CRUISE INDUSTRY TRENDS AND FORECASTS

Posted on 03/18/2016

The three day Seatrade Cruise Global event ended yesterday in Fort Lauderdale. Key industry players participated in a ‘State of the Global Cruise Industry’ session introduced by new CLIA CEO Cindy D’Aoust and moderated by CBS News travel editor, Peter Greenburg. The top news item - “cruising is now outpacing land based travel options.”

According to D’Aoust the cruise industry is on pace to break last year’s record of 23 million passengers, by a million this year. She said, “Demand has increased by 68 percent in the last 10 years” and noted that the sector accounted for US $119.9 billion in economic impact. Greenberg asked the panel what innovation meant to them: Pierfrancesco Vago, executive chairman, MSC Cruises said, “I envisage a ship where people driving by in the port say, 'What was that?’” Richard Fain, chairman & CEO, Royal Caribbean Cruises Ltd suggested, “innovation has nothing to do with size.” Frank Del Rio, president & CEO, Norwegian Cruise Line Holdings Ltd spoke of his three “very distinct” brands. “You have to understand the customer and you have to differentiate enough what that they are willing to pay, otherwise there is no ROI.” It was recognized that the building of new ships is limited due to shipyard capacity restraints in China. Arnold Donald, president & CEO, Carnival Corporation suggested, “The fastest you can grow is six percent because there are only so many shipyards. It's not enough. We can't take ships out of other parts of the world – we can only grow (by building) in China.” Del Rio disagreed, “Analysts make the mistake of believing only brand new ships can yield growth, but as shipyards are full, there is more emphasis on maintaining ships at the highest level.” Norwegian plans to invest up to half a billion dollars in the next six years on fleet upgrades. With regard to Cuba, Donald said that the Carnival Fathom will be sailing to Cuba in May once it has the Cuban government’s approval and that the new cruise destination would add 2-6 percent to the choice of places to go and 10-20 percent to demand for cruises. MSC Cruises inaugurated Cuba as a destination at the end of 2015. Vago said that berthing in Havana was “very complex” due to infrastructure constraints. Del Rio concluded, “My guess is that there will be a slow rolling start to cruising in Cuba.” A second panel of executives had the following to say about their brands: Charles Robertson, chairman & CEO, American Cruise Lines and Pearl Seas Cruises said that his company builds their own ships, so they are not hindered by the capacity issues of shipbuilders in China. They presently have a fleet of nine ships (with two more on order for 2017 and three the following year. Edie Rodriguez, president & CEO, Crystal Cruises said that Crystal's plan to become, “the world's premier luxury brand portfolio,” will benefit in 2018 when it introduces “the world's largest mega yacht expedition vessel.” Of Crystal’s decision to purchase the SS United States for US $800 million, Rodriguez said, “The ship is part of the iconic fabric of Americana. How remiss it would be to see it scrapped. We are undergoing a technical feasibility study process. If it works, we will go ahead. We believe there is a market and we feel very bullish about making the money back.” Tara Russell, president, Fathom and global impact lead, Carnival Corporation, spoke of ‘Travel with a Purpose’ to the Dominican Republic and Cuba on the ex-P&O vessel, Adonia. “We are addressing a broad audience looking for purpose-driven travel. It's for people who want to go deep into one place.” Fathom works with NGOs and charities to provide guest activities, “We're working alongside our partners – it's not just us doing this.”