On-board services
debt increase of 90% on a combined basis in 2020 compared with 2019. Credit rating and research firm Moody’s believes it will take until 2023 before they will generate sufficient earnings and free cash flow to materially reduce those debt balances. As the pandemic rumbles on then, perhaps there is a new question to ask: has the on-board services arms race reached its zenith, or will it continue to boom as cruise lines seek to entice re-bookings like never before?
The demand for big ships John Zamora is a partner in Deloitte’s transportation, hospitality and services arm. He says the simple answer is that cruise lines will not stop working to build bigger and better ships. “What we see across the sector is not so much an arms race; it’s the industry responding to the demands of leisure travellers,” he says.
“If you look at the growth of cruising over the past ten to 15 years, taking out 2020, it’s grown at a significant pace, grounded in leisure demand. Guests are looking for experiential travel – they want to do different things in one destination – and cruise lines accommodate that need. Cruising also provides a great opportunity for multi-generational travel; when you have these different experiences like rollercoasters, you cater to the entire guest profile of that multi-generational consumer.” In July 2020, Deloitte released a report entitled Cruises Gonna Cruise, which analysed data from various consumer surveys and found that while cruisers were – understandably – more focused on safety and cleanliness than before the pandemic, their desire to cruise had barely diminished. 86% said that a certification of cleanliness from a trusted authority would make them feel more comfortable as they returned to travel, while booking volumes were increasing month by month.
This trend has continued with Q2 2021 bookings 40-50% higher than Q1, and overall 2022 bookings ahead of those in 2019. “This is the baseline being used to measure recovery and performance and is demonstrative of the resilience of the sector and the demand for cruise companies’ offerings,” Zamora says. Deloitte’s consumer tracker in June 2021 also showed that 23% of respondents intended to take a cruise in the next three months, up from 14% a year earlier. Amongst cruisers themselves, statistics from CLIA show that 82% are likely to cruise again soon.
Cruising in confidence
Investors, too, have continued to show strong confidence in the cruise sector during the pandemic. “Cruise lines have been able to access capital in the financial markets – it’s been readily available although obviously more expensive,” Zamora says. Carnival Corporation, for example, has raised approximately $24bn in capital to continue to operate despite a lack of revenue for more than a year and, as
World Cruise Industry Review /
www.worldcruiseindustryreview.com
well as launching the Mardi Gras, has continued to build other ships, with four more set to debut in 2021 as guest cruise operations resume.
In addition, two more cruise ships are expected to be delivered to Carnival Corporation brands at the end of 2021. Overall, the company has a total of 11 new liners in the pipeline up to 2025. Two more Excel-class ships are on the way – Carnival Celebration is set to debut in late 2022 from PortMiami and an as-yet-unnamed vessel is scheduled to enter service in 2023. “Mardi Gras has been a phenomenal success and our ship designers are hard at work planning and outfitting her two sister ships, which we fully expect will generate a comparable response when they set sail in 2022 and 2023,” Clement reveals.
Get your orders in early Moody’s VP Peter Trombetta says other cruise lines will take similar approaches. “New ships have several benefits for cruise companies and we do not expect that investments will be materially lower in future years,” he stresses. Those benefits, he says, include better fuel efficiency, new technology and better on board experiences, which helps differentiate cruise brands.
“Cruising also provides a great opportunity for multi-generational travel; when you have these different experiences like rollercoasters, you cater to the entire guest profile of that multi-generational consumer.”
John Zamora
“The amenities and on board experiences also help attract ‘new-to-cruise’ customers which is an important piece of the cruise industry’s growth story,” he adds.
According to CLIA, the new ships that will be introduced in the next few years are predominantly in two segments: exploration/luxury cruise ships and large cruise ships. And while each segment has its drawbacks, those limitations are accepted by their clientele. “With larger ships, there is an impact on itinerary; they can’t call in as many ports,” Zamora says. “But that is totally consistent with the consumer profile who want to be on those larger ships. What each of these cruise lines are doing – building rollercoasters and Go-Kart tracks – it’s all responding to market demand. Luxury ships are smaller vessels that can manage more ports of call and those customers want longer and deeper itineraries.” Trombetta’s only word of warning for cruise operators is to place their orders in early to get a place in the queue. According to CLIA, orderbooks typically get filled up seven to ten years in advance.
23% Deloitte
The percentage of consumer respondents that intend to take a cruise in the next three months, up from 14% last year.
40% -50%
The percentage rise in cruise bookings in Q2 2021,
compared with Q1. Deloitte
45
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61
