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The Five 'Vs' Signal Success for CruisingMarch 18, 2010 By: Susan Young
Rick Sasso at
As Rick Sasso, chairman of Cruise Line International Association's (CLIA) marketing committee and president of MSC Cruises USA, walked to the podium to deliver his state-of-the-industry keynote address, he quipped: “Like in our cruise industry, there’s music for everyone.”
But far more than music had changed. The gloom hanging over 2009’s conference had disappeared for many. Cruise executives seated on the panel looked happy to be there. Sasso touted CLIA’s 35th anniversary. The outlook was decidedly improved on many fronts.
Evolution and Growth
Characterizing the evolution of the cruise industry over the past 35 years as “We’ve come a long way baby,” Sasso talked about the importance of “braggers” in fostering the industry’s success. He noted that cruise guests over the years who have gone on a cruise, gone home and bragged to friends have helped spread the word.
“Who could have imagined?” he asked, in showing how the industry evolved from ocean liners used for transportation to 118 purpose-built cruise ships – from riverboats to mammoth ocean vessels carrying from 82 to 5,000 passengers. “We have the technology and the environmental capabilities to be one of those dominant industries in business today,” he stressed.
Sasso said it’s a special achievement when people see that a little boutique industry that started with just a few converted vessels now delivers an economic contribution of more than $42 billion in the United States and another $32 billion in Europe.
Like every industry, there are adversities, he said, “but our industry seems to escape them a lot better than most,” he said, citing wars, 9/11, and recession. He said Japan Airlines lost $2 billion the last nine months, the hotel occupancy in Orlando is hovering around 70 percent, and yet the cruise industry has had steady 7.4 growth annually – “the strongest EKG you’ll ever see on any chart.”
“Sometimes you also need a little luck,” he said, pointing to the ‘60s television show, "The Love Boat," which also helped spur interest in cruising in the industry’s early years.
Over the last 35 years, there have been 85 cruise lines that were members of CLIA. Some disappeared, others were consolidated. But today membership of CLIA stands at 25 lines, Sasso said, noting he believes that will continue to grow.
Addressing what he termed the “shipboard revolution,” he showed slides comparing features of today’s cruise ships versus what he sold as a young man working for a cruise line in the 1970s and 1980s. The audience giggled as the screen revealed so-called “modern” features of the era. “I remember going around and saying that the porthole actually opened up,” he quipped.
In terms of onboard amenities, Sasso reminded the audience that lines used to sell “shuffleboard” as the sole exciting onboard activity while today people are looking at rock climbing walls, boxing, simulators and more. But beyond the fun, “we’re the most proud of the things we have done in terms of safety and environment,” Sasso said.
But one thing hasn’t changed in 35 years, he said. “The basis of our distribution system was travel agents and it still is today,” Sasso said. “The travel agent is still the predominant distribution system that supports and brags about our products.” CLIA has trained hundreds of thousands of travel agents, he said, “and that has been a very strong point in our success over the past 35 years.”
Where Do We Go From Here?
If you want to know where the industry is headed next, “you don’t have to be Nostradamus to figure it out,” Sasso told the audience. It’s all about what the CLIA member lines and the industry have done over the past 35 years – supply, globalization and flexibility.
And increased supply of ships and berths will continue to occur steadily as it has over the past decades, says Sasso, who says the investment will keep coming over the next 10 to 20 years. In 2009, CLIA member lines— ocean, river and niche— added 13 ships and 20,000 berths.
One plus is the industry’s ability to move ships, which other industries don’t have. “Hotels in Vegas can’t go anywhere,” he said, stressing that lines can move ships and develop new departure ports.
Sasso said it wasn’t long there were only five major cruise ports in North America. Today, there are 30 departure points for cruise ships in North America, and a plethora of home ports worldwide.
Last year, approximately 13.5 million passengers sailed on CLIA member lines and more than 400,000 of those were new passengers.
Globally, “the growth in Europe has been extraordinary – double digits,” he said. Sasso said the European numbers are growing faster than they did in North America 20 years ago and soon Europe might represent 30 percent of the total passengers carried, up from 10 percent about a decade ago.
Moving forward, the cruise ship order book for ship deliveries from 2010 to 2012 looks robust as well. CLIA member lines have 26 new ships on order, representing 53,000 berths. That equates to a $15 billion-plus investment.
Sasso’s formula for cruise industry success moving forward? He says that’s the “Five Vs”— Volume, Value, Variety, Voice and Versatility.
Wondering about the Voice? Sasso told the audience, it’s “the voice of all those bragging millions of people [cruisers who go home and tell their friends], the voice of the travel agents that we train to sell cruises, the voice of the press who write stories….and the voice I hear every day. I hear it in my ear when I wake up. It says ‘Aren’t you a lucky soul that you’re in the cruise business.’”