Details on the North American cruise industry’s overall economic impact in the United States in 2009 were released today by the Cruise Lines International Association.
"Despite a protracted global recession, the North American cruise industry continued to make an impact on the U.S. economy in 2009,” said Terry Dale, CLIA’s president and CEO. Last year was tough for everyone. We are encouraged that the current economic climate is showing signs of improvement and cruise lines have been reporting strong activity thus far in 2010.”
North American cruise lines, their employees and passengers generated $35.1 billion in gross output in the U.S. last year, including 313,998 jobs paying a total of $14.23 billion in wages and salaries, and direct cruise industry spending totaled $17.15 billion, according to “The Contribution of the North American Cruise Industry to the U.S. Economy in 2009,” an annual report prepared for CLIA by Business Research & Economic Advisors (BREA). BREA, based in Exton, Pa., has been compiling annual economic impact reports for CLIA since 1997.
The cruise industry’s U.S. economic contribution in 2009 was felt in every state to varying degrees. Of the 13.44 million CLIA member cruise line total cruisers in 2009, U.S. ports embarked 8.9 million passengers, accounting for 66 percent of the worldwide total. Florida port embarkations grew by nearly 3 percent for a total of 59 percent of the U.S. total, due to gains in Port Everglades, Tampa and Jacksonville.
Industry expenditures typically correlate with volume of cruise passengers, with the top fifteen U.S. cruise ports accounting for 92 percent of 2009 U.S. embarkations. Direct spending increases in Massachusetts, Maine, Louisiana, Maryland and Alabama reflected increased cruise activity while Nevada and Arizona benefited thanks to increased numbers of residents taking cruises and increased direct cruise line spending. Declines in Hawaii and Alaska were due to redeployment of cruise ships which resulted in reduced capacity.
“We are encouraged, not only by signs that a turnaround is in progress, but also by the industry’s history of out-performing other tourism sectors and even the national economy,” Dale said.
The 2009 economic environment for the travel industry was daunting. Most of the negative impact of the global recession, which experts have determined to have occurred between December 2007 and the fourth quarter 2008, were felt during 2009 due to continuing nationwide loss of jobs and consequent rising unemployment. Not surprisingly, real inflation-adjusted consumer expenditures fell by .6 percent in 2009, with discretionary spending on such items as transportation services falling by 3.7 percent. In short, last year represented an economic environment in which consumers were steadily reducing their spending particularly for discretionary services.
These circumstances had a consequent effect on the industry’s level of economic contribution to the U.S. but it is worthwhile putting 2009 in historical perspective. While last year’s contribution of $35.1 billion represents a 12.8 percent decrease for the year, over the last decade the cruise industry has outperformed the national economy and the travel and tourism (T&T) sector. Between 2000-2008, annual direct expenditures of the cruise industry had increased by 85 percent, approximately double the 48 percent increase in annual personal consumption expenditures and the 40 percent increase in annual direct output of the T&T sector. As of 2009, the cumulative growth in direct expenditures by cruise lines was still 50 percent higher than the cumulative growth in personal consumption expenditures and more than double the increase in direct T&T output. It is also noteworthy that, in 2009, the cruise industry out-performed several other segments of T&T, including traveler accommodations, air transportation and other transportation.
CLIA members responded to last year’s challenges presented by these economic realities by offering attractive cruise fares and other incentives. As a result, net capacity (available bed days) among CLIA members in 2009 rose 3.8 percent and average capacity utilization was 104.6 percent for the year. Even with these results, total gross revenue declined by 11.4 percent.
The “long view” is not the only cause for optimism looking ahead. The 13.44 million people who cruised in 2009 represented a 4.8 percent increase, a strong sign of continuing consumer interest and demand. The North American cruise industry continues to expand its presence throughout Europe, a continuing source of new passengers. Cruise capacity in Europe grew by 8 percent from 2008, and has grown by 75 percent from 2005. The number of U.S. resident cruise passengers, who represent 70 percent of all cruisers, grew in 2009 by 1.5 percent, largely reflecting the popularity of Europe.
At the same time, cruise lines continue to report positive statistics for 2010 and beyond, citing improved revenue yields for the first time since 2008, strong booking volumes for the second half of the year and the effectiveness of cost-control measures. With demonstrated consumer interest in new ships, some lines see increased capacity as an opportunity to drive revenue rather than as a challenge to fill staterooms.
“Given what we’ve been through, CLIA’s cruise lines can look ahead with a good measure of optimism,” said Howard Frank, vice chairman of the board and chief operating officer of Carnival Corporation & plc, and chairman of CLIA’s executive committee. “Demand is solid, advanced bookings are encouraging, there are significant growth opportunities around the world, and we’re seeing opportunities for better pricing strategies that, in the end, mean better results for the cruise lines and greater contributions to the economies where we operate.”