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State of the Industry: Challenges and OpportunitiesApril 19, 2011 By: Susan Young Travel Agent
|Jan Swartz, chairperson of CLIA’s marketing committee, speaks at Cruise Shipping Miami.|
Every year at Cruise Shipping Miami, the chairman of the Cruise Lines International Association (CLIA) marketing committee lays out the State of the Industry for agents, port officials, media, destinations and cruise lines. This year, Jan Swartz, executive vice president of marketing, sales and customer service, Princess Cruises and Cunard Line, did the honors—wowing the audience with her humor and enthusiasm and a mix of facts and figures.
Swartz began with the challenges: “The global financial crisis at the end of 2008 resulted in the largest drop in the equity markets in the history of the U.S. since the Great Depression. This resulted in a retraction of credit, increased volatility in equity and currency markets around the world, and ultimately resulted in a drop in consumer confidence.”
She said many jobs have been lost and not yet replaced. And while the economy is starting to show signs of recovery, she characterized unemployment as “stubborn.” She talked about the many global disasters and challenges, not only the recent Japanese earthquake and tsunami but also previous earthquakes in Chile and New Zealand, volcanic ash clouds over Europe, and political instability in Egypt and other countries. “And all of these things affect us, and we have colleagues all over the world that they touch,” she said.
But Swartz was also upbeat. In 2010, CLIA carried a record 15 million guests, continuing the industry’s 20 years of consecutive growth. And North American cruise industry occupancy remains above 100 percent, when third and fourth berths are included.
On the membership side, “we remain 25 cruise lines strong, as CLIA members,” Swartz said, noting such additions as AMA Waterways, Avalon Waterways and Paul Gauguin Cruises. She also cited expansion of the CLIA fleet, with a net addition of 35 new ships over the past few years. Besides, there has been a surge in refits and refurbishments and “the order book for new ships has begun again,” she said.
The new ships “have been phenomenal,” she added, noting the explosion in river boat cruising, and the introduction of the world’s largest cruise ships—Oasis of the Seas and Allure of the Seas. “And we’ve had great things to look forward to this year,” she said, pointing out that Disney took delivery of its first ship in years, the Oceania Marina launched, and the Carnival Magic is just ahead.
In a troubled economy, the industry clearly had to drop its prices, creating even stronger value to the consumer. But, why is the cruise industry doing so well? She asked. “Many industries had troubles, many dropped price,” she noted, “and yet they don’t fill or, sell their entire product. There isn’t sufficient demand for their product.”
She pointed out four factors driving the cruise industry’s collective success in 2011. The first is that cruising remains a small sliver of the big vacation pie. In North America, only 3 percent of the population took a cruise in 2010; in the UK, only 2.6 percent; and in other places, even less. “So, because we know we can convince people to take a cruise, and demonstrate it’s fabulous value and exceptional customer service, we know there’s a lot of headroom for growth,” she said.
The second reason for the industry’s success is that cruising has great value and the third reason is that the industry as a whole innovates, Swartz added. She praised destination partners for their innovative marketing, because when consumers want to go, the industry can “chase that demand.”
“Our port partners also innovate to accommodate that growth,” she said, citing Port Everglades, FL, which now serves the largest ships in the world, “yet in the terminal boarding process it helps people feel like they’re not part of the crowd.” She also singled out Barcelona, which she said is working on an innovative terminal project.
“We also innovate with our shipyard partners, creating features and activities on our ships that 10 or 20 years ago no one could have dreamed about,” she said, giving the examples of skating, boxing, ziplines, surfing and spas. She said innovation also extends to technical areas and the trend of shore power—in which cruise ships hook up to the local electrical grid while docked, rather than burning diesel fuel.
As for marketing innovation, she cited several humorous examples, including the appearance of Kevin O’Sheehan, CEO of Norwegian Cruise Line, on an episode of Undercover Boss—painting decks and serving meals. She also put together a slide show of executives such as Richard Fain, chairman and CEO, Royal Caribbean Cruises Ltd., surfing on the FlowRider and Gerry Cahill, the president and CEO of Carnival Cruise Lines, zooming down on a Water Slide, and mentioned even her own boss Alan Buckelew, president of Princess Cruises, had turned into a blogger. “There is really nothing our CEOs won’t do to promote the industry and promote their brand,” said Swartz, eliciting raucous chuckles from the audience.
She added that lines also invest in creating “best-in-class tools” that help travel agents become more effective and efficient in driving that demand. As an industry, she said the cruise lines also listen; they track consumer sentiment and research; and their crews deliver “an exceptional vacation” to guests.
Swartz cited interesting market research from TNS on brand awareness and loyalty. The cruise industry in 2009 and 2010 had a score of 76 and 74, respectively, the highest level of brand commitment of any product in the survey.
“The future is bright,” she said in closing, noting that in 2011, the industry expects to carry 16 million passengers, up 6.6 percent from previous years. But, she also cautioned attendees a bit, noting that the entire picture—given world events—isn’t totally rosy. “Make no mistake, many challenges are still ahead,” she said.
|Newly launched, the Carnival Magic is now sailing Mediterranean voyages.|