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Seatrade 2008
The State of the Cruise Industry

by Linda Coffman

Miami Beach, March 2008 In many ways, my colleagues and I agree that Seatrade marks the beginning of the cruise year. It brings together cruise industry leaders, suppliers, and naturally the press. If I were forced to describe this year's 24th annual Seatrade Cruise Shipping Convention in two words or less, they would be international and ambitious.

International because the cruise industry is not only sailing to far-flung regions of the world, it is also expanding its marketing efforts for global growth. Not only is Europe playing a strong role as a destination, it is a source of new passengers. The European market is growing in much the same way as the North American market did in the 1980s and 1990s. And the industry is ambitious because a new cruise ship will be delivered every 32 days on average from now to 2010 and, if placed end-to-end, the ships currently on order would stretch a whopping six miles. However, don't look for all those ships in North America. Even with more berths available in the Caribbean, the largest increase is in Europe.

Although the United States news media is full of economic gloom-and-doom stories, Cruise Lines International Association forecasts that 12.8 million passengers will sail on CLIA-members' expanding fleets in 2008. Travel agents surveyed by CLIA are optimistic that 2008 will be an even better year than 2007. Ships are sailing at over 100% occupancy and now, more than ever, a cruise is the most cost-effective way for Americans to visit Europe.

While industry executives still consider the Caribbean a strong region and North Americans to be their largest passenger base, there is concern over where the U.S. economy is headed. During the State of the Industry Debate, Dan Hanrahan, President & CEO of Celebrity Cruises and Azamara Cruises pointed out that the cruise industry is historically "recession resistant, not recession proof." With middle income consumers already feeling the crunch of higher gas prices and lower home values, ships can move to parts of the globe where economies are stronger.

Jerry Cahill, President & CEO of Carnival Cruise Lines stated that while most North American consumers are feeling the effects of a poor economy, they won't give up their vacation plans; they will simply scale back on expenses. While a cruise is a discretionary expense, it is also a good value. Cahill feels the cruise industry is "well positioned in uncertain economic times" because of its greater resiliency to bounce back faster than other travel segments.

After forty years of growth despite obstacles, Rick Sasso, President & CEO of MSC Cruises (USA), says that North America is the most penetrated region of the world, yet is still under-penetrated in comparison to land-based resorts and holds enormous potential. According to Sasso, "The sea is the limit and unless the oceans of the world dry up, you'll see growth in the cruise industry."

Colin Veitch, President & CEO of Norwegian Cruise Line pointed out that the American population is aging, most are employed, have disposable income, and want to go on vacations. He stated that the "cruise industry's vote of confidence in Europe is not a lack of confidence in the Caribbean." Of course, that's good news for us in the United States and Canada.

What can avid cruisers expect to see in the future? Adam Goldstein, CEO of Royal Caribbean International coined a new term: "disegalitarianism"--meaning that wherein all passengers were equal in the past, there's a change afloat. Passengers who pay more are now expecting more; they expect special treatment and a more exclusive experience. With the increasing diversity of passengers' tastes, cruise lines are responding with intriguing features to pique their interest. Cahill describes that trend as not different "classes" aboard, but different areas, or components, to appeal to different kinds of people. Veitch pointed out that NCL's "ship within a ship" concept is working well; there's clearly a market for passengers who want large ship amenities, yet with an exclusivity that they are willing to pay for.

On the Seatrade convention floor there was a noticeable difference from just eight years ago. In size, the convention space has mirrored the growth of ships. It's huge. However, in 2000, exhibits positioned in prime spots near the main entrance were focused on US embarkation ports and Caribbean ports of call; for 2008, international ports were more prominent. Just to the right of the main entrance were exhibitors representing Dubai and the UK; to the left were Sweden, a variety of European ports, and areas devoted to China, Korea, Japan, and Taiwan.

For the future, look for growth in all sectors of the cruise industry and all regions of the world. And look to the Far East as the next Big Thing in cruise travel.

Photo Courtesy of Seatrade

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