Cruise Line Industry

Introduction

This report's objective is to give an overview of the cruise line industry? trends that are shaping it and opportunities for Canadian agri-food suppliers. Information has been gathered though 4 distinctive activities:

Interviews conducted with 21 cruise line purchasers? chandlers? distributors and brokers. (Interviews took place in March 2004 and were done in collaboration with Sophie Legendre? Consul and Margaret Cullen? Senior Trade Commissioner at the Canadian Consulate General in Miami.);

Trade Show Intelligence exercise performed at the Marine Hotel Association (MHA) Trade Show held in Vancouver in April 2004;

Observations made and participation of the author in the first Business Cruise Conference held on-board the Diamond Princess in September of 2004; and

Documentary searches on the cruise line industry performed in June 2004 and in January 2005.

The report is divided into four sections: Industry; Trends; Opportunities; and Next Steps. Four appendices provide supplementary information from the cruise line purchasers and suppliers' interviews? information from the MHA trade show intelligence exercise? a list of cruise line industry contacts and resources? and a bibliography.

Industry

Facts and Figures: Cruise Industry in the World

According to a report from Datamonitor? the global sector of hotels? resorts and cruise lines reached a value of $315 billion in 2003. The cruise line sector represents 5.2% of this market segment. Its worldwide value was estimated at $16.2 billion in 2003. The global sector is forecast to grow at a compound annual rate of 3.8% between 2003 and 2008. The cruise line segment alone is forecast to achieve the strongest growth. Conservative estimates put the annual growth of the cruise sector at approximately 8%; more optimistic figures are as high as 20%. Therefore? the following projections using Datamonitor's 3.8% annual growth rate indicator for the global sector? should be considered as conservative.

Table 1 - Forecasted Value Worldwide per Segment? Hotels? Resorts and Cruise Lines? in billion dollars? 2003-2008.

 

2003

2004

2005

2006

2007

2008

Cruise Lines

16.2

16.8

17.4

18.2

19.0

19.7

Hotels & Resorts

298.3

306.6

318.1

332.4

345.7

359.5

Global Sector

314.5

323.4

335.5

350.6

364.7

379.2

Source: Calculations made from data in Datamonitor. 2004. "Global - Hotels? Resorts and Cruise Lines." P.16

After years of decline or near nil growth following the September 11 terrorist attacks in New York? and the wars in Afghanistan and Iraq? most cruise lines reported improvements in the 2004 season. It is expected that the growth trend should accelerate by 2006 when the first large wave of baby-boomers reaches retirement age.

Two companies dominate the industry: Carnival Corporation and Royal Caribbean Cruises. Carnival is the largest in the industry with 47% of the market. It owns six cruise brands: Carnival Cruise Line; Holland America Line; Windstar Cruises; Seabourn Cruise Line; P&O Princess Cruise Lines; Costa Cruise Lines; and Cunard Cruise Lines. Royal Caribbean operates two brands: Royal Caribbean Cruises; and Celebrity Cruises. Together? they own 70% of the market. Both companies are involved in cruises and on-board casinos but Carnival also reports revenue from tour operators and resort hotels. Royal Caribbean identifies land excursions as a revenue source.

Facts and Figures: Cruise Industry in North America

The number of passengers that have participated in a cruise in North America has gone from 8 million ...