Despite all the negative economic news, the message from the cruise industry is that it is weathering its adversities well, according to Dan Hanrahan, chairman of the Cruises Lines International Association and president and CEO of Celebrity and Azamara Cruises, who was the keynote speaker at the recent Miami cruise conference.
Gerald Cahill, president and CEO of Carnival Cruises Lines, said that the industry is more resilient than people think, but noted also that cruises represent discretionary spending and, thus, are likely to be affected in a weakening economy.
In the Industry's Favor
However, there are three factors playing in the industry's favor, according to Cahill. First, is the historical record that bas shown industry growth despite economic downturns and terrorism fears. Second, is the value proposition; people do not give up their vacations, Cahill said, but will look for greater value (which will benefit the cruise lines). Third is the globalization of the industry, providing new sources of passengers. Cahill said that in 2007, 30 percent of the passengers of the various Carnival Corporation brands were generated outside of North America and that 46 percent of the revenues were generated outside of the U.S.
His prediction: The industry will be much more resilient than the dooms-day sayers predict. Value Proposition Adam Goldstein, president and CEO of Royal Caribbean International, said the value proposition is attractive around the world. And, the value allows the cruise industry to take market share from land-based tourism, according to Rick Sasso, president and CEO of MSC Cruises North America.
The fundamentals are as strong as ever, added Colin Veitch, president and CEO of NCL. "The population is aging and has disposable income. We have the highest satisfaction rating and a small percentage of the market and, hence, potential to grow," he said.
Veitch said there is softening in some markets, but others are booming, including Europe. Stein Kruse, president and CEO of Holland America Line, added to the value proposition, comparing current brochure rates to those of the early 1980s and '90s, saying that they are the same. When inflation is taken into account, today's value is much stronger, he said.