Paint with numbers

People might be tempted to stereotype statisticians and other data crunchers as being heavily math leaning, if not somewhat lacking of the artistic gene.  Not always so.  The telling of an easy-to-comprehend story from a complex data set is really a skillful art.  It is the same thing with finding creative ways to use the sometimes massive quantities of information in a database.  Out of the box thinking can provide new value to users in ways they never imagined.

Take the folks over at  They dared to color outside the lines and developed a neat little port crowd calculator widget.

That could be a point of differentiation in the commoditized world of online cruise booking.  As one of history’s greatest artists/designers Coco Channel said “In order to be irreplaceable one must always be different.”

More Chinese to Go on Caribbean Cruise? What The Emerging Middle Class in China Means to Global Cruise Industry

Flickr Chinese Dragon Year Statue

Flickr Chinese Dragon Year Statue (Photo credit:

Chinese grooms did not traditionally purchase diamond engagement rings for their prospective brides. It was only 20 years ago that diamonds begin to appear in engagement ceremonies among the Chinese elite. But smart marketing campaigns and the increasing purchasing power of China’s middle class have reshaped luxury spending over the last two decades. While the United States still leads the world in diamond demand they will eventually be replaced by China (not unlike the current Olympic medal count battle). Experts in the diamond industry put that timeframe in less than 10 years.

There is a strong analogy for the cruise industry.  Consider each cruise ship as a diamond, each seeking to discover new lucrative source markets to drive growth.

Most Chinese still think of cruise ships solely as a means of transportation and favor train and airplane. But as more and more Chinese open up to the idea that “a cruise ship is actually a floating five-star resort" (aka getting there is half the fun) their perceptions of cruising are also changing. "Cruise travel is becoming the new form of tourism favored by Chinese." Last year’s cruise statistics validate this claim (made during a cruise forum in northern China’s Tianjin): International cruise destinations from mainland China in 2011 increased by around 50% compared to 2010. This means the Chinese no longer just take river cruises on Yangtze, but are looking at more exotic and sunny destinations. A Mediterranean or Caribbean cruise is likely to arouse their fancy, if their recent exodus to Maldives and Guam are a leading indicator.

Global statistics show the bulk of cruise travelers come from North America followed in (far) second place by Europe, and then the rest of the world. Between 2008 and 2012, for example, North Americans outnumber Europeans by as much as 120%, and Europeans outnumber passengers from other countries by as much as 200%. But just as Cruise Market Watch brought to readers attention back in 2008, cruise line executives are looking east and the prospects are astonishing.

Even with conservative forecasts, the implications are far-reaching. In 2009, there were only 365,000 Chinese who went cruising (compared to 110,000 in 2008), a mere fraction of North America’s 12 million plus. But the world totals are likely to begin to skew in favor of the Chinese in coming decades if their luxury spending trends and evolving perception of cruise travel is any indication.

Forecasts on the high end have placed China’s outbound tourists to 300 million (all modes of travel).  This is roughly equivalent to an entire continent’s (North America or Western Europe) population.

Despite the glimmerings of economic recovery felt in leading source markets, the cruise industry as a whole will only see a relatively modest jump in cruise passengers in the next five years. Analysts predict that the economies of North America and Europe are likely to remain sluggish, and this translates to slower growth in consumer spending, especially on non-essential goods and services.

Looking at present statistics (20,135,000), the compound annual growth rate (just a little below 8%) will only result in about 28 million passengers in 2018, a mere 9.3% of China’s potential cruise passengers of 300 million.

The rough stone is ready to be cut into a faceted gem.  Cruise traffic going to China, which was only 750,000 in 2011, is also likely to increase. The Seatrade All Asia Cruise Convention descended on Shanghai in 2010 for the second time to open up Asia to international itineraries. China tops the list because of its touristic appeal: It has varied geography, a 4,000-thousand-year-old history, staggering archaeological discoveries and a huge population with immensely diverse regional customs and beliefs.

All these exciting developments mean one thing: China’s dragon is ready to breathe new fire into the cruise industry. All the cruise industry has to do is fan the flames.


Are small ports the new Saint Graal for the cruise lines?

The Port of New Orleans has a cruise line term...

The Port of New Orleans has a cruise line terminal that accommodates cruise lines such as Carnival, Norwegian, and ACCL. (Photo credit: Wikipedia)

The cruise industry is often defined as a niche to the global tourism industry. The reason is that, in contrast with other branches of the tourism sector, the cruise industry is mostly driven by supply and not by demand. In fact, cruise lines make profit by providing more capacity (ships) and itineraries.

However, these are only two of the marketing strategies that cruise lines use to increase profits. Experts in this industry know that the cruise prices fall when too many ships are positioned in the same port/area. How to overcome this problem?

In recent years, an interest has arisen in small/local ports as a possible way to attract a new typology of cruisers. “Off beat” ports are synonym of “new”, “less crowded” and “interesting”, and everyone wants to feel special, even when choosing a mass type of vacation such as a cruise.

This is evidenced by comparing 2011 and 2012 PortPulse rankings.  Notice in the table below the percentage of unique sailings has increased by double digits in smaller ports (ranked 101 and higher) compared to the low single digits in the largest ports (ranked 1-100).

But why is it problematic for cruise lines to add small/local ports to their itineraries?

Features of ship ports and problems concerning small ports

Experts in the cruise industry claim that this business is not about destinations but about itineraries and routes. Hence, it’s understandable that, to be taken into consideration, small ports have to be in the right circle route. Given that cruise ships can cover 200 nautical miles per night, the small ports need to be within this distance parameter from other big and known ports.

Moreover, small ports are required to present a not very deep draft, which is a necessary condition for the cruise ships’ mooring, together with other specific technical features.

From the point of view of the port profile, small ports often don’t offer the same quantity of local amenities of bigger ports. When booking a cruise, cruisers not only look at the on-board activities, but also and mostly at the excursions available on the locations of the cruise itinerary.

However, the most challenging of the issues are the concerns that can arise as regards to the impact of cruise tourism on the existing economic and environmental resources. Even when economic projections confirm a potential economic growth of the sea area, strong protests can be held against the cruise companies. This is often the case in areas where most of the citizens work in the fishermen industries. Concerns range from water pollution, which may affect the fishing activity, to the changes to the historical and cultural assets of the area.

A new era for the cruise industry?

Even though little-known ports require a challenging plan of promotion, many cruise lines have focused on this aspect to increase their profits.

2011 saw some interesting statistics as regards to the cruise lines that have added less-explored ports to their itineraries, especially in North America.

Would this strategy also be applied to other areas of the world? For example, refer to the table below focused on the port of Benoa, Bali.  As illustrated by passengers sailed, it has moved up the PortPulse rankings from 623rd in the world in 2011 to 394th in the world in 2012.

And which cruise companies would mainly adopt this strategy? The answer is in the cruisers’ hands.

Cruise Market Watch Announces 2011 Cruise Line Market Share and Revenue Projections

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.

Travel Agent Trends

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: and DVB Research & Strategic Planning The Cruise Industry and its Outlook 2009-2013

Typical cruise spending and expenses

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.


Cruise Market Watch Announces 2010 Cruise Line Market Share and Revenue Projections


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

What “Oasis” means to Cruise

In mass-American culture, bigger hasn't always meant better to everyone, but it has certainly meant brand buzz.

Oasis of the Seas
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

New cruise venture taps Indian market opportunity

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.

Cruise ticket prices increase 14% from early 2009 lows


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.