The Worldwide Cruise Market - September 2012
As a result, there is scarcely a natural, climatic or geopolitical event anywhere in the world that does not have an impact on a part of its operations. Similarly, quantum leaps in its operational costs – notably, but not exclusively, fuel – now threaten its business model. At the same time, its growth, although to a size still small in global industry terms, has brought it to the attention of regulators, legislators and tax-hungry politicians just about everywhere.
Consequently, from being an industry in the 1980s, 1990s and even the early part of the 2000s that was mostly focused on transforming the product with a succession of ‘wow’ factors in entertainment and dining on a series of ever-larger ships, its focus has been quite radically altered. It now spends much more of its time dealing with regulatory, taxation, environmental, and health and safety issues. One top executive likened running a major cruise company nowadays to administering a small country with entire departments filled with specialists in law, taxation, the environment, government affairs and even communicable diseases.
These are also part of a broader group within the company on 24-hour call to form a task force whenever there is a major crisis looming that could impact the company’s operations. Such crises are normally unpredictable but the industry does recognise that it faces at least three major challenges – one short-term and two long-term.
In the short term, it must overcome the wave of negative publicity – and subsequent loss of consumer confidence – surrounding the Costa Concordia accident and resulting passenger/crew fatalities. The accident has also reinvigorated critics of the industry globally and not just on safety issues but also on tax and, in particular, environmental issues. In the longer term, the industry faces the same problem as all (not just travel) leisure products in the many parts of the world where economies have struggled since the 2008 credit crunch: it has to compete for what is now a declining pool of disposable income available to consumers and needs to find new ways to attract sales without moving into an endless cycle of discounting. Perhaps the most pressing long-term issue, however, is the rising cost of fuel, which will only be accelerated by the series of environmental regulations being introduced locally, regionally, nationally and globally through to 2015, 2020 and most likely beyond.
This report assesses the industry’s options and likely strategies to maintain its current level of growth while improving profitability in the face of all these challenges. It focuses – inter alia – on:
This report covers:
- The recent and ongoing financial performances of the major companies and the likely trend in these moving forward in the light of the Costa Concordia impact and the financial troubles of the economies in major source markets
- Individual initiatives by brands to differentiate themselves in an increasingly competitive arena by building new classes of ship and retro-fitting their most popular features as part of the staged revitalisation of their existing fleets
- The prospects for expanding existing major source markets (North America, the UK and Continental Europe) and for developing emerging ones such as China, Brazil and South Africa
- The importance of economic impact studies in influencing political and public opinion and in attracting financing for the cruise port infrastructure development required to service the increasingly large and sophisticated ships being deployed
- The prospects for the small band of European specialist cruise shipbuilders (Fincantieri, Meyer Werft, STX Europe) as they see orderbooks reduced for the foreseeable future and the imminent threat from Asia shipbuilders such as Mitsubishi in Japan and new entrants from China and South Korea
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