The cruise market: not just for the middle-aged and elderly

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With growing interest from Asia, the cruise industry is speeding ahead. Sally White reports on this fast-growing sector

In an industry with a $7.6 trillion global valuation, a figure of $117 billion might attract the description of ‘mere’. Cruising is as yet a tiny fraction of the World Travel & Tourist Council’s figure for the vast global travel and leisure industry, but it should by no means be dismissed.

Investors certainly haven’t overlooked it! Shares in industry major Carnival have soared from $33 to $55 in New York over the past 12 months and from 2,093p to 3,576p in London. (Carnival is planning on growing its 10 million passengers to an estimated 13 million by 2022.) No. 2 operator Royal Caribbean Cruises has seen its shares go from $52 to $93 in New York.

Already strong growth will be given extra impetus by the 22 new ocean, river and specialty cruise ships hitting the water this year, the 17 more scheduled over the next two years, the ten new cruise ports planned in China by 2020 and a host of other major investments. China has even ordered its state companies to build cruise ships.

The industry’s own major body, the Cruise Lines International Association (CLIA), says that globally preliminary ship orders extending to 2022 are valued at $26 billion.

China has even ordered its state companies to build cruise ships

Only the cruise industry’s ability to woo online customers is questioned by analysts who list this as a possible hobble on growth.

Cruise Market Watch figures for the cruise industry give it ‘an annual passenger compound annual growth rate of 6.55% from 1990 – 2019’. Yet the market is very far from saturated. Only 23 million passengers are expected to cruise this year.

Most holidaymakers have yet to go on a cruise – Cruise Market Watch says just 24% of North Americans, for example, have ever taken a cruise. To give some perspective, it offers this – ‘All the cruise ships in the entire world filled at capacity all year long would still amount to less than half of the total number of those going to Las Vegas’.

The online qualms come from perceptions that cruising is for the middle-aged and elderly, and online booking the domain of the young.  

The CLIA, seems to acknowledge this as it says: - ‘Travel Agents Are Key to Cruise Travel – While the internet and mobile devices have overtaken how consumers make purchases, travel agents continue to be the most popular and best way to book a cruise. In fact, seven out of ten cruise travellers (70%) use a travel agent to plan and book cruise vacations.’

However, according to a CLIA survey carried out just last year for its Cruise Market Profile: ‘The average age of cruisers was 49, with age demographics spread fairly evenly across the spectrum.’ Of course that age is not exactly ‘young’ but neither is it geriatric and it usually comes with a higher salary. Another important factor for the industry is that maintenance of the necessary high standards does not come cheaply; the CLIA puts the average cruise price at $1779.82 per person.

Digital marketing agency Inside Online took a look at search volume on 20 of the top companies’ websites over the last year and in its view is that five were ‘underperforming’. After monitoring the sites Inside Online came up with the conclusion that the website with the largest search growth was www.royalcaribbean.co.uk (the No 2 market leader) with an increase of 171% in organic search in the 12 months to September 2015. The hardest hit was www.iglucruise.com with a decrease of 43%.

(The top three cruise companies are Carnival Corporation, Royal Caribbean Cruises and Norwegian Cruise Line Holdings. They account for 81.6% of worldwide share of passengers carried and 76.7% of worldwide share of revenues, according to the CLIA.)

Family friendly push

The cruise companies are working hard to improve their online marketing, putting on their sites virtual reality views of the luxuries and services on their boats and the scenic destinations. The shots include a lot of young families! They are also installing the fastest wifi and encouraging use of social media. An Amadeus survey found that technology is very important to the cruiser with 62% of respondents expecting ‘super-fast’ wifi onboard the ship and 30% requiring 24/7 technology support throughout the journey.

Cruise companies wanting to grow should be pushing on an open door! Interest in cruise holidays seems to be booming all round the world, in Asia especially.  

Market shares, according to Cruise Market Watch, are expected this year to be 58.6% North America (Canada, United States and Mexico) followed by Europe (25.9%), Asia (8.5%) and Australia (4.3%). But by 2019, 25.3 million cruise passengers are expected to be carried worldwide of which 55.8% will originate from North America, 25.1% Europe and 19.1% the rest of the world.

China and India are not only growth destinations, they are also seeing dynamic demand.

Enviable growth is being seen in CLIA’s specialty segments - sophisticated ships, luxury yachts, elegant ocean liners and the newest river cruises. It says specialty cruises grew by 21% annually in 2009-2014. Top destination has long been the Caribbean which has won a third of global deployment capacity market share in 2015. However, the Mediterranean continues to grow as a destination, as well as Asia and Australia. This year 52 ships are providing 1,065 Asian cruises with capacity for 2.17 million passengers.

China and India are not only growth destinations, they are also seeing dynamic demand.

“As tourism in Asia grows, particularly in affluent travel in the region, opportunities are rife across the various sectors of the tourism business,” said Amrita Banta, managing director at Singapore-based international research group Agility Research & Strategy. “One of these growth areas is the newly evolving cruise industry.” Research in the luxury market this year found that 68% of Chinese and 61% of Indians were considering taking a cruise holiday.

She added: “Indian cruises can fit into more compact packages…. but cruises geared toward the Chinese market will require more days. While cruises from Bali – Sydney are already available, these typically run up to around nine days.”

The Chinese interest is excellent news for both the cruise companies and the OTAs.  China is not only the fastest growing travel market, (according to international consultants AT Kearney), its consumers also prefer to do business online!

Key statistics to ponder

22 Ocean, river and speciality cruise ships hitting the water this year

10 New cruise ports planned in China by 2020

$26bn The global value of preliminary ship orders until 2022

23m Passengers expected to cruise this year

49 Average age of a cruiser today

24% Percentage of North Americans that have taken a cruise

62% Cruisers that want super-fast wifi

68% Of Chinese considering a cruise (Indians, 61%)

For more insights into Asia join us at one of next year’s event in Hong Kong (Jan 26-27) or Singapore (Jun 15-16)

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