Viva Las Cruises – The Cruise Market Can Grow

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.

Jon Mayer’s “Mayercraft Carrier” and  – the cruise lines version of “Elvis Live In Las Vegas Hilton”

Elvis live in the Las Vegas Hilton and the cruise line version - Jon Mayer’s “Mayercraft Carrier”

 

  • 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.

 

2 Comments

  1. I think there will be growth in shorter cruises as you suggest, but not for the same reasons, nor will what does occur be what is assumed.

    Older ships are typically smaller, less feature laden, and less efficient in their operation. They are best suited to short range cruises focused on people seeing a few days dedicated to festivities. In that, these shorter cruises will compete more directly with the ever-present Las Vegas get-aways that are promoted almost all year. People who have never cruised and have the many misconceptions about taking one and younger passengers looking for a few days of frivolity are the future of shorter cruises.

    So the growth in the number of shorter cruises will continue. However this will be a function of marketing and operational expediency.

    Beyond the need to best use older ships, I think the core of the industry will always be longer cruises of the traditional 7 day variety. The cruise industry likes to control its image, indeed it has redefined paranoia in how it vigorously seeks to control it. One can appreciate that since it can be attacked from every direction imaginable, albeit unfairly on balance. The industry seeks to cultivate the perception of what it offers slowly and systematically. Las Vegas by comparison, pretty much promotes the idea that anything and everything can and does happen there.

    In the end, I think the cruise industry and Las Vegas are aware of each other. Yet I really don’t think either truly considers the other to be some kind of arch rival. They each do their own thing, and the survival of each isn’t dependent on either “beating” the other.

    NWLB
    **************************************************
    http://www.RoyalCaribbeanFan.com

  2. Your observation has some merit as the new ships coming on line are filled with amazing new amusements and fabulous new restaurants for passengers to enjoy.

    However, I perceive the difference being that shorter cruises do not hold the charm for most people tat a short stay in Vegs does. It takes much longer to embark and disembark from a cruise ship due to immigration regulations so many hours of a shorter cruise are spent standing on line waiting for embarkation or disembarkations.

    The optimum cruise, especially for families is 7 days and the new ships are being built with that in mind. this length of cruise will take them to myriad ports unavailable on shorter cruises, allow for those fabulous sea days where you have nothing to do but lie in the sun and work on that enviable tan and have plenty of evenings to enjoy those restaurants, shows and that bit of Las Vegas that accompanies most cruise ships, the casino. The newer ships are truly destinations in their own right with the ports being the additional icing on an already huge slice of cake. It does make one wonder what else they can come up with as there will be zip lining, double rock walls, aquatheatre and high diving, floating bars and carousels as welll as water parks and central park on just the one ship, The Oasis of the Seas.

    Even with all the new ships available or coming soon a cruise is still the best value in vacations with the cost of your floating resort which includes you cabin, food and entertainment as well as tranportation added to the benefit of only having to unpack one time.

    I see the current economic status as having some effect on the vacationing public but not for long. People will soon realize that they NEED that vacation and cruising is truly the best way to go!