Innovation — in destinations, ships and vacation styles — took center stage at the cruise industry’s largest annual conference Tuesday in Fort Lauderdale.
“People still have such a wrong impression of what cruising is about,” said Richard Fain, chairman and CEO of Royal Caribbean Cruises. New features and formats, the executive agreed, help travelers think of cruises differently. Said Arnold Donald, president and CEO of Carnival Corporation: “Innovation drives [business.]”
Tuesday’s keynote presentations kicked off the four-day Seatrade Cruise Global conference, bringing together top executives from Carnival Corporation, Royal Caribbean Cruises, Norwegian Cruise Line Holdings and MSC Cruises to discuss the limitations and developments as lines penetrate new markets — particularly the two Cs: Cuba and China.
The executives spoke shortly after the White House announced further easing of travel and business regulations related to Cuba, adding fuel to the already-hot topic of cruising to the island. Though the Cuban government has yet to give the OK to cruise lines, executives said they were confident approval would come soon.
About 11,000 global participants are expected at Seatrade, being held at the Greater Fort Lauderdale/Broward County Convention Center while the Miami Beach Convention Center is undergoing renovations.
During the conference’s “State of the Industry” presentation, moderated by broadcast travel journalist Peter Greenberg, executives said the Cuban market is another way to increase cruise vacations’ impression in the larger tourism industry.
“Cuba is a great opportunity for us in the cruise business and I think it’s a great opportunity for the Caribbean as well as it relates to cruising,” Fain said.
The rest of the Caribbean doesn’t have to worry, [Cuba] will shine a bright light over the area.
Frank Del Rio, president and CEO of Miami-based Norwegian Cruise Line Holdings
But the excitement didn’t cloud logistical concerns about the island’s ability to sustain the pent-up demand of travelers.
Fain said the port of Havana won’t be able to host its 4,000- and 5,000- passenger ships — and it doesn’t have to.
The opening of travel with the island nation will play the larger role of re-energizing the oversaturated Caribbean market.
“It’s creating a halo of interest,” Fain said. “People are interested in Cuba and the Caribbean. It will add 10 or 20 percent to the demand for cruising.”
Frank Del Rio, president and CEO of Miami-based Norwegian Cruise Line Holdings, said cruising to Cuba will be a “slow rolling start,” but once it takes off, he expects there will be a ship in Havana’s Sierra Maestra port every day of the week.
“The rest of the Caribbean doesn’t have to worry,” Del Rio said. “It will shine a bright light over the area.”
Among the panelists, only Geneva-based MSC now operates a ship in Cuba, 2,679-passenger MSC Opera., with another on the way next year. Pierfrancesco Vago, Executive Chairman of MSC, said the Cuba situation is complex, but conditions are improving as Cuban authorities become more educated.
“Last time I was in Havana, one of [MSC’s] ships was there and it pissed me off,” Fain joked.
Royal Caribbean has invested in ships in the Chinese market, homeporting one of its new ships, Quantum of the Seas, in Shanghai. Most major cruise lines have introduced ships in China, where cruise executives agree they’ve only brushed the surface.
2 million Number of travelers expected to pass through the Shanghai cruise port in 2016
“China had 135 million outbound tourists last year, the largest outbound tourist nation in the world,” Donald said. “We are tiny in the world as an industry — we are infinitesimal in China.”
Still, cruise lines’ China footprint is expanding. At a later panel, Dr. Wang Hong, director general of Shanghai International Cruise Business Institute, said the Shanghai port welcomed 800,000 travelers in 2015 and expects to see 2 million travelers in 2016.
In North America, cruise lines face challenges drawing new cruisers to the more mature U.S. market. While executives avoided directly referencing Royal Caribbean International’s Anthem of the Seas’ voyage into a storm last month, transparency in the social media age was a topic of conversation.
“The most important thing we have to understand is two things: Everybody knows just how rare this stuff is,” Fain said. “The second thing we have understand that no matter how unusual it is, it gets publicity if it’s on a cruise ship.”
Donald offered Carnival’s lessons from the line’s own disaster in 2013 when an engine room fire disabled the Carnival Triumph. Being honest with travelers, Donald said, is central in the heavily connected world.
“[Social media] can work against you in an instant,” Donald said. “On the other hand, if you handle the situation properly, people are tweeting about it.”
A second keynote panel brought together executives of three innovative cruising approaches. Tara Russell, president of Carnival Corp.-owned Fathom Cruises, has created voyages to the Dominican Republic and Cuba aimed at cultural travel and “voluntourism.” Charles A. Robertson, CEO of American Cruise Lines, has created river and oceangoing ships built in the U.S. Edie Rodriguez, president and CEO of Crystal Cruises, is adding luxury air service, river cruises and residences to its new cruise ships.
About 50 percent of the passengers on Crystal’s new 56-passenger mega yacht, Esprit, have never cruised before. Those first-time passengers are a prime target for lines seeking to draw new cruisers at a time when the demographics and preferences of potential cruisers continue to change.
About 24 million people are expected to take a cruise vacation in 2016, according to the Cruise Lines International Association, a slight uptick over last year.
“How many [travelers] are we undeserving?” Vago said. “Twenty-four million is nothing.”
43 percent of potential cruisers interested in booking cruises through unconventional means said they’d turn to Amazon.
According to travel and marketing firm MMGY Global, only one in 10 U.S. households took a cruise vacation in 2015. But, about about 48 percent of those surveyed were interested in cruising. Of those, 34 percent are baby boomers and 32 percent are millennials, a coveted passenger demographic.
The way travelers are booking their cruise vacation is also shifting. Travel agents remain a popular option, but for travelers interested in booking through unconventional means, 43 percent of those surveyed said they would turn to Amazon.
While Amazon booking is not an option yet, new cruisers can expect increasingly unconventional options on ships sailing now and in the coming year.