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See How They Grow

February 8, 2008 By: David Eisen Home-Based Travel Agent
 

The cruise industry braces for an onslaught of new ships and upgraded ports


At the beginning of the 1970s, it was estimated that half a million Americans a year took a cruise. For 2007, the Cruise Lines International Association (CLIA) says that number surpassed 12.5 million—and passenger totals are increasing at an annual clip of 8 percent. Still, there is more potential for growth. Though 12.5 million sounds lofty, CLIA notes that only about 17 percent of U.S. adults have ever taken a cruise. With an aim of raising that figure, the cruise lines' focus is twofold: build more ships and build or expand ports.

Approximately 375 cruise ships ply the oceans today, visiting an ever-changing mix of ports. In 2008, eight ships will be introduced into service. More than 30 new ships will be added over the next four years, proof that the industry doesn't foresee any slowdown. And why should they? Cruise line profits are through the roof. Case in point is Carnival Corp., whose full-year revenue clocked in at $13 billion for 2007. That kind of cash can buy a lot of ships.  Carnival Freedom docks at the Cozumel cruise port

Making Headlines

New ships keep the cruise industry fresh and—perhaps more importantly—put the industry into the news. Each ship unveiling brings not only pomp and circumstance but also the opportunity for lines to again tout their product to consumers and travel agents alike. For the former, new ship debuts push the cruise industry back into public consciousness—something to draw upon when it's time for a family or a couple's vacation. For agents, it can mean more dollars!

As in any business offering a product, having more options to sell often means higher revenues. In this case, cruise lines and travel agents both win. Agents are always looking for new ships to sell as a way to ingratiate first-time cruisers and give seasoned cruisers additional options (for example, someone who pledges Carnival fealty will jump at the chance to cruise on a new Carnival ship). There is always that sense of pride felt when trying out something new or buying the latest thing on the market.

Let's talk hypothetically. Bob from Rye, NY, says to his golf buddy Phil, "Hey, we just got off the new NCL Norwegian Gem—you know, the one with the bowling alley—and boy, was it something!" Not only does it make Bob feel good about himself, deep down it probably incites a bit of envy in Phil, who will go above and beyond to book his family on the next big ship coming on the market ("I'll show him," he may say). So, when Royal Caribbean launches Independence of the Seas in May, guess who makes one of the first bookings? The site of the Mahogany Bay cruise terminal in Roatan, Honduras, expected to be completed in 2009

This is both a travel agent's and a supplier's dream scenario and the beauty of new ship releases. They give consumers something to talk about and prevent the industry from going stale. They also bring forth business to travel agents, who are able to tap into brand-new inventory.

Change in Class

The cruise industry also feels that stocking more ships on the shelves—er, sea—is financially beneficial and not cause for oversupply worries. But what about product differentiation? Many of the new ships are part of a line's "class," such as Carnival's Fantasy class or Royal Caribbean's Freedom class. Each ship within a class has similar characteristics from the inside out. Continuity might be one thing, but a direct facsimile of a prior blueprint can become monotonous and tedious. Thankfully, classes are often reformatted once a few ships are churned out.

Building ships may be good for the bottom line of the cruise industry, but doing so also takes a toll on the ports that are called upon to accommodate these often mammoth vessels. If the cruise companies decide to continually add ships, it's just as important to add new port facilities or, at the very least, expand or upgrade existing ports to keep up with the size of these new ships.

Cruise ports have become a source of pride for the hosting destination, as well as a revenue generator. Many ports are outfitted with restaurants, shops and bars—even their own beaches where guests can disembark the ship and plop down on the sand mere steps from the dock. This is especially nice and convenient for passengers who want to get off the ship but don't much feel like venturing too far away.

Most probably think that the physical port has no true bearing or effect on a cruise vacation. Guess again. How well a port is constituted and maintained can go toward making a cruise that much more enjoyable. It also helps when the cruise ship you are on can dock at the port instead of anchoring out at sea. Having to board a tender to go ashore is often a hindrance that keeps passengers onboard. While water depth adjacent to a port is sometimes a deciding factor as to whether or not a cruise ship can moor, other times a port just isn't equipped to host ships of a certain size. Future port construction and upgrades will take these variables into consideration.


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