Evolution of The Cruise Industry

By the year 2018, the entire cruise industry’s market worth was USD 150 billion making it the fastest-growing segment of the tourism industry. By early 2020, the industry welcomed more than a million passengers onboard the various cruise ships and seemed to be well on the road to a record-breaking year.

Unfortunately, the global hit of the coronavirus pandemic brought all economic activity to a standstill overnight. Between March 2020 and September 2020, the cruise industry lost business worth USD 77 billion. A study conducted by Statista recorded that over 500,000 jobs were lost with over 2500 jobs lost worldwide for each day that cruise operations were suspended due to the pandemic. In 2021, the cruise industry slowly began operating as restrictions relaxed with more companies joining as the year progressed. The question that keeps hovering in the face of such a sudden and unforeseen collapse is – Will the cruise industry recover?

History
Cruise Industry - Current Trends
Facilities and Amenities Offered Aboard Cruise Ships
The Effect of the Pandemic
Environmental Impact of the Cruise Line Industry
Drivers of the Cruise Industry and Conclusion

History

The year 1822 is considered the birth year of the cruise industry with the first leisure cruise by the Peninsular & Oriental Steam Navigation Company. Three sailors Captain Richard Bourne, Brodie McGhie, and Arthur Anderson began with a steam service between London, Spain, and Portugal, better known as the Iberian Peninsula. Two decades later, in 1844, the first passenger cruises were introduced that marketed sea tours to destinations like Athens, Malta, and Gibraltar. The company later introduced round trips to Alexandria and Constantinople.

The rapidly growing popularity of the cruise industry saw major development with larger, more luxurious ships being built in the later half of the 19th century. The SS Ravenna became the first ship to be built with a complete steel superstructure in 1880 and the SS Valetta which was built in 1889 was the first ship to use electric light.

Augusta Victoria was the German cruise ship that popularized cruises to the wider market. It sailed in the Mediterranean Sea and the Near East between 22^nd January and 22^nd March 1891 with 241 passengers onboard. The first ship that was exclusively built for luxury cruising was named Prinzessin Victoria Luise of the German Empire. It was designed by Albert Ballin, General Manager of the Hamburg-America Line, and completed in 1900.

Three European-owned luxury ocean liners offered transportation between Europe and North America in 1897, which increased to seven ocean liners by 1906.

In the 1960s, when the jet aircraft was invented, the ocean liner trade suffered a terminal decline as passengers shifted from ships to planes. The ocean liner services that were aimed at passengers finally ceased in 1986. The focus then shifted from passenger travel to cruising with entertainment value. International celebrities were hired to perform onboard, along with cabarets. Casinos and other entertainment amenities were added and the crossing itself was advertised as a vacation.

The Sovereign-class ships were contemporary cruise ships that were built in the late 1980s and were the first mega ships built specifically for the mass cruising market. These were also the first series of cruise ships that included a multi-story lobby and single deck housing cabins with private balconies.

Between 1988 and 2009, just two short decades, cruise liners have grown longer and wider with an increased passenger capacity from just 2744 passengers to 5400 passengers. They have also tripled in volume from 73,000GT to 225,000GT.

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Cruise Industry - Current Trends

The cruise ship business has been, historically, volatile. The prominent reason for this is that ships are a large capital investment with high operating costs. Throughout its existence, cruise lines have sold, renovated, or rebranded their ships to keep up with the continually changing traveling trends. The 1990s witnessed a wave of failures and consolidations as many cruise liners were bought over by larger holding companies and continued operations as a brand. For example, Carnival Corporation & PLC’s owned Carnival Cruise Line had an earlier reputation as ‘party ships’ for younger travelers and yet turned its name around to become synonymous with the large, modern, and profitable enterprise.

There are some cruise liners that even specialize in a particular cruise type. Saga Cruises allows passengers only above the age of 50 years aboard their ships, while Star Clippers only operate tall ships. Carnival Corporation & PLC, Royal Caribbean Cruises Ltd., and Norwegian Cruise Line Holdings are currently the largest cruise line holding companies and operators in the world.

In comparison to the hotel industry globally, the total number of cabins on all world’s cruise ships amounts to less than 2%.

Facilities and Amenities Offered Aboard Cruise Ships

Cruise ships operate similarly to a hotel and are also known as floating hotels. These ships are equipped with a complete hospitality staff in addition to the crew. Modern cruises offer various dining experiences like formal fine dining, buffet-style eateries which may remain open 24 hours, or even a diverse range of ethnically themed restaurants. Various other on-board facilities include –

• Card Room
• Casino – Open only when the ship is on the high seas and able to avoid conflict with local laws
• Child Care Facilities
• Cinema
• Clubs
• Fitness Center
• Hot Tub
• Indoor / Outdoor swimming pools with water slides
• Infirmary and morgue
• Karaoke
• Library
• Lounges
• Observation Lounge
• Ping-pong tables
• Pool tables
• Shops – open on the high seas to avoid merchandising, licensing, and local taxes
• Spa
• Teen lounges
• Theatre with Broadway-style shows

There are a few ships that offer additional entertainment amenities like bowling alleys, ice-skating rinks, rock climbing walls, sky-diving simulators, miniature golf courses, video arcades, ziplines, surfing simulators, water slides, basketball courts, tennis courts, chain restaurants, rope obstacle courses, and even roller-coasters.

The Effect of the Pandemic

As the world grappled and crumpled under the attack of the deadly coronavirus, all economic activity was brought to a standstill. The cruise industry was rocked under weighty restrictions from various governments as countries refused docking permissions or in some cases did not allow crew members to disembark and return home after the passengers were safely sent back. The cruise line stock saw a sharp decline on March 27^th, 2020 after the USD 2 trillion relief package passed by the US Congress and signed by then President Donald Trump excluded companies that were not organized under United States Law.

In a tweet, Senator Sheldon Whitehouse clarified – “The giant cruise companies incorporate overseas to dodge US taxes, flag vessels overseas to avoid US taxes and laws, and pollute with offset.  Why should we bail them out ?”  

Carnival Corporation & PLC, which is registered in Panama, England, and Wales recorded a loss of 75% on its stock between 1^st January and 31^st March 2020.

Environmental Impact of the Cruise Line Industry

Sewage, greywater, hazardous waste, oily bilge water, ballast water, solid waste, and air pollutants are a number of waste streams that are produced by cruise ships in general. If left untreated, these wastes can be a significant source of pathogens, nutrients, and toxic substances that can cause damage to aquatic life. Cruise ships primarily run on heavy fuel oil which results in high sulphur dioxide emissions. However, most cruise ships are now taking active steps towards reducing environmental pollution and are fuelled by LNG. Cruise ships are also increasingly being adapted to use onshore power reducing dependency on diesel generators.

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Drivers of the Cruise Industry and Conclusion

The global cruise industry is being driven by the growing hospitality and tourism industry as holidaymakers are looking for small vacations in the wake of the pandemic. Millennials are increasingly enjoying leisure trips and voyages. River cruises are gaining popularity with attractive packages that include travel within the countries and not just the coastal areas.

Between 2022 and 2028, the river cruise segment itself is all set to witness the fastest growth rate by registering a CAGR of 13.3%. However, the market is dominated by ocean cruises by revenue share due to their exciting packages, amenities, and entertainment activities. The cruise industry is here to stay for the long run as it continues to offer and deliver unique experiences to travelers.

FAQs

Which are the largest cruise line holding companies in the world?

Carnival Corporation & PLC, Royal Caribbean Cruises Ltd., and Norwegian Cruise Line Holdings are currently the largest cruise line holding companies and operators in the world.

Which was the first ship that was built for luxury cruising?

The first ship that was exclusively built for luxury cruising was named Prinzessin Victoria Luise of the German Empire.

What are the environmental impacts of the cruise line industry?

Sewage, greywater, hazardous waste, oily bilge water, ballast water, solid waste, and air pollutants are a number of waste streams that are produced by cruise ships in general.