By
Michele Witthaus |
The leaders of the world’s four largest cruise corporations participated in the opening session of Cruise Shipping Miami 2014 at the Miami Beach Convention Center on 11 March. The State of the Global Cruise Industry plenary session marked the opening of the 30th anniversary of the cruise event.
The BBC’s Katty Kay moderated the session, which featured the first appearance at a cruise trade event of this scale by Arnold Donald, who was appointed president and CEO of Carnival Corporation & plc in June 2013. The other members of the panel were Richard Fain, chairman of Royal Caribbean Cruises Ltd.; Kevin Sheehan, CEO and president of Norwegian Cruise Line; and Pierfrancesco Vago, executive chairman of MSC Cruises.
Donald said: “Clearly, the last few years the industry has experienced demand growth that is less than the capital growth we need in order to get the yields we want across our products and services. The challenge for all of us is to attract the new to cruise.”
Sheehan said the industry had managed to grow through the worst of the economic downturn. “My hope is that we finally have a strengthening market and we need to be smart about driving growth. We deserve a higher price and I think we are poised for that right now.”
Vago remarked: “Despite the shrinking economy, Europe has been amazing on the cruise industry side. We have seen an increase of 400,000 passengers in the last five years and since 2008, the cruise industry has increased by 50% in Europe alone.”
On the subject of what cruise passengers want, he said: “Our brands serve distinct psychographic markets, and all 10 are different.” He noted that the company’s expanding Asia operations demanded specialised planning approach as cruise is so new in much of the region. “We are starting with a greenfield in China. There really is opportunity everywhere.”
Fain said: “We have so far resisted the temptation to homogenise ourselves and have maintained brand differentiation. We should differentiate ourselves on what our guests want - it is part of the reason the industry has been successful.”
On the subject of the impact on public confidence in cruising following the Costa Concordia and other incidents, Sheehan said he referred to the ‘schmuck factor’. “Someone says he’s going on a cruise and his friends ask: ‘Hey, didn’t you read what’s going on?’”
Donald said that his company had learned from the public relations challenges of the last two years. “We hadn’t done enough to give context but we’ve been working on that.”
Fain said that because cruising is seen as exotic and esoteric, “we are held to a higher standard. The fact that these incidents are so extraordinary makes them of interest, but the public is beginning to realise how anomalous they are.”
Vago referred to the role played by CLIA in improving safety in recent years. “We engaged with lawmakers, governments and the IMO to voluntarily increase levels of safety over and above those required by class certification; we set up a safety review; and we added ten new regulations and introduced the CLIA Passenger Bill of Rights.”
Sheehan warned, however: “Unless we can keep our businesses out of the news for a period of time we will continue to be on the defensive all the time and we need to go back on the offensive. We need to have a period of time of stability from a news standpoint and once we do, this industry will thrive.”
The panellists agreed on the need to counter the threat of more taxes being imposed on the cruise industry. “We pay a lot of taxes all over the world,” said Donald. “In terms of changing the tax laws, the reality is that it will not be good for us to have added tax, from a job creation standpoint, from a revenue standpoint, and in terms of being competitive.”
Fain added: “A recent survey showed that the cruise industry generates 325,000 American jobs and in Europe a little over 300,000 jobs.”
Perceptions of cruise were being hampered in the US by the fact that the country is among few countries that don't have a ministry of tourism, said Donald. “It speaks to the perception of tourism that we haven't elevated it to that level, even though it drives an unbelievable number of jobs. We want to make it easier for people to come and visit the US, and for people in the US to access what they want in another part of the world.”
The conference programme, which runs from 10-13 March, follows four themes this year: Ship and Ship Operations, Global Geography of Cruise Tourism, Market Segments and Cruise Product Development.