March 07–It was smooth sailing for the cruise industry in 2017.
The year marked another milestone for the developing industry, with expansive growth and a deepened foothold as a mainstream travel option.
That was the message Tuesday from executives in the top cruise companies in the world, who spoke during the keynote address at the industry's largest annual conference, Seatrade Cruise Global. About 11,000 people attend the four-day event, which runs through Thursday in Fort Lauderdale. (It returns to the Miami Beach Convention Center next year after a three-year hiatus.)
At the keynote, industry leaders highlighted the massive number of ships on order to be built in the next 10 years — with 27 new ships coming in 2018 alone. Over the next decade, the total investment equals $60 billion — a $10 billion increase in just a year from 2016's order figure of $50 billion.
The increase in ship orders reflects the growing number of travelers who are taking cruise vacations. That figure is expected to grow to 27 million people in 2018, from 25.8 million in 2017, according to the Cruise Lines International Association (CLIA). The industry generates more than $126 billion in economic output and supports more than a million jobs.
"We are mainstream and I think you are seeing that in the U.S., beginning to see that in Europe, see it in Australia, and in due course will see that in China and other parts of Asia," said Richard Fain, chairman of Royal Caribbean Cruises.
South Florida-based companies — including Carnival Corporation, Royal Caribbean Cruises and Norwegian Cruise Line Holdings — are finding recent investments in emerging destinations are paying off. Cuba itineraries, which opened in mid-2016, grew significantly in 2017, with most major lines adding sailings to the island nation. The emergence of Asia as a cruising destination also continues to develop as lines move some of their vessels — and build new vessels — for Asian travelers.
In the Caribbean last year, the cruise lines were impacted by the temporary closure of five ports severely damaged by Hurricanes Irma and Maria. Those ports are now receiving cruise ships again. Most islands have moved from recovery to development mode as they rebuild infrastructure that was lost due to the storms.
Norwegian Cruise Lines Holdings president and CEO Frank Del Rio said ships to Cuba are full at "very high prices." The introduction of its new vessel, Norwegian Joy, in China has been well-received. He has little to complain about, he said.
"If this was Christmas and you were Santa Claus, I'd ask for nothing," Del Rio told moderator Peter Greenberg, travel editor for CBS, during the keynote address.
As for industry efforts to add new and unexpected features, such as a race track, on board, he said, "no idea is absurd anymore. These ships are big. Anything can fit on them, and they are only going to get bigger."
But as the lines continue to grow, they must remain empathetic to concerns of over-tourism in regions around the world, including Venice, Barcelona and Dubrovnik, where overcrowding has reached near crisis proportions, said Arnold Donald, president and CEO of Carnival Corp.
Overcrowding is mostly driven by land-based tourists, he said. But the size and visibility of the ships makes them a symbol for "destination degradation," and cruise lines need to be sensitive to that, Donald said.
Fain of Royal Caribbean said cruise lines need to do a better job of spreading out their guests among different ports and excursions to avoid negatively impacting the destinations they visit.
"It's a question of where people go …[and] how do you bring people in a way that protects the environment but also educates them," Fain said.
And, as the lines continue to grow, they will also have to focus on managing the needs of diverse employees scattered across the globe. For most of the CEOs, that's one of the challenges that keeps them up at night.
"We have to look at the [Human Resources] side, we have a lot of people working for us," said Pierfrancesco Vago, executive chairman of Geneva-based MSC Cruises.
Donald of Carnival, Del Rio of Norwegian and Fain of Royal Caribbean highlighted the importance of maintaining service levels as the industry grows.
"The thing that makes our crews special are the men and woman that provide amazing service — how do we continue to maintain that? Attract those people?" Fain said.
Also top of mind Tuesday was innovation. The next few years will usher in a wave of new developments — from Carnival's medallion personal concierge technology to Norwegian's go-karts, the first at sea — to brand new lines disrupting the industry altogether.
Two of the newest players, Virgin Voyages and Ritz Carlton Yacht Collection, said they are out to attract passengers who are already loyal to their land-based brands, Virgin and Ritz Carlton.
At Ritz-Carlton, its 300-person yachts will focus on intimate experiences with more dining options than traditional small ships and stops at more remote posts.
Virgin's sailings will be adults only, 18 and up, with no Broadway shows but with diverse entertainment and dining experiences and a design aesthetic that is reminiscent of Virgin's products on land.
"They are going to come on our ship because of who we are and that Virgin experience," said Tom McAlpin, president and CEO of Virgin. "We are not trying to be a disruption for the travel industry, [but create] a new travel experience that will generate first-time cruisers."
Chabeli Herrera: 305-376-3730, @ChabeliH