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Published on : Jan 08, 2015
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Slide 1 -

A case study of the Cruise Industry and its evolution over the decades.

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Benny M987Z219 Nadia M987Z250 Rachel M987Z226 Sonny M987Z261 Christina M987Z237 Febby M987Z248 Group One Members

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Presentation Contents History of the Cruise Industry Growth phase Industry SWOT Conclusion Q&A

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History of Cruise Ships Increasing air travel and the first non-stop flight to Europe in 1958 marked the ending of transatlantic business for ocean liners.

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History The real blow to the cruise ship industry came in the 1960’s when Boeing began selling 747s and other aircraft worldwide. Meanwhile, a global transportation network of airports was being established => The age of the jumbo jet had arrived.

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CRUISE SHIP A cruise ship or cruise liner is a passenger ship used for pleasure voyages, where the voyage itself and the ship's amenities are part of the experience. Cruising has become a major part of the tourism industry, with millions of passengers each year. The industry's rapid growth mainly focused in North American, European and smaller markets such as the Asia-Pacific region.

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TURNING POINT The 1960s witnessed the beginnings of the modern cruise industry. Cruise ship companies concentrated on vacation trips in the Caribbean, and created a “fun ship” image which attracted many passengers As the decade came to a close, it was no longer fashionable, practical, or economical to travel by boat.

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History of Cruise Ships For many years, a cruise vacation was stereotyped as a big boat full of boring old people…

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Customers want a more intimate experience The new cruise line image was solidified with the popularity of the TV series “The Love Boat” which ran from 1977 until 1986 => Contributed to the idea a growing trend of cruise ship travel as a luxury vacation rather than a means to travel as a necessity. Many people also want to spend their vacations experiencing foreign cultures or learning new hobbies and more intimate experience.

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New Cruise Line Industry Developments Bigger ship with more amenities, features to attractive the customers:  Restaurants  Sports complex  Center training  Ceremonies  Swimming pools  Broadway theater  Nightclubs  TV studio, casino  Shopping centers  Museum  Onboard wedding  Meeting Rooms This fact has created a growing market for smaller cruise lines that operate everything from 200-passenger cruise ships to yachts and sailboats that carry only 10 to 30 travelers at a time.

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Inside a Modern Cruise Ship Casino & Shops Staterooms Theater Restaurants Pool Area

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Cruise Line Industry Developments Perception change in 1980s, as a result global cruise industry average an 8.5 percent annual growth in booking at 1990s. Also low tax and operating cost if they register their ship in Panama and Liberia. Cruising become most profitable service business during that decade. Due to concerns about terrorism, high energy cost, increased pollution of harbors, and the like, industry growth slowed a bit after 2002.

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Three largest cruise operators Carnival Corporation: as "The World’s Most Popular Cruise Line“ in 1987 . In April 2003, Carnival Corporation combined with P&O Princess Cruises plc, creating the world’s first global cruise operator , one of the largest leisure travel companies in the world. Royal Caribbean International: One of the biggest recent mergers was the purchase of Celebrity Cruises by Royal Caribbean on 30 July 1997, which has resulted in the creation of one of the largest cruise companies in the world. Star /Norwegian Cruise Lines: Once known as NCL’s Dreamward , big difference between NCL and other cruise lines is Freestyle Cruising “guests can do everything, or nothing at all”, operates a growing fleet sailing to more than 140 ports around the world.

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SWOT Analysis Strengths BIGGER AND BETTER SHIPS Queen Mary 2 (transatlantic ocean liner) (Cunard Line) Carnival Destiny (first cruise ship to be built over 100,000 grt) (Carnival Cruise Lines) Star Princess Grand-class Cruise ship, with the capacity of 2,600 passengers (Princess Cruises) Caribbean Princess (first cruise ship to have an outdoor movie theater) (Princess Cruises) Ventura (Britain’s largest cruise ship) (P&O Cruises)

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Strengths MORE OPTIONS AND CHOICES Six cruising experiences serving the North American market, each with its own unique style and ambiance – the contemporary sparkle of Carnival Cruise Lines; the Italian charm of Costa Cruises; the classic British tradition of Cunard Line; the five-star sophistication of Holland America Line; the complete escape of Princess Cruises; and the indulgent intimacy of the Yachts of Seabourn. Carnival UK who operate four of the world's leading cruise lines: P&O Cruises, Cunard, Princess Cruises and Ocean Village Holidays…along with sister companies of Carnival, Costa, Holland America Line and the Yachts of Seabourn.

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Strengths Better amenities and professional crews. Carnival corporation & plc is a global company with over 80,000 employees including more than 65,000 shipboard employees. The company is headquartered in Miami, Florida and London, England. Our cruise brands also have headquarters in the USA in Miami, Seattle, Washington and Santa Clarita, California, as well as in Southampton, England; Genoa, Italy; Rostock, Germany; and Sydney, Australia.

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Weaknesses Overcapacity With 7 different cruise brands, offering different vacation products. Carnival Corp. has 92 cruise ships to provide its operations worldwide. With 13 new ships on order, scheduled for delivery between now and 2012. Increased competition Royal Carribean Cruises Ltd. (Miami, Florida) Star Cruises (Kowloon, Hongkong) TUI (Hannover, Germany) Declining demand The demand of Cruises has fell last year, because of economic recession and the issue of swine flu. Passenger Safety Passengers are subjected to outbreaks of illness while onboard and occasionally fall overboard to their death. On Caribbean cruises, 87 people have fallen overboard since 2000.

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Opportunities New cruise destinations Asia, Canada/New England, the Indian Ocean and Africa, the Amazon and Brazil, the Middle East and the Arctic regions, including Newfoundland and Greenland

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The map below indicates where cruise ships are operating on Oct 11, 2009. Where there are no dots, there is opportunity! Opportunities

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Opportunities More specific customer segments Targeting specific demographic groups with a variety of entertainment options Example: Kid & family friendly cruises

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Opportunities Emerging ports around the world Dubai, Abu Dhabi and Bahrain (the Arabian Gulf); Mumbai (India) etc.

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Opportunities Shipboard Innovations Casinos, full-scale seagoing aqua parks, luxury spas, skating rinks

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Opportunities Co-Branding Opportunities Disney Cruises is a good example of a successful co-branded cruise experience. Disney was so successful; they ended their partnership with Premier Cruises and purchased their own ships. Fitness Co-Brand Marketing Example: Canyon Ranch Spa & Regent Seven Seas Cruises

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Threats Terrorism Cruise ships present a target for terrorist organizations. A famous hijacking took place in 1985 onboard the Achille Lauro in the Mediterranean Sea. World Political Unrest Political unrest led to decreased industry revenue in 2002. (example: Somalia) High Energy Costs Increased energy costs lead to reduced profit margins

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Threats Over Capacity With rapid growth, there may now be too many ships for companies to remain profitable. Over capacity can restrain growth and create barriers to entry for new competition. Economic Recession With a global economic slowdown, fewer people have the disposable income for a leisure cruise. Environmental Impact Cruise ships have a history of polluting the water they operate in. As environmental laws become more strict, this will create new costs and restrictions for cruise ship operators. Tax Challenges Cruise ships have been registered in many countries with weaker tax requirements; i.e. Liberia, Panama, and The Netherlands. Countries experiencing a reduction in tax revenue could move to add tariffs to cruise fares.

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Conclusions Creating long term relationships with past customers in the hopes of generating more repeat business (offers substantial discounts to past customers) Because Cruise Ships create a lot of waste, the industry should emphasize on the growing environmental trend, and provide a better waste management.

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Conclusions The challenge is to increase growth in passenger bookings so to recoup the investments made in the new bigger ships. Getting the opportunity of increasing market value, Cruise Ships should create cheaper tickets to customers (Giving promotional benefits or discounts)

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Recommendations Keys to Success Giving more promotional programs to customers. Improving the physical facilities on older ships.

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Questions We Discovered With the size of Carnival Corp. and Royal Caribbean, is there room for any competition? CNBC reports: “…the two largest companies, Carnival Corp. and Royal Caribbean International, are already so big they both face anti-trust issues, especially in Europe. The Carnival takeover of Princess only won the European Union's final approval after they agreed to make it one of the world's first dual listed companies, on the New York Stock Exchange and the London exchange…”

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Questions We Discovered How many passengers and crew have been lost overboard in the last 10 years? Approximately 120 according to the Cruise Lines International Association

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Why do cruise vacations have a higher percentage of satisfied customers than any other vacation experience? Value: Your ticket price covers accommodations, dining, entertainment, and more. In general, this price is 20-40% below what you would pay for a land-based vacation of comparable quality. Simplicity: Don't come back from your vacation needing a vacation. Pack and unpack once. Skip the rental car. Effortlessly select among nice restaurants and activities knowing that all the details are taken care of. Activities: Fill your days with sightseeing, sports activities, cultural lectures, educational tours led by naturalists and historians or simply lounge by the pool and relax. At night, enjoy dance extravaganzas, musical revues, gaming or a quiet evening gazing at the stars. New Horizons: With over 1,800 ports of call and an amazing array of places to see and things to do, there is a perfect cruise for you. A cruise is an ideal way to see Alaska, where a ship allows you to a perfect vantage point to see mighty glaciers and pods of whales. Family Fun: Families love cruising. Youth programs, kid-friendly menus and a safe ship to explore will keep your children happy. Meanwhile, adults can have some well-deserved time alone. Pampering: Regardless of your budget, all cruise lines pamper their guests with a very high level of service. From complimentary room service 24/7 to decadent spas, cruises are a wonderful place to be treated like royalty Cuisine: Tantalize your taste buds with gourmet fare that showcases exotic ingredients, old standbys like pizza and ice cream or spa cuisine for a healthy alternative. Questions We Discovered

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Q & A

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