Luxury Cruise Line SWOT
The luxury cruise industry is projected to rapidly expand within the next decade. However, the industry as a whole is sensitive to bad publicity. Below, we will discuss our SWOT analysis of the luxury cruise industry in more detail.
The luxury cruise industry is a rapidly expanding segment of the cruise industry. Between 2018 and 2027, the luxury cruise industry is expected to double in size from 544,900 guests in 2018 to about 1,095,286 guests in 2027. According to U.S. News, the top seven luxury cruise lines in terms of quality are Seabourn, Viking, Crystal, Azamara, Regent, Oceania, and Silverseas respectively. In terms of the market, Viking owns 26% of the market. While Viking owns about a fourth of the market, the market is considered healthy due to its expected growth. Both of these statistics are global data points as luxury cruise brands are international entities. Contrary to popular belief, cruises, both in terms of luxury cruises as well as mid-market cruises, is a market that is almost recession-proof. In 2012, cruises as a whole contributed $42 billion to the U.S. economy.
The primary weakness of the luxury cruise market is its aging market. Luxury cruises skew older. While the market is expected to expand as noted above, the luxury cruise industry has to reach newer customers in terms of age as well as other demographic features. Luxury cruises need to expand to and cater to new countries.
Luxury cruises are expanding to new markets in Asia. Currently, the United States and Europe are the primary market for both luxury cruises and mid-market cruises. About 11.5 million customers were Americans according to 2016 data, the latest available. Chinese customers numbered at 2.1 million. American customers number about as much as the next nine highest countries combined.
Luxury cruises must attract younger and multigenerational customers. Attracting younger customers who desire luxury cruises will require a pivot. Sustainability is a desired quality for younger customers as well as some older customers. Some customers of luxury cruises desire "transformational" cruises that offer new experiences rather than simple relaxation.
The luxury cruise industry as well as the cruise industry as a whole is very sensitive to bad publicity. Crimes or accidents weigh heavily on the mind of consumers when they occur. Commissioning new ships or upgrading old ships is an extremely expensive procedure. One threat to the industry is if a potentially rocky economic era affects the market. Companies expect the industry to expand according to projections and thus have commissioned new ships. The rapid and high spending may not pay off if the market contracts which leaves these companies with expensive assets.