The luxury cruise sector is growing, but is it too much, too soon? Hollie -Rae Brader investigates, as aspire puts the spotlight on the ship dubbed ‘the most luxurious in the world’
The luxury cruise market is going through somewhat of a renaissance.
This year marked the arrival of three ocean ships from upmarket brands, a wealth of river ships and even a high-end boutique expedition yacht. The growth looks set to continue with Seabourn launching the first of two new ships, Seabourn Encore, in January, and further vessels slated for Regent Seven Seas Cruises, Silversea and Crystal Cruises, which has three ocean ships on order.
But in the years leading up to 2016, the sector went through a slight dip, with no additional capacity and pretty stagnant passenger figures. In fact, capacity in the luxury sector fell slightly between 2012, when it hit a record number, and 2015.
Figures from Clia UK & Ireland show that 18,515 Brits took an ‘ultra-luxury’ cruise in 2006. The figure peaked at 28,450 in 2012, before falling to 26,513 in 2014. The total did rise, however, in 2015, albeit by fewer than 100 passengers, hopefully signalling an end to the hiatus.
There’s no doubt that new and innovative ships will provide a big boost to the industry.
But the rapid growth that is plotted, particularly by Crystal Cruises, has split opinion among industry bosses. While most support the growth of the sector, others are fearful it will drive prices down.
Larry Pimentel, president and chief executive of Azamara Club Cruises, is one of those with anxieties. Earlier this year, he told delegates at the Clia Conference in Southampton that he was putting his growth plans on hold due to fears that other lines were flooding the market with too much capacity.
He said: “Capacity is a sensitive issue. The luxury sector has amazing growth plans and there are more ships coming into service than I’ve seen in my three decades in cruise.
“It’s too much, too fast – it will drive down prices. I firmly believe that there will be cruises lines that will sell, merge or collaborate because they will have to.”
But when Frank Del Rio, chairman and president of Norwegian Cruise Line Holdings, was asked his thoughts on Pimentel’s views, he dismissed them. This is likely to be linked to the fact that he runs two of the lines spearheading the growth, with Regent launching Seven Seas Explorer and Oceania Cruises launching Sirena earlier this year. Del Rio is bullish about the “build them and they will come” adage, believing that creating supply boosts demand.
“Azamara doesn’t have any new ships and probably never will, so I can see why Larry takes that view,” he said. “This industry is one that works for the saying ‘build and they will come’. It’s a truism. This is a competitive industry and everyone is raising the bar, regardless of which space they operate in.”
Edie Rodriguez, president and chief executive of Crystal Cruises, is also confident of growth in the luxury sector, with the brand planning to launch aircraft, river ships and yachts over the next six years.
Agents are leaning towards Del Rio and Rodriguez’s way of thinking, believing that in the long run, an increase in supply will lead to a surge in demand. James Cole, managing director of World Travel Holdings UK, which owns Six Star Cruises, predicted some short-term impact on pricing, which would settle once demand catches up with supply.
He said: “In my 20 years’ experience of the UK cruise industry, capacity increase has usually been supply-led and due to the cruise lines introducing new product to the market.
“In the mid to late 1990s, the public did not demand three-star cruising, which was supplied by the likes of Airtours and Thomson. Demand caught up with supply.
“A similar thing happened when Royal Caribbean based a mega-ship in Southampton for the first time.
“I don’t see any difference with the luxury cruise market. The more supply, the more marketing and the more distribution [there is], the more value for money the product will become until demand catches up [quickly] with supply.
“In the short term, there may be some downward price pressure, but in the medium and longer term, demand will catch up with supply.”
Claire Brighton, senior commercial manager at Advantage Travel Partnerships, said members were jumping at the chance to boost their luxury cruise bookings. She said: “We have seen strong growth in the luxury cruise sector over the past 12 months, which certainly indicates there are more luxury cruise passengers out there for agents to target.
“The buzz around new luxury ships such as Seven Seas Explorer, Oceania’s Sirena and the still-to-come Silver Muse and Seabourn Encore would indicate that passengers want to see new product from these lines.
“It is difficult for anyone to say if the growth in any area of cruise is too much, too quickly – and that includes luxury – but our members are certainly taking the opportunity to grow their share of it, and new product only assists with this.”
As Brighton points out, no one really knows what the future holds for luxury cruising, but the industry will certainly expect growth in its 2016 figures due to the high profile launches. The impact growth has on pricing remains to be seen.