An Upbeat View

The cruise industry sees a glimmer of hope during the downturn

By: By Marilyn Green

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Click here for more information on how this positive outlook is boosting the cruise industry

Cruise Lines International Association (CLIA) presented an unexpectedly positive view of cruise trends for 2009 in its annual analysis of cruise industry research. Executives said the cruise industry is well positioned to take on the global economic challenges of 2009, sparked by new ships, ports and destinations, and innovative shipboard experiences.

According to experts, the cruise industry may do better than others. // (c) Princess Cruises
According to experts, the cruise industry may do better than others.

Industry veteran Richard Sasso, president and CEO of MSC Cruises and chairman of CLIA’s marketing committee, said, "Forecasting is difficult, but we’re going to do better than most industries, with pretty clear skies, very calm seas and smooth sailing."

He also referred to a quote from Michelle Peluso, Travelocity president and CEO, who said, "Cruises will be big in 2009, especially cruising from a port close to home."

Agents endorsed the upbeat view: A survey of more than 900 CLIA agents conducted in early January found that, despite the current economic environment, 92 percent expressed optimism for cruise sales in the next three years, and 52 percent expected cruise sales in 2009 to be "good" or "very good" compared to 2008, with another 28 percent anticipating a "fair" cruise sales season.

By a large margin, agents said the primary motivator for consumer decisions to book a cruise during the 2009 wave season is good to extraordinary value offered by the cruise lines. They said in terms of consumer interest and perceived value, cruises outscore all other vacations.

CLIA executives drew optimism from a number of encouraging signs, like Princess Cruises’ recent record-breaking booking day — up 17 percent — and MSC Cruises’ record booking days on Jan. 5-9 and Jan. 12-13. CLIA points out that, in addition, Expedia ended 2008 with an 18 percent increase in sales.

CLIA’s analysis of consumer trends shows shorter booking windows in 2009 and the international share growing in overall cruise passenger numbers. The meetings and incentive market is expected to increase; in fact, groups in general are expected to be a solid area of growth, especially affinity travel and multigenerational groups. Other growth areas are projected to be boomers and first-time cruisers. Theme cruises continue to gain popularity, with food and wine leading the way.

Sasso suggests new ships are the root of the industry’s success.

"Supply does create demand," he stated, "not the other way around."

A corollary to this is the expected strong growth of luxury cruising, as a group of new ships enter the market in the next few years.

"During the past two years, we’ve seen a real increase in luxury passengers," said Sasso. "MSC built luxury space on the Fantasia-class ships for this reason. We didn’t have enough product in the luxury sector in the past, but with the new orders coming in, I think you will see tremendous growth in the next few years."

Overall, 2009 will see 14 new CLIA-affiliated ships, and 21 are currently on order for the next three years, a $14 billion investment that will probably will rise as cruise lines announce more plans.

As new ships are introduced, there is a strong trend toward environmentally friendly vessels. Even on older ships, every effort is made by many lines to conserve resources and recycle. Among the initiatives and technology being utilized are: advanced wastewater purification, air emission reductions, LED lighting, solar power, high-efficiency appliances, energy-efficient windows, products made from recycled materials, "Eco-speed" and other environmentally friendly hull coatings, low sulphur fuels, solid and liquid waste processing, water pollution education programs, fuel conservation, food byproduct management and other initiatives.

CLIA says the coming year will see continued diversification and global expansion of cruise operations. While the Caribbean, Alaska and Europe remain the dominant markets, many CLIA member lines have announced plans to increase their presence in other parts of the world, including Asia, Canada/New England, the Indian Ocean and Africa, the Amazon and Brazil, the Middle East and the Arctic regions, including Newfoundland and Greenland. Within Europe, there will be new cruise opportunities in the UK, Scandinavia and Northern and Eastern Europe. There will be greater choice in world cruises and trans-Atlantic itineraries as well.

Since 1980, the average annual growth of the North American cruise industry stands at 7.4 percent. An estimated 13.2 million travelers cruised in 2008, up from 12.56 million in 2007 and CLIA’s admittedly conservative forecast for 2009 is 13.5 million passengers, a gain of 300,000 and 2.3 percent.

Sasso expressed strong belief in the industry’s ability to be profitable even in very difficult times, and cited the intelligence and creativity of industry leaders throughout the past decades.

"Tourism is the largest industry in the world, and we may be the most successful piece of that industry," he said.