Crystal Cruises LLC: Exploiting climate change or making the best of an unfortunate opportunity?
Climate Change has created innovative opportunities – but what if the opportunity is dependent on the negative effects of global warming?
A Once in a Lifetime Experience
“This [is] kind of a bucket list thing. I’d love to see a Walrus before I die” Sue Pendleton remarked, preparing for her cruise on the Crystal Serenity.[1] The ship, owned and operated by Crystal Cruise lines, was beginning her maiden voyage through the treacherous Arctic Northwest Passage in August 2016. Small, ice-strengthened ships had regularly conducted cruises through this passage, the first of which sailed 30 years ago. However, at nearly 8 times the size, without any ice-strengthened construction, the Serenity would be the largest and most vulnerable ship to ever sail the passage with 1070 passengers aboard.[2] At a $22,000 ticket price per passenger, the cruise sold out within 3 weeks.[3] Publicity was widespread within the travel community bringing awareness to the rapidly growing subsidiary of Genting Hong Kong.[2] However, reactions were mixed. Travelers seemed unsure whether to embrace this new operating model or shun it. On the one hand, it educated passengers on climate change and improved the economy for local communities hit hardest by global warming. Still, the cruise wouldn’t be feasible without melting ice caps and diminishing glaciers. Is Crystal Cruises LLC exploiting the negative effects of climate change or are they making the best of an unfortunate opportunity? As a leader in this new market, the company must decide how to position itself. The company’s answer to this question may determine its long term success.
Crystal Cruise Lines Seizes an Unfortunate Opportunity
The decision to conduct this maiden voyage through the arctic was one of several ambitious moves made by CEO Edie Rodriguez since she had taken the helm of Crystal Cruises in 2013. In three years, she set out a rapid growth plan including the company’s acquisition by Genting Hong Kong, expansion into residences at sea, yachts and even luxury airlines in the attempt to be an all-inclusive travel service.[3] Melting ice caps presented the company with an opportunity to traverse the Northwest Passage with the largest cruise ship to date. The company also had an opportunity to bring over $100,000 in business to poverty stricken Inuit communities.[1] The popularity of the initial voyage was so successful for the business that they began selling tickets for the 2017 summer transit before Crystal Serenity set sail in 2016. The overwhelming success encouraged competitor, Regent Cruises, to enter the market as well.[1] However, enthusiasm was not shared by all. Some viewed it as a cavalier operating model that also exploited a dramatically negative global warming epidemic.
The Risks of Sailing the Northwest Passage
The primary threats to this model were the risky nature of the Northwest Passage and the impression that Crystal Cruises was betting against the climate. Concerns quickly rose from maritime officials that subsequent shipowners would enter the market with a lack of adequate planning resulting in a devastating accident.[4] While most inaugural passengers felt safe, a small accident, even by a competitor could derail the entire initiative. It often took maritime officials over two days to successfully reach areas in the Northwest passage. Additionally, the idea of cashing in on “extinction tourism” was very troubling to some.[5] “It is an abomination – a massive, diesel-burning, waste-dumping, ice-destroying, golf-ball smacking middle finger to what remains of this planet” one reporter remarked.[6] This association with global warming exploitation, coupled with any sort of environmental disaster could pose a risk to the strong Crystal Cruises brand.
Green Initiatives and Risk Mitigation
To mitigate risk, the company was escorted by logistical ship specializing in ice reconnaissance and oil pollution containment equipment.[1] To address the concerns of environmentalists, the ship took two actions. It offered a “Study in Global Warming” excursion, highlighting the negative effects of climate change for passengers.[1] Additionally, the ship promised to surpass minimum requirements by using a pricier but environmentally friendly low-sulfur fuel.[1]
An Opportunity to Set the Example as a Leader in a New Market
These initiatives only slightly appeased environmentalists. In its unique market position as a leader, Crystal Cruises can do more. It has an opportunity to set the example for a small niche of businesses that find opportunity specifically in the negative effects of climate change. Consumer perception continues to shift with an increasingly stronger emphasis on improving the climate. Crystal Cruises could look for ways to become greener company and take an active role in climate talks as its business serves on the front line of global warming. Doing so will not only differentiate the cruise line, it will hedge what could be dramatically negative effects of an environmental mishap. The irony is not lost on inaugural passenger Moira Somers. She remarked, “One kind of feels – I won’t say guilty, but you are taking advantage of what is happening”[7]
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Sources:
[1] Schwartz, Karen. “As Global Warming Thaws Northwest Passage, a Cruise Sees Opportunity.” New York Times, July 6, 2016. http://www.nytimes.com/2016/07/10/travel/arctic-cruise-northwest-passage-greenpeace.html?_r=0. Accessed 3 November 2016.
[2] Sloan, Gene. “A history of cruises through the Northwest Passage.” USA Today, October 7, 2016. http://www.usatoday.com/story/travel/cruises/2016/10/07/northwest-passage-cruise-history/91720028/. Accessed 3 November 2016.
[3] Gollan, Doug. “How Crystal Cruises Pulled off its Massive Expansion.” Forbes, July 23, 2015. http://www.forbes.com/sites/douggollan/2015/07/23/how-crystal-cruises-pulled-off-its-massive-expansion/3/#3957852b3a12. Accessed 3 November 2016.
[4] Paris, Costas. “Luxury Cruise to Conquer Northwest Passage.” Wall Street Journal, May 10, 2016. http://www.wsj.com/articles/luxury-cruise-to-conquer-northwest-passage-1462872605. Accessed 3 November 2016.
[5] Michael Byers, “Here and Now”, National Public Radio, September 12, 2016. http://www.wbur.org/hereandnow/2016/09/12/northwest-passage-cruise. Accessed 3 November 2016.
[6] Oremus, Will “The Upside of Global Warming: Luxury “Northwest Passage” Cruises for the Filthy Rich”, Slate, August 17, 2016. http://www.slate.com/blogs/future_tense/2016/08/17/crystal_serenity_s_northwest_passage_cruise_is_a_festival_of_environmental.html. Accessed 3 November 2016.
[7] “Rachel Waldholz, Weekend Edition Saturday, National Public Radio, August 27, 2016. http://www.npr.org/2016/08/27/491337521/in-warmer-climate-a-luxury-cruise-sets-sail-through-northwest-passage, accessed November 2016. Accessed 3 November 2016.
Image Sources:
“Crystal Cruises Northwest Passage Explorer 2017 Brochure.” http://www.crystalcruises.com/voyage/details/northwest-passage-explorer-7320 & http://viewer.zmags.com/publication/06b0f96d#/06b0f96d/1. Accessed 3 November 2016.
The company is in a interesting predicament, caught between a business opportunity and environmental exploitation. I tend to agree that they could do more. In particular, I wonder whether there are entirely carbon neutral methods of powering the ship? If not, I think they should offset the emissions of all passengers. Backing out of the market entirely is not the right strategy as this would simply open it up to other competitors, many of whom are likely to be even less focused on environmental sustainability.
Crystal Cruises just commissioned a new megayacht specifically for polar trips. One way they could position themselves as “greener” is to make sure the new yacht is as sustainable as possible – both in terms of its fuel and in terms of its materials: I imagine there’s a lot that could be done with the wood, metal, leather, etc that goes into building and decorating a luxury yacht.