Industry Evolution

Art Rodney (middle)It is hard to believe 29 years have passed since I joined Stan McDonald during the early days of Princess Cruises. The cruise industry was in its infancy, with only 500,000 passengers. The era of the Great Ocean Liners transporting wealthy elderly passengers in ultimate luxury was over due to the arrival of the jet airplane. The traditional shipowners were now investing in smaller ships designed for leisure cruise vacations.

The modern-day cruise industry was emerging with Kloster positioned in Miami with Norwegian Cruise Line. Royal Caribbean Cruise Line was operating the 700-passenger Song of Norway and on the West Coast Princess Cruises was the sole operator with the 400-bed Princess Italia. The image of cruising was still for the select few, perhaps the rich or elderly. This had to change - and it did. During the 70s the industry started to grow with the introduction of Sitmar Cruises in L.A., Royal Viking Line in S.F., and Carnival Cruise Lines in Miami, along with several other small lines.

The cruise industry prospered during this decade, but it wasn't until the "Love Boat" TV series in the mid-70s that growth really started to take off and forgive the pun, "cruise." For the first time, mass audiences were able to see the benefits of cruising - romance, relaxation, fun and new experiences - all available for a price that was affordable.

By 1980 demand for cruising exceeded supply and most lines were prospering. This was due to numerous factors in addition to the continued success of the "Love Boat." The industry was delivering a great product, which enjoyed high passenger ratings. All-inclusive air programs had been incorporated, making it easier and more convenient for passengers to enjoy their vacation. The travel trade and cruise lines developed a strong sales and marketing bond, which still exists today. As a result of these successes, the 1980s saw the first new vessels to be built in almost a decade. Carnival led the way with the introduction of the 1,000-bed Tropicale and then Princess Cruises' 1,200-passenger Royal Princess, with its all-outside cabins, verandas and unique ship design, set the standard for future vessels.

During the 80s we saw the emergence of several niche products. Small luxury ships such as Sea Goddess and Seabourn started to appear, along with the emergence of Crystal in the large luxury ship sector, offering new innovations. These products appealed to the more affluent passenger. Sailing ships were appealing to the more active passenger who wanted to enjoy swimming and watersports in areas larger ships could not visit due to size. Small exploration ships became popular for the well-traveled passenger who wanted more exotic ports and destinations.

By the 90s building costs had escalated dramatically, forcing cruise lines to build larger ships for more efficiency. Small players unable to grow internally started to be absorbed, resulting in the domination of three cruise companies: Carnival Corp., Princess Cruises and Royal Caribbean International. As lines consolidated into larger, more dominant players, onboard experiences expanded. Ship activities, lounges, traditional cruise entertainment and gyms evolved as did impressive production shows, expansive passenger programming and elaborate spas. Multiple restaurants, unique cabin designs, huge casinos and a variety of activities including ice-skating, rock climbing, sports and wine bars, and Internet cafes emerged.

As cruise lines expanded their customer reach to include families, prices have remained relatively static, with little change over the past years. As a result, cruising is now more affordable and appealing to a greater base of people than any other vacation destination - and its popularity is growing year over year. Much of this is due to the advertising and marketing efforts of the lines, travel agent support, and cruise lines’ product strengths, and some great promotional efforts by the Cruise Lines International Association.

The majority of the North American cruise market is just starting to understand and embrace the cruise vacation. The potential is massive when you consider only 11 percent of the population has taken a cruise. What does this mean for the travel agent, the consumer and the cruise lines? What will be the impact on the current distribution system in the upcoming years? How will the successful cruise lines differentiate themselves and evolve to meet the needs of the demanding public?

I think we will see some significant trends that will impact cruising as we know it. Trends that will be the harbinger for the look, feel and shape of the cruise experience of the future. Trends that will be used by the savvy cruise line to shape their product today to capture new travelers tomorrow.

For example, with the radical expansion of the mass-market cruise lines in the contemporary and premium segments, we will continue to see low per diems and affordable price promotions that will combine to expand the market. However, this mass market building boom will have significant impact on the luxury and upscale cruise, as cruisers, satisfied with their first-time experience, look for opportunities to trade up for longer or unique cruises.

In the new millennium, we will continue to see new innovations in product delivery as well as ship design. Multiple and unique dining facilities, "cutting edge" approaches to programming, new stateroom designs and reengineered entertainment treatments which will, I believe, emerge with progressive cruise marketers.

This leads me, and hopefully you, to one inescapable conclusion - the cruise vacation, as strong and wonderful as it currently exists, will continue to evolve and strengthen, and as a result, develop new opportunities in the future for consumers and distribution systems. 

(Art Rodney is the author of this article and was most recently president of Disney Cruise Line and before that president of Crystal Cruises and Princess Cruises. He helped create and launch both Disney Cruise Line and Crystal.)

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This article ran as part of a special Millennium section of the of Cruise Industry News Quarterly Magazine, Winter 1999-2000

Related articles:

Art Rodney: Industry Evolution

John Maxtone-Graham: A 100 Passenger Years

Knut Kloster: Industry Creator

Ted Arison: The Century's Shipping Giant

Arne Wilhelmsen: The Bigger, The Better

Nicola Costa: Developing Europe

Ed Stephen: Market Was Always There

Kirk Lanterman: Crew is Key

Bruce Nierenberg: More Homeports

Warren Titus: Proactive Industry

Stanley McDonald: Full Ships from Day One

Barney Ebsworth: It's All About Marketing

Lord Sterling: Worldwide OutlookLord Sterling: Worldwide Outlook

Joe Watters: Passengers Want Stimulation

Rod McLeod: Diversified & International 

 

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