Cruise line executives, analysts and travel agents expect the economic woes of 1991 to continue into 1992. The recession is still lingering in the United States and at best, a recovery is not expected to get underway until spring or early summer. Even then it will take time before the consumer regains confidence.
In addition, more new capacity will be introduced which will not exactly help alleviate the overcapacity experienced in some markets this year.
At the start of 1992, there will be an estimated 109 ships in the North American cruise market with a combined passenger capacity of 4,262,489, about a five percent net increase over the previous year.
During 1992, a further 12 new ships will be introduced boosting the fleet to 121 ships with capacity of 4,766,539 passengers, an 11.8 percent increase over 1991.
During 1993, the growth rate will taper off to six new ships boosting the fleet to 127 ships with capacity of 5,084,889 passengers, a 6.7 percent increase over 1992. In 1994, only two new ships are scheduled to enter the market, bringing the North American cruise fleet to 129 ships with capacity of 5,218,339 passengers.
Allowing for the withdrawal of some older and smaller vessels and redeployment of some vessels to other markets, it is a fair assumption that by the start of 1995, the North American cruise market will consist of more than 125 ships with a combined capacity of more than five million passengers.
New safety legislation may force more ships out of the market, which would boost passenger demand further for the newer ships, and create a need for more newbuildings as the North American market continues to develop and new markets are expected to develop in Europe and the Far East.
In the meantime...
The North American cruise industry, which has grown dramatically since 1980, has also had to weather all sorts of unexpected events during the last few years, including acts and threats of terrorism, airline strikes, hurricanes, war, and recession. Thus, industry executives hope that nothing worse than the tapering off of the recession is in store for 1992.
1992 promises to be a strong year for cruises in Europe, Alaska, New England/Canada and New York/Bermuda. The Caribbean, meanwhile, is expected to be somewhat of a battle ground as record new capacity will be introduced there throughout the year. The three/four day market from Southern Florida to the Bahamas also appears to be intensely competitive.
It is expected that during the year, more ships will be "retired" from the Caribbean to operate year-round in Europe, the Far East, possibly even South America.
The Caribbean, however, is still the strongest cruising region and is expected to bounce back once the recession is gone and the market has been able to absorb the new berths. Interestingly enough, however, there is only one cruise line which has newbuildings scheduled to enter service in 1993 and 1994.
Caribbean Market Growth
The contemporary seven-day Caribbean market, which has already experienced some saturation, will see further addition of new capacity in the next few years. But the strongest capacity growth is expected in the premium Caribbean seven day market.
There has recently emerged a relatively new premium Caribbean market led and revitalized by Celebrity Cruises.
While market definitions of cruise ships vary, a premium Caribbean market would be made up of Celebrity, Crown Cruise Line, Holland America Line, several Princess Cruises vessels, and the new Costa Cruise Line fleet.
Thus, this market would include eight ships with a combined capacity of 300,142 passengers, but will grow to 11 ships and a combined passenger capacity of 461,142 through 1992, a whopping 53.6 percent increase within a 12-month period.
Further additions in 1993 will bring the fleet to 13 ships with a total capacity of 567,142 passengers, a 23 percent increase over the previous year.
Contemporary Caribbean Market
The large "contemporary market" fleet saw its passenger capacity boosted from 1,414,425 at the start of 1991 to 1,652,535 at the end of the year. This was a dramatic capacity increase of 17 percent.
In 1992, it is expected that three more ships will join this market, boosting the fleet to 33 ships, and passenger capacity to 1,870,325, a further 13 percent increase.
In 1993, four more ships are expected to join the market, boosting capacity to 2,035,025 passengers, an increase of 8.8 percent from the previous year.
In 1994, the market expansion will taper off to five percent, bringing the total fleet to 38 ships, and capacity to 2,137,225 passengers.
The "contemporary market" operators include the seven-day cruise lines mainly out of Miami, Port Everglades and San Juan.
The industry's recent growth rate has shown that the contemporary market can keep up even with the forecasted growth rate. What has happened, however, is a blurring of price distinction between what used to be considere "budget" cruises with the contemporary cruises.
If the recession continues much longer, it is also likely the premium class cruise ships in the Caribbean will be forced to discount more so that any price distinction between them and the contemporary market will also be increasingly blurred. This could force some of the older ships out of the market.
If that should be the case, the combined seven day Caribbean market would consist of 38 ships with a passenger capacity of 1,952,667 at the start of 1992. During the new year, the Caribbean fleet would have to absorb six new ships and 378,800 passengers, an increase of 19.4 percent over 1991. The total fleet would consist of 44 ships with passenger capacity of 2,331,467.
During 1993, the fleet would grow to 50 ships with a capacity of 2,602,107 passengers, an 11.6 percent increase over the previous year.
Consequently, whether seen as distinct markets or one large market, the seven-day Caribbean market will experience significant supply growth during 1992 - 1994.
Other Caribbean Markets
The small, exploration/adventure-type cruise ship market will only see the addition of one new ship, the Mayan Prince, in 1992. These vessels account for only about 5,000 passengers in 1992, increasing to some 7,000 in 1993.
The Caribbean sail cruise market consists of nine ships with a passenger capacity for 1992 of about 41,650. One new ship, the Star Clipper, may be added for the winter season of 92/93, bringing total capacity in this market to about 45,000.
The luxury Caribbean market, however, which is largely seasonal, will experience a considerable increase late in the year when the new Radisson Diamond launches service from San Juan. The 354-passenger Radisson Diamond will nearly double the luxury market in the Caribbean from five ships and about 20,000 passengers in 1992 to six ships and more than 35,000 passenger capacity in 1993.
Who will do well in the Caribbean in 1992? The large, strong operators are expected to do well although the market will continue to be squeezed through 1993 at least, by the effects of the recession and overcapacity.
The large operators have the resources to weather the seas and the economies of scale to generate earnings even at discounted rates. However, they may be forced to redeploy smaller or older, less economical vessels, to other markets.
Also, those who are not dependent on the Caribbean, but can supplement their revenues by, for instance, Alaska cruises, can be expected to do well.