Trends
Posted By Cruise Market Watch / 11th December 2010
Among the 2011 highlights:
On the heals of the 3,650 passenger Carnival Dream, the 5,400 passenger Royal Caribbean Oasis and Allure and the 4,200-guest Norwegian Epic a total of 14 additional cruise ships will come online by 2014. These new ships will add another $1.6 billion in annual revenue to the cruise industry. By 2014, 21.6 million cruise passengers are expected to be carried worldwide.
The new ships bring attention to cruising, creating interest, additional pricing power, economies of scale and bookings of first time cruisers. Average cruise revenue per passenger (APCD) for 2011 is projected to be $218.57, a 5.2% increase over 2010.
Moreover, the addition of the new ships allow older ships to be spun off to other overseas brands, generating additional revenues and further penetration of less mature overseas markets. International markets are now growing passengers faster, percentage wise, than the core North American market.
The new ships are the Apple iPhone’s of the sea. They generate excitement, helping to get cruising back to front and center so vacationers are thinking “that would be fun.” This helps chip away at the edges of the “hard core” resistors, those 55% of the U.S core market who have never cruised.
Posted By Cruise Market Watch / 24th August 2010
With projected growth of cruise passengers world wide at 7% to 18.4 million this year alone, the cruise market represents eye opening potential in a rough economic environment. Growth is a thing a beauty for any business, but especially welcome to small business entrepreneurs who provide lucky cruisers with insight and expertise, the travel agents.
Cruise agents can provide niche services to specialized cruise segments, or offer travelers the ability to book into a broad range of cruises. The graph illustrates the size of each cruise segment by passenger capacity.
North American Ticket Revenue and Commission Potential
With over $13.7 billion in gross ticket revenue in North America, about $3 billion (22.5%)* is made by travelers purchasing directly to the cruise lines. From the remaining revenue, nearly $1.5 billion is earned by travel agents as commissions. This is expected to grow 6.5% by the year 2013 to $1.6 billion.
North American Online Bookings Commission Growth
Of the non-direct bookings, about 8.5% of cruise sales are currently booked and paid for entirely online.* As acceptance of cruise booking online picks up momentum, commissions earned online are estimated to grow 23% to $164 million.
Similar sentiments were reflected in recent a Cruise Pulse survey About one third of agents (31%) believe direct to cruise line bookings have increased a little, up 10 percentage points from the previous survey. Likewise, agents felt online bookings compared to in-store are increasing, with 16% saying they have increased a lot. This was also up more than 10 percentage points from the previous survey.
* PhoCusWright Research 2009. Other Sources: www.cruisemarketwatch.com and DVB Research & Strategic Planning The Cruise Industry and its Outlook 2009-2013
Posted By Cruise Market Watch / 28th March 2010
Wanted to share an article I authored that was published in Maritime Executive for its January-February 2010 issue and distributed at the Cruise Shipping Miami Convention this March. Read “How the Dream, Oasis and Epic are Launching the Next Era of an Industry.”
Posted By Cruise Market Watch / 7th January 2010
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.
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.
Photo Source: gabriele82 on Flickr
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
Posted By Cruise Market Watch / 21st September 2009
The growing Indian tourism sector has proven an opportunity for new venture Louis Cruises India. The subsidiary of Louis Cruises was officially launched in India on the 19th of September 2009. MV Aquamarine, a 1,200 passenger capacity cruise vessel will cruise from its homeport in Kochi (colonial name Cochin). The vibrant city situated on the south-west coast of the Indian peninsula is located in the scenic and prosperous state of Kerala, hailed as “God’s Own Country.”
Kochi currently receives 6 million domestic and .5 million internationational tourists annually with a 15% growth rate. Its proximity to the equator, the sea and the mountains provide a moderate equatorial climate. Its historic blend of Arab, British, Chinese, Dutch and Portuguese influences provide a rich cultural setting.
According to Mr. Oneil Khosa, CEO & MD of Louis Cruises India “exotic voyages to Maldives and Colombo are generating a large interest.” The product offering will be a fusion between Western and Indian themes – in entertainment, food and service. As a part of the launch, Kerala Tourism has signed an exclusive deal with Louis Cruises India wherein both parties will engage in joint marketing efforts for promoting Louis Cruises India. These include an inaugural sailing in Mumbai (Bombay) with media guests and Bollywood tie-ins.
Aquamarine will be conducting Kochi-Maldives-Kochi and Kochi-Colombo-Kochi cruises with overnight stays at both the destinations. The cruises have been specially designed to allow guests the flexibility for either 3-night or a 7-night cruises.
Mr. Khosa previously served DVB Bank as a cruise industry focused financier. DVB Bank has been active in the cruise industry M & A activities apart from conventional asset lending. Before joining DVB, Mr. Khosa was employed as a First Officer with Royal Caribbean Cruises Lines.
Posted By Cruise Market Watch / 17th September 2009
Travel agents report an average increase of 14% in cruise ticket prices during June, July and August of 2009 compared to April 2009, according to the quarterly Cruise Pulse survey. Pricing, while still below the same period the year prior, indicates stabilization in the cruise market.
There is also evidence of stronger pricing for cruises booked for 2010 departures, driven by interest in the new ship builds, more favorable demand in the European market and re-surging interest with luxury cruise lines.
Data was gathered August 25 to September 8, 2009 from 349 travel agents from around the world. Margin of error +/- 5.2%.
Read the full report here.
Posted By Cruise Market Watch / 19th July 2009
When my wife and I moved to Miami we fondly told each other “it’s like a dream.” The dream kept growing, as she is now working on the Carnival Dream’s set-up in Montefalcone, Italy. Scheduled for its first sailing Sept. 21, it will be Carnival’s largest ship. As if these two things weren’t enough to get excited about, CruiseMarketWatch.com is eager to experience the new on-board technological features, dubbed the “FunHub.”
The FunHub creates the cruise industry’s first on-board social network, along with access to ship’s services, facilities and daily activities information.
Guests can:
- create a personal profile to meet and interact with others on-board
- create groups based on interests
- find details about the Dream’s numerous on-board activities
- browse food and beverage offerings
- learn about ports of call and excursions
- access weather updates
- read biographies of key shipboard personnel and see ship maps
- receive cruise director announcements
- participate interactive polls
I think this is a really smart, forward looking move (in fact, one I preached about in an Sept. ’08 blog post and subsequently developed similar features into our own iPhone application for cruisers that is waiting iTunes review). I applaud the year-long collaboration involving Carnival’s hotel operations, marketing, IT and guest experience departments.
In addition to FunHub portals, access to the FunHub is available on any guest computer or Wi-Fi enabled device free of charge. Internet access to sites outside the FunHub is available with purchase of a special Internet package.
Follow Carnival’s Dream Team of 12 I/S managers here http://www.dream-startup.net/.
Posted By Cruise Market Watch / 4th July 2009
Below are price ranges for three different contemporary cruise lines for August 2009 sailings, balcony cabin, all 7-day eastern Caribbean cruises:
- Brand 1 = $739 – $1,309
- Brand 2 = $999 – $1,149
- Brand 3 = $1,463 – $2,309
Why is one line able to fill cabins at rates 50% to 100% higher than the others? Why are consumers willing to pay a steep premium even in tough economic times?
It is due to passion – consumer’s passion for the brand. Review the passion pyramid below. At its pinnacle is aspirational attainment – a brands ability to fulfill a market’s goals and dreams. Consumers who get here feel a kinship with the brand, they are where they belong and are willing to pay to get there. At the bottom is the mass market, where there is no pricing power because the vacation experience is a commodity competing on price.
Consider an example from the auto industry, where consumers pay more to purchase and maintain large SUV’s with four-wheel drives that are rarely if ever engaged. What is engaged is the fulfillment of the dream or idea that one could escape – a member of the group that can climb mountains and steer around avalanches – even if it is only on the way to the suburban grocery store.
A family vacation at its core is functional, but the choice of what vacation you take is “what does it say about me.” Consumers today consciously choose to associate with your brand. It is the label you use to display your kinship, like kachina dolls displayed in Native American Hopi family dwellings to designate membership in various clans. It is not just your vacation, it is telling others who you are.
And who is willing to pay a 100% premium for a contemporary cruise? Consumers who aspire to become members of the Disney clan. Disney’s power is derived from the fact they are not communicating in monologue, but engaging across multiple channels; cable networks, teenage pop stars, theme parks and 80-year-old characters that are cultural icons. Professor Ludwig Von Drake introduces me to cruising via podcast on my iPhone.
Most recently Disney Cruise Line is partnering with Kodak and Disney Channel to deliver themed cruises where cruisers will mingle with stars from Disney Channel shows like Hannah Montana, Sonny With A Chance, The Suite Life on Deck, JONAS, Camp Rock and High School Musical. All complete with autograph session and live performances.
“A dream come true for hundreds of kids this summer by offering kids the possibility to hang out with their favorite Disney Channel stars.”
Now that is something to aspire to.
Claivevit
Charlie
Pietro
Stuart Falk
Greg
