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The Cruise Industry To Hike Its Production By 2028

Last Updated June 27, 2018

Cruise Industry To Hike Its Production By 2028

The cruise industry is a unique, luxurious and comparatively new segment of travel that has emerged since 1970 and has been gaining increasing popularity since then.

The cruise industry is among the most exciting and fast-growing categories in the leisure market. Cruise ship industry has had average passenger growth rate of 7.2% per year since 1990. This type of travel vacation industry is pretty young.

Between 1980-2009, over 176 million travelers took deep-water cruises (duration 2-days or longer). Of this number, nearly 70% have been generated for the last ten years, and 40% of the total passengers’ number has been generated for the last 5 years alone.

Cruise industry market has strong potential – North Americans who intend to set sail over the next three years are over 50 million. The industry’s products are incredibly diversified and offer something “cool” for everyone.

They deliver unexpected customer satisfaction as vacation experience exceeds expectations consistently on a wide range of vacation travel attributes.

This segment offers the best business opportunities in the fastest-growing segment of travel. Since its emergence in 1970, the escalation in this sector of travel has almost been 2100%.

There has been a sharp increase in the number of loyal customers who are permanently in favor of certain cruise companies. The cruise line industry has increasingly become popular over the years for several reasons:

  • Best quality products and services
  • Luxury
  • Ever-increasing demand and supply

All these have proved that the cruise industry is in for fierce competition amongst other travel options. The numerous operational cruises worldwide are an explanation of the repositioning cruises offered seasonally when virtually all of the significant relocation ships change their vessel’s Summer or Winter operating regions.

The growth of the industry is also well observed if one notices the major increase in its passenger capacity. If statistically studied, we observe that in the 1980’s almost 40 new cruises were manufactured, which doubled to 80 in 1990’s and more than a hundred introduced in 2000.

The size just like the numbers has sharply increased -from large to enormous, suggesting more demand, more passenger capacity.

The cruise industry gives fuel to the evolution of the fashion of spending a vacation in sea-hotels or ship-hotels which are unique as a vacation experience. Over the years even network companies, operator have increased their itineraries and now include convenient ports of embarkation and a variety of ports for call.

To add to this, they have also included unlimited facilities on the ship, which makes it a tough competition to land-based options.

To mention some of the eye-dazzling facilities:

  • Cell phone access and Wi-Fi zones
  • Aqua Parks with multiple waterslides
  • Huge health club facilities and expansive spas
  • Huge LED screens for open-air movies
  • Planetarium (QM2)
  • Golf simulators
  • Demo kitchens
  • Self-leveling (gyro) pool tables
  • Multiple themed restaurants
  • Multi-room multi-level suites and villas
  • and so many more.

The cruise industry commits to adding better facilities, and it owes all of this to the tremendous potential and growth of the cruise industry.

However, studies have recently shown that only 20% of the American citizens have traveled in the cruise and therefore a vast untapped sea of opportunities lie in front of the industry.

A Short Overview Of The Cruise Industry Line In The United Kingdom

  • The travelers from the United Kingdom opting for top-luxury cruise vary from 19,700 (which was the count in 2008) to almost 28,450 in 2012.
  • The number of cruise departing from the ports of UK was almost 807,000 in 2013, 894,000 flying cruises from the UK the value of the cruise industry in the economy of Great Britain was nearly £2.5 billion, with the number of employees being 66,000(ships, lines, ports, agents).
  • Cruises comprise not more than 1 out of 8 vacation packages in the UK.
  • The cruise travel market of United Kingdom accounts for more than 70,000 employees per year and is currently the biggest in Europe. The contribution of the industry to UK’s economy is a whopping 2.5 billion pounds. It created more than 5000 new jobs.

(According to CLIA UK statistical data)

The Scenario In America

  • CLIA of 2010 revealed that the number of jobs produced by the shipping industry of America was 329,423, with a wage increase of US 15.2 billion.
  • In the last few decades, the US industry (the travel and tourism sector particularly) has outperformed the US economy. Spending with US businesses by the industry increased by 75% (2000-2010), reaching US18 billion.
  • The economic output in total generated by the US cruise industry increased by 128% –which equals to almost $16,6bn (2000) to $37,9bn (2010) in US dollars.

During the last decade, the cruise industry has responded to the increasing consumer research which has the additional help of newer destinations, themes, exclusive ship -designs and concepts, innovative onboard and on-shore activities, to manifest the new waves or trends in the cruise industry.

Cruising is important for sampling destinations to which travelers may return. Over 80% of passengers think that a ship cruise is a good way to sample a destination they may want to visit again on land-based vacation.

40% of cruisers state they had returned to vacation at destinations first visited during a cruise.

Cruise ship industry is continually improving its popular “cheap and fun vacation deals” image, but also its lobbying effectiveness.

Massive investments have been made (and the trend continues) by the major cruise companies to improve their ships’ waste-disposal systems, fuel efficiency, backup power systems, propulsion, and safety in general.

And all the investments are already paying off – big time. The whole cruising travel sector is continuously increasing its popularity and wins more and more supporters.

And the people’s general opinion is this is an excellent vacation travel option that outperforms many land-based vacation deals.

Main cruise industry trends for 2014 are:

  • Improved ship technology (safety and backup systems), improved onboard connectivity (Wi-Fi access shipwide, lower rates, free of charge cell phone usage on the ship only)
  • First-time cruiser market growth
  • Higher demand for luxury cruise deals with all-inclusive pricing
  • Increased multi-generational and family travel
  • More active (fun packed) vacations with more shore excursions and tours choices.

More and more travelers consider not the ports of call, but the cruise ship itself as the paramount “best fun” destination.

Six new big cruise ships joined the market in 2014 – the gain in capacity of passengers was 17,410, which includes (in brackets – lower berths capacity): Royal Caribbean Quantum of the Seas (4100 pax), NCL Norwegian Getaway (4000 pax), Regal Princess (3600 pax), Costa Diadema (3000 pax) and TUI Mein Schiff 3 (2500 pax).

  • The 2012 new ships list (featuring the “biggest” names of Carnival Breeze, Disney Fantasy, MSC Divina) added another 10,000 berths to the industry’s pax capacity – and another USD 2,3 billion in annual revenue.
  • By the end of 2014, the expected number of passengers is 22,3 million (worldwide).
  • By the end of 2016, 17 more ships will add more than 41,000 (over 9%) to passenger capacity, this way generating in annual revenue US$3.4 billion more for the cruise industry.

In 2013, the industry’s growth in 2012 continued (2.5% increase) – with 11 new cruise ships added to the market’s immense fleet of pleasure marine vessels.

  • The ship orders 2013-2016 list has 26 new cruise ships (14 ocean-going and 12 riverboats, again FCCA/CLIA cruise lines) with a total of 48,000 berths. The amount of capital invested in these ship projects is over US$9.5 billion.
  • 2013 over 2012 increase was 2,5%, but keep in mind; this is with the new build ships’ added passenger capacity included in the statistics.
  • The Caribbean continued to rank as the most popular destination, featuring 37,3% of all 2013 itineraries, and leading share of cruise ship industry capacity. Next by popularity were listed Mediterranean (19,9%), Europe (Med excluded 9,8%), Asia (3,6%), Australasia (4,1%), Alaska (5,4%), South America (3,4%).

Between now and 2028, the global cruise industry will add at least 104 new cruise ships, as a record order book propels capacity growth globally.

According to 2018-2019 Cruise Industry News Annual Report, the industry is targeting 40 million passengers and net earnings in the $9 billion range by 2027.

This year, the industry is expected to carry around 27 million passengers, up from just under 17 million 2008.

The modern cruise industry can trace its roots back to 1966 and has added capacity every year since.

And while the onslaught of new ships (view the cruise ship order book) coming is like nothing before, Carnival Corporation and Royal Caribbean Cruises have a string of positive annual earnings since their IPOs in 1987 and 1993, respectively.

The Growth of the Ocean Cruise Line Industry

The market talks to each other, influences each other.  So progress gets amplified.  The more people who have ocean cruised, the more who will tell others, the more who will want to take an ocean cruise too.

Worldwide, the ocean cruise industry has an annual passenger compound annual growth rate of 6.63% from 1990 – 2020. Growth strategies to date have been driven by larger capacity new builds and ship diversification, more local ports, more destinations and new onboard/on-shore activities that match demands of consumers.

The industry is also expanding rapidly internationally. These activities help increase penetration in a core North American market that still has growth potential.

Only 53% of the target North American market (or 24% of the whole U.S. population) have ever taken an ocean cruise.  All the cruise ships in the entire world filled at capacity all year long still only amount to less than ½ of the total number of visitors to Las Vegas

Shipbuilding Summary

A total of 13 new ships with a passenger capacity of 33,379 will be added in 2018.  From 2018 to 2020, 37 more new cruise ships will come online adding 99,895  to worldwide passenger capacity.

These ships from 2018 to 2020 alone will cumulatively add $11.7 billion in annual revenue to the ocean cruise industry by 2020.

The forward-looking supply picture counts an additional 104 ships with an average size of 2,380 guests at double occupancy (two people in each room).

MSC Cruises, a privately-held player based in Switzerland, has the biggest plans of all and will welcome ten new large ships to its fleet.

Adding more tonnage to North America, the MSC Seaside made its debut in Miami last December while the MSC Seaview just launched service in the Mediterranean.

New ships present economies of scale to the cruise lines, command the highest ticket prices and drive the most onboard spending with the latest features. They also create a media buzz for the industry.

New entrants Virgin Voyages and Ritz-Carlton should only help that, as well as a trio of new ships coming in the early 2020s from Disney Cruise Line.

In addition, the latest technology means they are the most efficient to operate when it comes to energy consumption.

A number of new ships promise to use LNG (Liquefied Natural Gas), which burns cleaner and is cheaper than traditional fuel options.

Each next-generation class of cruise ship is generally 20%  more efficient per passenger than the previous generation, despite getting larger.

Eight large new cruise ships are committed to the Chinese market, which could one day have the potential to be the world’s largest cruise market.

Expectations are being brought down to reality in the near-term, however, as oversupply has caused a market correction in mainland China, with some operators trimming capacity.

Companies are also expected to retire older ships, but at a slower rate. These vessels are often sold to operators not competing with the main cruise lines.

The major players, however, continue to invest heavily in existing tonnage, spending tens of millions on renovations and upgrades to add revenue-generating features.

There’s also the expedition market, led by Lindblad Expeditions. With over two dozen new small expedition ships coming; these niche vessels travel to unique areas and command high ticket prices.

According to the 2018 Cruise Industry News Expedition Market Report, the current expedition market will grow by at least 70%  in passenger capacity been now and 2028, based on known newbuild orders and confirmed ship deployments.