Posted By Cruise Market Watch ~ 21st December 2008
While I have yet to hear of a major boxing or Mixed Martial Arts (MMA) match aboard a cruise ship, there are some analogies and lessons to be drawn from the boom era experienced in the Desert City and the future potential of cruise lines.
- Cruise ship building, like construction of Las Vegas hotels over the last 17 years, will create growth for the entire cruise market, not erode business between cruise ships and brands.
- Las Vegas’ annual visitor volume, relative to annual cruise passengers carried, indicates growth potential for the cruise market.
- Lessons from Las Vegas show the trend towards shorter cruises will accelerate
I recall the spectacle surrounding the launch of Excalibur in Las Vegas in 1990 (200 miles west of me) while studying for my Master’s degree. What was interesting was the continual building of hotels and casinos did not cannibalize each other’s business. Rather, each new hotel added to the creation of an even bigger overall destination. Each generated more buzz, which in turn spawned more new people traveling to Las Vegas. All the hotels won. Room inventory in Las Vegas increased 71% from 1991 to 2007, while annual visitor volume increased 84%. This is how the Dream, Oasis of the Seas and NCL’s F3 will help the cruise industry as they hit the market.
Think the cruise industry over extended itself with an uncontrolled ship building spree? Maybe some perspective would help. All the cruise ships in the entire world filled at capacity all year long still only amount to 1/3rd of the total number of visitors to Las Vegas – that single city in the desert. See chart to the left.
I’ll leave the debate over the functional differences between the two vacation experiences for another post, but suffice to say I believe cruises can generate as much passenger traffic worldwide as the landlocked Desert City. If cruise lines grow 84% over the next 17 years (like Vegas has) they will carry 26.4 million passengers and require a passenger capacity of 680,000 (using today's 7.1 day average duration of stay). This would still fall 13 million visitors short of Last Vegas' 2007 visitor numbers.
The chart to the left compares available rooms in Las Vegas (times two to make comparable to the cruise industry standard of passenger capacity, which counts two people for each available room). Overall cruise lines do have more available capacity than Las Vegas. So why the large differences in overall visitors? This is because the duration of stay in Las Vegas is much shorter (2.5 days on average) compared to cruise lines (7.1 days). Look for this difference to narrow as shorter cruises increase in consumer popularity because they decrease the overall cost of the vacation. Cruise lines benefit by “turning over” more total passengers. If the average duration of stay for Las Vegas were applied to cruise lines current capacity, they would carry 49.3 million passengers annually. In addition, passenger’s onboard spending per day is higher on cruises of shorter durations!
Las Vegas statitisics courtesty of Bob Potts, Assistant Director, Center for Business and Economic Research, University of Nevada, Las Vegas. Cruise statistics from Cruise Market Watch and the CLIA.
- Mexico Tourism Board Promotes Cruise Line Destinations at Cruise Shipping Miami 2012 (cruiseindustrywire.com)