Shift to a global focus shakes cruise sellers and ports

CruiseShippingMiami-ExecsMIAMI BEACH — The cruise industry’s accelerating shift to a global focus is shaking up old patterns and making itself felt in every corner of the business, from travel agent relations to port improvements.

That trend came into sharp relief last week at the 2013 Cruise Shipping Miami event, the industry’s largest trade show.

Speaking on a State of the Industry panel, several cruise line CEOs said that ports in emerging countries are forging ahead, raising the need for established ports of call in the Caribbean to keep pace.

“I’m not sure the Caribbean destinations truly appreciate the nature of the competition on a global basis,” said Royal Caribbean International President Adam Goldstein.

He cited the $400 million Marina Bay Cruise Center in Singapore as just one example.

“That is world-class travel and tourism,” Goldstein said.

However, Caribbean representatives attending the forum said they are well aware of the changing reality of the global cruise market.

“We know we are in competition with more than each other,” said Chantal Figueroa, deputy commissioner of tourism for the U.S. Virgin Islands. “We do get it, and we are trying our best to refresh our product.”

Cruise executives said a more dynamic port experience in the Caribbean would be one of the most important improvements the industry could make to attract more business.

“We need to make every one of these destinations interesting and safe,” said Norwegian Cruise Line CEO Kevin Sheehan. “So many of these sailings we have repeat guests on, and if it’s not an interesting destination, they’ll come off the ship, they’ll take a look around and they’ll get right back on. And that’s the absolute worst thing that can happen.”

Kevin Sheehan, CEOSheehan, who is also chairman of the Florida-Caribbean Cruise Association, cited Cartagena, Colombia, as one Caribbean port that has done a good job of making its old city exciting.

“The key is mixing it up, so you’re not getting the same experience in each port,” Sheehan said.

Carnival Cruise Lines CEO Gerry Cahill said that some Caribbean ports are trying very hard. Carnival and other lines, he said, occasionally invest in port attractions to help key destinations refresh.

For example, he said, Carnival is now working on such a project in Nassau with a third-party investor.

Carlos Torres de Navarra, Carnival’s vice president for commercial port operations, told the Miami Herald that Carnival and Miami-based Carib Resorts will be developing a shore excursion called Balmoral that will include elements of Bahamian history and serve as an alternative to downtown Nassau and Paradise Island.

Cahill said details would emerge in the coming weeks.

Figueroa said upgrades take capital that many Caribbean countries lack. The USVI government is working on improvements to the historical district in St. Thomas, which she said should be ready by June 2014.

There are also plans to add nightlife options to encourage ships to stay later into the evening, she said.

“It’s a chicken-and-egg problem,” Figueroa said. “You have to have the money to fix it up, but you can’t get the money until you fix it up.”

Caribbean ports are not only a concern for cruise lines based in North America. Pierfrancesco Vago, chairman of Italy-based MSC Cruises, said Europeans also want to visit the area.

MSC this fall will deploy the 4,000-passenger MSC Divina, one of its newest ships, to Miami on seven-day Caribbean cruises.

Closer to home, Vago said first-time cruisers are returning to the Med after being scared off by the Costa Concordia accident.

While passengers from Italy and Spain last year fell 9% and 18%, respectively, the number of German cruisers grew by 11%, and overall, 6.1 million Europeans took a cruise, he said.

This winter, MSC is deploying four ships to South America, where 80% of the population lives within 200 miles of the coast, Vago said.

Among CLIA member lines, the portion of passengers who come from markets outside North America has grown from 9% in 2000 to 31%, CLIA President Christine Duffy said in an address to Cruise Shipping Miami.

Cruise developments in Australia underscore how operating globally is more of a concern even for companies once firmly anchored in North America.

Late last year, Carnival Spirit arrived for year-round cruises from Sydney and Melbourne.

“This is a big deal for us,” Cahill said. “In our 40-year history we’ve never home-ported a ship year-round and sourced from a foreign market.”

Cahill said Australians are fun-loving and optimistic, which meshes well with Carnival’s “Fun Ship” tradition.

“They like other people, and we’ve always felt that’s a good fit for our brand,” Cahill said.

Among the modifications Carnival had to make for year-round Australian cruising was adding more coffee inventory, Cahill said.

“We sell six times as much coffee to Australians as we do to Americans,” he said. “No one ever sleeps.”

Carnival’s other 23 ships sail primarily in North America, and those that sail in Europe are marketed to North American guests.

As cruise lines expand across borders, some agents are eager to take advantage of disparities among cruise prices offered in different countries. But in a panel discussion, executives from several big lines said existing rules that ban the sale of tickets sourced in one country to passengers from another country aren’t going away.

“Every country has different laws as it relates to the cruise contract,” said Lisa Bauer, executive vice president for global sales and marketing at Royal Caribbean International. With cross-border selling, cruise lines can’t be sure the customer is getting the ticket that matches the laws of his or her country, she said.

Another concern is that currency swings will shift business illogically, hurting long-term marketing initiatives.

Andy StuartAndy Stuart, executive vice president of global sales and passenger services at Norwegian Cruise Line, said, “There’s a lot of thought and investment that goes into developing individual markets. You get this crazy volatility, and suddenly all of your business is coming out of Australia because of a currency shift, and you undermine all the marketing we’ve been supporting as a line with local partners.”

Even so, Van Anderson, co-owner of Avoya Travel (No. 41 on Travel Weekly’s 2012 Power List), said he would like to find a way to work with the big cruise lines to ease restrictions on cross-border selling. That would enable some of the most efficient agent groups to generate more sales for the cruise lines, Anderson said.

Again at this year’s conference, Asia was named the region with the best growth prospects.

“Asia-Pacific certainly has the greatest potential, after China, and the penetration is low,” said Celebrity Cruises President Michael Bayley. “And of course the Chinese market has truly phenomenal potential but almost zero penetration.”

Lionel Yeo, chief executive of the Singapore Tourism Board, said that realizing the potential will depend on regional cooperation. “It’s a game Singapore cannot play alone,” he said.

Even as Royal Caribbean International deploys two large ships in China this year, Goldstein said the line is eager to work in the Caribbean to freshen the appeal of its namesake region.

Long-standing ties to the Caribbean put cruise lines in a position to suggest ways to keep the region competitive, Goldstein said.

“I really feel there’s an opportunity for the cruise lines and the destinations to have a better conversation about what these options are,” he said.

Follow Tom Stieghorst on Twitter @tstravelweekly.


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