Cruise Industry

Part
01
of four
Part
01

Cruise Industry SWOT

To provide a SWOT analysis of the ocean and adventure cruise industry, we leveraged credible research and academic resources for SWOT analyses of major cruise lines. Our research produced SWOT analyses of Carnival Corporation, Royal Caribbean Cruises, and Norwegian Cruise Line. We then considered and provided the strengths, weaknesses, opportunities, and threats that are common to all three companies/ Our assumption was that they must be the major factors impacting the entire industry since they affect three of the key players.

Findings

Strengths

  • Strong brand portfolio that enables easy expansion into new product categories
  • Reliable suppliers that eliminate supply chain problems
  • Automation has facilitated consistency and has enabled the industry to scale up or down as needed.
  • Successful product innovation
  • The ability to hire and train skilled workforce leads to high levels of customer satisfaction

Weaknesses

  • High daily inventory may affect future growth of companies
  • Low R&D expenditure
  • High employee attrition rates
  • Gaps in product ranges
  • Limited success outside core business

Opportunities

  • Expansion is made possible by decreasing costs
  • Its possible to increase market size due to increased customer spending
  • Potential of growth from the developing countries
  • Increased popularity of cruises
  • High customer retention rates

Threats

  • Shortage of skilled workforce in some global markets may threaten its growth
  • New technologies developed by market disruptors
  • Seasonal nature of the industry's products
  • Rising pay levels may impact profitability
  • Security concerns impact customer preference
Part
02
of four
Part
02

Cruise Industry Market Size

The United States large ocean cruise industry is valued between $21.26 billion and $25.81 billion. The major players in the industry are Carnival Corporation, Royal Caribbean Cruises Ltd., Star Cruises and Disney Cruise Line. Unfortunately, we were unable to determine the market share of these companies in the United States. We, however, provided their global market share. Below, we have provided a detailed overview of our calculations and assumptions, and overall research methodology.

Methodology

We commenced this research by searching for market reports and research on the ocean cruise industry. While there were a plethora of articles and reports on the subject matter, there were neither any comprehensive reports that focused exclusively on the United States or that provided all the requested information. Based on the nature of this request, we quickly recognized that a triangulation would be necessary as we were able to pull together data points that would serve as the base of our calculations.

As regards the major players in the United States market, IBISWorld reported Carnival Corporation, Royal Caribbean Cruises Ltd., Star Cruises and Disney Cruise Line as the biggest players, without stating their market share. To find the market share of these companies in the United States, we sought to find their respective revenues specific to the United States, but this was not available in the public domain. We searched through company annual reports for public companies and also performed a general press search on the subject matter. None of these strategies yielded any useful data points. As a proxy, we provided each companies global market share in 2018.

Overall United States Cruise Line Market Size

METHOD 1

The cruise line passenger volume in the United States was 13,090,800 in 2018. In North America, the passenger volume was 14,167,168, while the global cruise line passenger volume was 26,001,022 in 2018. Therefore, the market share of the United States cruise line is

(13,090,800/26,001,022) * 100 = 50.34%

According to Cruise Market, the global ocean cruise industry was estimated at $45.6 billion in 2018. Therefore, the United States cruise line market is:

50.34% of $45.6 billion = $22.96 billion

METHOD 2:

According to Statista, the size of the cruise line industry in the United States was $23.2 billion in 2015 and $31.5 billion by 2020. Using an online cumulative annual growth rate (CAGR) calculator, we calculated the growth rate, and subsequently the market size for 2018.

GROWTH RATE
Final value (2020 market size): $31.5 billion
Initial value (2015 market size): $23.2 billion
Period (2020-2015): 5
Growth rate: Unknown
The growth rate was calculated as 6.31%

Using this growth rate, the market size for 2018 was $27.87 billion, by imputing the following variables:

Final value (2020 market size): $31.5 billion
Initial value (2018 market size): Unknown
Period (2020-2018): 2
Growth rate: 6.31%

Therefore, the United States cruise line market is valued between $22.96 billion and $27.87 billion.

United States Large Cruise Lines market size

Viking is the leading luxury cruise line provider globally, with a market share of 26 percent and approximately 500,000 passengers yearly. This means the total passenger volume of the luxury cruise line is:
(500,000 * 100) /26 = 1,923,077

This figure is about 7.4% (1,923,077/26,001,022) of global passenger line. Therefore, large cruise lines make up about 92.6% (100-7.4) of the global ocean cruise industry. Assuming this figure is the same for the United States, then the market size of large cruise lines in the United States is valued between $21.26 billion (92.6% of $22.96 billion) and $25.81 billion (92.6% of $27.87 billion).

Major players

According to IBISWorld, the companies with the largest share of the United States are Carnival Corporation, Royal Caribbean Cruises Ltd., Star Cruises and Disney Cruise Line. Globally, their market shares are:
Carnival Corporation: 44.1%
Royal Caribbean Cruises Ltd.: 23.9%
Star Cruises: 0.9%
Disney Cruise Line: 2.3%


Part
03
of four
Part
03

Cruise Industry Growth Factors

The estimated global compound annual growth rate of the cruise industry was 4.61% over a nine years period (2009-2017). The compound annual growth rate of the United States large cruise market was estimated to be 5% over a two years period (2017-2018). One of the factors driving the growth rate of the ocean cruise industry is as a result of travelers finding cruise vacations convenient.

METHODOLOGY

We began our research by looking for credible sources which directly provide the compound annual growth rate of the large cruise market industry in the United States. In attempting to locate this answer, we conducted exhaustive research through market reports, statistic portals/databases, and trusted media articles. Our research team utilizes Statista reports, FCCA/CLIA reports, Forbes, Deloitte, Cruise Industry News, Access Cruise, and CAGR Calculator to completely address all aspect of this request.

Continue below for a step by step walkthrough to our calculations.

United States Large Cruise Market Growth Rate

CALCULATIONS

 CAGR Formula: [(Fv / Pv) ^1/t] — 1
where:
Fv — future value
Pv — initial balance
t — time/period
  • In 2018, the United States has 13,090,800 cruise passenger.
  • In 2018, Vikings has 26% of the luxury cruise market with a 500,000 passenger annually.
  • Total number of luxury passenger = (500,000 x 100%) / 26% = 1,923,077
  • Number of large cruise passenger = 13,090,800 – 1,923,077 = 11,167,723
  • Percentage of large cruise passenger in the United States = (11,167,723/13,090,800) x 100% = 85%
  • In 2017, the United States has 11,900,000 cruise passenger
  • Number of large cruise passenger in 2017 = 11,900,000 x 85% = 10,115,000
  • CAGR = [(11,167,723 / 10,115,000) ^ ½] — 1 = 0.05 x 100 = 5%

United States Large Cruise Market Growth Drivers

  • One of the factors driving the growth rate of the ocean cruise industry is as a result of travelers finding cruise vacations convenient.
  • Passengers take cruise vacation because it helps travel many destinations within a short period; this has been a contributing reason while the ocean cruise industry sees more passenger growth in recent times.
  • Instagram photos are currently driving the interest in ocean cruise travel around the world; with the provision of onboard connectivity, cruise passengers use Instagram feeds to share diverse travel experiences both onboard and on land from several cruise destination.
  • Cruise lines offer total wellness in the form of restorative experiences, providing onboard oxygen bars, wide varieties of healthy diets' menu, and the provision of fitness innovations.
  • With the introduction of onboard smart tech, travelers now use smart tech on a daily basis while on vacation; keychains, necklaces, bracelets, and apps are some examples of cruise lines adopted technology to provide highly personalized travel experience while on and off the ship.

Part
04
of four
Part
04

Travel Brand Examples

Two of the world’s largest companies with multiple travel brands that use data to leverage other brands within their portfolio are Booking Holdings and Expedia Group. Booking Holdings the world’s largest online travel portal that offers various online booking and travel services such as online accommodations, price-comparisons of various platforms, digital media advertising for brands, online car rental services, and reservation services. Expedia Group is considered to be the second largest online travel channel in the world that coordinates over 23 travel brands that engage in travel, airplane bookings, hotels, vacations, destination reviews, hotel-price comparisons, hotel and car rentals, media, and cruise bookings.

Example #1: Booking Holdings

Booking Holdings is considered to be the world’s largest online travel services platform. The company’s portfolio of travel brands engages in creating travel tools, online booking services, price-comparisons, online rental car services, online accommodation and reservation services, and a wide range of online hotel and restaurant bookings. The company first began its operations in the United States and has expanded its reach to more than 220 countries through six key brandsPriceline, OpenTable, Agoda, Booking.com, Rentalcars.com, and KAYAK.
Originally called the Priceline Group, this company acquired Price Match, a data analytics and a cloud-based company that provides offers from various brands including OpenTable, RocketMiles, and Hotel Solutions. It was found that the company successfully decreased its marketing expenditure by leveraging consumer data across its six key brands through Genius Loyalty Programs. These programs were designed to provide a 10% discount for those customers who utilize selected brands.
In 2018, Booking Holdings acquired Fareharbor and HotelsCombined. The same year, the company entered into a strategic partnership with a leading mobile transportation platform, Didi and a leading mobile and transportation services platform, Grab. Booking Holdings attained a place on Forbes’ list of the World’s Best Employers, came in at #46 on Fortune’s Future 50 list, and took a spot on Forbes’ Best Employers for Women list, in 2018. The company made $92.7 billion in gross bookings and over 760 million room nights were booked, the same year.

Example #2: Expedia Group

According to a report published by Skift, Expedia Group is the second largest online travel platform in the world that generated over $10 billion in revenue in 2017 and $11.2 billion in 2018. The company has over 23 different travel brands and offers a wide range of vacation destinations, hotel deals, cruise deals, attractions, affordable airfares, car rentals, in-destination activities, and other services. The company coordinates with more than 1.8 million online bookable listings, dozens of cruise lines, more than 175 rental car companies, over 35,000 activities, 500+ airlines, and more than a million properties. On a global scale, the company operates over 2000 travel booking sites across 70 countries.
Expedia Group has a brand portfolio of 23 travel brands that engage in vocational rentals, small online travel brands, online travel agencies, hotel price-comparisons, and agent-heavy businesses. Expedia Group includes brands such as Expedia Partner Solutions (EPS), Expedia Incorporation, SilverRail, Traveldoo, Classic Vacations, Expedia Lodging Partner Services, CarRentals.com, Expedia Local Experts, Expedia Group Media Solutions, CheapTickets, Ebookers, Wotif, Hotwire, Travelocity, Orbitz, HomeAway, Trivago, Egencia, and Vrbo.
The company is found to virtually coordinate every relevant aspect of research concerning destinations, planning of travel booking by car and airplane, hotel reviews, guiding business and leisure travelers with budgets with cost considerations for modest and luxury offers. Expedia Group leverages data integration and insights among its multiple travel brands from the point of booking a travel destination to providing price quotes and comparisons for activities, attractions, nature of services, cruise ships, cars, and hotels. The company uses data-driven analysis to operate rental platforms for booking cabins, beach houses, hotels, and condos. Digital solutions are utilized to offer travel guidance based on the various regulations of destinations and on consumer preferences.
Expedia Group earned the Best Place to Work title on Glassdoor, was granted the Most Innovative Company award in 2018 and received the Best Diversity and Inclusion Recruitment Strategy award. The company also obtained the Best Travel App award, was named the Best Place to Work for LGBTQ Equality by the Corporate Equality Index in 2018, was recognized by the World Trademark Review Industry Awards as the Travel and Leisure IP Team of the year, and earned the Best Employer award.

Sources
Sources

From Part 03
Quotes
  • "In 2015, the revenue of the U.S. cruise industry was around 23.2 billion U.S. dollars. This figure was forecasted to rise to 31.5 billion U.S. dollars in 2020."
Quotes
  • "The success of the cruise industry could result from travelers finding cruise vacations convenient. In 2016, the majority of Americans considered a cruise vacation to be the ideal way to visit many destinations in a short period of time."
Quotes
  • "Instagram photos are driving interest in travel around the world. With onboard connectivity, cruise passengers are filling Instagram feeds with diverse travel experiences both onboard and on land from several cruise destinations. "
  • "Cruise lines are responding by offering total wellness in the form of restorative spa experiences, onboard oxygen bars, healthy menu choices for a wide variety of diets, and the latest in fitness innovations. "
Quotes
  • "Things like convenient port locations, great value, and clean rooms go a long way. But many other customer experience elements that may have once been value-adds are now considered essentials. The "new" basics include modern fitness facilities, pleasant community spaces, and high-quality restaurants. Even sustainability practices have moved from a niche offering to a basic demand."
Quotes
  • "Luxury Market Capacity in 2018 – 544,900 guests Luxury Market Capacity in 2027 – 1,095,286 guests"
From Part 04
Quotes
  • "Showing that names mean something, in March Expedia Inc., became Expedia Group. The switch came a month after the Priceline Group rebranded to Booking Holdings."
  • "Expedia Group is the number two global online travel player, behind Booking Holdings, and booked $10 billion in revenue in 2017. Below, Skift presents an explainer about Expedia Group’s brand portfolio."
  • "We show how Expedia Group has positioned each of its brands based on edited company statements. Then we share our Skift Take on how these brands truly operate and fit into the online universe."
Quotes
  • "Expedia Group is the world’s travel platform, with an extensive brand portfolio that includes some of the world’s leading online travel brands."
  • "Collectively, the Expedia Group brands cover virtually every aspect of researching, planning, and booking travel, from choosing the best airplane seat to reading personal travel reviews of hotels, to planning what to do in a destination once you arrive. The Expedia Group portfolio serves both leisure and business travelers with tastes and budgets ranging from modest to luxury."
Quotes
  • "We’re honored to be recognized for our commitment to our people, our industry innovation and our work with communities around the world. "
  • "Expedia Group has been designated a Best Place to Work for LGBTQ Equality by the Human Rights Campaign’s Corporate Equality Index for efforts on behalf of our LGBTQ workers."
  • "Expedia Group considered one of the Best Places to Work in Tech by Glassdoor."
  • "Expedia Group’s Legal and Corporate Affairs team specializing in Intellectual Property was recognized as the Travel & Leisure IP Team of the Year at the World Trademark Review Industry Awards. It is the team’s second win in less than five years."
  • "Expedia Group wins Best Diversity & Inclusion Recruitment Strategy at the Firma Awards in London."
Quotes
  • " THE WORLD LEADER IN ONLINE TRAVEL & RELATED SERVICES"
Quotes
  • "Some hotel groups will be jealous of Booking Holdings’ ability to have one out of every two of its customers booking travel on its brand sites and apps without having to buy online ads to acquire them."