THE STATE OF THE CRUISE INDUSTRY IN 2010: CONFIDENT AND OFFERING NEW SHIPS, INNOVATION AND EXCEPTIONAL VALUE
Celebrating 35 Years of History, Cruise Lines International Association and its Members Forecast 2010 Growth and Continued Success
Having weathered perhaps the most challenging 18 months in its history, the cruise industry as represented by Cruise Lines International Association's (CLIA) member lines, is looking ahead with optimism and a proud sense of accomplishment. CLIA, its member lines and travel agents, have adapted quickly and effectively to the global economic downturn in order to keep ships sailing at full capacity throughout 2009 and expect continued growth in 2010.
CLIA was founded in 1975 to serve the needs of a small, new venture - the transformation of increasingly obsolete maritime transatlantic travel into trend-setting leisure vacationing. The industry's story is one of impressive growth - 118 new ships since 2000, and, since 1980, average annual growth in passengers of 7.4 percent, despite numerous economic downturns and other obstacles.
In 2008/2009, the cruise industry was impacted by many of the same challenges facing all businesses. Fuel prices, H1N1, the stock market crash and continued fluctuations, the housing crisis, corporate restructuring, stimulus plans and bailouts, even the uncertainty of a presidential election and, certainly, declining and fragile consumer confidence. Unlike many other industries, cruising, with an impressive history of recession-resistance, had several advantages. These include vessel mobility and redeployment, ability to quickly adapt to change, effective expense management and, above all, a product with the highest perceived value for money spent. Combined with the excitement of new ships, a proactive travel agency sales network and promotional efforts to create incredible vacation values, CLIA member lines were able to drive consumer demand and operate at full capacity throughout the most challenging months.
"CLIA's member lines and travel agents responded amazingly well to the economic crisis and have put themselves in a very strong position to succeed in 2010," said Terry L. Dale, CLIA's president and CEO. "In many important ways, if you have to have these challenges, cruising is the industry to be in. We have continued high cruise vacation interest and demand and an under-penetrated market of millions who have never cruised before; approximately 80% of Americans have yet to cruise and the opportunity is even greater in Europe and abroad where cruise vacation adoption is growing at an accelerated rate. Statistically, cruising exceeds traveler expectations and first-timers and past cruisers keep coming back. The industry's history of thriving through even the hardest of times gives our guests confidence that they are making a safe and rewarding purchase. And, most important, cruise vacations are perceived by virtually all consumers as very high value when those consumers are seeking value above all else."
Industry Growth and Economic Impact
Despite the economic turmoil of 2009, the cruise industry continued to grow. A total of 13.445 million guests are forecast to have sailed last year (totals through the third quarter, 2009 - 9,999,068 passengers - indicate that forecast is on track), U.S. and Canadian residents accounted for 76.5 percent of guests, with 23.5 percent sourced internationally. Volume of international guests has been growing consistently. In 2000, less than 10% of the guests sailing on CLIA member cruise lines were sourced to international markets. The CLIA fleet (collectively among all 25 member cruise lines) in 2009 sailed at an average occupancy of 104.4 percent, with an average length of cruise of 7.2 days. In short, passenger volume continues to keep pace with capacity.
CLIA forecasts a total of 14.3 million passengers in 2010 - 10.7 million from North America and 3.6 million sourced internationally. This represents a total increase of passengers of 855,000 or 6.4 percent growth.
The industry's growth is also reflected in its economic impact. In 2008, direct spending in goods and services by cruise lines and their passengers totaled $19.07 billion, a 2 percent increase over 2007. Factoring in indirect spending, the total economic impact of the industry on the U.S. economy was $40.2 billion, an increase of six percent. All 50 states were positively impacted. This included the generation of 357,710 jobs paying a total of $16.2 billion in wages and salaries nationwide.
After introducing 14 new ships representing a total investment of $4.7 billion in 2009, the CLIA fleet will invest an additional $6.5 billion and welcome 12 new vessels this year. Significantly, the new ships continue to reflect the diversity of ships and cruise experiences available to the traveling public, ranging in capacity from 101 passengers to 5,400 passengers and built for everything from roaming the globe in sheer luxury to sailing the waters of Europe's most famous rivers and the coastlines of North America.
The newest members of the CLIA fleet will include:
- Royal Caribbean International: Allure of the Seas (5,400 passengers)
- Norwegian Cruise Line: Epic (4,200 passengers)
- Celebrity Cruises: Celebrity Eclipse (2,850 passengers)
- MSC: MSC Magnifica (2,550 passengers)
- Costa Cruises: Deliziosa (2,260 passengers)
- Holland America Line: Nieuw Amsterdam (2,100 passengers)
- Cunard Line: Queen Elizabeth (2,092 passengers)
- Seabourn Cruise Line: Seabourn Sojourn (450 passengers)
- Avalon Waterways: Felicity and Luminary (138 passengers)
- Pearl Seas Cruises: Pearl Mist (110 passengers)
- American Cruise Line: Independence (101 passengers)
Looking forward, CLIA member lines have 26 new ships on order between 2010 and 2012 - 23 ocean-going vessels and three built for river/coastal cruising. This represents a net increase in capacity of 18 percent, or 53,971 beds.
At the end of 2009, CLIA surveyed its member lines and member travel agents to get a better picture of their outlook and level of optimism for 2010 and to identify major industry trends. These are some of the findings:
- Travel agents are optimistic about the coming year, with 75.7 percent anticipating an increase in sales and another 11 percent expecting to hold even with 2009. Most agents surveyed looked forward to sales increases of approximately 15 percent.
- Although the cruise selling season spans the entire year, the traditional "Wave Season" (January-March) will continue to be important for cruise sales, according to agents, with 83 percent predicting an increase in booking volume of 10-20 percent.
- Consumers, according to agents, continue to express strong interest in all types of cruising. High interest in contemporary cruising was expressed by 73 percent of clients, followed by premium cruise lines (49.7 percent) and destination/niche cruise products (47 percent). One of the most dramatic findings was the high interest in river cruising by 34 percent of clients.
- Cruising continues to rank number one among consumers for perceived value, vacation interest and, for travel agents, ease in selling.
- The anticipated top cruise destinations for 2010, by volume of sales, according to agents, are: The Caribbean/Bahamas, including eastern Mexico, Alaska, Mediterranean and Greek Islands/Turkey, Europe, Hawaii, Panama Canal, West Coast of Mexico, Bermuda, European rivers and Canada/New England.
- The top "hot" destinations (consumers increased interest) include: The Mediterranean, the Caribbean, Alaska, European rivers, Europe, Hawaii, Panama Canal, West Coast of Mexico and the Bahamas
- While remaining relatively short, the cruise booking window is lengthening. Agents report an average window of 5.04 months (compared to 4.6 months in 2009), with only 30 percent of clients booking less than four months out (compared to 39 percent in 2009).
- Couples dominate cruise demographics although agents report continued growth in families, extended families, and friends traveling together as well. Seniors also continue to be an important segment.
- Fifty-three percent of agents expect to book more new cruisers in 2010 while 37 percent expect their client mix of new and repeat customers to remain constant.
- CLIA travel agents continue to be very optimistic about travel in the next three years, particularly cruise travel - 71.1 percent describe themselves as "very or extremely optimistic."
- CLIA training remains extremely important for member agents. Eighty-eight percent have taken CLIA training; almost 70 percent are currently enrolled in some form of CLIA education, and 87.2 percent say training is important.
CLIA member lines, meanwhile, identify a number of trends that will help define cruising in 2010:
- Strong interest in group and affinity travel (for some lines more than 40 percent of business)
- Popularity of theme cruises, notably music, food and wine cruises
- Some lines are increasing their line-up of onboard speakers for enhanced enrichment programs
- Cruise lines expect baby boomers and repeat cruisers to be the biggest growth markets
- Historical and cultural shore excursions tend to be the most popular
- Shipboard spas continue to attract cruisers, with some lines reporting use by 40-50 percent of passengers
- New green, environment-friendly shipboard technologies being utilized, such as solar power, advanced water treatment systems, Alternative Maritime Power, fuel conservation, innovative hull treatments and others
It is also worth noting that many CLIA member lines have plans in place to boost marketing efforts for 2010 to ensure continued demand, including taking full advantage of social media, including Facebook and Twitter.
CLIA travel agents agree with member lines that consumers have much to look forward to in 2010. In addition to new ships of every size and description, these are some of the innovations that are guaranteed to generate strong interest among vacationers:
- New shipboard amenities and facilities such as themed "neighborhoods," full-sized waterparks, adults-only areas, comedy clubs, more and more dining choices and a greater choice of accommodations
- Expanded and diversified shore excursions, including private excursions
- Incentives to book in advance, such as gratuity packages and discounts
- Approximately 30 domestic ports of embarkation mean that half the residents of the United States are now within driving distance of cruises sailing to all parts of the world, eliminating the cost and inconvenience of flying
"Vacations are needed now more than ever; everyone needs the time and space to relax and revitalize. Nothing makes that easier than a cruise and we are confident that with new ships and itineraries, innovative shipboard experiences and incredible value, 2010 will be a great year for cruising," Dale said.