Report upbeat about future for cruise

Record profits being made by the major cruiselines should ensure agents can rely on continuing high commission levels, according to the author of a report released ahead of this month’s Seatrade event in Miami.

UK-based analyst Tony Peisley said of the two major changes seen in the travel industry in recent years; the emergence of low-cost air travel and the growth of cruising, it is the latter that has been good news for agents.

“Low-cost air travel has been a disaster for the travel agent, whereas the travel agent has always proved the best way to distribute cruise product. There is no sign of any marked move away from that. If I was an agent I would be selling cruise,” he said.

Peisley’s report, The Future of Cruising – Boom or Bust? A Worldwide Analysis to 2015, paints a rosy picture.

Market leaders Carnival and Royal Caribbean Cruise Lines, that between them command 71% of the global market, both had record years in 2005 making $2.2 billion profit, up 22%, and £716 million profit, up 51%, respectively.

Star Cruises Group, owners of Norwegian Cruise Lines, also saw profits leap by a half and rapidly expanding, privately-owned Italian cruiseline MSC is tipped to establish itself as the fourth major world player.

Globally, passenger numbers are predicted to get back on track following the downturn after the September 11 attacks on New York with the 20 million mark expected to be hit in 2011, just one year behind pre-September 11 forecasts. UK passenger numbers could almost double to two million by 2010.

Peisley expected the trend for ever bigger ships, that is underpinning the dominance of major cruiselines, will continue. “The big ships have changed the business model for cruiselines who are selling cruises like low-cost flights. Prices go up as demand rises, the discounting primarily comes from agents.”

Passenger Shipping Association director Bill Gibbons said he thought the cruise industry was still going through a growth phase.

“For the travel industry it’s extremely good news that, bar any unforeseen circumstances, the future growth of the industry is assured and the threats to the industry are relatively minor.”

For the first time the European Cruise Council, of which Gibbons is also marketing director, is preparing a study looking at cruise’s economic impact of the sector, something the US has done since 1998. The results are expected in November.

Gibbons expected ship sizes to continue rising and said development of eastern Mediterranean north African ports will help take the pressure off smaller established ports as capacity rises.

“The problem can be not the size of ships but the number of ships and that they all tend to follow each other around and all want to arrive in ports on the same day. I think there needs to be more work done to regulate arrivals.”

The next big challenge for the major cruiselines is expected to crack the Far East market and already there are signs Carnival has its sights on the region with the decision to base Costa Allegra in Hong Kong dedicated to the Chinese market and Costa Marina sailing out of Singapore.

The move follows P&O Cruise’s scrapped Cruise Asia programme out of Singapore this year after it was decided to sell P&O Australia’s 1,200-passenger Pacific Sky to a Spanish operator.

Coming the other way Singapore-based Star Cruises will begin a programme of cruise out of Malta this summer.

“It’s really difficult to focus solely on one market or destination, you really have to have your eggs in more than one basket,” Peisley said. “Asia has been on everybody’s hit list for the last 15 years and for various reasons it has never really taken off at the level that had been hoped for.

“What’s driving the renewed interest is China. It has a huge and increasingly wealthy population.”