Strategies to take advantage of the boom in cruises - ist
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3 strategies to take advantage of the boom in cruises
INDEX
To know the market
1 a. A booming market: what is going to happen in the next decade?
b. Types of cruises: which cruises do passengers prefer?
c. Trends in the market: what cruise passenger profiles are we going to find?
To choose the business model
2 a. Hybrid Model
b. Online Model
c. Face-to-face Model
3 Choose the tool that
best suits your business
1 To know the market To understand the needs of the client and achieve solid business agreements
The cruise line industry is the fastest growing sector within the global
tourism market. 2019 has been a year of growth in terms of the supply of
berths and the capacity of the industry, as many cruise line companies have
launched new mega ships with greater space and size, which ultimately
translates into a greater volume of passengers.
In a market which retains great growth potential, the cruise line industry is
already a consolidated sector with more than 400 cruise ships, 122 new ships
under construction, more than 3000 base ports and almost a hundred cruise
line companies operating and offering a differentiated product that increasin-
gly seeks to provide unique services and experiences to the traveller.
All indicators support the upward trend.
The repetition rate and fidelity of cruise
passengers is high within the industry, with
9 out of 10 passengers wanting to repeat
their cruise vacations.
However, before entering into this adventure, you have to take into ac-
count that the uniqueness and added value that characterizes a cruise trip
also entails a particular complexity in its sales process, and understanding
all its details, formulas and characteristics, is not an easy task.
But without a doubt, the wide variety of options and experiences that this
product can offer, makes it a unique tourist product. That is why, to get the
most out of it and take advantage of the trend, the first thing you should
do is to know the market and its wide variety of options, analyse your
customer to understand their needs and desires and finally, achieve solid
business agreements with the cruise line companies that you would like
to work with.
a. A booming market: what is going to happen in the next decade?
The sector in figures
10 years ago, there were 17 million people who chose the cruise option to The data that supports the upward trend of the cruise market
travel. A decade later, there are already 30 million passengers who enjoy speaks for itself: if in 10 years the cruise industry has increased its
this journey crossing our oceans, seas and rivers on a daily basis. passengers by 40% and multiplied its offer of berths, what is going to
happen in the next decade?
2019 PASSENGER CAPACITY SNAPSHOT
2019 = 30 Millions Passenger Expected to Cruise
CLIA Global Ocean Cruise Passengers (In Millions)
30 30
28.5
40 MILLION
25.2 26.7
25 22.3 23.0
20.5 20.9 21.3
19.1
17.9
20
CRUISE PASSENGERS
15
BY 2028
10
5
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019p
p = projection
SOURCE: CRUISE LINES INTERNATIONAL ASSOCIATION
Over the next decade, the construction of a hundred ships is expected to add almost a total of 500 cruise-liners crossing our seas, oceans and rivers.
With the construction of larger ships, with greater capacity, but also being more sustainable and energy efficient, the supply of berths will exceed one
million over the next 10 years.
Global cruise capacity and passenger growth
37m 1.2m
Increase
Increase
3.5%
3.3%
Increase
Increase
3.9%
Increase
Increase
4%
35m 1.1m
4.1%
4%
Increase
Increase
4.4%
4.2%
33m 1m
Increase
Increase
3.8%
3.1%
Increase
Increase
3.4%
3%
Increase
Increase
3.5%
3.5%
Increase
Increase
31m 0.9m
3.7%
4%
Increase
Increase
3.5%
3%
Increase
Increase
4.3%
5.3%
29m 0.8m
Increase
Increase
2.4%
8%
Increase
Increase
4.6 %
4.8 %
Increase
Increase
5.2%
5%
Increase
Increase
27m 0.7m
4.8%
5%
25m 0.6m
Passengers
23m 0.5m
Berths
21m 0.4m
20
20
26
26
28
30
28
30
29
29
24
24
22
22
23
27
23
27
25
25
16
16
18
18
19
19
21
21
17
17
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
SOURCE: A.R. PEISLEY (CRUISE ANALYSTS) LTD
The cruise sector still retains significant growth potential. Today, this industry represents only 2% of the 1.4 billion tourists who travel around the world
every year and also, in 2018, it generated 134 billion dollars worldwide.
The key markets of the sector
1. North America
For decades, North America, with the US and Canada at the helm, remains on the thro- However, special attention should be paid to younger
ne as the main issuing market for cruise passengers with 40% of the global share. In people over 30 years of age, which is the fastest growing
addition, it is expected that it will continue to maintain the reign in the coming decades target group in recent years in this market, a trend that is
and reach 21 million passengers by 2027. fully aligned with the global predisposition of the sec-
tor that indicates a growth in demand for cruise ships
amongst younger people.
The profile of the American passenger
is the oldest of the three main issuing The star destination is still the Caribbean, although the
markets; in this case, we talk about a boom of the expedition cruises has been noted in this
market and is the destination that has become more and
cruise passenger over 50 years old. more attractive for these consumers who want to navi-
gate to these hidden retreats such as the Antarctic, the
Arctic, the Galapagos or Greenland.
SOURCE: CRUISE LINES INTERNATIONAL ASSOCIATION
TOP 5
2. Europe:
The European market countries with most cruise
has grown by 5.5% in passengers in Europe
recent years, reaching Germany
7.1 million passengers
31% UK
with Germany being the largest cruise line
passenger market in Europe with 31%, followed
27%
by the United Kingdom with 27%, Italy with 12%
and in fourth position, Spain with 7%. The fastest
growing European regions in 2018 were Portugal
and Russia with 24% and 14% respectively.
According to the latest data, more and more
Italy
Europeans travel within their own geographi-
cal area and their favourite destinations are the
Central and West Mediterranean, followed by
Northern Europe, leaving the Caribbean in third
12% Spain France
position. The Canary Islands which has grown
by 10%, is becoming the favourite destination for 7% 7%
the most popular cruise passengers; 52% of Ger-
mans and 36% of Britons are inclined towards
travelling to these Spanish islands.
Europeans prefer cruises between 7 - 8 days
and have an average age of 50 years. Amongst
them, the youngest are the Italians, of 46 years
and the oldest are the Germans and British, who
are the main European cruise passengers.
3. Asia and the Pacific
with a 20% share of the issuing market, this region has grown by leaps
and bounds at an annual average of 33%, with 775,000 passengers in
2012 to more than 5 million in 2019. Without a doubt, Asian and the Pacific
has become one of the great
promising markets for the industry.
That is why the main cruise line companies are developing ambi-
tious strategies to enter these issuing markets, adapting the product
culturally to the needs of this region, which sees each time, a more
extended middle class and greater purchasing power.
Investment in this market is multilateral and local administrations are For decades, North America has remained
also opting for solid infrastructures to be able to absorb their full poten-
tial. Currently, Asia has more than 300 destinations, around 20 markets,
on the throne as the main issuing market
with China being the main passenger issuer with more than 2 million for cruise passengers with 40% of the global
cruise passengers and Japan the country with the most destination
ports. share, followed by Europe that grows year
In this region, 79 ships sail via 39 different cruise line companies that
make up a total of almost 2000 itineraries. Given the potential of this
after year with 25% and thirdly Asia and
market, cruise line companies increasingly invest in destinations in the Pacific (with 20 % of the share of the issuing
area to be able to captivate the first timers of the market and thus in-
crease the number of cruise passengers even more since it is easier to market) that has grown by leaps and bounds
try this product if they have it on their doorstep.
Another feature of this market is the passenger profile that remains
at an annual average rate of 33%, becoming
younger than in the successor regions; in this case, 4 out of 10 cruise one of the markets with the greatest
passengers are below 40 years.
promise within the industry.
Principle issuing markets (by number of passengers):
North America
40% 14,2
million passengers Average Average cruise
Europe passenger age duration
7,17
47 years 7 days
25%
* *
million passengers
Asia and Pacific
20% 5,7
million passengers
South America
3,3% 0,93
million passengers
Others
1,7% 0,47 Average passenger Average passenger
million passengers
revenue per day revenue per day (ticket)
** **
Principle destinations (by number of passengers) 223,60$ 164,35$
Caribbean calculation made based on the * calculation made based on the revenue
38,4%
revenue of the three most important of the three most important cruise line
cruise line companies companies. Q3 2019 data
Asia - Pacific
15,1%
Central and West Mediterranean
14,2% Average passenger revenue per Economic
Northern Europe day (on board + tour) impact 2018
9,4%
Australia, New Zealand and Pacific
59,25$ **
28,5 *
4% calculation made based on the
revenue of the three most important
million Passengers
cruise line companies. Q3 2019 data
$ 134
SOURCE : CRUISE LINES INTERNATIONAL ASSOCIATION
*
68% of cruise passengers indicate that the destination is the most important factor SOURCES:
that influences their decision making when choosing their vacations. billion of total
* CRUISE LINE INTERNATIONAL ASSOCIATION
Fuente: Cruise Industry News – Cruise Lines 2019 Q3 Breakdown: By the Numbers
CLIA – Cruise Line International Association - 2019 : CRUISEproduction
** CRUISE INDUSTRY NEWS worldwide
TRENDS & INDUSTRY OUTLOOKFuente: 2018 Cruise Industry presented by Cruise Industry News
The main cruise line companies within the industry Fuente: Cruise Industry News Special Report – 2019 Edition
The industry is led by 5 companies that control 90% of the market share:
Carnival Corporation
it is the world’s largest cruise operator. This large corporation has more than 40% market share in the entire industry, with
105 ships encompassing different brands such as: Carnival, Costa, Princess, Aida, Holland America, P&O, P&O Australis,
Cunard Line and Seabourn.
Royal Caribbean Cruises
it is the second largest cruise line company worldwide and has the largest ship ever built, the Symphony of the Seas, with
a capacity for 5400 passengers. Royal Caribbean Cruises has a market share of more than 20% and a total of 63 ships. This
company has amongst its networks brands: Royal Caribbean, Celebrity Cruises and Azamara Cruises. It also has interests
in brands such as TUI, Pullmantur, CDF - Croisieres De France, SkySea and Silversea.
Norwegian Cruise Line
with almost 10% market share, this company operates under brands such as Norwegian, Oceania and Regent that offer
27 ships with a capacity of almost 55,000 berths.
MSC Cruises
with 8% of the market share and 17 ships in circulation, the cruise line company only operates with its MSC Cruises
brand and has the most ambitious forecast for the construction of new ships.
Genting Hong Kong
as we have seen previously, the Asia-Pacific market is very promising, so much so that one of the cruise line companies
born directly from that market is in the TOP 5 of the global industry companies. With 9 ships in circulation and brands
such as Star Cruises, Dream and Crystal, this cruise line company is close to achieving 5% of the global market share.b) Types of cruises:
which cruises do
passengers prefer?
Like any market in the
expansion and maturation
phase, there is a tendency
to differentiate and diversify
products to offer more
alternatives and thus
convince those who have not
yet tried the product, and to
stimulate the repetition of
the habitual ones.
That is why, as we have seen, the main cruise
operators have different brands to reach diffe-
rent market niches.
This variety is one of the biggest attractions of
the product since it is a great opportunity for all
travel agencies that can easily adapt the pro-
duct to their customer.The luxury cruise niche is a growing
From luxury cruises to promotional cruises
sector. Currently, it has 600,000
There are some cruise line companies specializing in exclusivity and
luxury without the need to envy five-star hotels. For example, Seabourn, passengers and 51 ships operating and
Silversea, Cunard, Windstar or Princess.
it is forecasted to exceed 1,000,000
In general, these are small boats, some of them even sailboats, with
excellent service, focusing on customer service, with ample space for passengers and 85 ships by 2027.
passengers, a high-level of cuisine and a very complete all-inclusive
product. Itineraries tend to be longer with more nights in ports and On the other hand, there are economic or more commercial cruises that
exotic destinations which large ships do not reach. They also offer offer high quality services and facilities with very competitive prices for all
exceptional and unique experiences such as helicopter flights, a night customers. This would be the case of the largest and most popular cruise
at the opera or tickets to the finals of a tennis Grand Slam. line companies such as Carnival, Costa, Pullmantur or MSC.From going around the world to mini-cruises Travelling around the world is a dream for many people and there are already some cruise line companies, such as Oceania, MSC or COSTA, that offer this unforgettable, all-inclusive expe- rience and with all the comforts of touring the world aboard a cruise. The ship ´The World´ deserves a special men- tion: a floating community that travels the world offering the possibility of renting or buying cabins or apartments. Each of these luxury rooms or apartments, as owned properties, are between 1.2 and 7.5 million dollars and the lucky ones can embark on the ship at any port to en- joy a vacation. For those who have the busiest schedules and do not have many days available to disconnect, many companies offer the option of enjoying mini-cruises that are between 1 and 6 days long. This is an ideal way to enhance the product test experience for the most sceptical customer and it also provides them with the option of short breaks, allowing them to step off the treadmill just for a few days.
From the Tierra del Fuego Fjords
to the Danube river
The expedition cruise niche is at its peak with 12 new
cruise ships no longer only travel the oceans,
now they also sail through the heart of the great ships that began sailing in 2019. There are currently
European capitals and there are even rail cruises
such as the Orient Express and the Trans-Si- 279,000 passengers journeying into the most hidden
berian, which are luxury vintage trains that can
provide and offer all the comforts of a cruise.
and naturally beautiful retreats of the earth and
There are also river cruises specially targeted at these numbers are expected to double by 2027,
Millennials, which traditionally is not the public
for this specific market. The Uniworld river crui- approaching more than half a million passengers.
ses have been precisely developed to attract this
generation with outdoor experiences such as hi-
king or bicycle rides and services with on-board
entertainment such as the silent discotheque
with headphones, DJ´s and private cooking and
cocktail classes, as well as gym, yoga sessions
and internet access.
Politours, Panavision, CroisiEurope or Amawa-
terways are other companies who specialize in
river cruises.
Expedition cruises is another cruise niche. An
example is Australis cruise line that takes you
through the narrow fjords of Tierra del Fuego and
southern channels. But not only the most specia-
lized brands dare to offer the most adventurous
expeditions, also the most popular cruise lines
companies are exploring this niche that current-
ly has a total of 84 ships. For example, Celebrity
Cruises with Xpedition in the Galapagos.From family cruises to singles cruises
cruises with children are great for families. Not only do they focus on
children, but they also organize activities for adults.
The family-oriented cruises are very
large ships which are very attractive
and full of constant novelties with a
lot of entertainment on board and a
wide variety on offer for children.
These cruises place a lot of importance on on-board entertainment to
capitalize on on-board time as much as possible and offer options for the
whole family, including free promotions for children. Examples of such
family cruises are Royal Caribbean, NCL or Disney Cruises.
On the other hand, thematic cruises have become one of the biggest
trends in the industry. There are already several cruise line companies, of all
sizes, that focus on a very segmented audience with very specific interests
to offer mono thematic cruises and thus capitalize on that target.
There are multiple types of cruises available according to the type of client,
we can find a thematic cruise of a rock festival, with an exclusive cruise for
single people to make new contacts or another focused on a younger cus-
tomer that is finishing university studies or have their ´ End of Course trip´.
An example of this is the “Megacruise” of Norwegian Cruise Line that offers
live rock festivals with leading artists such as Megadeth, with all the comfort
of a cruise while touring different cities. For fashion lovers, Cunard offers the
“Transatlantic Fashion Week” that has catwalks of the best designers.c) Trends in the market: what cruise passenger profiles are we going to find?
Cruise line companies have been working for constant search for travel opportunities and enjoy The way to travel by cruise is also changing and
years to ensure that the purchase of a cruise is unforgettable experiences. For this reason, they the expectation of the cruise passengers is to
the acquisition of a unique experience for the are attracted to having multiple destinations and have access to the latest technology whilst on-
traveller. They are in a constant phase of trend thematic cruises at their fingertips such as mu- board the ships. In the same way, travelling alone
analysis and, in their products, they add expe- sic festivals at sea. This activity always leaves a is beginning to gain certain popularity.
riences so that people start getting younger and record of their experiences in the digital world
The cruise escapes the seasonality and little by
younger to live these experiences and that the through social networks, such as Instagram.
little, there are more passengers who prefer to
new generations are the cruise passengers of
Depending on the generation, the influencing enjoy a holiday in the sun in winter or a cold ge-
tomorrow.
reasons behind choosing a cruise as a form of taway in summer. Accessibility to hard-to-reach
The search for experiences as a form of travel, is travel are different; the older ones, the Baby Boo- destinations also attract new cruise passengers
entering the world of cruises through Generation mers, are more influenced by the destinations seeking exclusive and remote destinations (eg:
Z who will soon supersede the Millennials as the and the itineraries, on the other hand the Millen- Galapagos or Antarctic Islands) while preferring
main consumers. nials, a generation with great purchasing power, to travel in a conscious way and valuing contact
take into account the cost of the cruise and the with the local cultural, whilst respecting the envi-
This new generation is characterized by the
entertainment on board. ronment.2
Choosing the business model
Identify opportunities and choose
the optimum way of selling cruisesThere is no written rule on the best way to sell cruises as all
of this will depend on the situation, strengths, threats and
opportunities of each of the businesses.
The key is to carry out an exhaustive analysis of each of these blocks and
opt for the most appropriate model, aligned with the business.
Following are some of the most popular models used by agencies:Hybrid Model The opportunities we see in this business, which during its sales
process combine online and automated sales techniques with
The key to this business model lies within these steps offline and more conventional sales techniques, are to enhance
cross selling and up selling.
After automatically capturing the initial interest of the client,
the lead transcends to the virtual world and the client receives
1
Online activity
The agency has a web page that informs of personalized attention from the travel agent, who guides them
its cruise offers. through their purchase process in order to increase the profitabili-
ty of the opportunity of a Sale, whilst meeting specific needs.
This user, who ends up making the purchase by phone, origina-
tes through an online search. In a search of our website, the user
2
Capture of online traffic has already placed a first filter related to the purchase, to provide
Through a comprehensive strategy of digital marketing, communi- information about the destination, departure month and even the
cation and press, the agency attracts online traffic to its website. cruise in which they are interested in.
Subsequently, through the request for a quote, the agency still
contacts you with a ´hot´call, to evaluate interest, support you in
Generation of interest the decision process, refine your choice and offer you other peri-
3 With a persuasive design, offering the best user
experience and attractive offers to capture the
pheral products (cross selling) or higher profitability (up selling ) in
order to have more control over the conversion ratio.
user’s attention.
To achieve effective and efficient guidance, it is essential that the
travel agent immediately, makes the entire cruise promotions
available known to the client in order to offer the best alternative
Request for quotation / information
4
to the client.
The user chooses a cruise with a departure, destination,
date, port of embarkation and specific category and sends a In addition to being experts in terms of knowledge of the pro-
request for a quote or more information to the agency. duct, these agents need commercial and sales skills to be able
to persuade and understand what the customer needs, putting
them first.
Call by the commercial agent Many factors influence the sales process, but one of them is
5 When the agency receives the lead online, it personally
contacts the user through a call.
customer impulsiveness at that time. The faster we give the user
the information and all the data they need, the more we can take
advantage of the time window in which the client is more sensiti-
ve and more impulsive.Online Model In some ways, it is a model that can also include the guidance of the travel
agent during the sales process but the business offers the ability to priori-
tize the option of having an online approach first with the user, and making
the total reservation of their cruise through the web page. For personal
advice, these businesses can use chats or a support phone line.
However, the reservation is merely online and tools such as the payment
The benefit of this model lies in the gateway or the search and reservation engine are essential. That is why the
website must be clear, simple and focused on the key indicators to monitor
minimum structural costs associated with all metrics and be in the constant process of optimization. The search and
it, in addition to adequate technology, reservation engine must also be user-friendly, secure and offer the relevant
information to the user.
very precise marketing actions and Without a doubt, positioning a website which is optimized and capable of
offering a good user experience combined with online marketing tech-
constant monitoring. niques such as online advertising, retargeting, social ads, chatbots and a
good email automation strategy etc., will help us automate our sales flow,
but above all to convince the user that at the time of the search, they make
the decision to purchase based on simplicity, engagement, and trust.
The online sale is very price oriented, therefore, the agency’s margin
will be low as it will have to give part of its commission to lower the
price, and consequently, its margin will be lower. As this channel works
at a price and the margins are low, the only formula to make it sustaina-
ble is to move to quantity and reach a larger audience and therefore, a
large number of potential customers.
The deep knowledge of online marketing techniques is essential to
execute this type of model as the whole model is based on a sin-
gle-channel process where the reservation begins and ends within an
online platform, without the support or direct expertise of a travel agent.
Acquisition Lead Engagement Cruise Booking
Among others, this model works for that type of repeater and loyal cus- online caption in the web booking online
tomer, who knows the product and the brand and does not pose any actions engine
problem or fear of carrying out the entire process online with only the
support of technology and explanations of the associated tool to make
the reservation.Face-to-face Model
A recent study in Spain revealed that
digital natives physically return to
the agency for professional guidance.
Customer visits
the shop
Today, more than ever, the advisory capacity of travel agents is es-
sential for the tourism business. Above all, taking into account that the Travel agent seeks
cruise product is not an easy to understand item and due to the wide through the cruise
variety of promotions that exist and to the increase in first-time cruise booking tool
passengers who require more information than others.
In addition, it is a complex tourist product as the reservation itself can
become a combination that also includes other tourist products, such
as a hotel, a transfer or a plane. Commercial
The structural costs of this model are higher than the others as the visit is closed
investment to implement a physical agency or invest in a franchise and
then provide it with the necessary technology to manage all reserva-
tions is relevant, and that is why it is not a model of Business suitable In short, regardless of the model chosen
for all budgets.
However, if your vision allows you to opt for this route you should also
you will always need the best technology
keep in mind that the travel agent must have at its disposal the tools to to provide your sales channel with a
offer the entire number of cruise combinations and promotions availa-
ble instantaneously and quickly in in order to offer advice on quality. flexible, agile and simple process.3 Choose the tool that best suits your business Dedicate time advising and not searching
The cruise business is in full expansion throughout the world and travel agents In an increasingly diversified
who want to sell them have to have the appropriate technology to facilitate a
more efficient sale, if not, they will incur significant costs. market full of variants, travel
agents need tools that allow them
to sell and not to spend time
searching for products,
regardless of the type of cruises they have decided to
sell, their buyer or the business model that they have
chosen to implement.
Technology serves to reach a wide variety of promotions
organized by region, product, ships and other parameters
Integraciones API / /Soluciones
API integrations integrales
Integral solutions in an automated way. Travel agencies have the opportuni-
ty to improve their performance, expanding their product
portfolio and incorporating automated technologies into
their operations.
IST has been working with cruise line companies for 20
years. Each of them has its own idiosyncrasies and throu-
gh understanding the business rules of each one, we
enable them to converge onto a platform, making them
Travel agencies
Agencia de viajes available to the agent which is the added value that IST
brings to the industry.
IST consolidates and is connected to
95% of the cruise line promotions that
exist in the market, placing them on a
platform within reach of the agent, in
real time and through a simple ´click´.There are different types of flexible solutions and all of them adapt to the needs of the client. API integrations, such as the FIBOS solution, a unique XML messaging that con- nects with more than 30 cruise line companies in real-time. This solution provides the travel agency with the raw material to make a tool according to its brand criteria, with its own flow, adapted to its internal systems and with a lot of flexibility to modify it at any time according to its conversion ratios. It is a strategic investment as it takes time to im- plement. On the other hand, there are integral solutions, such as the Cruise Browser, which is a search engine and sales of cruises tool that allows easy and fast integration with tra- vel agencies, allowing them to centralize the entire supply of cruise line companies in one place without incurring technological development costs. In short, in the case of an agency where the cruise is another item, a search engine can be uploaded to any websi- te providing a perfect solution. For more than 20 years, the mission of IST has been to facilitate these sales and make the exchange between the agency and the cruise lines companies more efficient, ensuring that all of its solutions adapt to any business model, type of agency and type of user.
(+34) 935 001 226
e.marketing@istinfor.com
www.ist-cruisetech.com
Barcelona, Spain.
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