Real reason Melbourne cruise numbers have sunk as other states prioritise cruise tourism

• A new report, commissioned by the Victorian opposition, has offered data on the decline of cruising in Melbourne and Victoria.
• However, analysis appears to show that the Victorian government has decided not to prioritise cruise and rather focus on other areas of its tourism economy.
• Other states, such as Western Australia and South Australia, are vying for more cruise traffic.

Victoria’s state opposition has commissioned research that has revealed the full impact of Melbourne cruise tourism decline, spurred on by recent confirmation that neither Princess nor Cunard cruises will return to homeporting out of Melbourne.

The research reveals that Melbourne port is likely to see 113 fewer cruise ship berths in 2028 when compared to 2025. This will mean that despite the higher port fees, the government will see significantly fewer tax earnings from cruise ships, about $10 million less in 2028 than in 2025.

This drop will also affect general tourism in Melbourne, which is expected to see losses of about $27.8 million over the same time period. It appears this number is calculated only in relation to the loss of Cunard and Princess passengers.

Liberal MP Roma Britnell, the spokesperson on ports for the opposition in Victoria, said that the cruise industry “warned at the time the decision to move their popular cruise lines into other markets was largely due to Labor’s significant increase to fees and charges.”

Britnell blames this on the “incompetence” of the Victorian government.

“In addition to the economic loss to Victoria, the sheer incompetence of this government is on display with their decision to hike up port fees only to lose millions of dollars in port revenue because of their decision.”

But some believe there is more to this story. While states like South Australia and Western Australia are deep in talks with cruise lines and working on ways to increase their welcome, Victoria is not.

In November 2023, the Victorian government decided to raise Melbourne’s port fees by 15%, or about four dollars per passenger. While this may sound insignificant, Melbourne cruise has been spiralling downhill ever since.

The problem was the hike came without warning. meaning lines found it hard to pass it on to passengers who had already paid for their trips.

While some politicians and commentators frame this as incompetence, the reality is that Melbourne and Victoria appear to have made a conscious decision to put less emphasis on cruise.

The decline in Melbourne’s cruise industry has been well documented.

A previous Cruise Passenger investigation revealed that turnaround cruises out of Melbourne were set to plunge 70%, with potential losses in the hundreds and millions. This has quickly led to more people taking notice, with pundits like The Herald Sun, Channel Seven, and the Tourism and Transport forum taking note of the figures.

Is this the real reason for Melbourne’s cruise decline?

What Britnell overlooks is that the Victorian state government, and many Victorians, may not be too concerned about this.

In the 2023/24 tourism season, the tourism industry generated a massive $36 billion in gross state product for Victoria. In total, cruise contributed $637 million of this, which equates to about 1.8%. 

Furthermore, it makes Britnell’s figure of $37.6 million, the tax losses and tourism losses combined, look rather insignificant, as this equates to less than 0.1% of Victoria’s tourism economy.

Therefore, with these purported losses representing such a tiny portion of Melbourne and Victoria’s larger tourism industries, it is possible that the Victorian government has simply decided not to prioritise cruise and made the decision to increase port fees while being fully aware of the implications. It may not be a case of incompetence, but rather a deliberate decision not to prioritise cruise.

Station Pier, the cruise terminal in Melbourne, has been described as “third world” due to its neglected infrastructure. The Victorian government will dedicate $70 million to its maintenance over the next four years, and given that potential cruise losses aren’t yet posing a threat to its tourism economy, it likely doesn’t see it as necessary to invest more. 

As a comparison, current investments across aviation and accommodation projects exceed $11 billion.

However, a larger problem or risk for the local economy would be that overall losses could prove significantly higher than the figures quoted from Britnell. Cruise Passenger’s analysis showed that just from the 2024/2025 to 2025/2026 season, when calculating across all cruise lines, not just Princess and Cunard, a potential loss of $130 million is possible. This at least represents a larger chunk of the city and state’s overall tourist economy. 

Why not work to send the ships where they’re wanted?

While Melbourne appears to be unfazed by a loss in cruise visitation, other states such as Western Australia and South Australia have been trying to advocate for more ships. 

These states both have significantly smaller tourist economies than Victoria, and therefore appear to place a larger emphasis on the importance of cruise.

Furthermore, both of these large states have plenty of coastal communities that are difficult to reach by land and would benefit greatly from the presence of cruise tourism. Through infrastructure upgrades and increased marketing efforts, ports like Broome, Exmouth, Port Lincoln, Robe and more, could see more cruise ships visit.

If the government funds infrastructure projects for these towns, they could replicate the success of a port like Eden, which is now seeing visits from some of the world’s biggest cruise lines and ships.

This would mean cruise tourism was being directed to the regions that are directly calling for it, and would benefit from it the most.