Full Steam Ahead: The Cruise Industry in 2011

According to the Cruise Lines International Association (CLIA), the industry is expecting 16 million passengers to travel in 2011, up by 6.6% from 2010. Of this figure, 73% are expected to journey from North America, while the remaining 27% will be sourced internationally. In order to meet demand, operators’ deployment strategies offer a mix of tried-and-tested destinations combined with fresh itineraries and new ports of call.

Holland America’s current deployment strategy has been developed to appeal to North American and European customers. While the operator’s fleet remains stable at 15 ships, the company will benefit from increased capacity in 2011 as Nieuw Amsterdam embarks on its first full year of service.

Ryndam will move from Alaska to Europe and there will also be some itinerary changes.

“The North American market has flattened in comparison to the growth of the last decade,” says Joe Slattery, vice-president, international sales, marketing and planning at Holland America. “Places like the UK and Germany are rapidly developing as source markets. We are paying attention to itineraries that appeal to European guests, from the North Cape down to North Africa.”

The company is also focusing its attention on other key markets, including South America, Australia and New Zealand. Alfredo Spadon, commercial manager, emerging markets at MSC Cruises, has identified source markets that will become valuable for the industry throughout 2011.

“No market can be identified as more important than another, but some have greater growth potential,” he explains. “Eastern Europe is becoming a key market for the cruise industry, with 652,000 passengers in 2009, and it will surely become a big source market in the near future.”

Spadon also thinks markets that have previously been classed as developing, such as Russia, Turkey, the Far East, North Africa and the Middle East, can now be considered mature. MSC Cruises has guidelines in place to help determine its deployment strategy.

“We evaluate the seasonal advantages and forecast the market conditions that will best suit a vessel’s success, before analysing the cost of any operation with regards to fuel consumption and currency fluctuations,” says Neil Palomba, MSC’s corporate operating officer. “The competitive landscape, with respect to the number of vessels trading in any specific area and the quality of the hardware that will be deployed there by any operator, is also carefully examined.”

New ports and itineraries

Customer demand for new destinations and experiences remains high.

“We constantly have to reinvent our product in terms of itinerary,” says Slattery. “There are no new continents to be discovered. If you look at, for example, the European market you would think that all ports and itineraries have been established, but it’s not true. Even in Europe we are finding new port combinations for a creative itinerary. On a global basis, there are still maiden ports that we haven’t been to before.”

At Fred.Olsen, which has a high proportion of repeat customers, every effort is made to ensure that the company can offer something new.

“We refresh our itinerary every year,” says Fred.Olsen tours manager Stephanie Farrow. “This year, we will be taking a ship to the Red Sea, which we haven’t done for a while.”

New ports have also been added to the cruise operator’s schedule. “We have the same number of Norway cruises, but we drop into new ports, for the benefit of our repeat passengers,” she adds.

The operator’s Scandinavian and Baltic cruises remain popular, with excursions planned to enable guests to spend as much time ashore as possible.

“We have an extensive tour programme in these regions, including tailor-made tours for guests or small groups,” says Farrow. “Alternatively, guests can do their own thing.”

Spadon agrees that new itineraries are crucial in encouraging both new and repeat custom.

“Every year, the industry shows an impressive growth of innovative itineraries, original destinations and more choice in cruise length in order to meet passenger expectations and at the same time, contribute to leveraging the demand,” he says. “We distinguish passengers coming from Eastern Europe, who demand new routes towards the Middle and Far East, and passengers coming from the Far East, who logically seek different destinations such as New England and Canada.”

Brand development

Moving into a new market can pose a challenge for operators.

“Our objective is to enhance our brand awareness while penetrating a new market,” says Spadon. “It is essential to educate people about the advantages of cruise ships as a holiday option. One of the main challenges is then to maintain brand loyalty and gain greater recognition within the marketplace.”

MSC hopes to continue its expansion over the coming years and will launch a new vessel, MSC Divina, in May 2012.

“In the meantime, our key phrase for 2011 will be ‘market penetration’,” says Palomba. “We are present in 43 countries and will do our best to consolidate the strong relationship we have with local travel agents in order to have the name of MSC known everywhere as synonymous with quality, elegance and hospitality.”

For Holland America, infrastructure is an important consideration when planning future deployment.

“We have certain infrastructure requirements, both nautical and shoreside, and the product needs to be up to standard,” says Slattery. “We also build relations with the local government and business community. While most ports are very receptive to our ships calling, others can be more of a challenge. The air service from big source markets is also crucial.”

In the future, Holland America will continue to build on its success, believes Slattery. “We will continue to search the world to find new products, destinations and itinerary combinations,” he says. “Our ships range in size, which is ideal for different deployments. Mid-size vessels like ours are becoming rare with major brands, but there are many ports that cannot handle large ships. We have a refreshing number of choices.”