Cruise Industry Market Is Strong while Capacity Soars with New Ships

Cruise lines are enjoying a booming rebirth after coming to an abrupt halt during the early stages of the Coronavirus. Loyal customers are booking cruises again, and the cruise lines are improving operating efficiencies. Some are even taking delivery of new ships.

Cruise ships are a unique business model within the hospitality industry, a hotel/guest cabin side, multiple dining venues and a tour operation in one platform. The crew skills required to operate a cruise ship safely and successfully are by far the most varied within any of the hospitality and travel sectors. Cruise ships must have large engineering staff, a navigation staff, housekeeping, cooking/dining/bar staff, entertainment, social directors and frequently, even casino staff. Frequently, only a small part of the crew consists of permanent employees of the cruise line, with the balance being contract workers provided by outside firms. The Cruise Lines International Association (CLIA) reports that the cruise industry’s total economic impact on the global economy (on a broad basis) was $75 billion for 2021. The CLIA is optimistic about the resilience of the industry, projecting that passenger volume will recover and surpass 2019 levels by the end of 2023. The global cruise industry is projected by CLIA to grow from 625,000 berths in 2022 to 746,000 in 2028.

Cruises can be particularly well-positioned for budget-conscious tourists, as consumers consider cruises to be fun vacation packages at reasonable prices. Parents cruising with children often bunk the entire family in one cabin, saving even more money. Baby Boomers find cruises a cost-effective way to fulfill their travel wishes as they get older, and Millennials and Generation Xers like the party atmosphere found on some cruises.

Cruise Lines International Association (CLIA) estimated that, globally, 30 million passengers went on a cruise in 2019, up from 28.5 million in 2018 and 25.8 million in 2017. In 2020, CLIA reported passenger embarkations dropping to 5.8 million (down 81% from 2019). For 2021, passenger numbers fell again to 4.8 million. Those numbers rebounded on a global basis to 20.4 million in 2022 and are expected to reach 31.5 million in 2023.

Most cruise lines rely on heavy marketing and competitive prices to keep occupancy rates high. High occupancy, even if it’s necessary to reduce room prices to maintain that occupancy, is crucial, as cruise ships can earn 20% or more of their revenue from incidentals such as on-board spa treatments, extra drinks, shore excursions and gift shop purchases. Gambling in shipboard casinos is also an important revenue generator.

To capture more revenues, cruise lines formed their own excursion tour operations, rather than leaving this business to third parties. While consumers could get better deals if they hired their own guides and drivers, cruise lines were hoping that the convenience of one-stop shopping would attract more customers to book through their tour groups. In most cases, passengers book their own excursions on the cruise lines’ web sites before they even set sail. Some ships, such as the Queen Mary 2, allowed passengers to book excursions through channels on their in-room televisions. Cruise lines were also offering a wider variety of excursions. In addition to the standard, guided day-long bus tours, different lines, depending on the locale of ports visited, were offering helicopter tours, dog-sledding and so-called “canopy adventures,” in which customers skate along cable lines in harnessed suits over treetops. Moreover, cruise lines were booking multi-day excursions and land extensions to their routes. Crystal Cruises offered trips through the rain forests of Borneo or four-night excursions to Jaipur, Agra and Delhi, India. Moreover, cruise lines were spending heavily on marketing and advertising to lure customers and the agents who book the majority of cruise trips.

Royal Caribbean Launches Giant Floating Palaces

Among the largest ships built to date are Royal Caribbean’s $1.35 billion, 236,857-ton, 7,000 passenger Wonder of the Seas which launched in 2022. This vessel joins four other mega-ships (each more than 1,100 feet in length), the Symphony of the Seas, Harmony of the Seas, Oasis of the Seas and Allure of the Seas. In addition, the biggest ship of all, Icon of the Seas, has a maiden voyage scheduled for January 2024. (At 7,600 passengers plus 2,350 crew, it is roughly five times the tonnage of the infamous Titanic, and about two and one-half times as big as the major cruise ships built in the 1990s.) These newest ships also far eclipse Royal Caribbean’s previous behemoths, its three Freedom class ships, launched in 2007 and 2008, that each weigh in at about 160,000 tons and carry about 4,300 passengers. All five ships offer a plethora of revenue-generating onboard activities including multi-story water slides, ice rinks, rock climbing, carousels and themed, open-air neighborhoods in the center of the ships with gardens, restaurants, galleries and shops. An important design feature of Carnival’s latest megaships is the central courtyard, with towers of rooms surrounding each side. While the courtyard gives passengers a place to stroll, shop or dine, it also enables designers to create premium interior cabins with balconies overlooking the courtyards. This is a highly desirable improvement over interior cabins on smaller, traditional ships, as such cabins sell for much lower fares since they have no views and no portholes or balconies.

New ships continued to be built in 2023, with 17 new ocean ships for CLIA members’ lines on firm order with major shipbuilders. These shipyards are mostly in Europe. Major European shipyards include Fincantieri’s Monfalcone yard near Trieste, Italy, Meyer Werft in Germany and Meyer Turku in Finland. Meanwhile, Meyer Werft and Meyer Turku included among their projects four enormous 6,600-passenger ships for Carnival that will be the first ever ocean-going ships to be powered by liquefied natural gas (LNG). Carnival’s Mardi Gras, which is designed to carry 6,641 passengers, was delayed from its original August 2020 launch. Mardi Gras began sailing seven-day cruises in late July 2021. Royal Caribbean’s Icon of the Seas, which will take the title of the largest cruise ship in the world and will carry up to 7,600 passengers, was delayed from a December 2023 launch to January 2024. Chantiers de l’Atlantique (formerly STX France) is building five massive ships for MSC Cruises that will measure 1,082 feet long by 154 feet wide and have capacities of up to 6,850 people. The first of the five, the MSC Virtuosa, was delivered in February 2021. Larger ships can offer greater operating efficiencies than small ships.

Some of the newer ships feature elite access to small “ship within a ship” areas featuring a concierge, 24-hour butler service and a private pool, sun deck and restaurant, in exchange for a higher fare. For example, Norwegian Cruise Line’s Norwegian Escape (which entered service in late 2015) offers The Haven, a luxury venue open to only 275 of the ship’s capacity of 5,000 passengers.

Another innovation on large ships is small, wearable medallions equipped with chips that enable passengers to order and pay for food, drinks, excursions or other items, unlock stateroom doors, find friends on board and link to social media. Carnival unveiled the technology in early 2017 at the Consumer Electronics Show in Las Vegas. The devices also make embarkation and disembarkation faster and easier. Royal Caribbean offers wearable smart bands with similar technology on its high-end ships.

Internet Research Tip:

For extensive information about cruising and cruise lines, visit:

Cruise Lines International Association, www.cruising.org

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