Clear Sailing Ahead, Say Cruise Industry Leaders at Seatrade

Seatrade Exec Panel

It’s clear sailing ahead, the cruise industry’s top leaders said at the “State of the Industry” discussion during Seatrade Cruise Global’s annual conference in Miami Beach on Wednesday. More than 11,000 people are attending the maritime-focused show.

Stating that a downturn could always occur sooner or later, Frank Del Rio, president and CEO, Norwegian Cruise Line Holdings (NCLH), told the maritime-focused attendees that “there is nothing on the horizon I see that would suggest any type of slowdown.”

Arnold Donald, president and CEO, Carnival Corporation, stressed that cruising interest is strong among both Millennials in search of adventure and Boomers, who increasingly have both the time and money to cruise. Moving forward, the number of retirees is expected to double in the next 10 years, he said.

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Cruising as a vacation choice is also a relatively untapped market, compared with other vacation choices, said Pierfrancesco Vago, executive chairman, MSC Cruises, who stressed that just 1 percent of the European population has cruised, showing the growth opportunities.

Overall, the cruise executives reiterated what they’d said in recent earnings reports. Their companies entered the year with a strong booked position, good yields and growing demand.

Capacity growth continues to chug along, but is limited to about 7 percent growth per year, based on shipyard constraints in building new ships, said Donald.

Both Del Rio and Richard Fain, chairman and CEO, Royal Caribbean Cruises Ltd., also talked about how new entrants to the cruise market give credibility to the industry and help attract new guests. Several new brands, including Virgin Voyages and Ritz-Carlton Yacht Collection, will launch within the next year.

More Takeaways

In the “State of the Industry” discussion, moderated by BBC World News’ Lucy Hockings, here are a few other tidbits

Overcrowding in Destinations: In Barcelona, 140,000 visitors arrive every day by air, said Vago, yet only 5,000 of those are cruise passengers. Yet, ships are highly visible, so the industry tends to get blamed when people think there is overcrowding in a destination.

“We are a sexy industry, for good and for bad reasons,” said Vago, who said the industry needs to better tell its story. “It’s very easy to point the finger at cruising.”

In Dubrovnik, Donald talked about how the industry is working together with the mayor and others to lessen the industry’s footprint by staggering ship arrivals. “We can be part of the solution,” he said.

Fain stressed that global destinations also appreciate the economic benefits that the industry brings, and “more ports want us to come than not,” emphasized Del Rio.

Ship Size: Will ships continue to get bigger? Donald believes that the industry will continue to have a mix of big and small ships, and Fain said “it’s not one size fits all.” One of the nice things about the industry, according to Fain, is that “it’s remained highly diverse, highly differentiated.”

Over time, ships will likely get bigger, believes Del Rio, who said there are small ships, medium ships and mega-ships, but over time, all ships get bigger. But, at the same time, he said, they operate more efficiently and also have a lower carbon footprint.

Sustainability & the Environment: The industry’s recent push to be more vocal about its policies and actions on sustainability and environmental protection continued to resonate in the Seatrade discussion

Vago explained that new, larger vessels have incredible new technology that can reduce the industry’s environmental impact. For example, the introduction of LNG, or liquid natural gas, vessels is a big step in cleaner energy usage.

Donald noted that the industry’s ongoing renovation programs for existing ships allows for new technology to be installed to reduce emissions.

Del Rio emphasized that moving 5,000 passengers via one ship is much better environmentally than moving 5,000 people via multiple 747 passenger airplanes.

Return to Turkey: “We are very excited about the emergence of the Eastern Med,” said Del Rio, referring to the lines now beginning to return to Turkey, after a gap of a few years for geopolitical and security concerns.

Guest Experience: Fain talked about the lines' continual search for new and different ways to provide more experiences and to enhance the guest experience: “The trend is to continue to improve,” he said.

Vago, whose company announced a major investment for two new terminals at PortMiami on Wednesday, talked about investment in terminal infrastructure as a way to ensure the proper flow and the proper comfort of guests during both embarkation and disembarkation.

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