Seatrade Report: We Meet With Top Execs and Destinations

Richard Fain, Royal Caribbean Cruises Ltd.; Frank Del Rio, Norwegian Cruise Line Holdings; Arnold Donald, Carnival Corporation; and Pierfrancesco Vago, MSC Cruises take part in a panel discussion moderated by Peter Greenberg, travel editor of CBS News.
From left: Frank Del Rio, Norwegian Cruise Line Holdings; Arnold Donald, Carnival Corporation; Richard Fain, Royal Caribbean Cruises Ltd. and Pierfrancesco Vago, MSC Cruises take part in a panel discussion moderated by Peter Greenberg, travel editor of CBS News.

Razzle-dazzle ships with exciting features don’t simply materialize because someone at a cruise line had a great idea. “Creativity is coming up with great ideas,” said Richard Fain, chairman and CEO, Royal Caribbean Cruises Ltd., but “innovation is bringing great ideas to life.”

That was one of the key messages that Seatrade Cruise Global attendees heard on Tuesday during the annual “State of the Global Cruise Industry” discussion, which also touched on the topics of Cuba, China, the Caribbean and industry challenges with world events. More than 11,000 people are attending the 32nd annual conference this week at the Greater Fort Lauderdale/Broward County Convention Center.

Joining Fain on stage were Frank Del Rio, president and CEO, Norwegian Cruise Line Holdings; Arnold Donald, president and CEO, Carnival Corporation; and Pierfrancesco Vago, executive chairman, MSC Cruises. The session was moderated by Peter Greenberg, travel editor of CBS News.

When Royal Caribbean International was planning Central Park on its Oasis-class ships, for example, Fain said the line envisioned a creative rolling hills-type experience, with guests able to lie down in the grass. But upon further review and testing, it just didn’t work as planned. The idea was good but needed tweaking. Fain said it was evident guests wanted to see and do more.

So despite having a signed contact to create that lawn-type experience, the line changed gears. So today, Central Park is a neighborhood that’s more park-like with lush, green foliage, but also with shops and restaurants.

Fain also stressed that innovation doesn’t always have to be on such a grand scale. It can be small things too. And it doesn’t mean guests must “do” everything that’s considered an innovation. Watching is fun too. “The “truth is most of our guests can’t climb to the top of the rock wall,” he acknowledged. “Most of our guests don’t do it but they want the option.”

“Thinking outside the box” is how Carnival Corp.’s Arnold described his view of innovation. “It’s how you convert thinking into the experience.” Vago concurred and used the new Cirque du Soleil experience coming next summer on MSC Meraviglia as one example of how his line is innovating to please the guest.

With limited capacity in today’s shipyards and high demand for new vessels, the reality is that there are only so many new ships that can be built at one time. So innovation helps drive demand, which, in turn, helps profitability. “Innovation is the only way to drive yield,” Donald emphasized.  

seatrade cruise global 2016

Del Rio told attendees that the cruise industry is growing at 6 percent annually, but that’s due mostly to new options available on existing ships, and not so much due to the new vessels that are launching. “You’re going to see a more balanced approach of new builds and maintaining the existing fleets,” Del Rio said.

Discussing innovation, he pointed to Norwegian Cruise Line’s $400 million Norwegian Edge program to sizably update and enhance guest experiences. Norwegian is updating its entire fleet, updating culinary offerings and also updating Great Stirrup Cay in the Bahamas and creating a new Belize private isle experience opening this fall.

Balance is what the lines are seeking, as they try to improve yields with existing tonnage that’s refreshed and updated, as well as bring some new ships into the marketplace. But “we need to grow yield more than anything else with existing ships,” Del Rio remarked.

Other topics of discussion? China remains top of mind for the major lines, with 135 million tourists traveling overseas annually, but cruising will only be a tiny part of that, according to Donald, given that there just isn’t enough capacity in shipyards to build more new ships beyond the ones already planned.

Cuba was a hot button for all the executives, with Del Rio noting “it will shine a bright light” in terms of potential Caribbean itineraries, with Fain saying it will create “a halo of interest for all of the Caribbean.”

Due to great demand for Cuba cruises, MSC Cruises – sailing this winter from Havana with MSC Opera -- will add a second ship, MSC Armonia, in November. Vago also said the line plans year-round sailings.

As for the big U.S. cruise operators, none yet have received the required permits from the Cuban government, but the executives seemed hopeful that will happen soon. “We are anxiously awaiting approval,” said Arnold. His company’s Fathom brand is slated to sail for Cuba in May.

Some delegates from Caribbean nations have wondered if Cuba cruising will take away passengers from their island nations. During the panel discussion, the executives reassured other destinations in the Caribbean that with Cuba’s limited infrastructure for cruising (ground operators and cruise pier facilities), Cuba most likely won’t draw passengers away from other Caribbean destinations.

In fact, Del Rio, who was born in Cuba and is a proud Cuban American, described the planned launch of Cuba cruising as “a slow rolling start,” and he noted that western Caribbean destinations could actually benefit from any Cuba cruises.

Ships won’t spend their entire itinerary in Cuba and as more ships entire the pipeline, there are more itinerary options. The Caribbean represents 42 or 43 percent of the total industry deployment, Del Rio stressed. 

“It’s going to be a great expansion,” Donald said, noting that the addition of Cuba could be a refresher for the region. Since many cruisers have been to Caribbean ports, a new port is a big draw for guests but those itineraries that might include Cuba also will include other ports as well.

One interesting tidbit provided by Vago was that Caribbean cruising is becoming even more important for Europeans for winter getaways, given the political instability in North Africa.

In discussing the latest industry challenges, which include such factors as the Zika virus, potential terrorist attacks, fuel hikes and other issues, the executives said the industry has a history of handling whatever comes along.  

Unexpected things happen every year, Donald said, adding that as long as it happens every year in the way it’s been happening, and if people don't totally panic, the industry will be fine. "It’s just part of our business," he said.

Keep visiting for the latest headlines and trends from this year's Seatrade Cruise Global.