Page 13: of Maritime Reporter Magazine (January 1989)

POTENTIAL FOR SIGNIFICANT GROWTH FORESEEN

IN EXPANDING CRUISE SHIPPING INDUSTRY

By James G. Godsman, President*

Cruise Lines International Association *Editor's Note: A veteran of more than 25 years' experience in sales, marketing and general management in both the consumer packaged goods and transportation indus- tries, Mr. Godsman has been president of

CLIA since October 1985. He has been instrumental in increasing the visibility of both CLIA and the cruise product.

The cruise industry is one of the fastest growing sectors of the travel industry. Since 1970, when an esti- mated 500,000 people took cruises, cruise passenger travel has in- creased 600 percent, with more than 3 million people taking a cruise in 1987.

This growth has led to the cruise industry contributing over $1.2 bil- lion annually to the U.S. economy in direct purchase of goods and ser- vices.

In addition, the North American cruise industry's growth is also re- flected in the significant increase in capacity and passenger berths, with about 35-40 new ships having been built or planned during this decade.

Estimates project that cruise lines will spend more than $3 billion on shipbuilding before 1990.

The New York-headquartered

Cruise Lines International Associa- tion (CLIA), a marketing-promo- tional trade organization comprised of 35 of the major cruise lines serv- ing North America, believes that the 1980s "will go down in history as the most prolific in a generation—and perhaps of this century—for new passenger ship introductions."

In 1988, 10 new cruise ships with a total of more than 8,000 berths will have been launched. This year should see at least a half dozen new launchings with an additional 7,600 berths.

CLIA reports that 1988 should see a 1 percent increase in passenger totals from 3 million in 1987 to 3.5 million in 1988. The association es- timates that passenger travel has been growing at a rate of 11 to 14 percent per year throughout the 1980s.

Although there has been a signifi- cant increase in cruise passenger travel during 1980s, recent research indicates that there is still substan- tial room for growth. The research indicates that because of lingering misconceptions about the cost of cruise travel and old travel habits, potential consumers still might be wary of taking their first cruise.

While roughly 5 percent of the population has taken a cruise, CLIA has targeted its promotional efforts at the enormous body of potential first-time cruisers.

According to a study conducted by the research firm Market Scope

Inc. for CLIA, almost 75 percent of the 35 million people identified as "cruise prospects" are favorably dis- posed toward taking a cruise vaca- tion but simply have not gotten around to it.

January, 1989

James G. Godsman

The research indicates that only one of eight has a specific concern or "hasn't considered a cruise vacation seriously enough to take a posi- tion."

Over 50 percent of the prospects rated a cruise vacation higher than other vacations because of its par- ticular advantages.

For example, prospects cited such benefits of cruise travel as pamper- ing, service, convenience (no contin- uous packing/unpacking), quality food, rest and relaxation, casino gambling and exciting nightlife.

The Market Scope study showed that the cruise industry has done an excellent job of promoting most of the primary benefits of cruise vaca- tioning and has certainly overcome the traditional barriers to trying a cruise vacation.

This has been accomplished by such means as heavy advertising, public relations, direct marketing and the support of CLIA. But there are still several areas that need fur- ther emphasis.

According to research, the major obstacles to attracting the first-time cruiser are the (1) misconception that cruise vacations are too expen- sive and (2) vacation inertia.

The study showed that slightly more than 60 percent of cruise pros- pects believe that a seven-day cruise costs over $1,500 per person, and about 20 percent believe that it costs more than $2,500 per person.

The average price for a seven-day cruise, including airfare, is less than $1,300, although it can range from as low as $945 to as high as $18,770.

The important factor is that the price includes all meals, entertain- ment, a wide choice of activities and free or sharply reduced airfare.

When one takes all these into ac- count, it demonstrates the great val- ue of a cruise vacation.

Obviously, cruise lines need to communicate this value more effec- tively to draw more clients.

As for the problem of inertia—the reluctance to try a cruise vacation— the cruise industry should be hear- tened by the law of physics.

Once inertia is overcome, a body in motion tends to remain in mo- tion. Similarly, once a person tries a cruise vacation, he or she tends to take another one.

The study disclosed that those most likely to take a cruise are slightly more affluent (a median in- come of $45,000) and younger (a mean of 36.9 years) than other groups. About 45 percent are single, and 16 percent are single parents.

In fact, according to a company that specializes in travel for singles, the number of singles who have tak- en a cruise has steadily increased an average of 10 percent each year over the past several years. And a survey commissioned by CLIA reveals that the number of singles who are inter- ested in cruise vacations has almost doubled since 1986.

Most cruise lines offer fares tai- lored for singles who travel by them- selves or with friends. Some cruise lines also offer special plans for sin- gle parents.

Aggressive marketing efforts will bring some 10 million first-time cruisers into the marketplace by 1993, and with the heavy traditional repeat factor for cruises, this indi- cates a bright future for the cruise shipping industry.

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