ABSTRACT
This chapter discusses the economic success of the cruise industry, made possible in large part by the centerpiece of the business model: the flag of convenience. By utilizing this legal loophole originally intended for commercial cargo ships, major cruise companies that service the Caribbean, while headquartered in Florida, have registered their ships in Liberia, Panama, Bermuda, the Bahamas, and other countries that allow the companies to circumvent US tax, labor, and environmental regulations. A closer look is taken at the cruise ship work force, including standards, wages, and demographics. Onboard spending by passengers is another major factor in cruise line profitability. Whereas the image for cruise vacations is that they are both reasonably priced and paid for in advance, the reality is, on average, cruisers spend more for a one-week vacation than non-cruise vacationers. Costs and benefits to destinations are also discussed. Lured by the combination of direct, indirect, and induced economic benefits, coastal and island governments seek to attract cruise tourism as a way of quickly increasing visitor numbers and stimulating economic development. However, high investment in infrastructure, low head taxes paid by cruise lines, steep commissions, and low spending from passengers equate a much smaller economic impact than stayover tourism.
