Tourism & Cruises

Cruise industry leaders eye emerging markets for growth

From left, cruise ship executives Vincenzo Petrone and Arnold Donald look over a model of a Holland America Line cruise ship with David Dingle and Micky Arison at right during the Cruise Shipping Miami conference at the Miami Beach Convention Center on Tuesday, March 17, 2015.
From left, cruise ship executives Vincenzo Petrone and Arnold Donald look over a model of a Holland America Line cruise ship with David Dingle and Micky Arison at right during the Cruise Shipping Miami conference at the Miami Beach Convention Center on Tuesday, March 17, 2015. MIAMI HERALD STAFF

The leaders of the world’s largest cruise companies highlighted growth prospects nearby — and on the other side of the world — Tuesday morning at the annual “State of the Industry” address at Cruise Shipping Miami.

For more than an hour, top executives from Carnival Corp., Royal Caribbean Cruises, Norwegian Cruise Line Holdings and MSC Cruises discussed new opportunities and old frustrations while taking gentle swipes at each other.

An estimated 11,000 people are attending the cruise industry's largest annual conference, which runs through Thursday at the Miami Beach Convention Center and includes sessions on ports of call, energy efficiency, technology, public health issues, safety and more.

The biggest news of the morning surrounded not any particular cruise line but the event itself, which will take on a new but familiar name: Seatrade Cruise Global.

The conference was known as Seatrade until 2011. Because of scheduled renovations at the Miami Beach facility, the conference will move for the next three years to the Greater Fort Lauderdale/Broward County Convention Center.

Moderator Richard Quest, an international business correspondent with CNN, promised a morning of “grilling the men who are at the top of the industry” and asked those in the packed ballroom to pose their own questions via Twitter.

“We are about to get to grips with this industry and if you think this is your regular Cruise Shipping Miami CEO panel, you are wrong,” he said. “Nothing is off limits.”

Despite the warning, executives touched on many of the same subjects they and predecessors have addressed in previous years: their efforts to command higher prices, reach new passengers, establish new markets and drum up fresh interest.

Absent was any talk about disasters that plagued the industry in 2012 and 2013. In those years, talk of safety and reliability overshadowed other topics following the fire that crippled the Carnival Triumph in early 2013 and the Costa Concordia shipwreck that claimed 32 lives in January of 2012.

Richard Fain, chairman and CEO of Miami-based Royal Caribbean Cruises, said that as well as things are going, improvement in the business is still needed.

“I don’t think this is time to rest on our laurels,” he said. “We have not managed to raise our pricing in six years, and that’s not acceptable over a long period of time.”

Arnold Donald, president and CEO of Doral-based Carnival Corp., said a commercial the company ran during the Super Bowl this year was meant to inspire non-cruisers to consider the vacation as an option. The company had more than 10 billion impressions after the commercial ran, and five billion before.

“We footed the bill for the Super Bowl on behalf of the industry,” Donald said. “It cost us a lot.”

Quest asked if each of the companies were prepared to enter Cuba when the U.S. trade embargo is lifted.

Frank Del Rio, president and CEO of Miami-based Norwegian Cruise Line Holdings, snapped his fingers.

“Like that,” he said. “The wonderful thing about the cruise industry is we bring our own infrastructure. I would bet that all of us on this panel are ready to move at the drop of a hat.”

Already open and growing, China is proving fruitful, Donald and Fain said. The biggest challenge, according to Donald, is explaining the concept of a cruise vacation to potential passengers in China.

“They have no idea what it is,” he said. “We get to create it from scratch.”

Pierfrancesco Vago, executive chairman of European operator MSC Cruises, said he doesn’t have enough ships to enter that market, while Del Rio said his company is exploring the possibility.

“I’ve got a fantastic idea,” Vago said to Del Rio. “Let’s unite forces.”

“Once you guys do that, then we’ll buy you,” joked Donald, who heads the world’s largest cruise ship company.

During a later press event, the Cruise Lines International Association highlighted the growth of the industry in Asia with findings from recent research. The region has 6 percent of global capacity, tied for fourth place with Australia and New Zealand.

Passenger capacity grew from 1.51 million in 2013 to 2.17 million in 2015, said CLIA chairman Adam Goldstein, president and chief operating officer of Royal Caribbean Cruises.

“It’s just mind boggling that it came to be in the fourth position as fast as it has,” he said.

Last year, 697,000 passengers hailed from mainland China, a number that represents almost half of the total cruisers in Asia.

“When we look ahead, what we see is opportunity — lots of it,” Goldstein said.

At a panel later in the day, executives from four cruise lines discussed sailing trends in the Americas.

Thanks to improved economic conditions in the U.S., bookings for Alaska are strong, they said, and the CEOs for Holland America Line and Celebrity said they are adding capacity in the region for 2015. More cruises are returning to Mexico as safety improves.

Cuba again sparked energetic discussion, with Holland America Line chief Orlando Ashford saying, “the minute the embargo is lifted, we'll be ready to go.”

But Lutoff-Perlo said her company's approach might be more measured. “We’re looking at it,” she said, pointing out that because of the shallowness of Havana’s port, few ships might be able to dock there. “But I don't think all the questions have been answered yet.”

Miami Herald Business Editor Jane Wooldridge contributed to this report.

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