In December, I posted Cruise Market Watch’s three New Year's resolutions. One of which was to look at one specific market niche each month where cruise lines can increase penetration, grow market share and revenue. This post is the first installment of that series.
Why look for opportunities to grow revenue from within the larger travel industry?
The cruise industry has only a 2% market share of the total vacation industry. While ships are still going out full, the portion of repeat cruisers is up (i.e. former customers are taking advantage of the price discounts from what they paid last time). But you can only increase past cruiser frequency so much. That is not a sustainable model – there is a limit to the number of cruises one can take.
Nor is the best approach cannibalizing business from other cruise lines. Or even worse, customers trading down within your own company brands from luxury to premium, or premium to contemporary. And where will our industry be when fuel prices start to increase, severely limiting the ability to discount?
With more cruise ship capacity coming online, it is not why, but must. Must prompt non-cruisers to try something different, of a greater perceived value than other related activities they are engaged in today. Cruise lines have to change the game.
Ok, lets get to the meat. Where and how? The niche segment takeaway for the month is spa. As the chart below illustrates, the more cruise lines can improve the perceived spa experience, the more they can enhance the price/value relationship relative to the competition, the more they will acquire share.
How much is out there? The 18,100 spas in United States generate more annual revenue than ski resorts and nearly as much as movie box office receipts. Of these, 77 percent are day spas, 8 percent are resort/hotel spas, 7 percent are club spas, 5 percent are destination spas, 3 percent are medical spas, 3 percent are mineral springs spas and just .3 percent are cruise ship spas.
- The number of spa locations in the U.S. has grown at an annual average of 20% in the last eight years.
- There are more than 32 million active spa-goers
- In 2007, there were 138 million spa visits
- In 2006, there were 110 million spa visits
- In 2007, $10.9 billion of revenue was generated by the U.S. spa industry
- In 2006, $9.4 billion of revenue was generated by the U.S. spa industry
Got your attention? My blog posts over the next several weeks will be about how to get the “spa pod” chirping. To wet your appetite: about 60% of adult men’s bodies are water; babies are born at about 78%. Its not a cruise’s spa, its a spa on a cruise and like our bodies it is in water 24/7 – seems like the most holistic, natural and organic approach to healing.
Source: International Spa Association