So said Neils Bohr, The famous Danish physicist. Indeed, predicting anything nowadays is particularly difficult, given the fast pace of change and the number of variables at play. Notwithstanding that fact, I am going to make one anyway and it’s this — cruising is going to be the next big thing in travel!
Why do I say that? Because all the signs are there: the number of new ship builds scheduled over the next eight years and the tiny percentage of the overall market that cruising currently caters for, so the only way is up!
Here’s some interesting stats for you: Between now and 2025, cruise operators around the world have plans to build another 55 cruise ships to add to the existing global stock. That will add additional capacity of around 150,000 passengers to the approximate current tally of 486,385 that sail in 298 ships around the world every week. Looked on as an annual figure, that equates to 24.25 MILLION passengers a year worth about $39.6 BILLION dollars per annum of which the North American market accounts for just over half with 12.41 MILLION passengers with the remaining 11.84M almost equally divided between Europe (6.57M) and the rest of the world. The average cruise price per passenger is apparently $1,779 which realises a profit of $226 which, in turn, represents a margin of around 12.7%.
That figure of 12.7% profit is quite modest when you compare it against other industry sectors* such as:
Retail banking 23.39%
Tobacco Industry 27.39%
Alcohol Industry 19.13%
Transportation (Rail) 18.31%
So why all this massive investment (Harmony of the Seas is reputed to have cost $1.35Billion)? Even in the United States where cruising is most established and developed, market penetration is still less than 4% after more than 50 years of continuous growth, so clearly all this investment is a good bet because there is still huge potential — particularly with emerging markets such as Asia in general and China in particular coming on stream, whose burgeoning middle class have developed a strong appetite for all things ‘Western!’
The other reason is that all the innovation (and there is a lot of it) seems to be focused almost exclusively within the cruising sector! $1.3Billion still buys you quite a lot of ‘toys’ these days and there’s no doubt that much of the exciting things happening in global tourism are happening within the cruising sector. Innovations like 8K screen projections; robot bars; surfing platforms; roller-coasters; virtual balconies etc. — all are features of some of the latest ship builds from market leaders such as Royal Caribbean.
Meanwhile, on the smaller, more exclusive ships like Silver Muse (which I’ll have the pleasure of sailing on in just two weeks’ time out of Genoa), the emphasis is on luxury, exclusivity and cuisine that would give any land-based, Michelin-starred restaurant a run for its money. The fact of the matter is that the cruise industry is not one homogenous whole but a collection of mutually exclusive subsets, all catering to very different budgets, demographies and experiences (both on board and ashore). One size most certainly does not fit all and that’s probably the most compelling reason why you need to speak to a seasoned travel professional.
When you do, I predict a very successful outcome!