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Last updated: 01:33 PM ET, Tue July 07 2015

Carnival Corp. Opens Sales on Cuba Cruises

Cruise Line & Cruise Ship Carnival Cruise Line Theresa Norton July 07, 2015

Carnival Corp. Opens Sales on Cuba Cruises

PHOTO: Havana's waters will soon welcome ships from Carnival Corp.'s fathom brand. (Photo by David Cogswell)

Carnival Corp. is planning to offer Cuba departures every other week starting in May 2016 and is exploring itineraries that would visit three destinations on the long off-limits Caribbean island.

“This will be the first time in well over 50 years that a cruise ship can take passengers from the U.S. to Cuba and return on any kind of repeated basis,” Carnival CEO Arnold Donald said in a conference call with reporters. “It’s really kind of a historical thing.”

While Carnival has secured licenses for Cuba travel from the U.S. Treasury and Commerce Departments, its plans still depend on getting approval from Cuban authorities.

The cruises would be operated by the new fathom brand, which next April will begin operating cruises to the Dominican Republic where its passengers can engage in volunteer activities. The plan is to begin operating alternating weekly itineraries to Cuba in May.  

Carnival received word of U.S. approval on July 2, but it’s uncertain when Cuba approval could come. “We’re at the early stage but things can move pretty rapidly there,” Donald said. “We have intentions to sail there beginning in May 2016, and I think that gives us plenty of runway to work out whatever” problems might occur.

All fathom itineraries are open for bookings now. “We’re accepting deposits to book now, and if things don’t work out or the prices have to change dramatically, people would be refunded,” Donald said. “We don’t anticipate that, but if it would occur, deposits would be returned.”

Fathom cruises will meet the U.S. requirements for travel to Cuba, primarily that Americans engage in People-to-People educational tours while on the island. Fathom president Tara Russell said the tours will be “fully immersive” and focus on educational, artistic, and cultural exchange, and possibly work to support small businesses and the agricultural movement.

“They will all comply with the 12 authorized forms of travel approved by the U.S. government,” Russell said. “We’re still working to get approvals from Cuban authorities, and are deeply engaged with them.”

Itineraries are still being developed, but Russell said 11 destinations have been identified as possible ports of call and hopes the weekly cruises will visit three destinations in Cuba. Havana does have a cruise terminal built many years ago, but fathom’s 710-passenger Adonia could tender passengers into other ports, she said.

In fact, Costa Cruises, Carnival’s Italian brand, helped manage the Havana terminal years ago. After U.S.-based Carnival acquired Costa in 2000, it had to abandon operations in Cuba due to the U.S. trade embargo.

“We have people in our organization familiar with ports and other aspects of Cuba from their time there,” Donald said. “We do have some in-house experience, a bit dated, but it’s still experience.”

Fares for seven-day Cuba cruises start at $2,990 per person, almost double the Dominican Republic voyages priced from $1,540. Russell said that’s due to the extensive planning for the People-to-People excursions mandated by U.S. regulations.

“The real cost involved is for travelers engaged in People-to-People excursions on the ground eight hours a day,” she said. “That’s a requirement under the 12 authorized forms of travel. There is more involved in the trip price and trip package, and we are still finalizing those port fees and charges that will be in addition to the base price. … We’ll make it easy and convenient by taking care of that process and working with travelers to make sure they have all the tools and documentation.”

Carnival last month announced plans for fathom as a social-impact brand that would carry passengers to the Dominican Republic to do volunteer work. As fathom was being developed, executives noticed how it would comply with the newly relaxed U.S. travel guidelines to Cuba, Donald said.

“The application process to receive the licenses began well after our social impact travel experience had evolved into the fathom brand,” Donald said. “It wasn’t the intended purpose of fathom but absolutely fit under the current guidelines for U.S. citizens to be able to travel to Cuba.”

Robin M. Farley, a cruise industry analyst with UBS Investment Research, said Carnival’s move into Cuba gives the company “first-mover advantage.”

Cuba represents a “significant opportunity” in the long term for the cruise industry, Farley wrote in a research note.

“If cruise calls to Cuba were eventually allowed via other cruise brands, we believe it would represent a new itinerary with significant pent-up demand from American tourists,” she said. “Cuba is the largest island in the Caribbean, only 230 miles from Miami, allowing for it to be part of a variety of itineraries, and it has long been in the cross-hairs of the American cruise lines. While Havana may not currently be able to handle the largest ships, we believe operators would make the investment to expand dockside infrastructure.

“Many contemporary ships have been designed to be able to operate in Havana Port. Cuba could prompt many cruise passengers to repeat a Caribbean itinerary in order to see a unique and novel port that has gone unseen by most Americans for decades. Havana is a natural deep-water harbor and we believe operators could build dockside infrastructure on a much faster timeline than hotel infrastructure, and we believe there are close to a dozen other potential ports of call around the island. It could take years to develop three- to five-star American-branded hotel product in Cuba, favoring cruise ships as the way to visit the island in the medium term.”