A Cruise Revolution

ms Rotterdam in Venice


Cruise lines have always talked about an evolution of cruising, but looking back, what’s happened over the past few decades seems more akin to a revolution.

Since 1990, Cruise Lines International Association’s member lines have registered an average annual passenger growth rate of 7.2 percent. Between 1980 and 2009, more than 176 million passengers sailed on an ocean cruise of two days or more. Sixty-eight percent of those sailed within the past decade and 40 percent within the past five years.

“What propelled the industry forward were several basic things—the physical plant, for one, the new ships, and appreciably better product delivery year over year in hospitality, food and entertainment,” says industry veteran of 40 years Maurice Zarmati, who was involved with Carnival Cruise Lines’ launch in 1972 and is now president of Costa Cruises North America.

This year, CLIA expects 14 million guests to sail. These numbers are driven by the public’s growing awareness of cruising and a savvier travel agent distribution system. No longer order takers, today’s cruise sellers are skilled sales consultants, helping clients navigate a maze of complex cruise choices. 

Yet, despite the successes, the industry and retailers have had to face extensive challenges in the past two decades. The most significant was the aftermath of 9/11. Other challenges included wars, high oil prices, piracy, norovirus, SARS, economic downturns, and several high-profile cruise ship fires and guest disappearances. How have the industry and agents coped, and in fact, thrived?   

NEW, INNOVATIVE SHIPS: Mark Schiffner, vice president, Cruise Holidays, cites word of mouth among clients and innovative ships as the biggest factors spurring cruise industry growth. Similarly, Dwain Wall, senior vice president and general manager, CruiseOne and Cruises Inc., says value, a hassle-free experience and new amenity-laden ships are his top reasons for the growth.

“Existing cruisers are always looking for the next big thing for new experiences,” says Wall. “New ships hitting the market spur demand among existing cruisers, which is fantastic.”

When Richard Fain, chairman and CEO, Royal Caribbean Cruises Ltd., began working in the industry in late 1970s, Royal Caribbean International had opted to “stretch” several existing ships—adding a section into those vessels to make them larger. At the time, Fain was repeatedly asked by journalists and analysts if people will be comfortable with such a large ship. Fain notes that the ships were being “stretched” to carry 1,000 passengers. Today, that pales in comparison to Royal Caribbean’s new 225,282-ton Allure of the Seas—the world’s largest cruise ship—which carries 5,400 guests.

GLOBAL EXPANSION: Another question Fain was asked: “Will there be enough places to go for other itineraries?” That too is amusing—considering that next summer, Royal Caribbean will have 11 ships homeported in Europe alone and nearly two dozen sailing on multiple, diverse itineraries worldwide. Carnival Cruise Lines boasts 22 ships, Norwegian Cruise Line and MSC Cruises have 11 each, and the list goes on. 

For 2010, CLIA reports that the Caribbean/Bahamas represents the No. 1 destination for cruise itineraries, with 41.3 percent of total capacity deployed there. Europe is also huge, and many voyages continue to sail to Alaska and Mexico. New exotic home ports such as Dubai, have given rise to new itinerary options for repeat cruisers.

Clients are also more international; Dan Hanrahan, president and CEO, Celebrity Cruises told journalists onboard the new Celebrity Eclipse in Miami last month that 30 percent of Celebrity’s guests are now international.

Rooms inside cruise


CLOSE-TO-HOME PORTS: While the industry has certainly expanded internationally, it’s also burgeoned domestically. Today, clients can board ships across the nation in more than a dozen U.S. home ports. One of seven cruise passengers worldwide now sails from the Port of Miami.

The Carnival Fantasy introduced year-round cruising from Charleston, SC, this year, and both Carnival and Royal Caribbean are now sailing year-round from Baltimore. Lynn Torrent, Carnival’s senior vice president of sales and guest services, reports her line is “doing fantastically” in Charleston, and that Baltimore cruises are also doing well. Governments in Savannah, GA, and Brownsville, TX, are currently evaluating the potential for future cruise visitation.

Along the West Coast, home port cruising to the Mexican Riviera has taken a dip this year, primarily due to California’s difficult economy as well as safety concerns about certain parts of Mexico. But several new Pacific coastline voyages have been added, Seattle remains a stable performer, and experts say the region will in all probability bounce back.

PROGRESSING TO WOW: Some experts cite revolutionary changes in the onboard product as a huge factor for industry growth. “Cruise lines realized a few years ago that they were one-dimensional—very regimented,” says Michelle Fee, CEO, Cruise Planners, noting that lines mostly offered the same onboard product—early or late dining, Las Vegas-style shows and late-night comedy.

Today, the options are endless, with each line taking a slightly different direction and creating its own personality. “It’s allowed the agents to better sell each line and match the perfect client to the perfect ship,” emphasizes Fee.

The overall quality of the onboard product has also improved. “Years ago, a gym on a ship was basically one stationary bike and a jump rope,” says Edie Bornstein, vice president of sales and marketing, Azamara Club Cruises. She also notes that some staterooms on the older ships had bunk beds and didn’t have a private bathroom; guests had to go down the hall. Today’s ships have more than just private bathrooms. They also have private balconies.

NCL’s biggest contribution to industry evolution was the creation of its relaxed Freestyle Cruising concept, which debuted in 2000. Most notably, guests could forego the fixed seating approach for dining, and dine whenever, wherever and with whomever they wished. Most lines now have savory alternative venues. For example, Holland America Line offers the Pinnacle Grill with a Pacific Northwest culinary focus. Most lines have both fixed and open seating in the main restaurants. Many luxury and upper-premium lines have open seating all the time.

Who would’ve thought that a cruise ship could be a destination, says Fee. “I think Royal Caribbean rewrote the rules…with its Voyager-class ships and now the Oasis-class ships,” she says. She cites rock-climbing walls, ice skating rinks, parades, and even new interior balcony cabins with an open-air aura instead of an ocean view on Oasis-class ships. All these get the public talking about cruising, she says.

Oasis of the Seas and New Allur of the seas


As for today’s consumer vs. the client of 30 years ago, “they expect more, are more demanding and believe they know it all,” says Vicki Freed, senior vice president of sales, Royal Caribbean International. She says cruise lines must keep evolving to meet the lifestyle that consumers expect.

One offshoot? “We like to align ourselves with very strong brands because we know today’s consumer is very brand-oriented,” Freed says. Thus, her line has developed such partnerships as those with Ben & Jerry’s, Coach, Starbucks and DreamWorks, to name a few. Similarly, Oceania Cruises will have a Canyon Ranch SpaClub on its new Marina, Celebrity Cruises has partnered with Apple on its iLounge concept on Celebrity Eclipse, and Princess Cruises’ Sterling Steakhouse serves premium, hand-cut aged beef from the Sterling Silver brand. The list goes on.

Another upgrade is in the area of customization. Guests may attend private wine tastings. Concierges and butlers will personalize guest services and activities. Consumers are seeking out exclusive shore excursions. And overall brand quality is elevated on all levels. What constituted a high-quality premium cruise product 10 years ago is now considered a contemporary standard. Similarly, what may have been considered a luxury product 10 or 15 years ago is now premium.

New niches, such as upper premium or upmarket have evolved—notably with Oceania Cruises and Azamara Club Cruises, as well as in high-end suites on many ships in all categories. And luxury lines have evolved into ultra-luxury. Choice is everywhere. And value for consumers, says Wall, is the No. 1 factor contributing to industry growth. 

ACTIVITES ASHORE: Cruising has become as much about having fun on land as it is about enjoying life at sea. Lines are actively seeking out hot new ports, developing new cultural and activity options within those ports and designing itineraries to stay overnight so guests can take more tours and enjoy dining and nightlife ashore.

And the power of the destination has also led to an explosion of growth for river cruising. “One of my favorite types of cruising has become river cruising because you cruise through charming small towns and dock right in the heart of the city, so within minutes you can be walking around town,” says Chris Parker, vice president, All Aboard Travel and SinglesCruise.com.

The river lines have added many new vessels, new pre- or post-stays in cities like Istanbul, and new itineraries, in Europe and elsewhere. For example, Pandaw River Cruises specializes in Southeast Asia, including Mekong River voyages, and AMA Waterways and Viking River Cruises are among others operating on the Mekong.

MANUAL TO AUTOMATION: Perhaps nowhere, though, has change so permeated the cruise industry as in how cruises are sold. “In the last 25 years, when I look back at the cruise industry, it was a manual industry,” says Lee Robinson, vice president of field sales, Princess Cruises. “When the travel professional would call up to make a booking, we had big ‘berthing books’ for each ship that we used to go through and write in people’s names,” he says. If changes needed to be made, the line used white tape or a white liquid. And, “I’ll never forget when everybody said, ‘Whoopee! You can now book a cruise on a GDS system.’”

At the Cruise Planners conference in Fort Lauderdale Beach last month, more than three quarters of the 400 agency franchise owners participating raised their hands when asked if they had a website. Many agencies and cruise lines also have blogs and Facebook pages.

“Let’s face it, 90 percent of what we do today is done through a computer system,” Robinson says. “We’ve seen everything move and shift from the manual side to the heavy automated side. I have to say that we are so much better off today.”

DRAWING NEWBIES: After 9/11, a new pool of clients sailed on cruise ships. People were afraid to fly overseas and wanted to vacation closer to home, which led cruise lines to bring more ships to U.S. home ports and slash pricing to keep them occupied. So “people who wouldn’t have gone before went on cruises,” says Zarmati. The industry’s response to that tragedy created a new awareness and many first-timers.

Still, that was an unusual situation. CLIA acknowledged in one 2010 marketplace report that “the ongoing challenge for our industry is to convert cruise prospects into new cruisers.” Despite steady growth, only 20 percent of Americans have ever cruised. How does the industry draw more guests?

Camille Olivere, NCL’s vice president of sales, who has been in the cruise industry for only about two years, says, “A lot of it [the reluctance of first-timers] is about intimidation and not understanding the experience.” Wall says innovative new cruise products are certainly helping generate demand among first-time cruisers. But still, much more is needed.

Nearly 36 million people travel to Las Vegas every year, yet only 14 million cruise on all the lines annually.  Shows like Blue Man Group are increasingly being used by agents to hook nontraditional cruisers. For example, these may be people for whom gaming and entertainment is paramount; they may not care about water sports, onboard enrichment or shore trips, but they love to travel for select parts of the cruise experience. 

Agents also help overcome consumer misperceptions. “Of the thousands of people I have convinced to cruise in 29 years, the No. 1 reason for not cruising—mostly according to men—was that they would be confined and bored,” says Steven Gelfuso, president and CEO, CruiseBrothers.com. He says that’s a myth that’s vanquished once the clients sail.

“Clearly, the cruise pricing of the last two years is exceptionally low, but even at traditional peaks, it seems to be lower in dollars adjusted for inflation than it was 25 years ago,” Schiffner notes. While some old-timers who like to sail miss the inclusive nature of some contemporary-level products, Schiffner says, pricier extras of today help get new people onboard to grow the industry.

Getting new people onboard is all about agents, says Steve Tracas, president and CEO, Vacation.com: “The No. 1 [ongoing] challenge will be the economy and the ability for the average person to continue to experience the vacation of their dreams. That’s where the professional travel consultant comes into play, to reinforce the affordable nature of a cruise and the value it represents.”

BLAZING A PATH: While trends and industry developments have propelled the industry forward, so have its people. Who really developed the cruise industry and shepherded its growth? While different people have different opinions, here are a few.  

Fain cited Edwin Stephan, who is credited with much of the vision that ultimately became the modern-day Royal Caribbean. With support from Norwegian investors, Stephan envisioned cruising from south Florida to the Caribbean. He also focused on creating a different type of cruise experience than that reflected in the golden era of early 20th-century cruising.

Back then, cruising was predominantly transportation. Fain said Stephan took the industry standard of large cabins, fine dining but rather small public spaces, and created larger public areas so ships could have more activities and attract more guests. Stephan also understood that ships sailing in the Caribbean didn’t need to be constructed as traditional liners with long bows, low superstructures and deep drafts. His ships were the predecessors of today’s mega-ships with a plethora of activity options.

Zarmati singled out three people who were instrumental in the industry’s growth—all of whom believed in the agency distribution system. First, he cited the late Ted Arison, who founded Carnival Cruise Lines, taking a big risk but believing cruising would explode with growth. Zarmati also named Micky Arison, current chairman and CEO of Carnival Corp.: “He created a global brand, went on TV with Kathie Lee Gifford and the industry’s first national TV advertising program in 1984 and took the company public in 1987.”

Third, he named Bob Dickinson, an innovative marketer who retired in 2007 as president of Carnival Cruise Lines: “Bob always spoke his mind, both to the consumer and to the distribution system. He inspired travel agents to sell cruises for three-and-a-half decades.”

Concurring is Gelfuso, who says Dickinson was the reason he changed his full-service agency to a cruise specialty model in the 1980s—Dickinson visibly promoted the profitability of selling cruises and the industry’s growth potential. “It all happened just as he said it would and I’m very glad I listened to him,” says Gelfuso. “It’s been a great business to be in.”


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