In the news:
U.S. cruise lines head to far-flung waters
Aiming at markets in China, Brazil, Australia and beyond.
The Miami Herald
Before the Carnival Spirit made its October debut in Australia, where it is now based year-round, a team of marketing pros was mulling what it would take to adapt America’s “fun ship” for the land Down Under.
Re-work the menus and wine lists, for one; brew better coffee, for another. Then add more activities for the whole family, swap out machines in the casino, and ditch the American comedy routines, which just don’t translate.
“We call it Aussification,” said Terry Thornton, senior vice president for itinerary development and revenue planning at Carnival Cruise Lines. Last fall, the Miami-based line introduced the 2,124-passenger ship — the largest to home port in Australia — with the intention of filling just about all those berths with locals.
Among the foreign ports and tourism groups seeking to expand visitor numbers is the Hong Kong Tourism Board, which is spreading the word about the new $1 billion Cruise Terminal at Kai Tak, designed by Lord Norman Foster, that opens in June.
Bill Flora, U.S. director for the board, said the destination is eager to spread the word about the new terminal, which will be able to accommodate two 5,400-passenger ships at once when it is fully open next year.
“Cruising is a growth market overall, and it especially has monstrous potential when you consider China as a source market for cruising in the future,” Flora said. “Because Hong Kong is the cruise hub of Asia and so close to mainland China, it will be a perfect opportunity for us to be able to enjoy some of that upcoming growth.”
China’s development and Carnival’s move into Australia illustrate how the world’s largest cruise lines are increasingly biting off bigger pieces of the planet. This year, the luxury Seabourn line is heading to Antarctica for the first time, with five days of landings planned on each of four 20-plus day trips. It’s an itinerary that is requiring Seabourn to add Zodiac inflatable boats for the landings, said President Rick Meadows, as well as expedition leaders and even photographers to coach passengers on getting the best shot.
“One of the things that we pay close attention to is our guests and where they tell us they want to go,” Meadows said. “We have heard ‘Antarctica’ for years.”
Asia is on most lines’ must-visit list, with Azamara Club Cruises making its first call on Myanmar, SeaDream Yacht Club venturing for the first time into Asian ports from Sri Lanka to Hong Kong, and Holland America Line recently announcing it will increase its capacity in Asia with two ships for the 2013-14 season.
Celebrity Cruises recently announced its “world tour” for 2014-15, which includes sailings to ports on all seven continents. And the luxury Silversea Cruises, which is based in Monaco but has U.S. headquarters in Fort Lauderdale, Fla., is launching Silver Galapagos in the Galapagos Islands in September.
According to the Cruise Lines International Association, deployment of the 26 North America member lines since 2008 has increased 155 percent in Australia, New Zealand and neighboring islands; 302 percent in Asia; 49 percent in the Mediterranean; 57 percent in other parts of Europe and 57 percent in South America. Meanwhile, capacity in the Caribbean has increased just 33 percent and in Alaska, it has dropped by 5 percent in the past five years.
And for U.S.-based operators that have long catered to North Americans, the experiences abroad are providing an education in globalization — and risk management.
“The world is a big place and stuff happens, so you never know when you’re in the right or the wrong area,” said Larry Pimentel, a longtime cruise industry executive who heads up the boutique Azamara Club Cruises line for Royal Caribbean Cruises Ltd. “You never know when more domestic itineraries are a blessing or it’s the year when everyone wants to go to the place where you’re not.”
Last year provided a double whammy of an example in Europe, where North American lines have been increasing deployment: First, the Costa Concordia struck rock and capsized in Italian waters in January, sending demand and cruise fares in the region plummeting. Then European economies started tanking, pulling down profits in the region.
The year before, unrest related to the Arab Spring in the Middle East and North Africa forced cruise operators to change hundreds of sailings at great cost — bad news for Africa, which gets few ocean cruise visitors outside of Egypt, Tunisia and occasional long voyages. Also in 2011, the earthquake and tsunami in Japan disrupted scheduled sailings to the region.
For Royal Caribbean International, which was about to start the year’s cruises to Japan, the disaster meant that sailings to the country that had been booked years earlier had to be abandoned and the company had to scramble to sell voyages from Singapore.
“By diversifying where the ships go and where we source, inevitably there’s a greater chance that something happening in the world will affect us somewhat — and lesser chance that it will affect us a lot,” said Adam Goldstein, president and CEO of Royal Caribbean International. “That is a reality that we understand, and so we try to be as prepared as we can be and still we have to expect the unexpected. If we have to adjust itineraries, one of the great attributes of our industry is that we can move the ships. It’s not necessarily painless.”
Goldstein said that the brand he oversees has been sailing in Europe and Asia for the past 20 years, but with a different goal in mind initially.
“The intent of those programs was to take Americans on increasingly far-flung cruises. And while we still do that and we still like to do that ... there’s been a profound evolution,” he said. “And now the majority of our customers on cruises outside of North America are from the local markets where the ships are based.”
Today’s strategy can be traced in part to the aftermath of the Sept. 11 terrorist attack in 2001, when Americans were spooked by air travel and cruise lines realized they were too heavily reliant on American passengers, said Teijo Niemela, editor and publisher of the Cruise Business Review.
“I would say that probably the most vulnerable was the Caribbean, the North America-based source market,” Niemela said. “They needed to put the eggs in more baskets.”