Filling space

The rapid growth both in numbers and size of ships shows the optimism of cruise operators, but there are still wars to be fought as each seeks to fill their ships.

In an industry dominated by the battle of the superlatives, the latest salvo has just been fired by Cunard. No sooner has RCI`s mighty Voyager of the Seas been delivered than Carnival`s subsidiary announced some details of its long awaited Project Queen Mary. The company says the it will be the largest passenger ship in the world. Exactly how accurate this statement is remains unclear.

Cunard`s announcement underlines the two major trends in the cruise market at present. Continuing strong growth in terms of demand for further newbuildings, combined with the perceived need to produce ever larger ships. Apart from the flurry of newbuildings on order existing ships, such as Costa Classica, have now been stemmed for stretching to increase their capacity.

Nor is the growth in cruise ships confined to the major players, with a number of smaller operators such as Radisson, Silversea and Renaissance Cruises opting for new tonnage. Throughout the industry there is still widespread optimism that further growth is not only possible but inevitable. For most cruise companies anticipated overall growth, in terms of passengers, is expected to be about 4 per cent.

Individual companies, such as P&O with Aurora joining the fleet in the latter part of May, say a growth in the region of 45 per cent is needed. At the moment the company says that its forward bookings are in line with expectations. Carnival is forecasting a growth in passenger numbers of between 10 and 15 per cent.

In the main companies reflect Carnival`s belief: “We do not have enough capacity to fill demand and we only account for some 2 per cent of the total holidays taken in the USA..” Comments P&O: “The growth in passengers is expected to continue and there is no sign of decline as the growth in disposable income is continuing.”

There have been some reports of price discounting although this, notes NCL, is difficult to pin down. Still the company adds: “This is an incredible time for the industry although it was a soft first quarter.” Overall there are lots of newbuildings on order and little sign of any tonnage leaving the fleet. Operators are still managing to fill them up and managing to increase profit margins.

Most of the growth, both in terms of number and size of ships has been aimed at the mass market following the breaking of the 100,000g barrier by Carnival Destiny. This has been accompanied by the growth in the number of mystery cruises and voyages to nowhere. Three days in port with three days at sea is steadily becoming the norm for many cruises. Notes P&O: “Larger ships give better economies and greater choice and flexibility. However, there will be ultimately be a finite size because of the logistics”.

The move towards larger ships increasingly limits the number of ports available, but this is part of cruise lines` strategy. To encourage increased spend with the cruise operator, companies are buying their own private islands and, especially on the larger ships, the intention is to make the ships destinations in their own right.

To that extent Cunard`s decision to opt for a transatlantic liner may be sensible since it removes the need to consider stopping at any interim destinations.

Below this size band there has also been notable activity for ships in the 80,000g band. Both NCL and Holland America seem keen to battle in this area while Star Cruises is looking to move into larger tonnage. Remarks NCL: “We are happy with the 80,000g size band and we are not in a rush to catch up with the rest of the industry. We are still the fourth largest cruise company and the others are all looking to take new deliveries of about four new ships each year. They will obviously experience big growth with their new ships.”

But all is not rosy in the industry, and earlier last month Royal Olympic Lines was sold to Louis Cruise Lines, while Sun Cruises of Singapore was reported to be in trouble. This latter problem caused the UK`s Airtours, which has a division called Sun Cruises, to issue a statement that it was not connected with the Singapore company.

While the companies are all quite optimistic over growth prospects they are all fighting for as many passengers as possible. This has led to a distinct blurring of the differences between companies.