The cruise industry has come a long way in 10 years and leaders see more growth on tap barring no major geo-political or cruise-related incident occurs to derail current momentum.
The cruise industry has come a long way in 10 years and leaders of major lines Tuesday predicted more growth in the foreseeable future provided no major geo-political or cruise-related incidents derail the momentum.
This year, 25.3 million people are expected to take a cruise globally, up from 15.8 million people in 2007, marking a 61 percent growth in cruise passengers over the decade, according to the Cruise Lines International Association, the leading industry trade group.
On Tuesday, during the opening session of the Seatrade Cruise Global in Fort Lauderdale, top executives from four major cruise lines expressed optimism as a result of strong cruise sales this year, increased consumer confidence and a healthy U.S. economy.
“Our customers are happy. The economy is doing well,” said Frank Del Rio, president and CEO of Miami-based Norwegian Cruise Line Holdings during a panel discussion on the State of the Global Cruise Industry.
“We’ve had the Trump effect….The stock market is at an all-time high… so all systems are go, and I think all of us are seeing that in bookings and pricing. It’s going to be a good year,” he said, referring to the upsides following the election of President Donald J. Trump.
The strong booking trends this year show more people are being turned on to cruising.
“For a long time we’ve really been expecting this… but all of a sudden I think the understanding of what a cruise offers seems to have taken hold,” said Richard Fain, chairman and CEO of Royal Caribbean Cruises Ltd. “We’re seeing it in the United States, a tremendous market because of the consumer confidence and the economy doing well, but actually we’re seeing it doing well over in Europe, and Asia is just exploding.”
“People love cruising. They see it as a great value,” said Arnold Donald, president and CEO of Carnival Corp. & PLC, parent company of 10 cruise lines including Carnival, Holland America and Princess. “We all do a reasonably good job now of promoting [cruising] and getting enough people to consider it. We just have to have more people know about it.”
As for possible future growth obstacles, some leaders said the regulatory environment could have an impact on operations as well as the Trump Administration’s yet-to-be-announced U.S.-Cuba policies.
For the cruise lines that now offer cruises to Cuba, a less friendly and less open diplomatic stance toward Cuba might reverse the progress made in travel between the two countries under the Obama Administration.
But as for changes in Cuba cruising, Donald said it’s too early to tell what the impact could be on the cruise industry and the companies will “just have to wait and see what the specifics are.”
While Cuba today represents an “insignificant part” of major cruise lines’ business, it has the potential to “grow and become significant,” Fain noted.
Del Rio said he hoped that if Trump does make any changes to current US-Cuba policies, he would “revisit it in a positive way.”
“I’m all for lifting the embargo. It’s been a failed policy for 57 years,” said Del Rio. “Cuba is a major market that I think could develop over time … It has infrastructure limitations today but certainly Cuba could be a major force in the cruise business for the years to come. I hope the administration sees that potential.”
Panelists also touched on growth in China, which continues to be a major industry talking point as Asia has the potential in 10 years to surpass North America as the top cruise source market, according to CLIA.
Now China is entering the cruise-ship building market, which could change the dynamics of an industry that has been dominated by European shipyards.
“Asia [shipbuilding] will actually open up a new ball game,” said Pierfrancesco Vago, executive chairman, MSC Cruises.
Panel moderator Susan Li, a reporter for CNBC, asked the industry leaders what kept them up at night.
While some expressed concern over things they can’t control such as potential geopolitical events, one said it was “excitement” over future industry innovation, and another, the 24-7 business cycle.
“There’s just a lot happening, it’s very exciting,” Vago said, noting there are many advance orders for new cruise ships in the pipeline, a sign of confidence in the industry’s growth.
Some 74 new cruise ships will be built over the next 10 years, representing an investment of nearly $52 billion, Vago noted.
Seatrade Cruise Global, the cruise industry’s largest global business-to-business conference and trade show runs through Thursday at the Greater Fort Lauderdale/Broward County Convention Center.
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