CRUISE SHIP INDUSTRY

INTRODUCTION

Introduction

• A cruise is defined as ‘to make a trip by sea in a liner for pleasure, usually calling at a number of ports’

• It is characterized by the ship being similar to a mobile resort, which transports passengers (guests) from place to place.

• floating hotels.

• resort facilities comprise 75% of the ship

• These floating resorts mimic their land-based counterparts with restaurants, bars, sports facilities, shopping centres, entertainment venues, communication centres, etc. Cabins are becoming larger and more luxurious. The trend is for more cabins to have windows and/or balconies.

Cruise companies are increasingly promotingand positioning their brand names to enablecustomers to identify the products as

competition grows.

For instance, Carnival Cruises Lines associates the characteristics of ‘fun ships’ with its brand name, while the Queen Elizabeth 2 suggests a more exclusive image and unique experience with its promotional theme, ‘for once in your life, live’. Disney’s Cruises create a distinct brand appeal for children.

Davidoff and Davidoff (1994) outlined five specific features of cruises that appeal to travellers:

1. Passengers have the opportunity to visit a variety of places in a short period of time without the problems of other modes of travel.

2. The ships are self-contained.3. Cruise ships have a cruise director and staff whose sole

function is to make sure passengers have an enjoyable time.4. High-quality food is served in elegant style.5. Everyone usually begins and ends their vacation on the same

day.

Industry Growth

• Research they had commissioned in 2004 showed that 30 million Americans had expressed an intent to cruise during the next 3 years (CLIA, 2005a).

• during the last 15 years cruise ship passengers have increased by an average of 8% each year, and in recent years as much as 15%. They also indicated that the industry is worth US$23 billion a year (CLIA, 2005b).

• The year 2004 saw the launch of the then world’s largest cruise liner, Queen Mary 2 (QM2), costing US$800 million and carrying around 3100 passengers and over 1000 crew

Allure of the Seas, owned and operated by Royal Caribbean International, is the biggest cruise ship in the world with a length of 1,187.050 ft (360 m) and a beam of 208 m. Built at a cost of USD 1.8 bn, it has 2,706

staterooms with a max capacity of 6,296.

• Safety issues also require scrutiny, especially as the ships are becoming larger and are visiting relatively remote areas such as the Arctic and Antarctic. The sinking of the Sun Vista in the Strait of Malacca on 21 May 1999 highlighted once again the vulnerability of cruise ships.

Demand• A recent analysis of the cruise market shows that today’s cruise

buyer is a married baby boomer who loves to travel and does so frequently. Baby boomers are the heart of the cruise market. As many as 34% of cruisers are between the ages of 35 and 54. Three in four (76%) cruisers are married, and two in five (44%) are college graduates. Only one in four (25%) cruisers is retired. Families are an important segment of the cruise market. While a spouse is the most likely cruise companion, 16% of cruisers bring children under age 18 along on a cruise. Cruisers are frequent travellers. They average 3.8 vacation trips a year and 18.6 nights away from home. They also rely on travel agents with as many as nine out of ten (89%) cruisers who used a travel agent to book their last cruise.

• Worldwide cruise demand.• 1995 5.67• 2000 9.61• 2006 16.00 (est)• Average age of cruisers.• 1995 65• 2000 55• 2006 45

• Favourite parts of the cruise included food (29%), spending time with family (20%), picture-perfect weather (18%), rest and relaxation (16%) and romance (12%). Caribbean cruises remain the most popular in the world.

Supply

• The cruise industry classifies ships according to size, number of passengers, and state rooms (Mancini, 2000). They range from very small or micro (under 10,000 t and 200 passengers) to the megaships (over 70,000 t and more than 2000 passengers;

• Cruise ship categories.• Boutique 1–5 <200• Small 5–25 200–500• Mid-size 25–50 500–1200• Large 50–100 1200–2400• Mega 100–150 2400–4000Source: After Ward (2005).

• The new cruise ships currently being built are designed for new generations of passengers with broader, more varied interests. In a bid to outdo each other cruise companies are investing in the ‘biggest’, ‘grandest’, ‘first’, such as the first wedding chapel, ice rink, in-line skating track or rock-climbing wall

• Berlitz top ten ships 2005.1 Europa Hapag Lloyd Cruises 18582 Sea Dream I Seadream Yacht Club 17903 Sea Dream II Seadream Yacht Club 17904 Seabourn Legend Seabourn Cruise Line 17865 Seabourn Pride Seabourn Cruise Line 17856 Seabourn Spirit Seabourn Cruise Line 17857 Queen Mary 2 Cunard Line 17648 Silver Shadow Silversea Cruises 17579 Silver Whisper Silversea Cruises 175710 Hanseatic Hapag Lloyd Cruises 1740

Cruise lines

• Carnival Corporation is the largest company• Royal Caribbean Cruises and • Star Cruises Group

Cruise destinations

• Climate is a major determining factor in ship destination deployment. This leads to the relocation of fleets from one destination to another.

• The main cruising grounds are North and Central America (57% market share), Europe (24%) and the rest of the world (16%), The main cruising ground is the Caribbean based on its proximity to the North American market, followed by the Mediterranean Alaska and the Pacific regions

Cruise products

• Whereas in the past a typical cruise lasted for a number of weeks, over recent years short cruises have been introduced to meet the latent demand. Short cruises are relatively inexpensive and offer value for money, and provide the opportunity for first-time cruisers to try this style of holiday. In a ‘time-strapped’ world they are also more convenient for families and busy executives.

The world’s largest cruise ships• No. Ship Cruise line Tonnage• 1 Freedom of the Seas Royal Caribbean International 158,000• 2 Queen Mary 2 Cunard Line 148,528• 3 Explorer of the Seas Royal Caribbean International 137,308• 4 Voyager of the Seas Royal Caribbean International 137,280• 5 Adventure of the Seas Royal Caribbean Cruises 137,276• 6 Mariner of the Seas Royal Caribbean Cruises 137,276• 7 Navigator of the Seas Royal Caribbean Cruises 137,276• 8 Caribbean Princess Princess Cruises 116,000• 9 Diamond Princess Princess Cruises 113,000• 10 Sapphire Princess Princess Cruises 113,000

Major cruise corporations

• Rank Parent group No. of ships Cruise lines1 Carnival Corporation(70) Carnival Cruise Lines,

Holland America Line, Windstar, Costa Crociere, Cunard, Seabourn Cruise Line, P&O, P&O (Australia), Princess Cruises Swan Hellenic, Aida Cruises

2 Royal (27) Royal Caribbean, Caribbean International Cruises, Celebrity Cruises

3 Star Cruises (19) Star Cruises Group, Norwegian Cruise Line, NCL America, Orient Lines

• Theme cruises have existed since the earliest days of cruising, but cruise lines began marketing themed cruises in the early 1980s as a way to differentiate themselves to gain an edge. Popular theme cruises have included a focus on dance, music, food, wine, and health and well-being

• Crystal Cruises offer a Wine and Food Festival, Health and Fitness Cruises, Big Band and Jazz Cruises

• Major cruise destinations1 Caribbean 462 Mediterranean 113 Alaska 94 Northern Europe 85= West Mexico 65= Panama Canal 67= South Pacific 27= South America 29 Other 10

Total 100

• The Celebrity Cruises ship Celebrity has dedicated conference facilities installed by Sony. It has a conference hall that can accommodate 242 people and is equipped with the latest audiovisual systems, simultaneous language translation capability, the capacity for multimedia presentations, computer – generated graphics, video conferences via ship to shore satellite, etc.

• Star Cruises has been promoting its ‘Meetings At Sea’ programme to the Meetings, Incentives and Conferences Industry for several years, and in 2005 it staged the biggest offshore conference of its kind ever held in the South-east Asia region.

• Recently Celebrity Cruises teamed up with Cirque du Soleil to offer passengers a unique on-board entertainment experience on its Millennium-class ships Constellation and Summit. The observation lounges on the ships were transformed into the Bar at the Edge of the Earth, where Cirque du Soleil characters took the stage for 2 hours each evening.

• The latest cruise liners have large health centres incorporating the latest in high-tech muscle exercising, aerobic and weight-training equipment. Spas are regularly voted by passengers as being far superior to land-based spas and all new cruise ships have large areas devoted to health and well-being, and spa treatments are one of the biggest onboard revenue generators.

• Carnival Cruise Lines has introduced specially designated low-carb dining selections on dinner menus throughout the fleet. Main dishes comprise vegetables, meat and fish, and for each item on the menu the number of carbohydrate grams is written alongside it.

Impacts• Sales taxes generated by local governments as a result of local spending

by cruise ship passengers, crew and from cruise lines directly;● transient room taxes paid by cruise passengers;● revenues from fees paid by cruise lines and cruise passengers including

docking fees, littering fees and other port charges;● garbage disposal fees and charges for water sales;● passenger fees including admissions and payments for medical services;● tax payments made by businesses selling goods and services to cruise

visitors or sales taxes paid by business;● local purchases in support of their business operations;● secondary or indirect tax revenues (such as sales and property tax

payments) made by employees (and their dependants) of the cruise industry.

Revenue raising

• In the past cruise ships were sold as ‘all-inclusive vacations’, i.e. once the fare was paid, there were few extras to pay for items other than those of a personal nature such as for shopping, alcoholic drinks and of course, end-of-cruise tips. Today that has all changed and the all-inclusive element has given way to a ‘user-pays’ situation. This includes on-board revenue centres that include optional ‘extra-tariff’ restaurants and food outlets, mini bars, recreational activities and same-day newspapers. Onshore revenue generators include landbased tours and shopping programmes.

Social/cultural

• According to Sheridan and Teal, cruise tourism is continuously portrayed as bringing prosperity and development for local communities but this does not correspond seamlessly with the local reality

• They argue that the cruise tourism product provides tourists with an impoverished experience and leaves local communities disempowered and underpaid. Whereas in the past, tourists in the Caribbean would spend at least a few days and nights in an island hotel and have at least some encounters with island people and places, now most visitors are cruisers visiting individual islands for only a few hours at best, and often not even that as cruise companies discourage tourists from going ashore.

• The social impacts of cruising are not confined to destination regions where ships visit. The International Transport Workers Federation (ITWF) claims that cruise crews have poor working conditions with little leisure time and are accommodated in unsatisfactor conditions

• The ITWF A have few rights – a situation it notes that has not changed for decades. llege that crew members are underpaid and

Environmental issues

• The ‘International Convention for the Prevention of Pollution from Ships 1973 and the Protocol of 1978’, commonly referred to as MARPOL, specify ship waste disposal, record keeping practices and pollution control equipment to be carried by all ships.

How much waste does a cruise ship produce on average per day?

• 300,000 gallons of wastewater (10% is sewage)• 15 gallons of toxic chemicals (paints, dry cleaning• fluids, photo developing chemicals)• 30,000 gallons of sewage• 2 pounds of garbage per person• 1 pound of food waste per person• 2 pounds of glass & tin per person• 37,000 gallons of oily bilge water• Thousands of gallons of ballast water containing pathogens and

foreign species• Smokestack emissions the equivalent of thousands of automobiles

• Cruise lines are opting to invest in on-board waste-disposal technologies and have adopted environmentally sensitive practices.

• cruise industry is fast approaching “zero discharge”, which means that nothing is discharged into the world’s oceans at any time’

Safety and Security

• The two main aspects of cruise safety are guarding against accidents (e.g. ship flooding or fire) and direct threats (e.g. hijacking or terrorism). Safety issues are generally addressed by the International Maritime Organizations’ Maritime Safety Committee.