Posted By Cruise Market Watch / 23rd December 2011
Carnival recently announced an upgrade to its advertising campaign just ahead of the 2012 wave season. Right on the heals of NCL’s “Cruise like a Norwegian” and RCL’s “The Sea Is Calling” Carnival’s “Land Versus Sea” commercials are aimed directly at the yet to be tapped first time cruiser market.
What destinations can cruiser newbies discover aboard Fun Ships in 2012? And from what home ports can they set sail? What could Cruise Market Watch do but count and map the options in the interactive table below.
Posted By Cruise Market Watch / 18th December 2011
Advertising is a form of communication used to persuade, a job made all the easier when that message taps into innate human desires. Life itself emerged from the ocean 500 million years ago and in fact no less than 60% of adult’s bodies are water. European sailors returned to it in search of discovery of new worlds.
What else could we do but answer the question – at what cost? We had to graph Royal Caribbean’s average price per person per day for an inside cabin on sailings to destinations in the Caribbean.
You can answer Royal Caribbean’s calling for as low as $82 per person per day as early as the end of this January – or during peak pricing towards early July for as much as $145 per person per day. Either way, both Royal Caribbean and the ocean will be waiting to greet you.
Cruise Market Watch’s proprietary databases are mined, statistically analyzed and modeled for over 1,100 ports of call from over 9,000 sailings by 190 different cruise ships owned by 25 cruise lines. Cruise Pulse™ and Port Pulse™ reports provide near real time guidance on net revenue yields, capacity and year over year ticket pricing trends as well as port visitations and economic impact estimates.
Norwegian Cruise Lines has been generating positive cruise industry buzz over the last few weeks. After all, the launch of its new “Cruise like a Norwegian” national adverting campaign alone would be enough garner cruisers attention. But Norwegian topped itself with a simultaneous announcement of advance booking availability to sail its newest ship, the Breakaway as early as April 30, 2013. The Breakaway will home port in none other than the Big Apple – New York City).
What else could we do? We had to map all of Norwegian’s sailings for the next 12 months and let users discover how many cruisers around the world are cruising like Norwegians – by port, ship, country and month. Discover for yourself using the interactive interface below.
Insights into how the cruise lines are performing around the world, and how pricing changes impact forward earnings can be accessed from our proprietary database. It tracks daily ticket prices and passenger sailings to port destinations for over 8,000 annual cruises. With an exclusive window into the pricing of virtually every sailing, every day, world wide (including Carnival Cruise Lines (CCL), Royal Caribbean Cruises Lines (RCL) and Norwegian Cruise Lines (NCL)) our subscribers can view cruise revenue and passenger trends in near real time.
Our proprietary database tracks daily ticket prices and passenger sailings to port destinations from nearly 8,000 annual cruises.
This gives us a unique vantage point to spot unusual values.* Topping our “least expensive” list is the Norwegian Sky. For a total of $109 you could sail round trip from Miami, FL to Grand Bahamas Island, Bahamas to Great Stirrup Cay, Bahamas and Nassau, Bahamas.
The last three in our top 5 least expensive cruises (per day per person) are all Royal Caribbean. Of the three, two don’t sail until November 2011, so you have plenty of time to book.
The Vision of the Seas, which hit prices as low as $514 in December, is a transatlantic sailing. It starts in Lisbon Portugal, moving to several stops in Grand Canary Islands; then Recife, Salvador and Rio de Janeiro Brazil.
Closer to home the Monarch of the Seas, pricing a round trip from Port Canaveral, FL at $159. It stops in Coco Cay and Nassau, Bahamas.
Feeling even more exotic? Try this low price Spain to Brazil cruise. The Splendour of the Seas from $619 also crosses the Atlantic. You will sail from Barcelona Spain with stops in Valencia Spain; Cadiz Spain; Lisbon Portugal; Tenerife Canary Islands and Salvador Brazil.
When you are a researcher, you just can’t help but be analytical. But I must not be the only one to wonder while on a cruise what the revenue is from an average cruiser – and how that income is distributed among cruise line expenses? In case I am not, here is a typical breakdown based on Cruise Market Watch statistics. The average cruise passenger spends a total of $1,454 per cruise. Note this is for all cruise lines, luxury to contemporary. With the typical cruise lasting 7.1 days, this amounts to a per passenger per day (APCD) projected to be $205, with $155 per day ticket price (75.6%) and $50 per day on-board spending (24.4%)
For the cruise line, about 7% of this revenue is spent on fuel, 11% shipboard payroll, 11% agent commission and 6% food. You can find further detais in the chart below.
The new ship is scheduled for delivery in 2012, following the 2011 launch of the Carnival Magic reports Seatrade Insider. This is big news as it ends a near two year drought in new ship orders and helps validate the cruise industries strong position with consumers and continued dedication to growth. The current economic environment also helped Carnival procure an excellent price, at $200,000 per lower berth compared to $202,000 for the Carnival Magic and $259,000 for RCI’s Allure of the Seas (sister ship of the Oasis).
Posted By Cruise Market Watch / 29th November 2009
Cruise Market Watch releases 2010 cruise industry market statistics based on current economic conditions and anticipated new ship builds.
Among the 2010 highlights:
Total worldwide cruise passenger capacity will increase 6.9% over 2009.
Annualized total passengers carried worldwide in 2010 are estimated at 18.4 million.
The total worldwide cruise market is estimated at $26.8 billion, a 7.4% increase from 2009.
The majority of the increases are attributed to cruise lines significantly increasing passenger capacity with the addition of new ships. Additionally, pricing pressures to fill them in 2010 will be mitigated due to improved consumer confidence. Ticket prices and onboard spending are expected to improve modestly compared to 2009, although they will still remain below 2008 levels. Average cruise revenue per passenger (APCD) for 2010 for all cruise lines worldwide is projected to be $207.68, with $156.80 ticket price and $50.88 onboard spending. In addition, growth of international passengers will outpace North American cruise passenger growth on a percentage basis, and a weakening U.S. dollar will strengthen overseas earnings.
The combination of an attractive vacation value and marketing buzz surrounding new ship designs will provide opportunity to introduce new cruisers to the cruising experience. This will stimulate market growth for the industry through 2013. The end of 2013 projects passengers carried to reach 21.3 million, a 15.7% increase from 2010.
With cruise line stocks Carnival Corp (NYSE: CCL) and Royal Caribbean (NYSE: RCL) trading over 50% and 150% above their price 52-weeks ago (and even further above March 2009 lows) most of these positives are already baked into current share prices although events are still bullish long term for the industry. All the cruise ships in the entire world filled at capacity all year long still only amount to less than ½ of the total number of visitors to Las Vegas – that single city in the desert. The flexibility to move the ships to match demand and where the best yields can be achieved is a distinct advantage.
Posted By Cruise Market Watch / 23rd November 2009
Cruise Market Watch appears on PBS’s Nightly Business Report, Friday November 20th, 2009 discussing the cruise industry and launch of the new mega ship, Oasis of the Seas.
Posted By Cruise Market Watch / 19th November 2009
In mass-American culture, bigger hasn’t always meant better to everyone, but it has certainly meant brand buzz.
While some refer to the Mall of America as “Sprawl of America,” it is also the most visited shopping mall in the world. Opening in 1992, it attracts more than 40 million annual visitors and employs over 12,000 people. Complete with indoor theme park, underwater adventures, hotels and shops, the mall is a successful mix of entertainment and consumerism.
Also in 1992, the High Mobility Multipurpose Wheeled Vehicle (HMMWV or Hum-Vee) began selling to the public under the brand name “Hummer.” The Hummer became the world’s most distinctive SUV and an iconic brand. Its main appeal lay in its unique appearance, sheer size and the feeling owners experience driving one.
In 1999 Royal Caribbean launched the first of five Voyager class ships, the Voyager of the Seas. At 3,114-passengers it was a revolution in design and size. With on-board amenities that included an ice-skating rink, inline-skating track, basketball court, mini golf course and rock-climbing wall the ships became a brand signature for Royal Caribbean. The ship and the “Get Out There” advertising campaign opened the cruise market to new, younger and more active vacationers with an “explorer” mind-set.
Branding Royal Caribbean
The Oasis is a further extension of Royal Caribbean’s brand differentiation. In the Nation of Why Not, the Oasis seeks to continue to fulfill the brand promise of cruise innovator and “tell-your-friends you have been there” experiences.
As large as it is, only 5,400 people in the world can experience it each week. That creates scarcity, and as long as the buzz continues to create demand, that creates pricing power. Within the contemporary cruise segment, Disney has been the best by far at creating a brand consumers want to be associated with so much they are willing to pay 100% premiums. Pricing power gained through branding is the Holy Grail Royal Caribbean investors are risking their $1.4 billion dollars on.
Currently, ticket prices for a seven-day cruise aboard the Oasis start at $1,049. The Oasis features 37 different cabin types to maximize revenues by finding the right fit to various traveler budgets. This compares to a seven-day on the Norwegian Jewel for as low as $249, and eight days on the new Carnival Dream start at $599.
Maintaining higher ticket prices will be essential for shareholders. Royal Caribbean’s new ship builds have run at a cost 20% higher per berth than the Voyager, Radiance and Millennium class ships and 14% more expensive than peers. Royal Caribbean ships have been 7% more expensive to build than Carnival historically, but net yields have been 7% lower. So far, higher capital expenditures per berth have not paid off. While the higher barrier to entry makes it harder for competitors to match, it is also not a proven model others are yet willing to chase.
Onboard Revenues
For all cruise lines, onboard spending has risen 25% over the past decade while ticket prices have actually declined. Moreover, onboard spending has been historically less volatile than ticket prices. So, with approximately 28% of cruise line revenues already coming from onboard spending, Oasis certainly creates the “right environment” for increased onboard spending. With the port of call faded into the background in importance, cruisers seek out the variety of onboard activities and shopping experiences. On the Oasis, these can include botox treatments, teeth whitening, and dozens of shops (including a tattoo parlor), boutiques, cafés, casinos, bars and restaurants.
The Oasis also offers opportunity for improving returns through improved fuel efficiency and other fixed costs of operation, such as payroll and victualing may be lower on a per passenger basis.
Something for everyone
Cruisers who want exotic, quaint and remote ports of call seek out luxury lines such as Seabourn and Regent. On my cruises aboard Carnival, I am genuinely chagrinned by cruisers who are willing to go different islands, yet visit essentially the same Margaritaville’s and Hard Rock Café’s that aren’t that dissimilar to bars in their home towns. I prefer to seek out the uniqueness of each island. Others prefer the comfort of something familiar, while at the same time being able to say “they were there.”
If it is truly about brand differentiation, the onboard experience vs. the island destination argument is not relevant. So the Oasis is limited to ports of call that can handle 5,400 passengers debarking at the same time and dock a 220,000-ton ship. If the Oasis attracts new cruisers, ones seeking the Oasis experience and what it uniquely has to offer, then it strengthens the brand and grows the market. If the strength of that experience is such that it can continue to generate higher ticket prices, then it will reward shareholders as well.
The Oasis, however, is not an experiment. Allure of the Seas, its twin sister, is due for delivery in Port Everglades in a year.
Sources: DVB Research & Strategic Planning; Pareto Securities
Claivevit
Charlie
Pietro
Stuart Falk
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