Industry Focus: How cruise lines decide on destinations for each itinerary

How do cruise line’s decide where they will sail to next? How are their annual cruise programs put together and what are the important factors that need to be weighed? Cruise Arabia & Africa investigates.


As the world’s major cruise lines roll out their new 2015 cruise programs, offering longer stays in port, increasingly diverse itineraries and unique shore excursions, a trend seems to have revealed itself: destination diversity. More than 21.3-million people went on a cruise in 2013, with that figure expected to grow to 21.7-million this year, according to the Cruise Lines International Association (CLIA). This growth is possible, of course, because cruise lines have been so effect over the past decade or so at getting first time cruisers to take to the seas, and with an overall satisfaction rate that consistently exceeds 80%, the sector is unquestionably the most successful in the travel industry at meeting customers demands.

This leads of course to a high rate of return passengers (around 60% of cruise guests will book again with the same cruise line) and now as the cruise industry truly begins to recover from the 2008 recession and enters a phase of maturity (cruising is no longer considered a niche market globally), cruise lines have to work increasingly hard to diversify their cruise itineraries to keep past passengers returning and meet the needs of first time guests. With this in mind, Cruise Arabia & Africa takes a look at what goes into the planning of a cruise program, how do cruise lines choose which ports they’ll visit?

The world’s major cruise destinations (the Mediterranean, Caribbean, Northern Europe, Southeast Asia etc) will all of course include the marque ports capable of accommodating the massive cruise liners of today. Who would undertake a Southeast Asian cruise that didn’t include Singapore or Hong Kong? Or an Eastern Caribbean cruise that didn’t call in the Bahamas? But as the world’s cruise ships have grown to gargantuan proportions, there has emerged two different categories of cruise passengers, which cruise lines are now trying to court. There are those who go on a cruise primarily for the value-for-money it offers and the chance to visit a number of mainstream ports in under a week – these passengers tend to cruise aboard the larger ships. And then there are those passengers who prefer out of the way destinations, unique shore side experiences and relaxing days at sea. They tend to undertake cruises of more than a week and travel to out of the way destinations.


Increasingly, the ship is the destination, but diverse ports of call remain all important

These different passenger types emerged in the last few years as cruise ships exploded in size. In 1996, for example, when the Carnival Destiny (now re-named Carnival Sunshine) was launched, she was the largest cruise ship in the world at 101,000-gross tons. Now, she doesn’t even make the top ten largest cruise ships, and the currently largest cruise ship in the world, Allure of the Seas, is more than twice her size at 225,000-gross tons. Cruise lines operating smaller ships, such as the MSC Sinfonia and MSC Opera cruising out of South Africa, and the MSC Lirica in the Arabian Gulf and Splendor of the Seas, which is due to sail from Dubai next year, all offer a unique destination. MSC Cruises is the only cruise line offering round trip cruises in the Indian Ocean from South Africa, and Royal Caribbean’s Splendor of the Seas will be the only cruise ship offering cruises through the Musandum Peninsula in the Arabian Gulf. Commonly marketed as an ‘intimate cruise ship’ or cruise experience, cruise lines have found a new niche for these smaller ships. All of this needs to be done while meeting cost and revenue targets for investors (as most of the world’s largest cruise line’s are publicly-owned companies). The planning of cruise programs for the year is, therefore, a big deal.

Even though the cruise industry has turned a corner since the recession, average revenue per passenger remains below what it was before 2008 and cruise lines are therefore under pressure to maximize the net profit for each itinerary. There are a number of ways in which they do this: a cruise is generally a very inclusive holiday, with accommodation, food, transportation and entertainment all included in the fare, but onboard spending on services, novelty restaurants and beverages, as well as the fees for shore excursions, are some of the most important ways cruise lines bolster their bottom line. To do this, they must offer an interesting list of destinations aboard a cruise ship that provides a positive product experience.

Destination-intensive itineraries have become increasingly popular, with reduced days at sea, because it meets both these objectives: spending a day in port requires less fuel and therefore adds less to operating costs than a day at sea, while also allowing passengers to explore a new cruise destination (more than 50% of passengers say the destinations are the most important factor, after cost, in deciding which cruise line to sail with). ?“We are adding a lot more ports and fewer sea days and finding out that is what sells,” says Scott Kibota, Crystal Cruises, director of market planning. We can see this in the Arabian Gulf, where the typical 7-night round-trip cruise from Dubai will usually include just one day at sea, or two at the most. MSC Cruises in South Africa have also adopted this model, offering short three and four-day cruises to destinations within easy reach of Durban and Cape Town, whereas before in the mid-to-late 90s, cruises from Durban would stretch to ten and even 14 days, with half the time spent cruising at sea. The destination-intensive itinerary is also more cost-effective for cruise lines because port fees and taxes are covered by passengers in the cruise fare.

MSC Cruises remains the only cruise line offering regular round trip cruises from South Africa in the Indian Ocean

Exceptions are made for passengers who want to pay a higher premium to cruise to more out of the way destinations, such as Cape Horn, Antarctica or Mauritius, and of course the famous Trans-Atlantic crossings offered by Cunard Line aboard Queen Mary 2 and world cruises. Other cruise lines offer ocean crossings as well, but typically they’re a repositioning cruise that generates much lower profit per passengers than other itineraries. This is because the usual pattern of the industry follows a predictable course; most cruise ships spend the winter in the Caribbean and the summer in Alaska, the Mediterranean, Asia, Australia or Northern Europe and moving ships from one region to another of course requires the crossing of oceans. But, where it was only the premium or luxury cruise brands offering these ‘off the beaten path’ destinations before, now it is becoming a competitive option among contemporary mass-market cruise lines as well as the industry seeks to maximize revenue wherever it can, while keeping regular guests interested in its itineraries.

The Black Sea, Spitsbergen in the North Atlantic and the White Sea, have all popped onto the mainstream cruise industry’s radar recently, with Latin America and Africa also becoming more common as mainstream cruise destinations. Currently, MSC dominates in both markets, as the only cruise line offering round-trip cruises out of South Africa and Brazil. Seasonal deployments in Asia are also becoming more popular, with a homegrown Asian cruise market, like that in South Africa, becoming increasingly important to cruise lines. As Helen Beck, the Regional Sales Director for Royal Caribbean put it, “Asia is hugely important right now, we see significant growth in that market in the future.” Emerging markets like South Africa, Brazil, Australia, Japan and China will likely contribute an increasing share to cruise line’s profits in the years ahead as the North American and European cruise markets reach saturation. It is for this reason that Royal Caribbean is one of the only cruise line’s with a dedicated regional office in the Middle East, which accounts for just 1% of total cruise passengers numbers globally. According to Helen, Middle East passengers are extremely important to Royal Caribbean because they punch above their weight in terms of onboard spending. “Although the numbers are small, the quality of Middle East guests is very high,” Helen told Cruise Arabia & Africa. “They’re not booking budget inside cabins, they want balcony staterooms and suites, spa treatments, novelty dining etcetera, so they’re a very high standard of guest.”

Splendor of the Seas will offer one of the most unique itineraries in the Middle East

For the cruise planners in each cruise line, this complicates their traditional Caribbean in the winter, Mediteranean in the summer model because they need to develop itineraries for new markets that may prefer different cruise durations and destinations, while allocating some of the capacity to appeal to experienced cruisers from their main markets. Coastal Japanese cruises by Princess, for example, which is investing heavily in the Asian cruise market, are expected to be popular with Western cruise passengers looking to get a taste of Japan without any of the language or cultural barriers associated with staying on-land in the country. MSC’s South African itineraries offer Western passengers a similar taste of the continent without any of the security concerns associated with the region. In the Middle East, the 7-night Arabian cruise itineraries provided by MSC Cruises, Costa Cruises, AIDA and now Royal Caribbean, are marketed almost exclusively to European and North American cruise passengers who want to see as much of the region as possible within just a few days. Unlike in South Africa, where the Indian Ocean cruises offered by MSC are booked mostly by South Africans.

But finding these new and out of the way cruise ports that will appeal to various passenger types is a difficult balancing act. For the mass-market lines, they must be ports capable of processing upwards of 3,000 and possibly even 4,000 passengers in a day, they need to provide the services such as waste discharge and refueling required by the big cruise ships, as well as shore power facilities in order for cruise line’s to meet reduced emissions targets. It is a balancing act that often requires a trade off by cruise lines.?“Not all the ports are at a level we would like to see. Nor are the costs where we would like them to be,” says Gianluca Suprani, MSC Cruises, corporate shore excursion manager. Most importantly, however, they must offer interesting shore excursions to contribute to the shipboard revenue stream. This is best summed up by Crystal Morgan, Princess Cruises, director of market planning. “The perfect port has low costs and generates high revenue”.

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