As cruise ships prepare to return to the seas after an enforced 14-month break due to the pandemic, one of the hardest hit industries is facing a challenging future.
While many staff will return to work, life on board is set to be very different and that will reflect in salaries and the number of cruise ships operating.
Recruitment firms for major cruise liners said profits were down 70 per cent on pre-pandemic levels and fear it could take another year for the industry to recover.
“At the moment we have a very limited number of openings as we are mostly trying to deploy our returning crew who have been sitting at home,” said Mathew Dymtchev, director of operations at Odyssey International Maritime and Hotel Management.
People are still nervous about what the travel restrictions will be and what happens if someone gets covid on board.
Vivek Menon,
Deira Travel
“The companies that I am working with are gradually reopening from August 1, but are unlikely to be fully operational until September 2022.
“We are supplying crew for about 50 ships but with the travel restrictions, vaccination and different safety protocols for new crew, recovery will take some time.
“From our research around 85 per cent of these people are ready to come back to work, but that does not mean they will all do so.”
Staff joining cruise ships face strict new safety protocols.
Changes to the layout on board to incorporate social distancing measures have also been implemented at substantial cost.
Odyssey supplies crew to ships operated by global travel firms, including Oceania Cruises, Virgin Voyages, Regent Seven Seas, Crystal Cruises, Seabourn Cruise Line, Thompson Cruises, Princess Cruises and Cunard.
While most businesses in the Gulf have returned to some kind of normality, tourism continues to feel the strain and suffer from the pandemic’s fallout.
Based on a market-wide survey of more than 1,000 professionals in the region, 52 per cent said their organisation was in ‘business as usual’ or ‘growth’ phases of operation.
Of those still recovering, 28 per cent expected their operations to be back to pre-pandemic levels or beyond in the next 12 months, suggesting 80 per cent of organisations will be back on their feet, if not growing, by 2022.
The cruise ship industry, however, is likely to continue to suffer for some time, Mr Dymtchev said.
“It has been difficult, to say the least, and it will take far longer to recover and be much harder than any of us thought,” he said.
“The gravity of the situation was vastly underestimated by the industry as a whole.
“This time last year we thought we would be back within three months but it has been a much extended period of intermission.”
The US Centres for Disease updated guidance for resumption of cruise operations in May.
It included mandatory masks and regular disinfection. Trial voyages were also completed ahead of relaunching passenger cruises.
European ports imposing different safety protocols for new crew joining vessels has complicated recruitment further.
“If we send someone from Dubai fully vaccinated to join a crew in Southampton it will take a month of preparation in advance,” said Mr Dymchev, who established the SOS Crew Charity Foundation during the pandemic to support out-of-work staff.
“If someone is arriving in Venice, Italy they use also quarantine for seven days and have a PCR test, or for 14 days if they are unvaccinated. That makes things complicated and expensive.”
Despite international travel resuming as border restrictions ease, the cruise liner industry remains uncertain.
The first five post-pandemic voyages onboard the Cunard-run Queen Elizabeth liner were cancelled after crew members tested positive for Covid-19.
Cases were identified on new crew joining the ship in June as it was preparing to begin short-term voyages around the UK.
Royal Caribbean cruises resumed in June after a year-long suspension but also recorded two cases of the virus onboard its Celebrity Millennium vessel.
The global industry was worth around $150 billion prior to the pandemic and supported more than 1.2 million jobs worldwide.
Profits have now been considerably reduced due to falling demand and quiet schedules.
Several onboard outbreaks plunged the industry into crisis in early 2020, with the Diamond Princess one of the worst hit.
The 18-deck ship operated by Princess Cruises was in dock in Yokohama, Japan, when the virus spread through passengers on board, infecting more than 600 and claiming at least nine lives.
Meanwhile, a Genting Cruise Lines' ship on a "cruise to nowhere" returned to Singapore on Wednesday after a passenger, 40, was suspected to have Covid-19, the city state’s tourism board reported. The nearly 3,000 passengers and crew on board have been confined to their cabins, with contactless meals delivered.
Although Dubai’s new cruise terminal has already welcomed several super-sized liners into port this year, travel agents said the industry would need time to recover.
“Covid has been a nightmare for the cruise ship sector,” said Vivek Menon, a booking agent for Deira Travel.
“Prior to Covid, about 30 per cent of our total bookings were for cruise ships travelling all over the world.
"Now fewer than five per cent of all our travel enquiries are for these kinds of holidays so it has had a huge impact.
“People are still nervous about what the travel restrictions will be and what happens if someone gets Covid on board.
“There is a lot more nervousness about these kinds of holidays.”
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
Petrarch: Everywhere a Wanderer
Christopher Celenza,
Reaktion Books
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What drives subscription retailing?
Once the domain of newspaper home deliveries, subscription model retailing has combined with e-commerce to permeate myriad products and services.
The concept has grown tremendously around the world and is forecast to thrive further, according to UnivDatos Market Insights’ report on recent and predicted trends in the sector.
The global subscription e-commerce market was valued at $13.2 billion (Dh48.5bn) in 2018. It is forecast to touch $478.2bn in 2025, and include the entertainment, fitness, food, cosmetics, baby care and fashion sectors.
The report says subscription-based services currently constitute “a small trend within e-commerce”. The US hosts almost 70 per cent of recurring plan firms, including leaders Dollar Shave Club, Hello Fresh and Netflix. Walmart and Sephora are among longer established retailers entering the space.
UnivDatos cites younger and affluent urbanites as prime subscription targets, with women currently the largest share of end-users.
That’s expected to remain unchanged until 2025, when women will represent a $246.6bn market share, owing to increasing numbers of start-ups targeting women.
Personal care and beauty occupy the largest chunk of the worldwide subscription e-commerce market, with changing lifestyles, work schedules, customisation and convenience among the chief future drivers.
Why it pays to compare
A comparison of sending Dh20,000 from the UAE using two different routes at the same time - the first direct from a UAE bank to a bank in Germany, and the second from the same UAE bank via an online platform to Germany - found key differences in cost and speed. The transfers were both initiated on January 30.
Route 1: bank transfer
The UAE bank charged Dh152.25 for the Dh20,000 transfer. On top of that, their exchange rate margin added a difference of around Dh415, compared with the mid-market rate.
Total cost: Dh567.25 - around 2.9 per cent of the total amount
Total received: €4,670.30
Route 2: online platform
The UAE bank’s charge for sending Dh20,000 to a UK dirham-denominated account was Dh2.10. The exchange rate margin cost was Dh60, plus a Dh12 fee.
Total cost: Dh74.10, around 0.4 per cent of the transaction
Total received: €4,756
The UAE bank transfer was far quicker – around two to three working days, while the online platform took around four to five days, but was considerably cheaper. In the online platform transfer, the funds were also exposed to currency risk during the period it took for them to arrive.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Tips for taking the metro
- set out well ahead of time
- make sure you have at least Dh15 on you Nol card, as there could be big queues for top-up machines
- enter the right cabin. The train may be too busy to move between carriages once you're on
- don't carry too much luggage and tuck it under a seat to make room for fellow passengers
