Just as the word “sustainability” has taken the aviation world by storm, with flight shaming impacting air travel in Sweden and Europe, in particular, cruise companies are also bracing themselves for potential backlash against their industry.
When asked for one key development in 2019, which will have impact on travel and the world, Angie Stephen, managing director of Royal Caribbean Cruises, Asia Pacific, speaking at Cruise World Asia in Singapore, cited the environmental movement in Europe and “sustainability – understanding your own as well as your business impact on the environment”.
Cruising has always been in the media spotlight for its impact on the environment. This Bloomberg report from September is a good example of media calling attention to cruising, when it reported that starting next year, Cannes will no longer welcome cruise ships unless they comply with strict pollution controls.
The report, which details examples of environmental pollution caused by cruise ships, argues that with increased governmental scrutiny, consumer sentiment could also easily switch.
The growth in cruising could call more attention to the industry. Passengers increased from 17.8 million in 2009 to 30 million last year, generating about $45 billion in revenue. In Asia, cruising is on an upswing, hitting a record 4.24 million passengers in 2018, with China contributing more than 50% of that number.
That growth, as well as bigger ships which are coming to the region, could put more environmental spotlight on the industry although Michael Goh, president, Dream Cruises and head of international sales, Genting Cruise Lines, argues that bigger ships do not necessarily lead to more pollution “as this can result in reduced frequencies in ship deployments”.
Genting is building two 204,000 gross ton Global Class ships, each having the capacity to house 9,000 passengers, with the first due to be delivered in 2021. It is the largest ship to be built in the German shipyard MV Verften (which is owned by Genting, by the way) and will be homeported in Asia.
And recently, the cruise line operator also announced a plan to build a series of new midsize “Universal Class” cruise ships, which it will operate on a charter basis for global hotel brands.
Goh also said that in the last two to three years, cruise ships have been expanding into, and building up, new destinations to give places time to rest and cover, as well as moving away from congested ports such as Barcelona.
Stephen added that the cruise industry recycles 60% more waste than land operators and that the industry is spending over US$8 billion building more fuel-efficient ships that run on natural gas. “For Royal, we have our first LNG-powered ship coming out in 2022,” she said.
A game-changer coming and travel agents need to overcome mental block
With bigger and more ships coming into Asia, there is concern over the lack of development of infrastructure to support the growth. According to CLIA (Cruise Lines Industry Association), 39 cruise brands were active in Asian waters, deploying a total of 79 ships, in 2019.
Stephen said the fact that RCCL was committing its new ships, including Spectrum of the Seas, to be homeported in Shanghai in 2021 was a “great testament that cruise is here to stay”.
Indeed, RCCL is also here to stay in Singapore, having signed a five-year partnership with the Singapore Tourism Board and Changi Airport, which is expected to bring in 623,000 fly-cruise guests from 2019 to 2024 and generate over $430 million in tourist dollars. It will base more Quantum-class ships, the second-largest class in its fleet, in Singapore over the next five years.
Stephen called it a potential game changer. “We’ve been in Singapore for over 11 years and we started with six sailings. This partnership will see a multi-million dollar investment to grow awareness of fly-cruise and we have a real opportunity to bring many more guests onboard.”
And when you consider that Genting’s Global Dream, the first Global Class ship, will be homeported in Singapore, offering a 9,000-capacity, Goh said new age thinking needed to be adopted by travel agents. “I think not many partners take cruising seriously enough,” said Goh.
Asked why the “mental block” by travel agents to embrace cruises – after all, it remains the one remaining segment of travel that’s still largely sold offline – Goh said, “Change is difficult to embrace, but they are starting to take note. You have two brands here committed to bringing billion dollar assets to the region.”
Asked if the collapse of Thomas Cook would serve as a wake-up call to travel agents and what lessons could be learnt, Goh said, “The game has changed, consumer behaviour has changed. The Internet, social media, it’s much faster and people have more travel options.”
Stephen said agents have to stay relevant in a changing world. “Airlines are moving away from the agent, hotel rooms and airline seats have become commodities. Cruise is still a new concept, it’s complicated for those who have not experienced it before.”
She said that in the US, there had been talk that cruise would be next to go online but “in the US, still well over half of business comes from agents. It takes time to develop a cruise portfolio, it’s hard to book online and the service level is critical.”
According to Goh, Genting handles 500,000 cruise passengers in Asia, a number that will double to 1m in 2021. “Agents not in the cruise business are missing out.”
“Land is the new sea” in matured markets, in Asia, the ship is still the destination
To unlock the next phase of growth, cruise lines in more matured markets are expanding into expeditions and river cruises, as well as land activities. For example, Norwegian Cruise Lines has purchased a vacant lot in downtown Juneau, Alaska, which receives about 1.5m cruise passengers a year. It is unclear yet what it plans to do with the 2.9-acre site but in matured markets, cruise lines are looking to excursions and tours and activities for additional revenue streams.
In Asia however, Stephen said, “The cruise ship is still the destination.” And as such, like a destination, it can cater to many types of customers, from families to honeymooners, special interest groups, and meetings and incentives.
The question is how you segment the “destination” by customers and offer them individual experiences onboard the ship.
Beyond selling the ship, both Stephen and Goh said there were lots of opportunities for travel agents to sell to fly-cruise customers by creating unique itineraries that combine land content with cruise.
As for how the lines were blurring – for example, airlines like AirAsia acting like an OTA and Disney now offering its Disney Plus streaming service – I asked how they saw cruise lines shaping up in the future?
Stephen said RCCL’s position is that it is a technology company offering cruise holidays while Goh said Genting sees itself as an entertainment company – with cruise ships, integrated resorts and its ZOUK party brand. Global Dream, he said, will have the first theme park at sea with the highest rollercoaster.
Asked what was the most interesting new tech they were investing in, Stephen said, “tech to streamline the boarding experience, from customs to immigration to boarding”. It is also testing facial recognition in Miami to allow for seamless onboarding and will roll that out across the world. Goh cited a check-in kiosk system that will cut check-in time from five minutes to 30 seconds.
As for how they see cruising 2020 and beyond, Goh said it would become a leading travel trend in Asia while Stephen said it would become “mainstream and a core piece of corporate profitability”.