The cruise industry was found to be a critical part of the territory's economy in a study on the economic impact of tourism recently completed for the West Indian Co., Ltd.
The study, done by a company called KPMG LLP, also found that land-based hotel tourism in St. Thomas is recovering from the severe decreases that occurred after Hurricane Marilyn in 1995.
"The primary objective of the study was to analyze the direct and indirect economic impact of the spending by all visitors and crew arriving on board cruise ships at both St. Thomas and St. Croix, "says a statement released by WICO Wednesday.
"In summary, the research indicates that 'the cruise industry was found to be absolutely essential to the U.S. Virgin Islands economy, perhaps even more so than generally acknowledged," the statement says.
The study found cruise ship passengers on St. Thomas spend more money per day than "stay-over" tourists; cruise passengers spend an average at $243 a day compared to the $115 spent by those who arrive by airplane.
On St. Croix, however, cruise passengers only spend $115 a day compared to the $132 spent by overnight guests.
The study estimated the total economic impact of cruise ship passengers to be between $983 million and $1.37 billion.
The survey also found land-based tourism is showing strong signs of recovery though it is still behind the peak 1993 level. The study found that in 1998, the territory was visited by more hotel guests than any year since 1994.
The study warned, however, that competing Caribbean cruise destinations are improving their infrastructures and developing tourist attractions that are "designed to mitigate some of the problems U.S. Virgin Islands cruise passengers may be experiencing-congestion, lack of activities."
The study was optimistic about hotel expansion planned for the territory, new attractions that are being developed such as Carifest cultural theme park, the construction of casinos and increased airline flights. The study, however, concluded that the industry may be stagnating.
"Lack of sufficient night activities, particularly on St. Croix, coupled with poor infrastructure, are some of the factors that are hindering the growth of the U.S. Virgin Islands' overall tourism industry," the study says.