PHOTO: The tense stand-off between Ukraine and Russia could damage tourism to the Black Sea region. (Photo courtesy of RIA Novosti)
Will the Black Sea falter as a cruise destination before it really takes off? That's a question facing the travel industry this week as the tense face-off with Russia continues in Ukraine. Cruise line executives are keeping a close eye on the region, which has been gaining popularity as an exotic itinerary for adventurous, seasoned cruisers.
"Our security professionals are monitoring and we have excellent backup itineraries should Ukraine need to be avoided," said Larry Pimentel, president and CEO of Azamara Club Cruises. "Anybody traveling in the Black Sea is hoping for a less-complicated political scenario. No line will place guests, crew or equipment at risk."
Azamara has scheduled a nine-night "Black Sea and Greek Islands" voyage departing June 12. It includes calls at three ports in Ukraine - Odessa, Sevastopol and Yalta. The latter two are on the Crimean Peninsula, where Russian forces have dug in and surrounded Ukrainian military bases. Crimea houses a Russian naval base, giving the country its main access to the Mediterranean Sea.
The U.S. State Department issued a travel warning on Feb. 23 urging Americans to defer non-essential travel to Ukraine, based on the political demonstrations punctuated by violence in Kiev and Crimea.
Diplomats around the globe met in Paris Wednesday to attempt to defuse the situation and prevent a military escalation, so if things ease up quickly, travelers will likely make or proceed with plans to visit. Memories are short.
"I've learned over decades not to make instant decisions when the next voyage is a quarter-year away," Pimentel said.
Many ships schedule a handful of cruises to the Black Sea. Last week Royal Caribbean International announced its first-ever Black Sea cruises scheduled to stop at Odessa, Yalta and Sevastapol, as well as Sochi, in 2015.
River cruises also increasingly explore the Black Sea, some just in the western region (Bulgaria and Romania) while others visit Crimea. For example, Viking River Cruises offers 15 departures from May through October this year of the 12-day "Footsteps of the Cossacks" itinerary between Odessa and Kiev with calls Sevastopol and Yalta.
All Leisure Holidays also plans to visit those Ukrainian ports with ships from its Swan Hellenic and Voyages of Discovery brands. "They are some of our most popular cruises," said Steve Tucker, president-North America for All Leisure Holidays. "We definitely are keeping a close eye on what's going on over there. We hope for a speedy resolution."
The Minerva is scheduled for the 15-day "Black Sea Panorama" Aug. 27-Sept. 10, while the Voyager is slated for the 15-day "Black Sea Adventure" Oct. 8-22. The Voyager also will stop at Sochi.
The Black Sea cruises have gained popularity with cruisers who have already sailed in the Caribbean, the Mediterranean, Alaska and the Baltic, as well as those looking for a more educational experience with guest lecturers talking about the history, culture, architecture and art of the region. "The kind of customer who buys our product is someone who has been on the other cruises and is now looking to go to out-of-the-way ports," Tucker said.
All this makes it more the shame that Putin launched the Ukraine invasion just as the Sochi Olympics closed. Though Sochi had more than its share of negative publicity, the Olympics also showcased the resort's beaches, mountains and culture, which surely kindled some level of desire to travel there. It's inexplicable why Putin would spend $50 billion to develop the Sochi tourism infrastructure - it now has 40,000 hotel rooms - only to follow up with an invasion of the neighboring country and worldwide condemnation.
The situation has drawn scrutiny by some financial analysts who cover the cruise industry. Timothy Conder of Wells Fargo noted that the conflict centers on the naval base at Sevastopol.
"The Ukraine Crimean port of Sevastopol is likely the key to the Russian/Ukraine geo-political tensions," he wrote in a research note. "We believe that all sides involved want to avoid military conflict. Russia needs trade with Europe and the West overall, but does have alternative markets (e.g., China) for petro chemicals and grain. Europe is highly dependent on Russian natural gas.
"While it would appear Russia would like to bring Ukraine back into the old 'Soviet orbit,' we believe that ultimately, Russia's primary (and likely unnegotiable) focus is the secured access to the Sevastopol naval port. Once this could be guaranteed, it is likely that tensions would ultimately subside in a conceivably split Ukraine."
Robin Farley of UBS Investment Research said public cruise companies have minimal exposure. Carnival Corp. brands calling on Ukrainian ports include Holland America Line, Princess Cruises, Seabourn and Cunard, but that is less than 1 percent of total capacity.
It's a similar situation with Royal Caribbean Cruises Ltd. brands, she wrote in a research note. Norwegian Cruise Line doesn't visit Ukrainian ports but does operate a short season in the Baltic itineraries, calling on St. Petersburg, she said.
"While ships are moveable assets and itineraries can be changed to skip ports of call, overall demand could be impacted by loss of ports and overall passenger concerns about travel to Europe," Farley wrote.
So if the stand-off ends soon, cruises will likely operate as usual and the region could perhaps draw even more tourism interest, especially among the adventurous traveler. If the situation does not change quickly, or escalates, it could extinguish fledgling tourism demand to the Black Sea and Russia.
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