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YEAR BY 2000, ANALYSTS SAY Photo: P&O/Princess Cruises' Star Princess off the coast of St. Croix. In an effort to offset more cau- tious or reduced spending, some cruise lines are augmenting their discount practices by creating new cabin classes at reduced rates. In addition, cruise lines have stepped up their marketing cam- paigns by boosting their ad spend- ing 20 percent in 1990 to $300 mil- lion. The major target of the cruise industry is first-time customers. Cruising accounts for only 5 percent of the nation's $100-billion-per-year leisure business. Cruise lines are hoping new programs and itinerar- ies will not only attract new passen- gers but also bring repeat business by offering previous customers a new experience. According to Jim Godsman, president of CLIA, at the Holiday at Sea Convention in London, the number of first-time cruisers was a very encouraging sign for the indus- try in 1989. A study in 1986 showed that they accounted for 38 percent of all business. In 1988, this figure grew to 44 percent, and last year the figure rose to 50 percent. At a recent marine conference in Vancouver, B.C., Canada, Richard Skinner of Seattle-based Holland America-Westours, stated that the international cruise industry has grown from a mere 500,000 passen- gers two decades ago to 3.7 million in 1989. Mr. Skinner also believes that the industry will continue to grow by nearly 10 percent per year over the next five years. The Pacific Northwest has been a particular area of growth in the North American market. Since 1986, Alaska has become the fourth largest cruise destination, with about an 8 percent market share, surpassing the 100,000 passenger mark for the first time. In addition, passenger growth through Vancouver has grown to from 267,000 five years ago to 388,000 last year. Holland America Westours plans to add new capacity this year. Furthermore, Holland America also plans to enter the eastern Cana- da market with the 1,200-passenger Rotterdam. She will make autumn cruises from New York to Quebec City and Montreal. "As fleets continue to grow, cruise lines will be looking for destinations which can help them fill their ships," said Mr. Skinner. "There is a huge population pool in the New York, Boston, Philadel- phia area which we can tap into, that we think would love to cruise to Canada," he added. Rumors are circulating that Crys- tal Cruises Ltd. also plans to enter the eastern Canadian cruise market with the new 960-passenger luxury liner Crystal Harmony. Like the Rotterdam, she would also sail out of New York. Although the North American market represents 84 percent of the world total, other areas are growing in importance. One international cruise opera- tion that is hoping to consolidate regional market share is Mitsui O.S.K. Lines, which recently added it fourth luxury vessel, the 22,000- grt Nippon Maru. According to Michael White, a spokesman for Mitsui O.S.K. Lines, his company is focusing on the Asian cruise market, which has been growing rapidly. Compared with 4 million passen- gers a year in North America, Japa- nese passenger bookings rose to 142,000 last year from only 120,000 in 1988. Mitsui O.S.K. Lines' focus on the Asian market led the compa- ny to form a joint venture with a Chinese entity to operate a ferry between Kobe, Japan, and Tianjin, China. In addition, the Japanese compa- ny is also involved in the new cruise company Diamond Cruises Ltd., along with Finnish and U.S. inter- ests. Diamond Cruises Ltd. plans to enter the Caribbean and Mediterra- nean markets in 1992 with the revo- lutionary new SSC Radisson Dia- mond, an 18,400-gross ton cruise ship based on semisubmersible technology. Besides Asia, Europe is a growth area for the cruise industry as well. The U.K. market, for example, has grown from about 90,000 passengers four years ago to 180,000 passen- gers. Analysts predict that this market could reach 300,000 by 1996. Without a doubt the cruise indus- try will continue to grow worldwide, but just how much will depend on factors outside of its control. January, 1991 25
