The cruise industry makes around $1.7 million in annual profits from selling tickets to the Cayman Turtle Farm at a 100 percent mark-up to passengers.
A report by PwC on the economics of the tourist attraction concluded that while the heavily subsidized venue is unlikely to ever make a profit itself, it is a significant source of revenue for cruise lines.
Roughly 70 percent of the farm’s visitors come from cruise lines, particularly family-friendly operators like Disney and Carnival.
The report suggested government’s subsidy of the venue could be justified by its wider economic benefits to the tourist industry.
Part of the rationale for that judgment was speculation that if the cruise industry was unable to make such large profits from the turtle farm, it would seek to make them elsewhere – potentially putting the squeeze on smaller independent tour operators.
Ticket sales have always been an important source of revenue for the cruise industry, but the extent of the profit margin the industry garners from the loss-making turtle farm had not been publicized prior to this report.
According to the consultants, Cayman Turtle Farm ticket pricing data suggest a mark-up of around 100 percent. The market power of the cruise lines, which essentially control a huge portion of the farm’s customer base, is cited as a major factor in keeping wholesale prices low.
The consultants conclude, “In simplistic terms, this simply enhances profitability to the cruise lines and as such would have no wider economic impacts for the Cayman Islands.
“However, interviews with the various Cayman Islands industry participants indicate that, in the absence of this margin on Cayman Turtle Farm tour excursions, the cruise lines would likely seek to recover these returns elsewhere, possibly through either squeezing wholesale prices or raising retail prices on alternative attractions and transport.”
The report provides insight as to how cruise lines operate – making their money by acting as a broker or ticketing agent for island tour operators.
It appears to suggest that the Turtle Farm is acting as a buffer, protecting smaller operators such as Stingray City boat captains, from harsher margins.
“With the closure of Cayman Turtle Farm, the cruise lines would seek to recover profitability possibly through sales to alternative attractions, or through downward pressure on wholesale prices for remaining attractions,” it states.
The report adds that the relationship works both ways. The cruise lines are able to steer vast numbers of tourists to the farm. However, it points out that even with a vast increase in visitors, the farm will not break even unless it significantly scales down the size of the operation.
The turtle farm, along with Stingray City, say the consultants, give the Cayman Islands a somewhat “unique offering” in comparison to the dolphinariums, water parks and shopping excursions seen elsewhere.
It suggests the turtle farm is important to the cruise industry and features heavily in their marketing of cruises through the region, potentially even influencing tourists’ decisions to choose a cruise itinerary that offers Cayman.
“To an extent, there is a symbiotic relationship between Cayman Turtle Farm and the cruise lines, as the farm represents the second most popular attraction in the Cayman Islands and is therefore a significant draw in the cruise lines’ marketing of their itinerary, as well as a significant source of the cruise lines’ all-important margin from tour sales in the Cayman Islands,” the report says.