediterranean and Europe.

The success of the cruise line industry depends on the presentation of two of its core components:
the marine eco-system and the land destinations that are used as ports. Yet, this industry has been
accused of causing significant damage to these areas over the past several years. There have been
charges of environmental harm to the seas and natural environments along with a negative cultural
impact and lack of significant economic investment upon the locales. The most popular destinations
for cruise lines, the Caribbean and the Mediterranean, have been identified as the key biodiversity
hotspots by Conversation International.
These locations have been identified because they have a
rich diversity of endemic species which has been significantly altered by human impact and because
they are in danger of permanent changes. For 2003, more than 70% of cruise ship destinations were
in biodiversity hotspots.

Even Keel Newsletter, International Council of Cruise Lines, Summer 2004.

A Shifting Tide: Environmental Challenges & Cruise Industry Responses Interim Summary Report, The Center for
Environmental Leadership in Business, 2003.
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Figure 4: Global Bed Day Capacity Deployment in 2003

In the remainder of this report we will focus on the triple bottom line of environment, economic and
social-cultural components for sustainable tourism through the perspective of the cruise line
industry. Each section will critically analyze the current challenges faced by the cruise line industry
while providing substantial recommendations for future improvements. While no change can be
made overnight, these recommendations can provide insight into significant changes that can
gradually improve an industry that is on a targeted path for sustainable tourism.

5. The Cruise Line Industry and its Effect on the Environment

Because the cruise ship industry is one of the fastest growing sectors of the travel industry, it is
becoming increasingly important to understand and address the potential environmental impact.
Although, there has been much debate about how great of an impact cruise lines have had on
natural ecosystems, it is quite clear that any level of environmental impact is bad for both the local
regions as well as the cruise industry. All tourism can put enormous pressure on an area and lead
to impacts such as soil erosion, increased pollution, discharges into the sea, natural habitat loss,
increased pressure on endangered species and heightened vulnerability to forest fires.
the area of the environment that is of particular interest to those interested in promoting sustainable
tourism is the coastal ecosystem. The cruise line industry often puts a strain on the coastal
ecosystem which in many cases forces local societies to have to take drastic measures in order to
preserve their natural habitats.

As stated earlier in the paper, in order for any industry to be sustainable it is necessary for it to have
a minimal impact on the environment. Therefore, there is a pertinent need for local governments,
agencies and industries to join forces in order to boost awareness of the need to protect and improve
the environment at all current and potential tourism sites. Although many local communities have
taken great pains to maintain a healthy environment at sites that are heavily visited by tourists,
there is still a large majority of locations whose natural habitats are negatively impacted by tourism.
These negative impacts occur when the level of visitor consumption is more significant than the
environments ability to cope within reasonable limits of change. Coastal eco-systems must be
protected not only for the more general functions that they perform in terms of support to human
well being but also they provide the goods and services required for activities based on the coast.

Although there are several environmental challenges that occur because of the cruise line industry

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such as harmful air emissions and the introduction of non-native species, the issues that we will
focus on are: waste water and solid waste discharge and the potential impact on coral reefs.
Waste Water and Solid Waste Discharge
In areas with high concentrations of tourist activities, waste disposal is a serious problem --
specifically for waste that is disposed of by large cruise lines. If this waster is improperly disposed
of, it can be a major despoiler of the natural environment. Take for example cruise ships that travel
throughout the Caribbean. It is estimated that these ships, which carry an average of 3,000
passengers per voyage, produce more than 70,000 tons of waste each year. On average, passengers
on a cruise ship each account for 3.5 kilograms of garbage daily -- compared with the 0.8 kilograms
each generated by the less well-endowed folk on shore.
There are two types of waste that create
problems for the coastal ecosystem: wastewater and solid waste. Wastewater comes in the form of
graywater (wastewater from sinks, showers, and cleaning activity) and blackwater (sewage
wastewater from toilets, urinals and infirmaries.) The most significant impact on the environment
that comes from waste water is eutrophicationthe introduction of excessive nutrients that over-
stimulate the growth of aquatic plants and algae. In addition, the wastewater most often contains a
bacterium that is harmful for the underwater plants and animals.

The second type of waste that has a negative impact on the environment is solid waste
discharge. Solid waste, which is in the form of glass, paper, cardboard, aluminum and steel
cans, incinerator ash and plastics, is not easily biodegradable and injures many marine
animals every year. The toll that trash takes on marine life is staggering. Each year millions
of animals, like the gull seen in the picture at right, become trapped or poisoned by wastes
disposed of by cruise lines. Besides the impacts on marine life, waste pollutes coasts when
it is brought by strong currents or dumped in local harbors; contaminating beaches and
affecting the health of the people that live along the coast and those that use the coast for
their livelihood. Given this potential impact, many of the major cruise lines have made it
priority to implement shipboard recycling programs to reduce the amount of solid waste
that escapes into the ocean. However, it is not enough to reduce solid waste; we are now in
a dire need to eliminate it from entering the oceans entirely.

Although some cruise lines are actively working to reduce pollution, there are still examples of
cruise lines that are not abiding by the laws and regulations that were implemented in order to
protect local environments. For example, in April 2002 Carnival Corporation was fined $18 million
for the deliberate falsification of oily bilge water record-books. Because of instances such as this, it is
critical for the cruise line industry to demonstrate a commitment to implementing sustainable
practices in order to maintain a certain amount of credibility.

Potential Impact on Coral Reefs
Although coral reefs only cover 0.2 percent of the oceans area, they are a fragile part of the coastal
ecosystem that affects all marine plants and animals in some way. Activities that damage these
underwater structures are: anchoring, snorkeling, sport fishing and scuba diving, yachting, and
cruising. According to the Ocean Planet website, there are 109 countries with coral reefs. In 90 of
them reefs are being damaged by cruise ship anchors and sewage, by tourists breaking off chunks of
coral, and by commercial harvesting for sale to tourists. One study of a cruise ship anchor dropped
in a coral reef for one day found an area about half the size of a football field completely destroyed,
and half again as much covered by rubble that died later. It was estimated that coral recovery
would take fifty years. These activities provide millions of jobs and contribute billions of dollars in
tourism annually, but can cause direct degradation of the entire marine ecosystems. Recent studies
show that millions of people visit coral reefs in the Florida Keys every year, and these reefs support
significant economic activity through sales, income and employment. For example, over 3.6 million
people participated in a reef-related activity in the Florida Keys coral reefs of Monroe County in
2001. These reefs supported $363 million in sales, $106 million in income, 8,000 jobs and an asset

Our Planet, UNEP Magazine for Environmentally Sustainable Development, Volume 10, no.3, 1999.
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value of $1.8 billion. Overall for southeast Floridas coral reefs, 18 million people participated in reef
related activities during 2001, and these reefs are estimated to have an asset value of $7.6 billion.

6. Generating Sustainability by Minimizing Environmental Impacts
Investment in Waste Management Technology
Because cruise ships are of enormous size and are highly capable of producing massive
amounts of waste, it is imperative that they implement the most effective waste
management systems to ensure a minimal negative impact on the environment. One
solution to the elimination of large amounts of waste water being released in the ocean is
the investment in waste water treatments such as the ULTRA-SEP 10000 shown in the
picture here. This system, which processes 10 cubic meters of bilge water per hour, is the
largest of eight available models, all now carrying United States Coast Guard
In addition to investing in equipment that minimizes the amount of waste
water discharged into the oceans, there are also techniques in existence that attempt to
minimize the amount of solid waste discharged in the oceans. The U.S. Navy is now
investing in a combination of new and old-age technologies to make ships compliant with
international treaties that ban waste dumping at sea.
They are using an approach to treating solid
waste with the use of plasma energy developed by a Canadian company called PyroGenesis, Inc.
Through a system known as the Plasma Arc Waste Destruction System, waste is pulverized,
converted to gas consisting of carbon monoxide and hydrogen and then combusted in secondary
chamber and fully treated before being released.
At this time the company is considering
expanding the system to treat blackwater, graywater and bilge water, in order to make the system
even more helpful to combat the issues associated with waste created by large sea vessels. If all the
cruise lines invest in this type of technology, the negative impact of the industry on the environment
would be greatly minimized.

Environmental Programs
To face the environmental problems associated with cruising, many cruise lines have attempted to
develop environmental programs on board their vessels that are in full compliance with
environmental standards and laws set by the International Maritime Organization (IMO), the
International Convention for the Prevention of Pollution from Ships at Sea (MARPOL), the
International Council of Cruise Lines (ICCL), various maritime classification societies, as well as
Federal and State laws. Program's like Crystal Cruises' "Crystal Clean", enlist passenger cooperation
in anti-litter efforts. Passengers see the on board programs in action with such things as recycling
bins alongside waste bins , biodegradable golf balls and packaging of in-cabin toiletries. However,
the cruise line's environmental policies go well beyond these initiatives, encompassing all aspects of
ship operations.
For example, ICCL cruise line members have adopted aggressive programs of
waste minimization, waste reuse and recycling, waste stream management and shore side waste
disposal. Regardless of the origination of the environmental program, all cruise lines can build
upon other established programs and implement even further the best procedures and practices
necessary to keep the oceans free from waste and damage.

Certification Requirements
Because there is an urgent need for governments, businesses, NGOs, communities, and other
stakeholders to agree upon common standards for sustainable tourism practices, it is necessary for
the development of certification programs that can apply to all regions. These certification
programs would create a form of reassurance on the part of the public that the cruise lines are

Johns et al., 2001
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meeting rigorous environmental standards. This creates a competitive advantage for cruise
corporationsimproved community relations, better corporate reputations, and a decreased chance
of litigation due to lawsuits.

Certification systems in the cruise line industry are essential to inform consumers and to encourage
more sustainable production and consumption practices in these types of tourism services.
However, it is key that these types of systems follow some universally accepted criteria in order to
increase their credibility in the eyes of tourists. This is evidenced by the failure of the Green Globe
Certification program. This organization developed a set of benchmarking indicators for cruise
ships, and while a number of smaller cruise lines adopted the program, the larger cruise lines
refused to participate. These large cruise lines felt that because the certification programs were
voluntary it was not necessary to go above and beyond meeting the minimal guidelines and

Today there are over 60 different voluntary certification programs awarding good environmental
practices. One promising certification program was announced in April 2004. Four organizations
World Tourism Organization (WTO), Rainforest Alliance, The International Ecotourism Society
(TIES), and the Center for Ecotourism and Sustainable Development (CESD) are collaborating to
develop a universal green certification program that could make a true difference in improving the
way that cruise lines address important environmental issues.

7. The Cruise Line Industry and its Effect on Society and Culture

The socio-cultural impacts of tourism are the effects on host communities of direct and indirect
relations with tourists, and of interaction with the tourism industry. Host communities often are the
weaker participant in interactions with their guests and service providers. These influences are not
always apparent, as they are difficult to measure, depend on value judgments, and are often indirect
or hard to identify. The impacts become noticeable when tourism engenders changes in value
systems and behavior and thereby threatens the indigenous identity. Changes often occur in
community structure, family relationships, collective traditional life styles, ceremonies and morality.
However, tourism can also generate positive impacts as it can serve as a supportive force for peace,
foster pride in cultural traditions and help avoid urban relocation by creating local jobs. Then again,
socio-cultural impacts remain ambiguous: some are seen as beneficial by some groups, while they
are perceived as negative by other stakeholders.

Change of Identity and Values
One important negative impact that cruise lines have on local societies is a change or loss of
indigenous identity and values. The greatest negative impacts arise when tourism brings about
changes in value systems and behaviors because it directly threatens the indigenous identity of the
community. There are several specific occurrences that can result when cruise lines enter local
communities. The first occurrence is commodification, which occurs when local rituals and
traditions are re-interpreted in order to satisfy tourists tastes and expectations resulting in what has
been labeled as reconstructed ethnicity and staged authenticity. A second phenomenon is
standardization of landscapes and environment as tourists look for familiar venues such as well
known brands like a McDonalds or a Holiday Inn. A third occurrence is adaptation to tourist
demands in crafts and traditional arts which contributes to cultural erosion or traditions that have
been passed for generations.

Culture Clashes
The attitude of local residents towards tourism is dynamic in that it may move through the stages of
euphoria (where visitors are very welcome), through apathy, irritation and potentially antagonism
(when anti-tourist attitudes begin forming among local people). This has created a wide range of
local perceptions of tourism and has developed several specific attitudes. The first is one of
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frustration based on the economic inequality between well-off tourists and poorer locals. Another
negative feeling is one of irritation due to tourist behavior that is ignorant or careless of local
customs and moral values. Finally, job level friction can arise when the gap increases between locals
holding low-level jobs (gardener, maid) and expatriates holding managerial positions.

For example, in the Caribbean, too much profit from the tourist industry goes to foreign investors
who own the hotels, communications systems, and intra- and inter- national transportation systems.
Increases in real wages in the Caribbean are misleading. In fact, tourism has created new and strong
wage divides among the indigenous populations of the islands: between tourism workers with
access to foreign currency and those outside of the industry, as well as between menial labor and
management. Many argue that tourism has reinvigorated racial and gender labor divides, relegating
black people and women to stereotypical, low-paying, low-skill service jobs.

Physical Influences causing Social Stress
There are several physical influences that may cause stress for those in the local communities that
are visited by tourists via cruise lines. Resource use conflicts, such as competition between tourism
and local populations for the use of prime and scarce resources like water and energy can sometimes
occur. For example, fresh water is considered to be a scarce resource; however, it is sometimes
reserved for visitors more than for the local population because the tourists are prepared to pay a
premium for it. This can cause much resentment for those who take a back seat to non-locals.
Another situation that may occur is cultural deterioration that arises from vandalism, littering,
pilferage and illegal removal of cultural heritage items. This is a common problem at archaeological
sites in countries such as Egypt, Colombia, Mexico and Peru. In addition, conflicts with traditional
land uses arise when the choice has to be made between development of the land for tourist facilities
or infrastructure and local traditional land use.

There are numerous examples where local residents have lost access to local natural resources
because of tourism development. On Boracay Island in the Philippines, one quarter of the island has
been bought by outside corporations, generating a crisis in water supply and only limited
infrastructure benefits for residents. Similarly, in Bali, Indonesia, prime agricultural land and water
supplies have been diverted for large hotels and golf courses, while at Pangandaran (Java,
Indonesia), village beach land, traditionally used for grazing, repairing boats and nets, and festivals,
was sold to entrepreneurs for construction of a five-star hotel (Shah, 2000).

Increase in Crimes Committed against Tourists
There are several important ethical issues that arise with the increase of tourism. One that is of
particular interest to stakeholders within the tourism industry is crime generation. There are many
reasons why crime rates tend to be higher among tourists than among local residents. One is
because tourists have certain personal and behavioral attributes which tend to make them
desirable victims. For instance, tourists often carry large sums of money or valuable items such as
cameras and jewelry which can easily be sold by criminals. Furthermore, tourists sometimes engage
in activities which may increase their risk of victimization, such as frequenting night clubs and bars
at late hours, or accidentally venturing into unknown parts of the community which residents
consider unsafe.
With the growing animosity towards tourists in local regions and the increase
in drug use, the level of violence directed against tourists has increased visibly in the 1990s. These
violent acts range from verbal harassment, to incidences of physical assaults, robbery, rape, and
even murder.

TransAfrica Forum. .
Overseas Development Institute
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Prostitution & Sex Tourism
Prostitution and sex tourism, which is considered a subcategory of sexual exploitation, occurs when
tourists receive sex from local residents for money. In some cases, tourists pay sex travel agencies
for trips that include airfare, hotel, food, and women for sex. It is difficult to estimate how many
people are working in prostitution because so many women working as waitresses, hotel maids,
salesclerks, bar girls, and golf caddies are forced into prostitution as part of their work.

This issue has been analyzed on a global basis. In Europe, the European Commission has focused
on the issue for more than 10 years and is developing educational campaigns targeted towards
tourists. The campaign informs tourists of the dynamics of the issue and how participation in
prostitution negatively affects the area they are visiting along with the potential physical risks that
they face.

8. Generating Sustainability by Minimizing Social and Cultural Impacts

Cruise tourism is a positive force that can bring people and communities together in the
underserved islands. Tourism has also the potential to increase social development through job
creation, income redistribution, and reducing emigration from rural areas. It is a force for peace as it
brings people from different cultures together and encourages them to interact as guest and hosts. It
may also strengthen communities through events and festivals and reduce emigration from rural
areas. However, it has to be practiced, developed, and implemented in a sustainable fashion,
respecting local customs, communities, and traditions.

Community Involvement
Involving the local community is essential in the success of any sustainable tourism or cruise
tourism endeavor. A community involved in its own development will tend to be more supportive
and will have a better chance of benefiting from the local tourism industry than would a population
that is not taken into account by the industry and whose local officials are sidelined. For example,
tourism has had important social effects on the Caribbean, such as bringing a renewed internal
consciousness and celebration of indigenous Caribbean cultures and historic sites. This is evidenced
by the many local arts and crafts trades that have been revived and made into lucrative local
industries by tourist interests, the renovation of historic sites and monuments as tourist attractions,
and the development and support of local festivals and cultural events because of heavy tourist
participation and interest.

Community Development
Community development is a cornerstone in any sustainable tourism undertaking which is the
capacity to make decisions that consider the long term economy, ecology, equity of communities,
and financial wellbeing of all stakeholders. A key component of this community development is
ensuring that the physical infrastructure is at a sufficient level to attract tourists while at the same
time benefiting the indigenous community.

Additionally, visitors should be educated on how to observe and respect local customs. An
educational campaign on the benefits of socio-cultural responsibility should also be directed at
locals who are in charge of perpetuating traditions and safeguarding heritage. The preservation of
culture and tradition can occur through the sustainable management of natural resources and the
protection of local heritage, traditions, arts, and crafts.

Rogers, B. (Oct/Nov 1999). Bitter harvest. Ms. Magazine, 9. New York: Liberty Media for Women.

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Development of Long Term Goals
More importantly, governments should develop a long term vision of tourism in their islands
instead of the current solely cash based one. The political and business forces should work actively
to develop new sources of revenue for the country and not rely on tourism alone to provide for the

9. The Cruise Line Industry and its Effect on the Economy

According to the World Tourism Organization, tourism is the second largest industry in the world
and has enjoyed 300% growth rate in the past two decades. In 2003, tourism was valued at $1.28
trillion. Looking forward 10 years from now, the WTO projects that tourism will represent $2.3
trillion of expenditures and generate 84 million jobs around the world at a growth rate of 5.5% per
year. Furthermore, WTO predicts in its Tourism 2020 Vision that international arrivals will reach
over 1.56 billion by the year 2020. Of these worldwide arrivals in 2020, 1.2 billion will be
intraregional and 0.4 billion will be long-haul travelers.

Every year, more than 10 million passengers traveled around the globe using one of the 200 cruise
ships. According to ICCL, cruising is growing in popularity and the number of cruise passengers is
expected to more than double to nearly 22 million by 2010.
Finally, it is important to note that the
cruise ship industry is rapidly growing (8.4% per year over the past two decades) particularly in
North America which accounts for 80% of the world travelers. Despite the Iraq war and the slow
recovery of the U.S. economy, the cruise line industry presents real business opportunities for
existing and would-be investors in the sector.

International trade
Tourism is the single most important source of revenue for numerous countries. In 2002, foreign
currency receipts from international tourism reached U.S. $474 billion, outstripping exports of
petroleum products, motor vehicles, telecommunications equipment, textiles or any other product
or service.
Tourism is also believed to be the most competitive industry in which each country
has a unique competitive edge, and it provides a viable alternative to the poorest countries. Usually,
those countries have natural resources, culture, and the tradition to attract tourists.

Community development opportunities
Usually tourism activities are created in less developed areas in hosting countries. By emphasizing
this strategy, tourism could help reduce inequalities within countries and between nations. Local
population will have an incentive (new jobs, better exploitation of their cultural and improvement of
their environment) to remain in their local region rather than migrating to big cities or developed

National/Regional economies
According to the annual study by Business Research and Economic Advisors (BREA) commissioned
by the International Council of Cruise Lines (ICCL), the cruise industry has generated $25.4 billion
and more than 295,000 jobs in North America alone during year 2003. This economic impact is up by
11.4% compared to the previous year, and was felt in virtually all economic sectors: agriculture,
durable goods, transportation, employment and taxes, in almost every state in the U.S.

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Infrastructure Investment
The development of tourism requires significant investment in infrastructures to both attract tourists
and enhance the living conditions of local residents. For example, Vancouver (Canada) spent $130
million on the development of its terminals in order to grow cruise tourism. Similarly, the North
American cruise industry invested $616 million to U.S. shipyards for vessel construction,
maintenance and repairs in 2000.

The Queen Mary 2, the largest and widest ship in the world cost $800 million. It is currently the
most expensive cruise ship ever built. With such investment, the cruise line companies are
increasingly feeling the need to raise prices to relieve some of the pressure on their margins.

Direct Spending
Cruise line and passenger direct spending were up 25% over 2000 and reached a total of $12.9 billion
in 2003. The cruise passengers and crews expenditures often include goods and services,
employment of shore-side staff, marketing and tour operations fees, purchases at ports of
embarkation and ports of call, maintenance and repair charges, terminals fees, office facilities and

A recent Business Research and Economic Forecasting study conducted for the Florida-Caribbean
Cruise Association found that the typical cruise passenger spends almost $104 at each port visited.
At the same time, 30% of passenger embarking a one the 4 main ports in Florida spends one or more
nights in the port city, spending an average of $177 a night.

Tourism is an important job creator, employing millions of people around the world. The vast
majority of tourism jobs are in small or medium-sized, family-owned enterprises, especially in
developing countries or regions. Job creation in the tourism industry is growing faster than any
other industrial sector. All in all, tourism provides economic opportunities and continues to reduce
inequalities between various zones.

In the U.S, the cruise lines directly employed more than 295,077 (direct and indirect jobs), people
and paid a total of $11.6 billion in wages and salaries. In almost any country, tourism is responsible
for generating employment opportunities in various areas such as farmers, transport workers,
laundries, artists and crafts people, and ski instructors. More and more people are directly affected:
hotel staff, tour guides, ticket takers, souvenir sellers, waiters and waitresses.

Local economies/states
In 2003, Floridas ports accounted for two-thirds of all U.S. embarkations with 4.7 million
passengers. The state of Florida, with its 4 ports, represents over 44% of the world cruise market.
Studies found that the combined direct spending of cruise lines and their passengers on American
goods and services in 2000 totaled $9.4 billion. Similarly, 15% of cruise passengers at the port stayed
at least one night in Brevard County alone, spent more than $13 million in 1999. Florida-Caribbean
Cruise Association's survey showed that almost 80% of crew go ashore during a typical port-of-call
visit and spend on average $72 per visit. Finally, cruise line companies paid millions of dollars in
fees to local port authorities, taxes and surcharges waste disposal services each year. Recently,
Carnival decided to invest $40 million to erect its own facility at nearby Long Beach, California,
enhancing the area while creating additional jobs in the state.

Challenges to Sustainability in the Tourism Industry
Access to credit: the tourism sector is mostly composed of micro businesses and small and
medium-sized enterprises (SMEs). These SMEs do not have access to technical support or private
funds to invest and sustain their activity. Usually the banking system (the commercial banks),
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especially in developing countries, requires some financial guarantees before lending money to the
SMEs. This clearly limits their ability to invest in long-term strategy initiatives that are geared
towards sustainable tourism.

Concentration of the market: in 2000, there were about 47 cruise lines operating around the world,
with nearly 200 vessels of 4,500 GT (total gross tonnage) and above. However, 90% of the North
American market is controlled by only three cruise lines: Carnival Plc, Royal Caribbean, and Star
Cruises. Any major change in the industry with respect to the sustainable tourism has to involve
these players. They have the financial muscle and are more likely to be trend-setters in the industry;
therefore they could afford to embark on the route to sustainability, which requires long term and
significant investment in new equipment, technology, marketing campaigns and training staff.

Figure 5
Leakage: studies found that of each US
$100 spent on a vacation tour by a tourist
from a developed country, only US $5
actually stays in a developing-country
destination's economy. The balance
($95) returns to the developed country in
several forms (see figure to the right).

International law: cruise lines have put in
place voluntary standards to help protect
and preserve the environment. By these
standards all cruise ships operating in
American waters must comply with U.S.
environmental laws, including the Clean
Water Act, the Clean Air Act and the Oil
Pollution Control Act. They must also
meet international regulations that protect the environment, including SOLAS (the International
Convention for the Safety of Life at Sea) and MARPOL (the International Convention for the
Prevention of Pollution from Ships) that were established by the International Maritime
Organization. In addition, some cruise lines have adopted their own programs of waste
management and practices similar to "green" environmental ones. However, according to Oceana,
cruise ships generate as much as 30,000 gallons of raw sewage into the oceans every day.
and poorly treated sewage carries harmful bacteria and viruses that can cause or contribute to
unsafe swimming conditions and to contaminated shellfish beds. Contaminated shellfish can sicken
consumers, regardless of whether they are cruise ship passengers. It seems therefore that ICCL
members have not taken strong enough measures to prevent ocean pollution. In other words, the
cruise line industry is still miles away from adopting the sustainable path.

Cost of non-compliance: cruise lines are taking some steps mainly to avoid the huge litigation costs.
In 2000, Royal Caribbean Cruise Line was sued for illegal dumping of oil and chemicals in Alaska
water. The company paid $3.5 million settlement and was put on probation and barred from
entering the Glacier Bay National Park near Juneau for several years. Not only did the company pay
the fines, but it also lost a very profitable route to its competitors. Similarly, Carnival was sued for
$18 million in April of 2002, on pollution accounts, whereas its main rival, Royal Caribbean, was
fined for $33.5 million in a settlement for ocean dumping complaints that happened between 1994
and 1998.

Overdependence on tourism: several developing countries depend heavily on tourism. It is a
significant contributor to their GDP: 22% in Dominican Republic, 51% in Barbados. It is also a major
source of employment: 19% in Dominican Republic and 56% in Bahamas. If we combine this
phenomenon with the leakage effect, some poor countries may end up losing their economic
autonomy. Furthermore, since the wealth generated by tourism in those countries usually benefits
only the local elite of the region, some rural areas in developing countries may be exploited for the

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cheap labor. Finally, the development of tourist activity in a poor country usually stimulates
inflation, increasing the cost of living for local population. As a consequence, countries currently
relying on tourism as their main economic activity should consider a diversification strategy for
their economy if it is a high probability that the countrys natural resources which attract tourists
may be depleted too rapidly, leaving the country in a more desperate situation. This is especially
true for the Caribbean region which is highly exposed to changes in climate and other
environmental conditions that make the destination well admired.

Government commitment: Governments in developing countries are reluctant to take stringent
measures. They fear that they will lose their main source of income and employment. However,
failing to structure and act can harm the country more than being proactive in its actions.

Similarly, governments in authorizing the creation of tourist attractions could create huge
disruptions in local economies and displacements of indigenous populations. For example, the
government forced the Maasi tribes in Kenya to move from their traditional lands to allow the
creation of the Maasi Mara National Park. The anticipated benefits from such actions should
overweight the drawbacks, especially in the long term.

10. Generating Sustainability by Minimizing Economic Impacts

Sustainable tourism aims to maximize all stakeholders benefits, in the long run. Its emphasis is on
enhancing the overall impact of tourism on communities and preserving the environment while
generating economic profits for all businesses. There are several ways that the industry can become
more sustainable in its practices, and once these changes are the made the resulting benefit will be a
minimization of negative impacts.

Conserve resources
An increasing number of travelers are environmentally aware. They are willing to support or use
businesses that minimize pollution, waste, energy consumption, water usage and landscaping
chemicals. By helping preserve resources, the cruise industry could continue to enjoy an
exponential growth and avoid unnecessary lawsuit bills.

Community involvement
Local small businesses and civic groups need to step up and fight for the preservation of their
environment, which is also their main source of revenue. Together, they need to set standards and
promote them among all players in the cruise industry. The end goal is to provide a distinctive,
authentic experience to all tourists. In this respect, cruise lines would need to redistribute the
benefits of the business (cruise ship passengers and stay-over visitor expenses) to provide local
communities with sufficient financial resources to live on. For example, if an additional 10% of the
$4 billion generated by tourism in Thailand was left in the country versus the current 40%, an
additional $400 million would benefit the local economy. If cruise lines increase the level of business
that they do with do local communities, using the local workforce, services, and products and
supplies, this will increase the incentive for local communities to get involved in any sustainable
initiative in the tourism sector.

Government Action
Governments should anticipate these developmental pressures and set standards and policies that
apply limits and management techniques that sustain natural habitats, heritage sites, scenic appeal,
and local culture. The WTO should continue to lobby the governments in developed countries to set
higher standards. In the same time, WTO could pressure developing nations to follow the path of
more advanced nations.

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11. Key Conclusions and Recommendations

Tourism, as one of the largest generators of revenue and jobs in the world, provides travelers the
opportunity to visit and partake in exotic locales. However, the industry produces a large strain on
the resources of these economies. This strain is seen is seen across all areas, including the
environment, culture and the economy. With these negative impacts, it becomes essential for more
sustainable tourism to spread as it is critical to the long-term success of the tourism industry. As the
industry grows and there is a significant increase in the amount of tourist visitors, all interested
parties will need to adapt sustainable practices.

More than 10 million people will travel on cruise lines in the upcoming year. With an increased
growth of 6.6%, the cruise industry is one of the most popular methods of tourism. With the
significant impact made upon the natural and cultural systems by cruise ships, it is critical for this
industry to develop practices that will reduce its footprint. Substantial changes have occurred as
coalitions of government commissions, non-governmental agencies, private sector businesses and
local communities have partnered to develop programs and initiatives. Coalitions such as the
World Tourism Organization and the Ocean Conservation and Tourism Alliance are leading public
policy discourse on sustainable tourism as it relates to the cruise line industry.

As discussed in the white paper, there are key recommendations which will help to further the
progress of the industry:

Technological Advances
With the increase in passengers, there will be more waste produced. New technology is being
developed to convert physical waste into non-toxic gaseous byproducts which will help to reduce
waste products.

Create Mutually Beneficial Relationships among Government, Private Sector, NGOs and
Local Residents
This recommendation is key to the success of any sustainable tourism initiative or program.
Collaboration among all levels must occur for there to be agreement and consistent implement of
programs. This will also encourage organizations to implement the programs as they realize the
importance of the issue by the amount of resources attributed to it.

The first industry-wide partnership was created as the International Council for Cruise Lines
partnered with the Center for Environmental Leadership in Business in 2003 to create the Ocean
Conservation and Tourism Alliance. This program focuses on four key areas:

Best Practices for Wastewater Management
Establishing Destination Partnerships
Promoting Environmental Education
Promoting Vendor Environmental Education

Establish a Code of Conduct for Tourism at All Levels
The public policy collaboration lead by numerous levels of organizations has created a standard
level of practices. The consistent level of practices will allow communities and organizations around
the world to develop similar programs and initiatives that will truly make an impact. The joint
collaboration by numerous entities should also encourage all relevant parties to participate. It is
especially important for the private sector, namely cruise lines, to actively participate and engage in
following sustainable guidelines.

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Expansion of Local Business Opportunities
The joint collaboration of entities to develop a code of conduct also provides opportunities for local
businesses in the affected communities. These businesses are created for the purposes of allowing
the indigenous population to actively participate in the tourism industry without being exploited.

These recommendations provide a comprehensive foundation for the future of sustainable tourism
and in particular, the cruise line industry. Tourism is a powerful methodology that can be used to
encourage peace and develop cross-cultural understanding while providing positive economic
rewards for countries and its citizens. Yet the resulting resource strain can be too much for local
economies to handle. Sustainable practices provide the necessary context and practical guidelines to
allow all parties to develop practices that benefit all stakeholders.

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