The North American-based cruise industry carried 14 percent more passengers in 1990 compared to 1989, according to industry executives, who also said that the final numbers could fluctuate somewhat. While official numbers are not yet available, a spokesperson for the Cruise Line International Association (CLIA) said that as per October 31, 1990, cruise lines had reported a 12 percent increase in passengers over the previous year.

Port traffic reports largely support the growth rate although their numbers are somewhat distorted by one-day cruises and fiscal year reporting.

Some Distortion - Seven Percent Growth or Two?

With 3,286,000 passengers taking cruises of three-days duration or longer in 1989, a 14 percent increase in passengers in 1990 translates into approximately 3,750,000 passengers, an increase of 464,000 over 1989. This will give the industry an average loadfactor of 88.5 percent paying passengers in 1990.

However, there are some factors that distort the growth rate. According to one industry source, last year's increase of 14 percent also includes five percent of passengers who were of international origin. The source said that CLIA has not previously included international passengers in its reports.

The growth figure is also inflated by the dramatic increase in short cruises. While passenger bed-days increased by a total of seven percent in 1990 over 1989, including international passengers, from 22,187,984 to 25,099,782, with the record introduction of new berths, the estimated bed-utilization for the industry declined in 1990 compared to 1989, from 80.2 percent to 79.6 percent.

There was a net increase of approximately 9,000 new berths in 1990 providing a net increase in passenger capacity of approximately 300,000 passengers. The fact that more passengers cruised also demonstrates that existing ships were also able to improve load factors.

Mixed Signals

While the cruise lines again have demonstrated their tremendous growth potential, much of the growth in 1990 also came at sharply increased costs, in terms of marketing, sales incentives and discounting.

Marketing budgets were estimated to total $400 million in 1990 and are expected to be even more this year. Discounting, which has been averaging 27 to 28 percent across the board, seems to have gone even deeper in the last few months. Also, cruise rates have in many cases not been increased over the last several years. Moreover, much of the growth has come in the short cruise market with last year's introduction of the 2,050- passenger Fantasy and the 1,600-passenger Nordic Empress.

Historical Development

Based on its revised projections, CIN estimates that there were 100 ships in the market in 1987, representing 64,637 berths with a 3,407,934 passenger capacity offering 22,622,950 passenger (bed) days. (CIN includes all ships that were marketed actively in the U.S. market, whether the companies were CLIA members or not. CIN has also excluded those ships of CLIA members which were not marketed in the U.S. Thus, CIN numbers may differ from those of CLIA.)

For 1987, CLIA reported 2,875,000 passengers which with an average cruise length o 6.4 days generate 18,400,000 passenger (bed) days.

On a passenger count basis, the cruise lines averaged 84.4 percent occupancy. On a bed-day basis, however, the same cruise lines averaged 81.3 percent utilization.

In 1988, the actual number of ships in the market fell to 97 because of the withdrawal of Home Lines and the bankruptcies of Exploration Cruise Lines and American Cruise Lines, but the total number of berths increased because of the introduction of new and larger ships. The industry load factor increased to 88.5 percent and the bed-day utilization to 84.8 percent.

In 1989, the fleet grew to 104 ships with there deployment of ships that had previously been withdrawn and with the introduction of some new tonnage.

The combined cruise fleet had 81,288 berths providing a passenger capacity of 3,861,416 and 25,304,300 bed-days. The industry's load factor dropped to 85 percent and bed-utilization to 83.1 percent.

In 1990, the fleet continued to grow with the record introduction of new tonnage. At year's end 113 cruise ships were competing in the U.S. market, offering 81,288 berths with a passenger capacity of 4,160,392 or 28,540,800 bed-days.

Bed-days

Each passenger bed is offered an average of 350 days in the market, i.e., each bed represents 350 bed-days. As each bed-day represents revenue in the form of the ticket as well as onboard spending, the significant guage to the health of the cruise industry becomes the bed-day utilization factor rather than the passenger load factor. Interestingly enough, the passenger load factor can go up, while the bed­ utilization ratio can go down. This can happen when more ships in the short-cruise market bring more passengers into the industry, if ships sailing longer cruises sail with empty beds.