The Future of Cruise Industry

Category: Cruise, Future, Industries
Last Updated: 24 Mar 2020
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The Future of Cruise Industry Abstract Cruise industry has rapidly developing since 1990s; it becomes not only as transportation tool, but a modern way of travel and even lifestyle. It is regarded as ‘floating resorts’. This journal article focuses on the future development of cruising industry.

It examines cruise industry on five main factors: the structure of the industry: high concentration and enter of Low-Cost cruise lines; the potential customers: whether aging population or young generation would be the major group of consumers; destinations and markets: define the most popular destinations and core markets, as well as the exploration of new markets and destinations; the new innovation of sea-based apartment, the safety and security issues, which significant raised concern recently; and whether the cruise industry is environmental sustainable.

Three key sources are used to compare and contrast the viewpoints: Hospitality 2010, which is written by Dr. Cetron; Cruise Ship Tourism, written by Dr. Dowling; and the Cruise Ship Experience, written by Dr. Douglas. These key sources are very up-to-date and reliable, the key authors are admitted as experts whether in the business or academic field, their works are in line with the topic. This journal article identifies current situation and the future developing trends of the cruise industry. It concludes that he cruise industry has a very bright future if proper measurements and regulation are being introduced and well implemented.

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Nowadays, Cruise industry is concerned as the most rapid growing sector in hospitality industry, which the business is expanding by 8 percent annually. In some specific area such as Alaska and Caribbean, it remains the top industry that contributes to the economy. Cruising business is expanding and changing world-wide; however, the industry is little understood by the society. Today, ships are not viewed as a means of transport but as floating resorts. Mega ships were introduced to carry more than 5,000 people; new ports on call and destinations are been discovered and on the way of developing the business.

However, accomplished by the booming of the industry, several issues have been risen concerns on. This journal article will discuss six issues relate to the developing trends of cruise industry: the structure of the industry and further trends; the potential passengers; the existing and potential markets and destinations; the sea-based apartment—will it be popular; the concern of safety and security which is considered as primary factor due to the terrorist attacks; and the environmental issue: should corporations be self-guarded or forced to implement regulations.

The thesis statement of the article is that cruise industry will overcome the difficulties and have a fortunate future. The secondary research is based on both quantitative and qualitative data, include case studies, statistics and in-depth interviews. To support the secondary data, a primary research was conducted in the form of questionnaire. The sample gathered fourty international students that majoring in hospitality and tourism management in Sydney. The sample was gained from the Carrick College, International College of Management, Sydney and Holmes College.

The nationalities are varies, include Sweden, Norwegian, Australian, Japanese, Korean and Chinese. The questionnaire combines ‘Yes or No’ questions, multiple choices and short answers. These questions are in line with secondary data that discussed in the journal article, identify whether people are interested and willing to experience cruising in the future. The aim of primary research is to explore whether the responses are support or against Dr Dowling (2006), Dr. Cetron (2006) and Dr. Douglas (2004)’ findings. Literature Review

Ideas from two key sources are used to compare and contrast in this journal article. The first key source is chapter 8 from Hospitality 2010, which is written by Dr. Marvin J. Cetron, who is a professional forecaster for over 40 years admitted both by corporate and American government. He is admitted as an expert in the fields of technological forecasting, strategic planning, technology assessment, R&D planning, resource allocation, economics, marketing, and the behavioral sciences. Dr. Cetron has written 36 books, numerous articles and papers.

His most popular works are future orientated. Hospitality 2010 is written in the form of business report and is considered American biased (Hall, 2007); Chapter 8 explores most of the aspects of cruising industry briefly which brought out discussion. It examines potential trends and problems such as waste management, aging population and future destinations that are particularly useful for this journal article. Dr. Ross K. Dowling is Foundation Professor and Head of Tourism in the School of Marketing, Tourism and Leisure, Faculty of Business and Law, Edith Cowan University, Western Australia.

Professor Dowling is an international speaker, author, researcher and consultant on tourism with over 200 publications. He is passionate about Cruise Industry and he has lectured on board Silver Cloud around the east coast of Australia and New Zealand. The second source: Cruise Ship Tourism is the first comprehensive academic book to raise the awareness of cruise industry. It analyses current status of cruise industry and investigates a number of industry issues and predicts the future trends. This book gives clear direction from academic viewpoint. The third key source is The Cruise Experience written by Dr.

Norman Douglas and Dr. Ngaire Douglas. Dr. Norman Douglas is Director of Pacific Profile and has taught at the University of New South Wales, the University of the South Pacific, Fiji and the University of Hawai’i. Dr. Ngaire Douglas is Associate Professor in the School of Tourism and Hospitality Management, Southern Cross University, Lismore, NSW. The Cruise Experience examines cruising today, the economic impacts of cruising, and case studies from various perspectives. The Structure of Cruise Industry No doubt, three major companies control about 80% of the cruise market worldwide.

The top three companies are Carnival Corporation, Royal Caribbean and Star Cruise. While the cruise industry’s capacity is increasing, the number of cruise companies is shirking. Douglas (2004) states that the move towards oligopoly will continually contribute to the disappearance of the mid-sized independent cruise companies which are rating from three-to-four star; only companies which have their own niche market or have strong economic background will survive. Furthermore, the Carnival Corporation aims not only the ‘world leading cruise lines’, but ‘the world only cruise line’.

It means more cruise lines would likely be merged in the future; the concentration in the industry is possibly to increase even further (Dowling, 2006). Klein (2002) identifies bankruptcies as another reason for high concentration of the industry. In 2000 and 2001, seven cruise companies have ceased operations, include Premier Cruises, Commodore Cruise Line, Cape Canaveral Cruise Line and World Cruise Company, which eliminated more than 7,000 berths. Klein (2002) observes that the cruise industry’s expansion would be greater if the bankruptcies were not happened. Besides concentration that highly emphasised by experts, Dr.

Dowling (2006) argues that Low Cost Cruising would make a significant growth of the industry. For example, Low Budget ‘no-frills’ style airlines had made a success in 2000s, such as Midway Airlines and SunJet Airlines. In 2005, the founder of one of the Low Cost airlines, EasyJet, has started a Low Cost no frills cruise line EasyCruise in Europe, targeted at younger generation between 20 and 40 years old; more than half of the customers are British, followed by Americans, Germans and the Swiss. Dr. Dowling (2006) asserts that there will be a rapidly growing niche market for low cost cruises. Potential Passengers

According to Dr. Dowling (2006), a recent survey has shown that the passengers are becoming more youthful and are demanding more active itineraries. Take example of Alaska, the average age of passengers has fallen from 65 to 50 during 2004-2005. Furthermore, Dr. Dowling (2006) claims that family orientated cruises is becoming increasingly popular and will become a major niche market in future. Cruise Lines International Association (CLIA, 2004) showed 16% of cruisers bring children under age of 18 years sailed on their member line ships in 2004, which estimated number of more than one million. Dr.

Cetron (2006) agrees that younger travelers form a profitable market for family cruising; to build up brand loyalty is one of the biggest advantages of catering them, cruise companies considered them as the most profitable cruisers for their later lives. Dr. Dowling (2006) observes that compare to younger generation, the number of full-time retirees is declining due to the fact that mid-career baby boomers now make up the largest market for cruises of 42%. In contrast, Dr. Cetron (2006) strongly argued that due to the fact that people are living longer and growing older on average, these people make up a growing segment of the cruise market.

According to the Center for Strategic and International Studies, people over 65 were only 8% of the population in 1950 in the developed world, but 15% in 2000 and will be 27% in 2050. In some countries like Japan, the number will climb up to 37%. Secondly, senior generation take the longest and most luxurious cruises. Different from family and budget-minded passengers, elder people prefer small ships and regardless of the money just to have good times. They would be very profitable for cruise operators. Thirdly, Dr.

Cetron (2006) believes that the growth of over 65 market will moderate the regular seasonality of tourism, because retirees can travel at any time; this can help cruise operators to adjust their cash flow. In addition, some cruise lines have already targeted retirees as core market and adjust their service to suit the market; Dr. Cetron (2006) recommends this market has potential consuming strength that could definitely increase revenue for the cruise company; others should follow their lead. New Markets and Destinations A number of new markets and destinations are rapidly recognised in the cruise sector.

Dr. Cetron (2006) illustrates that by 2010, China is expected to be the single largest source of international tourists in the world, displacing Americans, Japanese and Germans. He predicts that 100 million Chinese will travel globally in 2020; even 1% of them take cruise trip, the market size will be more than doubled. In the meanwhile, although Dr. Dowling (2006) concerns China as a potential market as well, he suggests more studies should be conducted before enter of the market to understand and explore the possibility to develop cruise industry in China. Another emerging cruise destination both Dr.

Cetron (2006) and Dr. Dowling (2006) have strongly emphasised is the Indian Ocean. South Africa and the Eastern African ports have already established some trade, 0. 2% of the world market, as Dr. Dowling (2006) states; the National Ports Authority is working on the development of the cruise industry in this region in order to ensure that efficient, effective services and facilities are provided to cruise liners to populate the South African coastline. As Dr. Cetron (2006) observes, cruise lines will begin to offer cruises and on board amenities suited native Indian’s taste and serve the local market.

A New Innovation: Sea-based Apartment Dr. Dowling (2006) states that another area of potential expansion in the future is the rise of service apartment ships. These type of ships represent another type of community, the service include Clinique, swimming pools, several restaurants, grocery stores tennis court, disco, book store, mini golf course and helicopter pad. Already there is one privately owned residential cruise liner, the world, which houses 110 apartments that have already sold out, running the business. The residents mainly come from Europe and the USA.

However, some apartments usually being left empty and treated as holiday homes. Dr. Dowling (2006) concludes that the possibility of whether sea-based apartment is a new opportunity for cruise lines or just a short term fashion will be identified by time. Safety and Security Anderson (2005) described security issues facing cruise industry include piracy, terrorism, drug smuggling, sexual assault and stowaways (Dowling, 2006). Piracy is a form of terrorism that exists for a long time. However, it has been largely ignored by the community due to the frequency of attacks. Dr.

Dowling (2006) demonstrates the main cruise ships routes of piracy include the Straits and Malacca, the Red Sea and Indonesian and Malaysian waters. Another issue which has continually raising the concern is terrorism, despite of the infrequency of attack of cruise lines. The Caribbean has been identified as a major area of terrorist attack. Dr. Dowling (2006) detected that terrorist incidents within the cruise industry has been very rare, which is less than 2% of all terrorist attacks in the last thirty years. It may due to difficulty of accessibility and the specialist skills compare the way to attack land-based targets (Chalk, 2002).

Dr. Cetron (2006) argued that cruise ships are ideal targets for terrorists who are willing to sacrifice themselves as they can take large number of people with them. The second reason is, as the government facilities and land-based buildings are becoming harder to attack, cruise ships are currently facing great risk. Furthermore, 94 percent of American rate the hotel safety as a primary factor in order to decide where to stay (Cetron, 2006). Regarding cruises as floating hotels, terrorism becomes a top concern for passengers. Both Dr. Cetron (2006) and Dr.

Dowling (2006) mentioned the highjack of the Italian cruise liner “Achille Lauro” in 1985, which a US citizen was killed. Great emphasis of improving passengers’ safety and security was implemented immediately after the attack. Even though, bomb threats on board have never stopped, accomplished by people being killed. Recently, The International Ship and Port Safety (ISPS) Code was fully implemented in order to control the situation. Dr. Dowling (2006) emphasises US and Australia have higher security measures than other countries to prevent terrorist attacks on maritime targets.

In addition, Australia has some of the most secure ports in the world including the USA. Dr. Dowling (2006) concludes that there is little the industry can do to prevent terrorism, however, it can be minimised through better security both at sea and in port. In addition, Dr. Cetron predicts that the legislation will be much tighter in the future regarding to the prevention of terrorism on board. Environmental Sustainability: Environmental Policy Challenges The question has been raised that whether cruise industry is environment sustainable or not. As the primary survey shows, environmental issues are not being realised seriously by society.

Surprisingly, 74 percent of the sample responded with no clue of what environmental impact the cruise industry would cause, which is very shock. In fact, the destinations that located in biodiversity hotspots are being highly concerned as they have the most diverse and threatened environments on Earth. The destinations include the Caribbean, The Mediterranean, Western Mexico, the Panama Canal Zone and the South Pacific. Over the last 40 years, the governments have already made some progress and implementing environmentally responsible legislation and policy guidelines.

However, Furger (1997); Freeman (1997); Luke (1997) and Sinclair (1997) argues that “current debate shows ongoing progress will not be accomplished by government intervention alone” (cited in Dowling, 2006). To examine whether self-regulation and voluntary guidelines or control regulation is more suitable for the cruise industry, two case studies from Juneau, Alaska, USA and Sydney, NSW, Australia are examined in the article. No doubt, the state of Alaska has the strictest regulations for cruise ships in the world, as the state regards the industry as primary factor that contribute to the local economy.

The sewage and grey water discharge are especially strict in Juneau. Dr. Dowling (2006) states The Clean Water Act in the USA allows sewage to be dumped into the ocean beyond 3 miles of shore but not navigable water. Grey Water can be discharged anywhere in the USA but Alaska and the Great Lakes. Once the legislation has set, cruise companies responded voluntarily and showed their enthusiasm to go beyond compliance, which effect their marketing, reputation and economic value. Their strategies include best practice management, eco-labelling and green marketing.

In the meanwhile, innovative technology in the form of advanced on-board wastewater treatment facilities was introduced by the cruise industry that is commonly applied to the cruise ships today. However, Dr. Klein (2002) argues that environmental responsibility can never voluntarily assumed due to the disappointed history. Dr. Klein (2002) describes the pattern that most industry innovations follow is, deny their faulty behaviour, persuade government to not implement regulations, resist enforcement, and after being caught, announce new company’s regulations.

He maintains that self-regulation is the way cruise companies to escape from being caught. The situation in Sydney is a reverse of Juneau, where ‘regulation stifles innovation and discourages beyond compliance behaviour’ (Dr. Dowling, 2006). The legislation of ‘no-discharge’ in Sydney has made shipping agents frustrated. In Juneau, those ships with the state-of-art wastewater systems can discharge continuously cannot make exceptions from no-discharge policy applies at Sydney Harbour.

To reply these unhappy operators, Sydney ports argue that even advanced wastewater system installed in cruises, produce still excess nutrients (Sydney waterways, 2003). However, no-charge policy has made the new system become a financial liability to cruise companies. They have to afford the cost of installing and operating the system but still have to pay for sewage disposal. To reduce the cost, cruise companies use older ships with older technologies instead of new ships in Australia; they argue that the no-charge policy is actually posing a degree of harm to the environment, which because older ships poses even more environmental hazards.

In summary, experts support various viewpoints: Sinclair (1997) noted that mix of policy mechanisms and technological innovation should be involved; Klein (2002) asserts the industry requires strong legislations to control the corporations’ behaviour; on the other hand, Rondinelli (2000) believes more industry self-regulation would work. The key author Dr. Dowling (2006) concludes that due to the failure of corporations to build up their credibility and continually being caught and charged, cruise companies should not be trusted by self-regulation; Dr.

Dowling (2006) observes strong legislation would best control the disposal issue and maintains environmental sustainability efficiently. Conclusion It is obvious cruise industry is big business; not only for cruise operators, but valuable for many nations, cities, ports and communities. Just in North American region in 2004, it provided 135,000 jobs and contributed US$30 billion on the US economy, which increased more than 18% over the previous year.

The business structure will be very similar to the current airline industry, which dominate by oligopolists but small growing sector for Low Cost cruises; and these large companies might implement predation strategy, increase the frequency of sailing routes and depress the prices to drive Cost cruises out, like what American Airline did in 1990s. Secondly, the passengers will not only be concentrated on elder generation, but involved all age groups; different cruise lines will particularly target different groups when considering purchase new vessels and planning market strategies.

Thirdly, the progress of developing cruise industry in developing countries is on their ways, the future markets and destinations will not be only in developed nations, but spread globally. Next, the trend of sea-based apartment is difficult to predict, but due to the luxury and extremely high price of purchasing, one thing cannot deny that it is entertain for upper class only. Furthermore, due to the continue impact from terrorist attack and risen concern from passengers, the policy of safety and security will be increasingly tighter with new detecting technology involved.

Lastly, the environmental sustainability issue will never be finished the discussion. In my opinion, doesn’t matter what action people take into account, when there is human activities, it will be no longer sustainability. However, due to the fact that it is merely impossible for human being to stop discovering the Earth, what government and non-profitable orgnisations can do is to minimise our influence to the environment, establish more policies to regulate and strict activities with monitoring, because I believe deeply that self-regulation will never work, as long as the improper discharge of wastes can save their cost.

At the very end, I strongly believe the cruise industry will have a very bright future, for the cruise operators, the consumers, the employment, the society and the governments. References Cetron, M. (2006). Hospitality 2010— the Future of Hospitality and Travel. New Jersey: Pearson Prentice Hall Dowling, R. K. (2006). Cruise Ship Tourism. London: CABI. Douglas, N. & Douglas, N. (2004). The Cruise Experience – Global and Regional Issues in Cruising. London: CABI. Ebersold, W. B. Business Briefing: Global Cruise-- Cruise Industry in Figures. 2004). [Online]. Available: http://www. touchbriefings. com/pdf/858/ebersold. pdf [Accessed 2008, April 1]. Klein, A. R. (2002). Cuise Ship Blues—The Underside of the Industry. Canada: New Society Publishers Ye, W. China’s Cruise Economy is Ready to Bloom. (2007). [Online]. Available: http://www. ccyia. com/english/News_View. asp? NewsID=154 [Accessed 2008, March 31]. Choi, C. Q. (2007, March 25). Cruise Lines Face More Policing of Waste Disposal. The New York Times. P5. Appendix Survey on Cruise Industry 1. Have you ever been taken a cruise trip?

Yes No 2. Are you willing to take a cruise trip in the future? Yes No Not sure 3. Which type of cruise do you prefer? A. Small luxury ships with personalised service B. Big ships, 1000 – 2000 passengers, probably need to Queue for amenities/facilities C. Budgeted cruise trip 4. Who would you likely to travel with? A. Friends B. Family C. Alone 5. How many days do you prefer to spend on cruising? A. 3 days B. 3 to 7 days C. 14 days D. A month 6. What is your spending expectation during the stay on a cruise?

A. AU$50 to 100 B. AU$100 To 300 C. More than AU$300 7. Is there any destinations you wish to visit? Eg, the Caribbean, Alaska, Australia round trip, Antarctic, Malaysia/Indonesia, China 8. Why you choose cruise trips but not land-based hotels/resorts? Give one or more reasons. 9. What is the most important factor that you consider when choosing a route or cruise line? 10. Do you know the cruise lines are damaging the environment especially the marines? If yes, what things should be done to prevent/reduce the impact of cruise industry?

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The Future of Cruise Industry. (2018, Aug 20). Retrieved from

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