According to CIN estimates, the supply of cruise berths marketed in the United States will grow by 11 percent to 80,183 with the introduction of new berths throughout 1988.
The capacity growth rate through 1992, based on confirmed orders, is projected at about 5 percent in 1989, 10 percent in 1990, and 6 percent in 1991.
Projections based on confirmed orders and announced intentions to build could double annual growth projections, but not before 1990 because of construction time.
The total number of berths by 1991/92, based on confirmed orders, will be 98,523. But a maximum growth scenario could raise the berth capacity to 124,435 in the same period.
The bulk of the growth will be in the standard mass market, which can be regarded as consisting of two basic categories: the "popular" type of cruises, priced at the lower end of the mid-price range, which appeals to a younger, less sophisticated traveler; and the "traditional" cruises, priced slightly higher and geared toward a slightly older, more affluent person.
Significant growth will also take place in the high-price category.
Supply and Demand
At year's end, it is estimated that there will be a 30-percent industrywide oversupply of berths based on a supply of 29 million passenger days and a demand of 20.5 million passenger days.
An industrywide oversupply of capacity is projected for the next five years ranging from 30 percent to 33 percent based on confirmed newbuildings, to 45 percent based on a maximum growth scenario.
However, it is expected that segments of the industry will be affected differently.
CIN projections estimate an annual growth in the berth rate for the "popular" cruise market of 10.5 percent in 1988; 13 percent in 1989; 20 percent in 1990; and 17 percent in 1991. This market segment consists of Admiral, Carnival, Costa, and NCL.
In the "traditional" segment, consisting of Holland America, Princess, Royal Caribbean and Sitmar, the growth rate is estimated at 22.5 percent in 1988; 8 percent in 1989; 12 percent in 1990; and 6.5 percent in 1991.
While growth projections appear stronger in the popular market category, it is in fact the traditional category that may see the most growth if announced intentions to build new ships by Holland America Line, Princess and Royal Caribbean materialize. Another unknown factor is Carnival's Tiffany project.
Rocking the Boat
While having little effect on growth projections over the next four to five years, the planned 5,000-pax. Phoenix by World City and the 3,000-pax. vessel by Ravi Tikkoo, tentatively named The Ultimate Dream, would obviously impact long-term growth projections.
Standard Market Range
The standard cruise market also covers a range of cruises priced above and below the popular and traditional cruises, while remaining in the general mid-level market.
These cruise lines include Bermuda Star Line, Chandris Fantasy Cruises, Cunard Line, Dolphin Cruise Line, Exploration Cruise Lines, Ocean Cruise Lines, regency Cruises and Sun Line Cruises in the seven-day market; Admiral, Carnival, Commodore Cruise Lines, NCL, and Premier Cruise Line in the three- and four-day market; and Chandris in the two- and five-day market.
Total capacity for these lines is about 9,700 berths in the seven-day market; 7,800 in the three- and four-day markets; and 2,200 in the two- and five-day markets.
Long-term capacity growth in the market segments that overlap and border on the standard mass cruise market is expected to be much less than in the major categories.
This year, Regency is adding another ship to its fleet, the Regent Sun, which is the former Royal Odyssey. Most growth may be seen in the three- and four-day markets where Premier plans to add two more ships and where Admiral will put its new 1,600-pax. ship in 1990.
Luxury Market Growth
While the traditional upscale luxury market is largely expected to remain constant, much is happening in segments of the market.
The traditional upscale luxury market, which consists of Royal Viking Line, Cunard/NAC and Royal Cruise Line, will see new ships introduced by both RVL and RCL in 1988, but RCL has already sold one its vessels to Regency Cruises, and RVL is transferring one of its ships to NCL. Thus, market capacity remains fairly constant.
It is in the upscale niches that product development and innovation has taken place.
At the very top end of the market is Cunard/Sea Goddess with its two yachtlike vessels with a total capacity of 232 passengers.
Windstar Sail Cruises attempted to move into part of the very upscale market with a more youthful approach than Sea Goddess, but when rates inched upwards, passenger bookings inched downwards, and the line is presently repositioning itself with upper mid-market rates in a broader market.
This fall, the 212-pax. Seabourn Pride of Seabourn Cruises (formerly Signet Cruises) will enter service charging per diems in excess of $600.
Under construction in Italy for Fearnley & Eger is a series of eight yachtlike luxury vessels, the first of which will enter service in the summer of 1989 and the other seven ships following at three month intervals. Per diems will be in the range of $300 to $400.
The Dutch Goliath Group has announced plans to build two yachtlike luxury ships that would also be marketed in North America. Plans call for the first vessel to enter service in 1990.
As in the standard mass market, there are also unknown factors in the upscale cruise market, the most significant of which may be Carnival Cruise Line's plans to operate a fleet of 900-pax., 40,000-ton ships in the upscale market, although observers note that because of their size, the ships will most likely be positioned in the market segment now dominated by Holland America, Royal Caribbean, Princess and Sitmar.
If this project, dubbed "Project Tiffany," does materialize, it would cause serious waves in the upper levels of the traditional cruise market.
In the Hawaiian market there will be a 40 percent increase in berth capacity with the arrival of Aloha Pacific's Monterey. No further expansion plans have been announced.
American coastal and inland waterway cruising is seeing an increase from 843 to 983 berths this year with the launching of Clipper Cruise Line's new Yorktown Clipper. No further construction is envisioned in the near future.
Growth projections also affect cruise lines that have developed their own niches.
It is expected that Fearnley & Eger's fleet and Club Med's new sailing cruise ship will generate some competition for the Windstar concept.
Sea Venture is being positioned in the destination-oriented segment where Ocean Cruise Lines, Sun Lines, and Exploration Cruise Lines have positioned their products.