Differentiation, Diversity, Direct Engagement and Proactivity Propelling the Industry to New Records and Beyond

Meetings & Events

Differentiation, Diversity, Direct Engagement and Proactivity Propelling the Industry to New Records and Beyond

Excitement surged throughout the room

with cruise executives and stakeholders celebrating the industry welcoming 30 million guests and record performances for most of those gathered at the Seatrade Cruise Global State of the Industry Address. The numbers and industry’s global growth were the focus of Adam Goldstein, Vice Chairman of Royal Caribbean Cruises Ltd. and CLIA Global Chair, who fielded an interview with Zurab Pololikashvili, Secretary-General of UNWTO—an industry first and symbol of cruising’s role on the world stage—before a two-part roundtable.

Having sailed full steam ahead for so long as the fastest-growing sector in the leisure travel market and continually breaking records, a slowdown is expected by many, including roundtable moderator Lucy Hockings of BBC World News.

“It will happen sooner or later, but there’s nothing that I see—certainly by

the numbers that my three brands are posting—that would suggest any kind of slowdown is in the horizon,” encouraged Frank Del Rio, President and CEO of Norwegian Cruise Line Holdings.

“…THERE’S NOTHING THAT I SEE…THAT WOULD SUGGEST ANY KIND OF SLOWDOWN IS ON THE HORIZON.”

—FRANK DEL RIO, PRESIDENT & CEO, NORWEGIAN CRUISE LINE HOLDINGS

“We are a very small industry,” told Arnold Donald, CEO of Carnival Corporation & plc, informing that cities like Orlando and Las Vegas have more annual tourists, with 70 and 40 million, respectively.

After somewhat tempering the crowd, while also motivating about growth potential, Donald continued with an advantage this smallness and nimbleness allows: “We’re able to find enough people…”

And there are a lot of people already interested in cruising with it growing as a mainstream option and continuing to engage everyone from experience-seeking Millennials to multi-generational families – plus, there could be more coming, with Donald sharing that the retiree population, a perfect fit for cruising because they certainly have “some time and a little bit of money,” has expanded dramatically and will probably almost double in the next 10-15 years.

24 SECOND QUARTER 2019 | TRAVEL & CRUISE

Of course, cruising is also now a global option, and the current smallness and future potential are even more evident when considering international markets. In Europe, there were only 6.5 million cruise guests out of 600 million travelers, shared Pierfrancesco Vago, Executive Chairman of MSC Cruises.

More markets, such as the growth of Northern Africa and resurgences of destinations previously dealing with geopolitical issues like the Eastern Mediterranean, mean more opportunities, continued Vago – especially considering cruisers’ historically high conversion rate implying that simply getting someone on a cruise for the first time more often than not includes a second.

Those happy cruisers and cruising’s “incredible word of mouth” are one of its strongest attributes and marketing tools, according to Vago. “They go back home and actually rave about it, and they spread the word.”

Another advantage of the industry, per Royal Caribbean Cruises Ltd. Chairman and CEO Richard Fain, “We’re constantly looking forward because we’re looking for new things, so as people’s tastes change, we adjust.

“If we’re not proactive, if we’re not looking out for the things that would worry us, if we’re not focusing on continuing to react when people’s taste change, if we’re not looking to put safety and environment at the top of our agenda, if we’re not looking to build the market, then it will get away from us. And I think the reason we’re doing well is because we have been proactive with all those things, and we have been aggressive in staying ahead of the curve.”

Of course, “People want different things,” reminded Donald, which is why the industry is so diversified – and why the notion of simply bigger ships 10 years from now will likely not be the reality.

“There will be bigger ships, and there will be smaller ships,” he told. “Some people want ultra-luxury, some want expedition, some want very large ships that have everything self-contained.”

Del Rio agreed that this differentiation helps drive the industry – which is why new competitors are positive for all. “To have a vibrant industry, you need new entrants that keep us on our toes…

so I welcome the new competitors… introducing new wrinkles into the product. We’ll see if they work. We’re all very confident that we do what we do best, which is why we keep doing it…we’re all competing to try differentiate ourselves to consumers.”

“WE’RE CONSTANTLY LOOKING FORWARD… AS PEOPLE’S TASTES CHANGE, WE ADJUST.”

—RICHARD FAIN, CHAIRMAN & CEO, ROYAL CARIBBEAN CRUISES LTD.

“This is not one-size-fit-all,” said Fain. “And the fact is our industry has remained highly diverse, highly differentiated, and the new players help too because not only they bring in new products, but also just the fact they are entering gives a credibility to the industry – and it really does telegraph that this is something for everybody.”

“PEOPLE WANT DIFFERENT THINGS.”

—ARNOLD DONALD, CEO, CARNIVAL CORPORATION & PLC

However, in some ways, guests are similar. After investing in highly tailored products for international markets, such as in China, Donald told they learned, “The reality is they’re like any other traveler. They want to experience the different cultures, the different foods, the different [destination products].” Yet onboard offerings like karaoke rooms and mahjong to help Chinese guests feel at home away from home are a part of that personalized experience all guests want – personalization

to the point that Ocean Medallion provides a bartender with the information to know a guest’s favorite drink to make it feel like a local bar.

“Let’s also not forget that itineraries are one of the main drivers,” pointed out Vago, continuing that this applies to both where guests want to go and where ships can go. Larger ships mean current limitations, not just in terms of infrastructure, but also in proper guest flow, a “very important piece of the cruise experience,” which is why the industry and MSC place such significance on and investments in it.

Improving guest flow also combats the perception of overtourism, despite it mainly being a misconception as it applies to cruise tourism and its small—but “sexy”—share, for example about 5,400 of the 140,000 daily guests in Barcelona, informed Vago.

“But we can be part of solution… We’ve collaborated on staggering the timing the ships so we can distribute the flow of people,” told Donald.

As for the Caribbean, Donald shared that overtourism should not be a concern there because of the capacity it offers, with about 100 islands. “There’s certainly opportunity for further growth.”

“I’m building an island,” quipped Vago, alluding not only to the Ocean Cay MSC Marine Reserve, but also to the numerous lofty investments by cruise lines throughout the region that will further support capacity and create demand.

However, all know that no man—or industry—is an island, and it takes destinations and bilateral relationships with those destinations for the cruise industry to fire on all cylinders, which is why Fain told that economic impact is of the utmost importance.

“We’re really proud of the economic impact that we make,” he told, pointing to the 325,000 jobs generated from cruise tourism in the US alone. “I think our real opportunity is to expand that, and to do that, we need to do a better job communicating what we offer and what we provide to the local economies.”

One area the industry needs no help is in women’s empowerment, and that also literally took the spotlight in the following roundtable featuring Christine Duffy, President of Carnival Cruise Line; Lisa Lutoff-Perlo, President and CEO

SECOND QUARTER 2019 | TRAVEL & CRUISE 25