This recession is proving the cruise industry incredibly agile and able to successfully cruise past recession island. With an average annual growth rate for nearly two decades of 7.4%, the industry has a history of phenomenal success. Today cruising reaches a much broader market than the retirees of old. While diversification greatly expanded the market, it also exposes the industry to impacts in the mainstream economy.
For those who can take advantage of the tremendous deals being offered, Norwegian Cruise Line has introduced a job loss protection program in its insurance policy. For the one-week period ended March 1, 2009, Carnival recorded the highest number of net weekly bookings in its history.
CruiseMarketWatch.com estimates passengers carried will still increase by 2.6% in 2009.
Navigating four oceans
The industry will continue to chart the navigation of four oceans to cruise up the revenue growth curve.
1. Get consumers to start spending again (Pacific Ocean)
2. Absorb the new build passenger capacity (Atlantic Ocean)
3. Find new cruisers (Arctic Ocean)
4. Get prices moving up (Indian Ocean)
1. Get consumers to start spending again
Tighter consumer budgets mean shorter holidays (cruising to closer destinations), departing from closer homeports, booking closer to departure dates, and less onboard spending at the bar, casino and spa. When these trends reverse, we will have traversed the first ocean. Economists recently surveyed by Reuters forecast a 0.8 percent gain in U.S. gross domestic product during third-quarter of 2009 and 2.0 percent in the fourth-quarter.
2. Absorb the new build passenger capacity
One can’t help but be excited by the development of new and exhilarating ships. Oasis of the Seas, Odyssey, Dream, Equinox, Luminosa, Splendida, Luna, and others have jaw dropping wow factor. Most likely you already know that by the end of 2011 a total of 29 ships with passenger capacity of 70,390 will be added to worldwide fleets. This new capacity is projected to help add 2.4 million cruisers to the annual passengers roles.
3. Find new cruisers
Hotels, resorts and casinos are slashing prices to lure guests and be competitive. Cruise's continued growth requires reaching out in new and creative ways to acquire market share from the likes of destination spas (such as Celebrity’s spa concierge and spa cabins on Eurodam and Spendor), weddings, family reunions, casinos, and singles.
Ships are sailing full due to the cruise value proposition relative to other vacation options. But we are seeing a higher percentage of former cruisers onboard because they are the ones who understand best the value, and are taking advantage of the aggressive pricing. In the long term, the goal is to find new passengers by maximizing trends in consumer behavior.
4. Get prices moving up
While oil prices remain low, cruise lines can offer striking cost savings for the consumer over comparable land-based alternatives. This is a great strategy for acquisition of market share and the cruise industry is undoubtedly growing its piece of the travel pie in 2009. As more people cruise, more will tell others and they will want to cruise too. The cruise industry is in an enviable position for the imminent economic recovery. This leaves the final stage of re-establishing the upward revenue growth trend - the ability to raise prices in the face of increasing demand and limited supply with positive impact on profit margins.
Long-term prospects are bright; it is an exciting and challenging time to be in the cruise industry. I love a good cliché. So grab the rails, we are riding this storm out. Industry leaders are charting the navigation of the four oceans for future prosperity and the vacation enjoyment of millions.