Posts Tagged ‘cruise line’

Cruise Market Watch Announces 2013 Cruise Trends Forecast

Now in its fifth consecutive year, we are proud to release our 2013 cruise market statistics.  In that short span of time the industry has robustly managed both a “great recession” and a once in a century ship incident.

MS Ryndam in Cozumel. Royal Caribbean and Carn...

MS Ryndam in Cozumel. (Photo credit: Wikipedia)

The Costa Concordia and European sovereign debt crisis impacted all cruise line revenues by about -5.1% from our original 2012 estimate (made two months prior to Concorida in November 2011).  The actual revenue versus forecast difference was largest for Carnival Corporation (-9.2%) compared to -2.5% for Royal Caribbean Cruises Ltd. Passengers carried however continued to climb.  Compared to our original 2012 forecast of 5.6% growth, actual results were very accurate.  Carnival was down just -0.9% while Royal Caribbean was up 0.3% versus original estimates.  All-in-all, 2013 looks to rebound strongly from the year prior on all accounts.

Among the 2013 highlights:

  • - The worldwide cruise market is estimated at $36.2 billion, up 4.8% from 2012.
  • - Cruise passengers carried worldwide in 2013 is forecast at 20.9 million, a 3.3% increase over 2012.
  • - The top two cruise companies Carnival Corporation (NYSE: CCL) and Royal Caribbean Cruises Ltd. Co (NYSE: RCL) account for 71.7% of worldwide share of revenue
  • - Direct spending by passengers and crew at all cruise ports in the world is estimated at $17.5 billion.
  • - The top two ports are Miami, FL for embarkations and Nassau Bahamas as destination.
  • - Total worldwide cruise capacity at the end of 2013 will be 438,595 passengers (a 3.0% increase over 2012) and 283 ships.
  • - The average per passenger per day is projected to be $200.85, with $152.39 ticket price and $48.47 on board spending (average cruise duration 8.5 days, median duration 7.0 days).

A total of six new ships will be added in 2013 with a gain in passenger capacity of 14,074 (including the 3,600 passenger Royal Princess, the 4,010 passenger Norwegian Breakaway, 2,192-guest AIDAstella and 3,502 berth MSC Preziosa).  Looking out further, 13 more new cruise ships will add 39,297 lower births or 8.9% to passenger capacity by the end of 2015 – generating $3.2 billion more in annual revenue for the cruise industry.

By 2017, 23.7 million cruise passengers are expected to be carried worldwide of which 59.1% will originate from North America and 27.4% Europe.


Related articles

When to book your Caribbean Cruise for the best price

The infographic below guides you on how far in advance you should book, and the season to set sail for the best deal on a Caribbean cruise.  This provides a framework for planning, from which you can then narrow down your specific destinations, cruise duration, cabin type and ship segment.   Based on actual pricing* from 26 cruise lines and 144 cruise ships representing over 7,500  sailings in the Caribbean and Bahamas between September 1, 2010 to November 30, 2013, it just goes to show a little advance planning  can save a lot of money per person per day on your cruise itinerary.

Interestingly, unlike its European infograph counterpart, Caribbean cruises get more expensive each month closer to the sail on date - so no penalty for booking well in advance!


* Cruise Market Watch total weighted average price (per per person per day) across all cabin categories.

Best time to purchase a European cruise

Cruise prices vary not only based on destination, number of nights booked, cabin type and ship segment but are also dependent on the season you set sail and how far in advance you buy. The same cruise itinerary can cost you a lot less per person per day if you book your ticket for the right season and the right number of months in advance. This infographic* can help you figure out the best time of year to go on a European cruise by highlighting prices by season and how far in advance you should book to get the best deal. The "rule of thumb for a European cruise" graphic requires little additional editorial comment. The only question that remains is what you will do with the money you save?

* Cruise Market Watch total weighted average price (per day per person) across all cabin categories from 30 cruise lines and 163 ships representing over 8,500 sailings in northern and southern Europe between September 1, 2010 to November 30, 2013.


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.

Carriage and Cruise from the Port of San Juan

Sally with RCL's Grandeur of The Seas

Cruising has always been about more than just sailing – it’s also about visiting and exploring destinations.  One of the best ways to do that in Old San Juan Puerto Rico is a horse and carriage tour with Las Calesas Del Viejo San Juan.  Not only will you get to see the highlights of Old San Juan, you will learn about the culture and history from your skilled and knowledgeable driver.  The sound of horse’s hooves over the cobblestone streets can’t help but transport you back to the early years of Spanish rule in the 16th, 17th and 18th centuries.

Experiences such as these explain the positive cruise industry economic impacts to local economies and small businesses that operate shore side excursions.

Puerto Rico is no exception.  With a 2012 Port Pulse™ rank of 26th (out of over 830 embarkation and destination ports around the world) the Port of San Juan benefits from the spending of 150,000 crew and 920,000 annual passengers.  That is a direct economic impact estimated at over $125 million.

Review seasonality of 2012 passenger and crew spending in San Juan, cruise line share and embarkation vs. destination statistics in the charts below by clicking the image to enlarge.

 

Cruise passenger and crew spending in ports of call from direct spending on a variety of goods and services including ground transportation, clothing, food and shore excursions.  For embarkation/debarkation ports estimates also include lodging as part of a pre- and/or post-cruise stay, air and ground transportation and miscellaneous port and cruise line services.  

Sources: Crew and passenger visitation rates and port spending estimates derived from Business Research & Economic Advisors, Florida-Caribbean Cruise Association and Cruise Lines International Association.  Each ship's unique destination itinerary, sailing days and passenger capacity from Cruise Market Watch.

Costa Concordia Impact to Cruise Prices and Bookings

Thus far pricing* for sailings on Costa (all Costa ships, all sailing departure dates) has not changed since the Concordia accident on January 13, 2012.  Click on graph below for advertised prices from January 7 to January 21, 2012.  Note little or no change to the booking prices.  With prices for Costa holding up, wave season for RCL and CCL are likely holding up as well (refer to Cruise Pulse for details).

This finding is backed up by responses from several U.S. travel agents in regard to booking demand.  Surprisingly, agents have indicated minimal to no demand impact.  Nevertheless, on 12/30/2012  Carnival guided loss a booking slow down in the mid teens.

Interestingly, travel agents are currently Carnival’s best marketing resource. While the “Land vs. Sea” campaign is off the air (given its theme the campaign does not “play well” with current events) thousands of travel agents are out in the community engaged in conversations with prospective cruisers on a daily basis.  It is these human one-on-one interactions that assure vacationers this tragic event is a “one off“ and in fact, given the renewed focus on safety and procedures, now is the safest time to cruise ever.

* Average price per day per person, inside cabin.


Cruise Market Watch Announces 2012 Cruise Trends Forecast

Among the 2012 highlights:

  • ~ The worldwide cruise market is estimated at $34.1 billion
  • ~ Cruise passengers carried worldwide in 2012 is estimated at 20.3 million, a 5.6% increase over 2011
  • ~ The top two cruise companies Carnival Corporation (NYSE: CCL) and Royal Caribbean Cruises Ltd. Co (NYSE: RCL) account for 73% of worldwide share of revenue
  • ~ The 2012 Port PulseTM rankings place Miami Florida as the #1 cruise embarkation port in the world and Nassau Bahamas the #1 port of call
  • ~ Direct spending by passengers and crew at all cruise ports in the world is estimated at $15.5 billion
A panoramic view of Prince George Wharf, the f...

Image via Wikipedia

 While cruise lines have grown annual passengers traveled at a compound annual growth rate of 7.4% since 1990 - 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 annual visitors to Las Vegas.  Cruise passengers carried worldwide in 2012 is estimated at 20.3 million, an increase of 5.6% over 2011.

On the heals of the several new ships to be added to the market in 2012 (including the 3,690 passenger Carnival Breeze, the 3,013 passenger MSC Divina,  3,012-guest Costa Fascinosca and 2,500 berth Disney Fantasy) eight more new cruise ships will launch by 2015. These ships will generate another $2.3 billion in annual revenue for the cruise industry. By 2015, 22.3 million cruise passengers are expected to be carried worldwide.

This is not only good for the cruise industry (of which two cruise companies dominate - Carnival Corporation (NYSE: CCL) and Royal Caribbean Cruises Ltd. Co (NYSE: RCL) with a combined 73% of worldwide market share) but also for the local economies of ports visited by cruise passengers.  Direct spending by passengers and crew at all cruise ports around the world is estimated at $15.5 billion.  The 2012 Port PulseTM rankings place Miami, Florida as the #1 embarkation port and Nassau Bahamas the #1 port of call.  North America and Europe serve as the source markets for 85.9% of worldwide passengers, but other regions of the world such as Asia are growing significantly.

The new ships continue to bring attention to cruising, creating interest, additional pricing power, economies of scale and bookings of first time cruisers.  Average cruise revenue per passenger per day for 2012 is projected to be $240.13.


Where Norwegian Cruises

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.

 


Have cruise prices and revenues softened for European sailings?

Cruise stocks have been on some ride over last few weeks.  Both Royal Caribbean (RCL) and Carnival (CCL) touched new 52-week lows early this week, only to rebound with the overall market as stock prices whipsaw in reaction to the daily cycle of news out of Europe.

Headlines jump between “Greek Default Unavoidable” to “Greek Aid Likely,” and ”Eurozone Contagion” to “Banks are Stress Tested.”

Trying to predict and trade the swings boarders on madness, but one can predict the impact on cruise cabin prices for sailings with European itineraries.

Click on the interactive chart below.  One can see with each “Priced on Month” closer to a European sailing departure, the Total Weighted Average* price has come down – more so for the nearer term sailing dates.

Indeed, European pricing trends were confirmed by Carnival’s most recent 3rd quarter earnings conference call

 “In Europe, the sovereign debt issues and the related concerns about the strength of the European banks contributed to the slowdown in EAA brand bookings. These issues, together with related declines in consumer confidence in the various markets in which we operate, seem to have contributed to the softened booking activity during this August and early September period.”

Insights into how the cruise lines are performing in other regions of 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.

* Cruise Market Watch’s proprietary weighted average of the daily advertised price for each ships cruise sailing for each cabin category (on a per sailing day basis).  Weighting based on the total number of cabins on each ship in each category.

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Will Royal Caribbean’s earnings be an Oasis?

Royal Caribbean Cruises Ltd. (NYSE: RCL) is scheduled to release the company's fourth quarter financial results this week on Thursday, January 27, 2011.  This provides us an opportunity to compare "mega" ships current pricing (per person, inside cabin).

In the graph below one can see the average inside cabin asking price (during August to December 2010) for various sailing departure dates.  The Allure and Oasis have mirrored each other fairly closely, topping out at just over $1,400 per person.  Other than Allure's inaugural sailings, you will pay roughly the same for either Royal Caribbean ship.

Interestingly, Norwegian's Epic has maintained higher pricing than Carnival's Dream.  The premium paid to sail Royal Caribbean mega ships diminishes during September to November 2011 (particularly compared the Epic) only to increase again in the later part of the year.  Albeit, one can currently book a cruise aboard the Allure or Oasis during January to March 2012 for about 11% less than January to March 2011.  The bottom line, Royal Caribbean managed to unleash two of cruising's greatest buzz-worthy ships when it went super-sized.  If RCL can to continue to retain higher asking prices, larger margins and economies of scale from those investments will reward investors.

Royal Caribbean's earnings call will be available on-line at the company's investor relations web site, www.rclinvestor.com.

Our proprietary database tracks daily ticket prices and passenger sailings to port destinations from nearly 8,000 annual cruises.  With an exclusive window into 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.