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Introduction, to start with….
A cruise is a great way to spend your holiday; beautiful ships and great destinations. Next to that, you will experience excellent service and great food and nice activity and entertainment options. In the next blocks you will find an outline of the most important information related to this industry. After this introduction unit, there are seven specific units.
Since the cruise industry is a relatively new industry, it is unknown territory for most people. Even if you are already an experienced cruiser or that you have an interest for this industry for another reason, the essential documents and the essential sources might provide you with a lot of useful information. Please join me, and discover the amazing world of the cruise line industry in the theme Cruise Industry from EDES digital publishing. Do not hesitate to contact me for questions or any other remarks.
Cruise ships in Kusadasi Turkey
Tourism has been a global activity since the 1950’s. The income from tourism is, in many cases, vital for many countries. Cruise tourism provides a considerable income for these destinations. Tourism, and also Cruise Tourism, provides employment opportunities and stimulates economic growth.
The hospitality industry is a sector within the tourism industry, mainly associated with hotels and resorts.The hospitality industry has already existed for a very long time and can be dated back to the Roman Era. The cruise industry may be identified as a sector within the hospitality industry. Therefore, a cruise is a Tourism/ Hospitality vacation product for a broad target group.
The cruise industry is a very young and dynamic industry, which started to develop after the Second World War. Before this war, people traveled or emigrated to other continents, therefore these ships were mainly passenger ships. Only a few of these passengers travelled for leisure purposes. Cruise ships only carry leisure passengers, or guests, who are offered a vacation experience by sailing to a variety of destinations.
If we look at a specific definition of a cruise, We can define a cruise as a way of spending your vacation on a ship, sailing at sea, or a boat, sailing on rivers, with spending at least one night on the vessel.
Most of the time we are looking at the sea going cruise ships, but we should not forget the river cruise ships and the yachts. At this moment, every section of the cruise industry is in a stage of growth.
Fig. 1: Cruise Industry in context
If you want to obtain a recent overview of the developments within the tourism industry, a reliable source to look at, are the figures presented by the World Tourism Organization (UNWTO). The UNWTO website also has some specific information related to the cruise industry. If you want to know more about the latest developments in the hospitality industry a good source for that information is hospitalitynet.org.
In the last decades, the cruise industry has shown an unprecedented growth in passengers at an average of 7 percent per year
Despite all the challenges with issues all around the world such as economic crisis, conflicts, piracy, oil price, the increase of passenger numbers in the cruise industry seems to be very resilient to these situations. This does not mean that these situations do not have a negative financial impact. This industry is very much focused on cost control when a crisis occurs. If we consider the current developments, there is still a large potential for passenger growth and itinerary development all over the world.
A good website for overall information regarding, developments and current situation of the cruise industry, is provided by the Cruise Line International Association(CLIA).
If you want to know more about the history and development of the cruise industry, you should read: Devils on the deep blue sea by K. A. Garin (2006). This book describes the development of the cruise industry from the 1950’s, till the moment that there were only three big players left, after a few decades of acquisitions, mergers and takeovers.
The first cruises started in the 19th century on a very limited scale. At that time, there were already a lot of passenger ships, transporting people mainly from Europe to other continents. This passenger shipping industry was heavily impacted by the airline industry when airplanes were able to cross the Atlantic at the end of the 1950’s. For this reason, a lot of passenger ships went out of service and went to the scrap yard. Some of these passenger ships were converted into cruise ships.
The real boost for the cruise industry came in 1977 with the introduction of the popular TV series “The Love Boat”.
Already before the 1970’s, there were cruise activities from Miami to the Caribbean, but this was, at that time, not a very profitable industry. Spending your holiday on a cruise ship was simply not done because of the negative image of this industry back then. Due to ”The Love Boat”, people were made to believe that also celebrities spend their holidays on cruise ships. This, in combination with a good marketing strategy, for example succesfull TV commercials, was the start of a prosperous industry.
Due to some specific characteristics, the cruise industry differs from the hotel and resort industry.
First of all, cruise companies have moving assets. Cruise line companies, can deploy ships where they want, and redeploy ships when necessary. For example, when a region turns out not to be as financially prosperous as expected or when a region is not safe to sail to anymore, and already itineraries have been scheduled. On the other hand, when cruise line companies discover new source or destination market, they can simply deploy their ships to that region.
Secondly, the cruise ships need to have occupancy of at least 100% to be financially successful. If a cabin is not sold, there is not only the loss of ticket revenue, but also the loss of the on board revenue, see next point. Cruise line can go up to 103-104 % by using already available extra beds in the cabins.
Thirdly, the cruise line companies depend very much on board revenue since ticket prices are very much under pressure. For the hotel industry, in general, the break-even point lies within the rooms’ revenue. Within the cruise industry the break-even point lies within the on board revenue.
Fourthly, the cruise industry is working with staff from a lot of different countries. Therefore, the workforce on a ship is a multicultural environment.
For all kind of positions at all levels, the cruise industry sources from all over the world.
Fifthly, observing this industry, it looks like that there are a lot of cruise line companies. In reality there are only three big players, which are accountable for approximately 85 % of the total market.
- The next section is an introduction to the other 7 themes. Sources related to these units can be found in these specific themes -
Selecting & experience
Everyone is always looking for the best deal. This is obviously also applicable for selecting a cruise. On the internet you can find a huge number of websites offering cruises and cruise information. Some of these websites also provide you with tips on how to get the best deal.
Doing Research why people choose for a specific cruise, the first selection criteria is price, which is related to your budget you have for your vacation. The second criteria is the itinerary, related to destination/ sailing region and the third selection criteria is the company or even a specific ship, related to branding. Cruise lines usually focus on a specific target group. Especially when you are a first time cruiser, you have to check at what a specific target group a cruise line is aiming. This branding of a cruise line can be related, for example, to nationality, income or age.
Invest time to inform yourself about all the aspects of a cruise vacation. As I will show to you in the other units, there is a lot of information available
Even though more cruises are sold via the internet, still a large amount of cruises are sold via travel agents. One of the reasons for this is that this industry wants to attract a lot of first time cruisers who are not familiar with the cruise product. Therefore, first time cruisers prefer to be informed by an expert, such as the travel agent, who can give you specific information in a personal meeting.
CLIA provides a lot of sales training opportunities for travel agents. Therefore, it might make sense to see what the expertise of a travel agent is regarding cruise vacations. If a travel agent is CLIA certified, then you know that this travel agent has the necessary expertise.
Especially when you are a first time cruiser, it is very important to know what to expect from a cruise. The decision making process has a lot of similarities with choosing a flight or booking a hotel. Often a distinction is made between the pre cruise experience, the cruise itself and the post cruise experience.
In the pre cruise experience you should inform yourself, book a cruise and organize everything to prepare for the cruise and get to the ship. The cruise experience is what it is all about. Be aware that some aspects are different from staying in a hotel or resort. I will get back to this in the specific unit.
The post cruise experience is basically the process of getting home and evaluating the cruise. Furthermore, to decide if this was such a nice experience to consider already a next cruise or to book a new cruise already. From data provide by cruise lines we know that a lot of first time cruisers will become repeaters and like with every business, companies like to attract repeaters. For some people cruise vacations become an addiction.
In the unit “selecting a cruise" and "Cruise experience” I will describe this more in- depth.
Ship(s) building and cruise lines
The cruise industry is all about ships. With the construction of the Titanic, The White Star Line built the biggest ship at that moment, although we must say that it was not a cruise ship but a passenger ship. This ship was designed to do the crossings from Europe to the United States. The Gross Registered Tonnage(GRT) was 43, 628. GRT is a cruise ship’s internal volume. This volume is expressed in “registered tons” which equals a volume of 100 cubic feet (2.83 m3). Today’s megaships exceed 220,000 GRT. When we look at the size of the cruise ships, we have seen a tremendous development, they became bigger and bigger. Also the interior design of the ships changed drastically over time.
With the cruise ships getting bigger, there was also more space for more entertainment and dining facilities on board. But where does this end? At this moment, most cruise ships, have been or are being built in Europe. The reason for this is, that these shipyards have a large expertise building cruise ships which is not easy to imitate . If you compare, building a cruise ship with building an oil tanker or a container ship, a cruise ship is much more complex to build. Also the ships have changed drastically. After the Second World War, and with the introduction of airplanes that were able to cross the Atlantic, most of the real passenger ships were taken out of service. Some were converted into cruise ships, but at that time shipyards also started to build “real” cruise ships.
The design of a cruise ship differs from an ocean liner
Not only the exterior design is different, also the interior design is. On cruise ships, the focus is even more to offer guests all kinds of venues to enjoy themselves and to give guests more opportunities to spend their money, which is beneficial for the on board revenue.
Cruise ships belong to a specific cruise lines. As stated before, there are only 3 big players that dominate the cruise market and from that perspective we might define this industry as an oligarchic industry.
In the unit “Ships and cruise lines” I will describe this more in-depth
An important reason to choose for a cruise is the itinerary; what will be the destinations? There are different types of destinations, and you have to decide what kind of cruise you prefer. Cruise lines plan itineraries more or less two years in advance, so they can make the necessary arrangement with the ports of call and the turnaround port. The turnaround port is where the ship departs and most likely will return to, so where the guests embark the first time and disembark at the end of the cruise. Ports of calls are the ports where cruise ship dock for a day or sometimes for an overnight stays. From a financial point of view, for a port it is more interesting to be a turnaround port than to be a port of call.
There are a number of minimum requirements for a port to become a turnaround port or a port of call
If we look at the destinations from a geographic perspective, the most important destination or region is still the Caribbean. Since the biggest source market in the cruise industry is, still, from North America, it is very convenient for North American guests to sail in this region since they can sail out from their home country from ports such as Miami, Fort Lauderdale, San Diego, Seattle etc.
Still the most important cruise city
Other sailing areas are becoming more popular, such as the Mediterranean, Alaska and the Baltic. We can also see an increase of ship deployment in Asia, Australasia and South America, due to the fact that these regions are growing strongly as a source market and destination market.
Considering the types of destinations, we can make a distinction between the destinations. You have vacation destinations, cultural destinations, scenic destinations, private islands and exotic destinations.
We should not forget that the ships are becoming more and more a destination themselves
Especially with the introduction of the mega ships, there is a strong focus on the activities on board. Still these ships are sailing to ports, so guests can also enjoy getting of the ship and experience these destinations. Perhaps, in the future, there will be cruise ships only sailing, the year around, out to sea and do not visit any destinations at all.
In the unit “Destinations” I will describe this more in-depth.
As in every service industry, operations are very important to deliver the promised and expected service to the guest. In the cruise line industry, we can make a distinction between the operations on board of a ship and the shore side operations.
On board of a cruise ship we can make a distinction between de operations related to the hotel department and the operations related to the nautical and technical department
The hotel department is the biggest department on the cruise ship. On average 75% of the people that work on a cruise ship, work within this department. Sub departments within the hotel department are the food and beverage department, housekeeping, front office, HR, finance, medical, security and the outsourced departments such as spa and health, casino and shops. The exact names and what exactly is outsourced differs per cruise line. The hotel director is in charge of the hotel department, the Captain is overall in charge of the cruise ship.
Food, food, food
The other part of the operations is the Nautical and the Technical department. The Nautical department is responsible for navigating the ship from A to B. The Technical department takes care of the propulsion and all other technical systems on board of the ship and the power supply for the hotel department.
Shore side operations, include operations such as the head office of a cruise line, the passenger terminals and shore excursions.
The head office is responsible for the overall cruise line strategy. From an operational point of view, the head office arranges a lot of things to make sure, the ships can sail. First of all, they usually have a call center for selling cruises, furthermore they are responsible for developing the itineraries, purchasing of goods, hiring of staff, complying with regulation, maintenance planning for the ships, developing plans for possible new builds and a lot more.
Passenger terminals are developed for the purpose of embarking of disembarking passengers. For this, logistics systems are designed, to enable the cruise lines to disembark and embark passengers in the desired time frame. This guarantees that the ship can arrive and depart at the scheduled time. In some ports, due to the seasonality of the cruise business, the facilities are also designed for other purposes, such as conferences and events.
Shore excursions are very important for a cruise line, since they create a lot of revenue. Usually cruise lines cooperate with Destination Management Companies (DMC) and local tour operators. The local operators receive 40 to 60% of the shore excursion ticket price, depending on the type of excursions and the result of the negotiations with the cruise lines. Therefore, the revenue and profit from shore excursions may be substantial for the cruise line.
In the unit “Operations” I will describe this more in-depth
Working on a cruise ship is very demanding. Whatever position you take, you work every day during your contract and every day you work an average of 10 to 12 hours.
Working on a cruise ship is not a job; it is a way of living
Even though positions on cruise ships are very demanding, there are also a number of perks.
First of all, you don’t have to travel to work. Secondly, you do not have to cook and therefore, you also do not have to do your groceries. Thirdly, depending on your position, you also do not have to clean your cabin yourself and you do not have to do your laundry. These privileges are usually connected to an officer or manager position.
You have to work a lot and hard on a cruise ship, but you do not have any concerns related to pre and post job activities. Next to that, for most people interested in a job on a cruise ship; you can make good money, since, during your contract, you don’t spend that much money. Therefore, most people working on cruise ships can save quiet some money and you have the privilege of visiting a lot of beautiful places. A lot of the cruise ship workers, after finished their contract, travel around the world since then they have the time and the money. The length of a contract depends on your position. It can vary from two months (higher management) to ten months (crew members).
The Nautical and Technical officers are mostly former students from a Maritime institute, who usually are in a career track to become either a captain or a first engineer. Also, there are a lot of crew members within this department who usually did a maritime study at a vocational level in their home country. People from all over the world are working in this department.
Also within the Hotel Department, the staff and crew members are usually from all over the world. After crew members have been accepted they take trainings on land and after this training they embark the ship. Some cruise lines have their own training centers in Asia. Other cruise lines prefer to do the initial training on board. Hotel officers are sometimes former crew members, or people who worked for a couple of years in the hospitality industry shore side and decide that it might be interesting to work on a cruise ship. There is also a development that Universities (of applied sciences) offer cruise programs, focused on the hotel department. By participating in these programs students can assess if a career at sea in the hotel department might be a good choice for a future career.
Next to Nautical and technical, you have specific departments on a ship, such as entertainment and medical which you will not find in a regular land bases hotel. Especially the entertainment department usually has a fixed cast which has a specific type of contract. Next to that, there are usually a number of traveling solo performers who travel from ship to ship. At medical department there is a doctor and depending on the size of the ship a number of nurses.
Due to the predicted growth of the industry and the turnover, there will be a huge demand for cruise ship officers and crew in the future. On the internet, you can find a lot of job offers for all kind of position at all kind of levels. There are many offer for positions on board, but there are also job offer for shore side position, for those who would like to work in the cruise industry but do not want to sail. Especially working on the ship will give you the opportunity to travel and to meet with a lot of people. Most of the people that work or worked on ships have a great network all over the world.
In the unit “Working in the cruise industry” I will describe this more in-depth.
With this introduction unit I hope that you became more interested in the cruise industry and that the concept of EDESdp is appealing to you. If so, I hope that you will take a look, and register for a small fee, all the other units which I have introduced briefly. I believe that the essential documents are a great introduction to this industry and that the connected essential sources will provide you with a lot of additional information. Within this concept you can choose yourself, which essential documents and sources are interesting for you. With your own personal digital notebook you can make your own notes. And, as I already stated in the intro, do not hesitate to contact me.
The cruise industry is a young and dynamic industry and offers a lot of opportunities for a nice holiday experience. It also offers interesting job opportunities
For the next 10 to 15 years the current prediction is, that the industry will still grow. After that there might be a period of consolidation. Starting in The United States, the industry becomes more a global industry, which also challenges this industry to adapt the original, US focused, concept for a lot of other source markets.