February 2018, Miami
Cruise industry bounces back
Ahead of EyeforTravel’s 2018 Smart Travel Data Summit in Miami, the home of many a cruiseliner, we take a look at some of the dynamics playing out
New dynamics are entering the cruise market, both in terms of players and marketing. They could dislodge the supremacy of the Caribbean and US Gulf coast trade. ‘Cruise’ is already no longer synonymous with these coasts or major Mediterranean ports
It is too early to take the full measure of long-term damage from the terrible 2017 hurricane season, (though much of the Caribbean escaped and much is already up-and-running). Yet, one certainty is that brutal storms with torrential rain are likely to become more frequent along the coasts of the southern US and the Caribbean. That is the forecast of the US National Oceanic and Atmospheric Administration, among many others.
Key question now is: Will this enhance the competing appeal of Asia’s burgeoning cruise businesses and the new super-luxury ships plying the coasts of Europe and North America? For sure, there will be many future commercial opportunities that are cruise and Asia linked.
There is so much potential – Asia is nowhere near the 11 million-plus of Americans who cruise every year, around 3.1 million doing so in 2016. Plus there are so many beautiful destinations. There is a long way to go to dislodge the traditional markets’ dominance, but by 2030 is China expected to top the cruise tables.
The Cruise Lines International Association (CLIA) has been “astonished by Asia’s rate of growth”. China’s largest travel agent, Ctrip.com, forecasts country cruise market expansion of 30% this year.
This is down not just to Asia’s riches. As Helge Hermunsgard of Global Cruise Centre at DNV GL Maritime told shipping news website ship-technology.com, the ships are there: “The thing that really accelerated it all is the cruise liners coming in and launching new brands.”
This looks like an Armada! Carnival is already there, with Princess Cruises. It has debuted a ship especially for the China market and is building a multi-ship domestic cruise brand. Costa first went there in 2006. Royal Caribbean has announced that Ovation of the Seas, one of the world’s largest cruise ships, will homeport in China. Mediterranean Shipping is deploying a second ship from next year. Norwegian Cruise is also launching.
The first made-in-China cruise ship is being built in Shanghai for delivery in 2023, followed by a delivery rate of one vessel per year between 2024 and 2028. These figures come from the JV built them, China State Shipbuilding and Italy’s Fincantieri (the world’s largest cruise ship builder.)
China is now the world’s second largest cruise market, with 927 cruise ships last year calling into 11 of the country’s cruise ports
China is now the world’s second largest cruise market, with 927 cruise ships last year calling into 11 of the country’s cruise ports. This year has been forecast by China Cruise & Yacht Industry Association executive vice-chairman Zheng Weihang to be start of a “golden decade” for China’s cruise industry. The gain last year in trips to home ports of 93% to 4.29 million makes it look as the boom times have already begun! The region has plenty of appeal! Taking Asia as a whole, there are 204 destinations in 17 countries.
First-time cruisers are a major target of another new industry development, this time mainly in Europe, North America and the Southern Pacific. In an industry-first brand extension, Ritz-Carlton is bringing disruption with a sea-faring expansion and marketing has begun. As part of the newly minted Ritz-Carlton Yacht Collection, the five-star hotel brand is launching short cruises on small, ultra-luxury ships, starting in late 2019.
The vessels could cost around $200 million each and carry around 298 passengers in 149 suites. “We are designing these ships to turn heads,” says Fredrik Johansson, owner and executive project director of designers Tillberg Design of Sweden. Hence references to Maserati – the look will be long, slender and elegant, sized to be able to slip into small, pretty ports– and stunning inside.
The pitch is: enormous state rooms, luxury apartments with verandas in every room, longer stays, with local chefs and rare local wines, local artists, dignitaries, etc! According to MD of the Yacht Collection, Douglas Prothero, in an interview with news agency Bloomberg, key target markets are young high-net-worth cruise sceptics and other burgeoning groups such as Chinese and Japanese travellers.
Key target markets are young high-net-worth cruise sceptics and other burgeoning groups such as Chinese and Japanese travellers
And Ritz-Carlton is bringing with it all its well-honed marketing ploys – the yacht collection will probably have its own unique loyalty programme, but with guests points linked to their Marriott Rewards or Starwood Preferred Guest status. Though, the word is, Marriott Rewards is likely to be a perk of sailing with the Ritz-Carlton Yacht Collection.
With occupancy in cruise ships averaging 86-90% compared to 78% across Ritz-Carlton hotels last year, according to Bloomberg, this diversification makes good sense. Ritz-Carlton has already moved into branded residences and six-star resorts.
Cruise, meanwhile, grows steadily, around 26 million passengers expected to travel this year, up from 19 million in 2010. Scope for more growth is huge – the fleet will grow by 50% in the next ten years, according to Maritime News. Its travel agent member numbers, says the CLIA, have doubled in ten years to involve 25,000.
Marketing is becoming slicker. Wall Street leisure market analysts at Zacks Investment Research note Carnival’s efforts in particular, with the launch of the “industry’s first interactive guest experience platform – Ocean Medallion.” Carnival is also lauded for putting in place a yield management system which has begun to drive incremental revenue growth.
What with hurricanes and earthquakes, it has been a terrible summer for the cruise industry. Yet, what has been impressive is that, helped by local communities to whom tourism is vital, is, as said at a Carnival’s press conference, the industry’s “ability to bounce back”.