Exercise 15 Island Cruise NEGOTIATION 7e LEWICKI - BARRY - SAUNDERS Condential Role Information for MAYOR GIL EGAN [From the Island Council of Tropical Island) As the mayor of Tropical Island, you are faced with the dual mandate of preserving the island's natural resources, while at the same time promoting the island's economy. You are approaching the end of your rst three-year term, and are preparing to run for a second term. Thus, you want to make decisions promoting the health and welfare of your fellow islanders to secure their votes. You have been charged by the Island Council to negotiate with Captain Stuart Bing, the director of cruise ship operations for Island Queen, Inc., regarding his desire to secure exclusive anchoring and disembarkation rights to this tropical paradise. While you have sole responsibility for negotiating all agreements concerning Tropical Island's commercial activities, at least half of the eight-member Island Council must ultimately accept any agreement you negotiate. You have recently been contacted by the director of another cruise ship company, the Island Maid, Inc. regarding visitation rights to Tropical Island. You have delayed meeting with her, because you believe an agreement with Island Queen, Inc. will be more beneficial to Tropical Island. Island Maid, Inc. is a smaller company with an older, less luxurious ship, the Island Maid. A major concern is that older ships introduce signicantly more pollution into the marine environment than newer ships like the Island Queen. More importantly, Island Maid's clientele are generally middle-class retirees on xed incomes. The mayors of other local islands have warned you that this segment of the cruise tourist population is less desirable because they tend to eat the complimentary meals provided onboard their ships instead of patronizing island restaurants and they typically do not spend money in tourist shops, preferring to sightsee and relax on the beach playing cards. Based on the IsIand Maid's currently published itineraries, you anticipate they will want one-day visits, six times a year. Because the Island Maid is much smaller than the Island Queen, you estimate the demand will be about 300 passengers per visit. There are currently about 200 tourists arriving or leaving the island per day by means other than cruise ships. Many council members believe that these tourists are already having a negative impact on the island. For example, cases of theft and drug abuse among island natives, which had never been a problem before recent tourism, are now being reported a few times a year. Still, the Island Council is aware of the economic benet that tourism brings to the island. By offering an exclusive agreement to the selected cruise line company, the council expects they will be able to attract a higher level of clientele. Because cruise ship passengers visit the island infrequently, and for only a brief period of time, it is felt that an increase in this type of tourism would be acceptable. Most council members feel that the island's limited infrastructure can only comfortably support an increase of about 300 more tourists per day. Greater tourism, while possible, will likely result in an unpleasant experience for tourists, and have a negative impact on the native community. To minimize potential problems if the number of tourists increases, it will be critical to limit the number of cruise visits per year and the duration of each visit. Because the island wants to promote limited tourism, at least three visits a year will be necessary to provide enough demand for locals to embrace this new industry. However, damage to the marine environment and lack of tourist accommodations may require limiting the duration of a visit to just one day If more facilities were built, however, you think a two-day visit would be sustainable. You believe and have some indication ofagreement from the council that there is exibility on the number of passengers disembarking as long as they don't visit too often If the council feels there are too many visits per year you are sure they will vote against the agreement The three oldest council members are against allowing any cruise tourism because they believe tourism is already ruining the island. While they have some valid concerns, you believe the real reason for their position is iat they are bitter because many of their grandchildren have chosen to pursue college educations off the island and have not returned to live full-time on the island. The mayor of Desert Island, another island in the region, is rumored to be seeking additional tourism revenue by aggressively courting the cruise line industry. It is possible that ifyou do not reach an agreement with Capmin Bing, he may pursue adding Desert Island to his itinerary instead. While Desert Island's barren landscape is no match to the lush beauty of Tropical Island, it must still be considered as a potential factor in your negotiations with Captain Bing. Evaluation: In order to evaluate the economic, ecological and cultural impact of permitting cruise ship tourism, the Island Council has developed the following guidelines to help you understand their concerns regarding the various options. Your objective is to negotiate me most benecial agreement for die island. Issue #1: Number ofVisits (per year) Visits Qumment No Visits This option does not promote cruise tourism on our island. However, it has some value, because it eliminates issues related to cruise ship pollution, and other negative aspects of cruise tourism. 1-2 Visits While this is a culturally and environmentally acceptable solution, it does not utilize our resources efciently. One or two cruise visits a year may not provide enough demand for locals to embrace this new industry. Their doing so will depend upon the number oftourists, and the length oftheir visit. 3 Visits A cruise visit three times a year for a small number of visitors is expected to provide enough ofa demand to support a small domestic industry, while not impacting our native culture and ecosystem as long as the number of tourists and their length of stay are limited. 4-6 Visits This level ofvisitation by a minimal number of cruise passengers will certainly support a small local cruise tourism industry. However. if the number of tourists and their length of stay are not restricted, our native culture and pristine marine ecology will be negatively affected. 7-12 Visits Each succeeding increase in the frequency ofvisitation increases the potential for destruction of our local environment and culture It is imperative that these adverse effects be minimized by requiring reductions in the number of tourists and the duration of their stay Issue #2: Length of Visit (days) Lenh Comment 1 Day Our island does not currently have the infrastructure to support a large number of tourists spending the night. Thus, it is in our best interest to limit the duration of cruise Visits to one day This will also minimize the ship's impact on our shing activities in the island's ecologically sensitive coastal waters. 2 Days We can accommodate a small number of cruise tourists staying over-night on our island. However, overnight says typically lead to increased alcohol abuse by these tourists in our restaurants. This may be due to our festive lifestyle and their short stay. We want to minimize our community's exposure to this behavior. 3-5 Days More days on our island does not lead to proportionally more tourist spending. Longer visits result in more sightseeing and less spending per day. This increases the impact on our native environment including our harbor ecology which cannot handle the presence of operating cruise ships for more than ve consecutive days. Issue #3: Number of passengers on shore per day (in increments of 100 passengers) Eassengersomment 100-200 About 200 tourists currently arrive daily via other means. Occasional visits of 100 to 200 more, may not adequately stimulate a local cruise-based tourism industry. Also, more tourists will be needed to economically justify the adverse impact of cruise ships on our sensitive coastal waters. However, there are some council members who feel that any increase in tourism will be unacceptable, 300 A moderate number of cruise ship visits at this level of tourism will support a local cruise tourism industry without signicant impact on our native culture. The minor impact on our harbor ecology will be offset by the boost to our economy from the new tourism. While this number of tourists is considered the most desirable, it will depend upon the number of cruise visits and length of stay. 400-2000 Increasing the number of tourists disembarking may overwhelm our island's facilities. resulting in an unpleasant experience for locals and passengers. Limiting visit duration and frequency will be critical as more tourists disembark Any cruise ship visitation agreement that does not have the support of a majority of the council members runs the risk of affecting your ability to be re-elected. Input from Island Council members suggests the most desirable agreement would be for three one-day visits a year with 300 passengers. Negotiating such an agreement can be expected to ensure your re-election, and spare you the possible embarrassment of being the island's rst mayor unable to secure a second term. If you are unable to secure an agreement with Captain Bing that adequately addresses the Island Council's environmental and cultural concerns, then you are authorized to pursue a dialog with the director of Island Maid, Inc. in order to secure an agreement more benecial to the island. Note: Negotiations must be based solely upon information provided in this simulation and no external sources. . Exercise 15 Island Cruise Introduction In this exercise you will participate in a negotiation about a cruise ship and its rights to visit a tropical island. You will role-play this negotiation as either the director of the cruise ship or the mayor of the island. The issues to be discussed during the negotiation include the number of visits per year that the ship can make. the length of individual visits. and the volume of passengers allowed to disembark from the ship on each day when it visits. This simulation provides a rich context for a business negotiation in which economic. cultural. and ecological factors all come into play. Background Intormation The Island Queen is a privately owned and operated luxury cruise ship. Cruise ship pas- senger demand has steadily fallen over the past few years due to the poor economy. fear of worldwide terrorism. and recurring cases of the Norwalk virus on cruise ships. Norwalk- like viruses, which have afflicted hundreds of passengers on several cruise ships, cause diarrhea. stomach pain, and vomiting. The Island Queen '5 operations department has de- cided that adding a new exotic destination to the standard 16-day itinerary will help stimu- late passenger demand. While many islands in the region are possible candidates, Tropical Island is its rst choice due to the island's reputation as an exotic and pristine locale. Tropical Island Tropical Island is part of a chain of lush Pacic islands in one of the most remote spots on earth. At IO miles wide by 33 miles long, the island is not large. However. it is home to an extensive array of rare and endangered plant and animal species. many found only on Tropical Island. The traditional rural and native culture of the island has remained rela- tively unchanged over time, earning it the nickname \"The Last Unspoiled Island." The island is a wonderful combination of rain forests, desert lands. waterfalls. and black- and white-sand beaches. Weather on the island is pleasant year round. with maxi- mum daytime temperatures ranging from 88 degrees Fahrenheit in the summer (May to October) to 80 degrees in the winter (November to April}. Nighttime temperatures rarely fall below 60 degrees. As a result, the island's tourism, though considered minimal. re- mains almost constant year-round, at about 70000 visitors per year. Approximately 60 percent of the island's "H.000 residents have true Pacic Island an- cestry. This makes Tropical Island the only one in the region where true natives are the majority. These natives continue to practice the region's old traditions while trying to min- imize the inuence of the rampant commercialism found on other islands. The two closest islands are more than 25 miles away and are far more commercialized than Tropical Island. Compared to the other islands in the region. Tropical island is a quiet and pristine world of breathtaking beauty, where one can easily escape to peaceful solitude or partici- pate in a myriad of outdoor activities. In addition, prices on the island are generally lower than on surrounding islands. As a result, many visitors are actually repeat customers. reim- rnersing themselves in the idyllic lifestyle they know they will find on the island. Typical island activities include surfing. kayaking, fishing, and hiking. Snorkeling and scuba diving are especially spectacular due to the abundance of giant sea turtles. The island is also home to the longest barrier reef in the region, which stretches 28 miles. Guided hiking tours of the island's extensive rain forests allow visitors to learn about the ora and fauna unique to the region. For the less sure-footed, guided mule rides down the highest oceanfront cliffs in the world offer dramatic views of the unspoiled coastline. With only one movie theater, one public restroom. and no stoplights, the island takes pride in its lack of development. A weekly Saturday morning farmer's market offers a vi- brant taste of the rich local heritage. In addition, the island's macadamia nut farm, coffee plantation, and kite factory provide abundant opportunities to explore the island's unique character. Dining options cover the full spectrum from inexpensive eateries to extravagant gourmet feasts, complete with traditional native entertainment. In addition to tourism, major industries on the island include shing, farming, and retail sales. With the collapse of the sugar and pineapple industries in the 19903. the island has moved to replace these once dominant industries with more diversied aquaculture and agriculture. Tropical Island is governed by an autonomous council. Residents elect a mayor, who serves a three-year term with a two-term limit. and an eight-member island council with two-year terms. The island council. with current mayor Gil Egan as its representative, is responsible for making all decisions regarding the island community. Decisions are made by majority vote of the council. The mayor performs the function of \"tie-breaker" when necessary. There are five public and two private schools on the island serving 2,000 students from kindergarten through twelfth grade. Residents seeking a collegedevel education typ- ically move off the island for the duration of their studies. These students rarely return to live permanently on the island. This has been a major concern of the islanders. who wish to reduce the loss of native residents. Therefore, construction of a local community college is under consideration. Current means for tourists to access the island include small aircraft and small sea vessels. There are also two inter-island flights per day between Tropical Island and the surrounding islands. with each ight carrying about 50 passengers. On any given day. about 200 tourists arrive or depart Tropical Island. with a total of 500 tourists on the island at any given time. Electric cart rentals are available at the airport for transportation around the island. Marine ecological studies performed on Tropical Island by the United Nations' International Maritime Organization Agency indicate that for each day a cruise ship oper- ates in Tropical Island's sensitive coastal waters, at least two weeks of undisturbed marine environment must be maintained afterward to avoid permanent ecological damage. Each additional day of operation requires two additional weeks of recovery. The ecosystem. however. is not able to sustain more than ve consecutive days of abuse. These figures assume no intentional damage to the ecosystem. such as removal of coral or wildlife as a result of cruise shiprelated tourism. During the time that a cruise ship is anchored near the island, and for four days follow- ing its departure. local residents are advised not to sh or swim within a two-mile radius of where the cruise ship had been anchored because of potential health hazards. The island's only natural harbor is the best location for anchoring cruise ships. Unfortunately. this two- mile-wide bay is also the island's most productive shing spot. The island Queen At 971 feet in length and weighing 91 .000 tons. the $400 million island Queen is the larg- est cruise ship ever to service the Tropical Island region. It accommodates 2.200 passen- gers and 1.100 crew members. Operation of the lsland Queen is handled through island Queen. Inc.. a private corporation. Captain Stuart (Stu) Bing is the director of cruise ship operations for the Island Queen. While he has sole responsibility for negotiating all con- tracts governing the vessel's operation. he ultimately answers to the CEO and the board of directors of Island Queen. Inc.. regarding all corporate matters. With l0 distinctive restaurants and 14 separate lounges and bars. the Island Queen has a venue for the most discriminating guest. Passengers who desire the excitement of gam bling will enjoy the lavish Grand Casino with its glass elevators. oating staircases. stained glass domes. and ocean view windows. The magnicent Riviera Deck. adorned with spar- kling pools. bars. hamburger grill. ice cream bar. gymnasium, and spa. is the perfect spot for outdoor activities and food. The island Queen sets a new standard for luxury cruise ships with its unique alternative 24-hour dining in the panoramic Horizon Court. two the aters. computerized golf. and a library featuring \"listening chairs" for music and audio books. Industry standard venues and amenities such as buffet meals. theaters. and gyms are included in the price of the cruise. Dining in the more exclusive restaurants and some per- sonal services such as massages and beauty treatments are an additional expense billed separately to the passenger. The standard lsland Queen cruise is to days and 15 nights. The itinerary consists of five days sailing to the island region. six days visiting various tropical islands, and five days returning to its home port. An island visit generally involves passengers disembark- ing at 8 am. and returning to the ship by 8 p.m. On more popular islands. the ship will remain in port for two days. At these ports, passengers may elect to spend the night on the island, but they must return to the ship by 8 pm. the following evening when the ship sets sail for the next port. Island Queen. Inc.. has provided luxury cruises to the island region for over 20 years. but Tropical island has never allowed cruise ships to visit. For economic rea- sons. Tropical Island is now considering offering exclusive visitation rights to a cruise line company. Though other cruise line companies are vying for the right to add Tropical Island to their itinerary. the island Queen is the most luxurious prospect. An agreement with the Island Queen is expected to provide greater income per tourist for the island than an agreement with any of the other cruise lines because of the island Queen's wealthier clientele. Tropical Island and Island Queen Concerns Large cruise ships, like the island Queen, can severely impact the local marine ecology during their stay. According to one environmental group, typical cruise ships \"produce massive volumes of waste, including sewage. nonsewage wastewater or gray water, ballast water. oily bilge water. air pollution. solid waste, and hazardous waste. each of which may harm sensitive marine ecosystems like the island's through the addition of harmful patho- gens and chemicals, or the introduction of alien species."1 There are, however, interna- tional environmental standards under which cruise lines must operate. These standards. set forth in international conventions, create strict guidelines for all commercial vessels. in- cluding passenger vessels, to prevent ship-generated pollution for oil. garbage, and waste.2 Still. the island community has strong reservations about allowing cruise-based tour- ism because of the industry's dismal record of environmental compliance and poor en- forcement of laws regarding ship pollution. There is also concern that a sudden increase in tourism will adversely affect the so- cial makeup of the quiet rural island. Environmentalists point to small islands and towns in Alaska and the Caribbean whose local lifestyle, culture, and economy become crowded out by foreign visitors. The island council's community plan denes its primary economic focus as agricultural industries. Tourism is to be limited to a level that will not adversely affect the community's traditional, social, economic, and environmental char- acteristics. An agreement between the Island Queen and Tropical Island must take into account the impact it will have on the traditional lifestyle and customary rights of the native inhabitants. The main reason cruise ship companies have been hesitant to add Tropical Island to their itinerary has been the lack of island infrastructure to support the needs of a typical cruise ship visit. Too many cruise tourists descending upon the island all at once may over- whelm existing island facilities, resulting in an unpleasant experience for everyone. The fact that there is only one public restroom on the island is enough to dissuade even the most optimistic tour operator. Limiting the number of tourists disembarking will help pre- serve the island's natural character and benet the cruise ship since remaining passengers will spend their money on board the ship. Conclusion Traditional island culture and mores. as well as isIand law. forbid council members. and Mayor Gil Egan as their representative. from accepting any form of nancial incentives, such as bribes. from the cruise lines to gain commercial access to Tropical Island. A re- spectful and mutually benecial relationship between Tropical Island and the Island Queen is desirable. Any agreement between Tropical Island and the Island Queen should take into ac- count the current economic environment, existing resources and infrastructure, expected tourism income for both parties, and any damage to local ecology and native culture result- ing from added cruise line tourism. International maritime law requires that any agreement between the parties remain in force for six years following its adoption, so it is important to consider anticipated trends with any agreement since renegotiating in the near term will be very difficult. if not impossible