The second question will ask what the market is for the Cruise Line industry. In order to answer that, the market will be analyzed by answering topics such as market size, types of consumers, seasonal buying, special niches, and geographic constraints including governmental regulation. The third question will cover who the key competitors in the industry are. Some topics that’ll be discussed will be if the competition is direct or indirect, is the competition rough or minimal, and what types of niches/advantages companies have.
By looking at these questions and answering them accordingly, the Cruise Line industry key success factors should stand out to you. The things that cost affect industry members ability to prosper will explain to us why one Cruise Line is more successful in leading the marketplace than others. This will lay out the foundation to answering a very important question; what is the future outlook of the Cruise Line industry? Cruise Industry By Aleck The Industry For those who don’t know much about the cruise line industry, it was said to begin around 1970 when about 500,000 people took part in overnight cruises.
Since then, the passenger cruise industry, according to Cruise Lines International Association, has increased dramatically to more than 13. Million people in 2008. Not only is business booming for the industry, but the economic benefit in the U. S. Was about $38 billion. It’s estimated that 75% of the industries revenue comes from passenger ticket sales, with the rest coming from gambling, retail concessions, and equipment rentals. The most popular destinations traveled from North America are the Caribbean and Bahamas, and the most popular departure points are in Florida.
Since the industry is growing rapidly, research is always being conducted to help the evolution of the cruise ship experience. Some newer offerings are Wi-If availability, oiling alleys, spas, golf, and much more, Just so companies are able to compete at top level. Two distinct cruise lines have developed over time, one being a super luxury cruise that tend to the very rich, and the other being a short budget cruise that tends to the middle to wealthier class. The luxury ships are normally smaller in size but can be big, where the mass market middle class ships are highly advertised and ignoramus.
Travel agencies take a big role in the Industries growth, for more than 90% of passengers book their vacation through travel agencies. More than half f travel agents sales come from the cruise industry, and repeat business is vital to their success. The History Ocean vessels in the early sass’s only traveled when the weather was good and the ship was full of cargo. Passengers were usually second option when it came to ship travel. Then in 1818, the James Monroe left New York and headed to Liverpool with passengers and mail.
Being the first of the Black Ball Line service (aka Packet Ships), they focused on the passengers’ comfort. The first regular passenger ship without delivering mail was the City of Glasgow in 1852, which was also the first to have a par deck in which passengers used as a recreation area for good and bad weather. From then on, the ship industry started evolving. German Suppliers were created in the early sass’s, which created competition to make a successful ship passenger services. Ships started becoming the biggest, the fastest, the most indestructible, the most luxurious, and so on.
This all worked but only for so long, for after WI their glamour started fading, being replaced by Jet planes. Then in the sass’s, the Marci Grass was founded but was becoming a failure. During the Energy crisis, the ship ailed slowly to save fuel. To fill the extra time it took to travel, disco, singers, comedians, singers, and much more was added to the trip. Passengers were also encouraged to dress more casual and festive. Known as a “Fun Ship”, a marketing strategy trademarked by Carnival Cruise Lines, they advertised the time on the ship was fun and entertaining while traveling to exotic locations.
This opened the way for many other cruise liners to Join the market, trying to find different ways to get passengers on their fun ship. In 2009, according to the U. S. Census Bureau statistics, 253 establishments are engaged in the cruise line industry, with 21 ,393 people employed earning $981 million in wages. The only limiting factor within the industry is ship capacity, because most ships sail at over 100% occupancy. Carnival Cruise Lines Inc. And Caribbean Cruise Lines Inc. Have taken over the industry with more than half of cruise passengers choosing to do business with them.
With that being said, the threat of new entrants and threat of substitutions in North America is low when going against the big companies. It’s difficult to enter into a business that has been established for o long, along with the top industry leaders being well known and trusted through advertisement and past customers. The top industry leaders like Carnival have nearly 100 ships and owns/operates 11 other cruise lines, dominating the industry by targeting different demographics while offering a variety of options.
Carnival, along with many other successful cruise liners in North America, register their ship outside the U. S in order to get a significant tax break. Foreign regulation, or “flags of convenience”, allows U. S. Ships to hire a foreign crew and escape safety regulations as well. Market Industry According to Satanist. Com, more than 11 million passengers of cruise ships in 2013 were from the United States. The I-J and Ireland was the next closest country with a little over 17 million passengers. That being said, a good majority of customers come from the U.
S. People prefer traveling seasonally, for cruise companies acquire the greatest revenue during the summer and repair their ships while demand is low. With a low market penetration, there are numerous opportunities for growth. Safety concerns can affect demands for cruising around politically unstable areas and here public health is poor. Travelers don’t want to be around Bola outbreaks and Drug-related violence, so cruise lines move their focus away from troubled areas to limit passenger downturns.
Economic downturns can also affect demands as it did during the recession in the late sass’s. A variety of government regulations and guidelines can also affect a cruise liner. They must meet “United Nation’s International Maritime Organization standards under the International Convention for Safety of Life at Sea”, which provides safety equipment and operations, and security. They also may be subject to international and US law, which could lead to a disruption of schedule. Competition Industry The competition in the cruise line industry varies for the most part.
With Royal Caribbean, Carnival, Disney, and Gentling Hong Kong accounting for 95% of the industry revenue, it’s not ideal for new companies to enter the market and make an impact against those bigger companies. It is possible to enter the market of smaller cruise ships and possibly make an impact, for they have a competitive advantage with lower equipment and labor costs and with more personalized service. Large operators benefit in many ways that smaller companies do not, like strong bargaining resources for marketing, expanding, and investing.
The can also target different demographics, from Disney Cruises for kids to Princess Cruises for adults with spa services. Smaller companies go after a market niche to succeed. Smaller ships normally cruise the Great Lakes and coastal waterways with the focus more towards shore excursions and less onboard features, although, smaller luxurious ships have both the onboard features and shore excursions to exotic destinations. Cruises in the Great Lakes are seasonal due to the water freezing in the winter, limiting demand for business and profit.
Larger boats and companies, like Carnival and Caribbean, don’t really have to worry about the threat of another company ruining their profitable stability. The smaller, less luxurious boats have a greater fear that the threat of a competing company can ruin their profits, because of their lack of brand recognition, although its not probable. They also might not be able to keep up with the maintenance costs of the vessels. One boat is said to last 20 years and cost $1 billion, ND their lack of revenue might not be able to fund maintenance.
Larger companies that have enough money to invest in technology and maintenance gives them a competitive advantage in improving sales, reservation efficiency, onboard efficiency, and improving the overall passenger experience. Also, larger cruise line companies compete with vacation alternatives like hotels, resorts, theme parks, etc. Smaller cruise companies compete by targeting a particular target market segment and offering various port destinations. Key Success Factors A key factor to succeed in this industry is to have the ability to expand in an always- expanding market.
The cruise line industry is constantly growing annually, if your company doesn’t have the ability to keep up then you could potentially lose business. The ability to market and innovate is vital to success. Ships being built with spas, zip lines, gardens, high-tech casinos and cabins, mini golf, and many other ways to stand out are being innovative. Companies have to retain a high brand image as well. An example is that Carnival is known for giving a rewards program for repeat customers. If they all of a sudden take that away they could lose valuable customers desire and repeat business.
Studying your competitors is very important too, for having a niche in the market before a competitor could have you taking some of their business away. Companies in the cruise line industry expand by increasing availability in popular regions like California or Canada, constructing innovative ships, buying out competitors, and adding new points of destination. Future Industry In order to be a relevant cruise line company, you have to be able to adapt to market trends and evolve to meet customer’s needs and wants.
Currently the average passenger is around 50 years old(2023), and predictions say that in the years allowing, passengers around that age will increase by 12%. This is due to the aging baby boomers demographic, making the future target market even better than it is today. According to Firecrackers. Com, since Europeans have more vacation time than Americans, it makes European countries a more logical choice to grow and vacation. The bigger market cruise liner companies will start to have technology- enabled upgrades within their ship. Investing in technology is vital because it attracts more customers leading to more profits.
Newer ships are adding entertainment technologies such as a AD theatre and a simulated skydive. Phones and wristbands with RIFF technology enables customers to keep track of their kids. The future will also involve more environmentally friendly ships with LED and solar power lighting, recycling, fuel efficiency, and much more. Conclusion In conclusion, the cruise line industry is a continuously evolving market that relies on several key factors to succeed. Small businesses need to find that niche to be competitive, where as the larger companies tend to the customers wants and sustain their important brand image.