Seatrade Sound Bites: The State of The Global Cruise Industry

Andrew Hazelton, Thomas Mielke | Cruise Sector
Optimism and energy were on display at this year’s Seatrade Conference in Fort Lauderdale, Florida where industry insiders proclaimed that the ‘cruise business is strong’ and ‘the future continues to look promising.’ As usual the conference’s annual keynote address did not disappoint, as executives from major cruise companies provided attendees with their candid and insightful opinion on the overall state of the cruise business and where it is heading.  During the keynote we heard from strategic executives at Norwegian, Carnival, Royal Caribbean, MSC Cruises, Virgin Voyages and the Ritz-Carlton Yacht Collection.  As we were in attendance this past week, Aethos™ took note of a handful of major sound bites. An Industry on Steroids Across the panel the mantra was that each organization was in the business of creating experiences and, not just any experience, but their customers ‘best vacation experience!’ Their success can be found in the numbers, as cruising is on the uptick; it is predicted that by the end of 2018, 27 million passengers will have cruised according to the Cruise Line International Association (CLIA).  Customer demographics are shifting as well. More and more millennials are starting to hit the seas and rivers, expanding the ever growing target audience for cruise companies. As millennials further penetrate the overall cruise customer base, they look not just for value but also for diversity in experiences, on and off shore - leading to more and more (product) innovation and the development and exploration of new destinations.  Moving forward, companies will roll out a number of new initiatives to appease their customers (for example, amenities such as ‘go-karting’ on Norwegian will soon come to light). The new players on the water, The Ritz-Carlton Yacht Collection and Virgin Voyages, plan to make a splash over the next coming years and are helping the industry to capture new customers.  Note that neither company has the word ‘cruise’ in their name – their goal is to stand out by being ‘atypical’ and doing things differently. The Ritz-Carlton Yacht Collection will provide an intimate feel of ‘casual luxury’ on the seas while Virgin Voyages plans on providing their customers with an ‘epic experience’.  The takeaway - there is a large amount of excitement for both brands from everyone across the board.
  • Pipeline & Destination Growth: In order to sustain their growing customer base, cruise companies will be investing USD $60 billion dollars in new ships over the next decade. This year alone, 27 new ships are expected to come on line. So where will they all be headed? To no one’s surprise, the Caribbean will continue to be the hot ticket (especially Cuba) which has been resilient and bounced back nicely from this past year’s hurricane season. Although restrictions have been put on travel to the island, nation ships to Cuba continue to be full at ‘very high prices.’ All the major players will also continue to look east as the emergence of Asia comes into the fold; specifically, a lot of energy and specific focus will be placed on China over the next coming year. According to Richard Fain, chairman of Royal Caribbean Cruises, “We [the cruise industry] are [already] mainstream and I think you are [definitely] seeing this in the U.S., [and you are] starting to see this in Europe, see it in Australia, and in due course you will see it in China and other parts of Asia.”
  • A Question of Sustainability: With every positive comes a negative, thus with such current and expected growth, the topic of over-tourism weighs heavily on everyone’s mind. Cities such as Venice, Barcelona and Dubrovink have made headlines throughout the years for becoming overcrowded destinations. There are many players who contribute to the ‘over-tourism’ epidemic although it can be argued that land-based tourists are mainly to blame. Regardless, major cruise organizations have recognized the importance of listening and working with city officials. Executives agreed that cruise companies need to do a better job of spreading out their guests amongst the various ports and excursions. It was clear to all the major companies represented on the panel that they have a fiduciary responsibility to protecting the cultural integrity and environment of each and every port destination.
With so much positivity across the industry, what is keeping our industry leaders up all night? Besides geo-political events that are out of everyone’s control, ‘change’ itself is moving at a faster pace, therefore, getting in front of such change remains high on everyone’s list.  How to stay current and innovative in order to provide the much discussed customer experience also remains high on the ‘worry list.’  Additionally, the panel noted that they continue to think about the employee base; their overall success truly depends upon them.  Thus, how can they continue to foster an environment, on and off shore, that satisfies such a diverse, global employee base? In conclusion, the cruise business is in the best place it has been for a long time. Most would agree with Norwegian’s CEO, Frank Del Rio, when speaking to Peter Greenberg, CBS travel editor and panel moderator, “If this was Christmas and you were Santa Claus, I’d ask for nothing.”