Comment: Cruise growth puts yields under pressure

Comment: Cruise growth puts yields under pressure
By admin


A little over 12 months ago, I wrote an opinion piece for Travel Today questioning the future growth of  cruising, suggesting the industry’s goal of one million Australian cruisers by 2020 would not be easy.

Under the headline: ‘Are the cruise boom years over?’, the piece argued that while growth will continue, it will plateau “quicker than expected” after a marked slowdown in 2012.

I was right on the money. It won’t be easy hitting that one million milestone. It will be an absolute stroll.

Yesterday, Cruise Lines International Association Australasia (CLIA) released its Source Market Report, the annual statistical analysis of the trends and size of the local market.

Far from further leveling of – as some commentators would have you believe – passenger numbers soared more than 20% to 833,000 while market penetration increased from 3% to 3.6%.

These figures make Australia the world leader in terms of annual growth and penetration, and make my prediction last year, well, let’s say a fraction wide of the mark and leave it at that.

One million passengers by 2020, a target regarded as highly ambitious when it was first set by Carnival Australia chief executive Ann Sherry, is now likely to be achieved by 2016, with suggestions that passenger numbers could rise to 1.5 million, and even as much as two million, by 2020.

Market penetration, meanwhile, could hit 30% by 2030, Sherry said, although that is surely a lofty and unachievable target.

But – isn’t there always a but ? – top line figures such as these, however good they are, do not necessarily translate into the one true measurement of success that matters to cruise line executives and shareholders; profitability.

There is no arguing that the continuing growth is nothing short of astounding, and if local and international cruise lines were losing their shirt in Australia they would not, you would think, continue to pile on capacity at the rate they have.

Demand is clearly being created, and the focus on cruising by travel agents, and the exposure given to cruising in the mainstream media, is putting the option of an ocean voyage in front of consumers.

Yet I wonder how much of that demand is being driven by price?

With so much existing capacity in the market, and with more arriving over the next two years, pressure will mount on matching that capacity with demand at a price that is sustainable. In short, yield pressure will grow as more cabins need filling.

International cruise lines in particular – Royal Caribbean, Holland America – will not hesitate to withdraw ships from Australia if they believe a better return on investment can be found by deploying their vessels elsewhere.

For the moment, the cruise industry is rightly basking in the success of the 2013 stats, and slapping itself on the back.

But a degree of caution may be needed over the next two or three years. Passenger growth is fantastic, and the industry should be congratulated, but it’s profitability that matters.

Email the Travel Weekly team at traveldesk@travelweekly.com.au

clia cruising

Latest News

  • Conferences

Expedia CEO assures AI will not replace human roles, announces AI text assistant

Expedia’s EXPLORE conference is currently underway and the travel giant has wasted no time unveiling several new features and products including the world’s first AI chatbot Romie. As to be expected, AI has been one of the key topics of discussion. Expedia CEO Ariane Gorin put to fears around its power and ability to replace […]

  • Aviation

VietJet walks away from Bonza deal, administrators maximise chances of survival

The administrator overseeing Bonza’s collapse has said they will continue to “maximise the chances of survival” for the airline. In an update on the status of the carrier, Hall Chadwick say they will continue the aim is to save “as much as possible of its business continuing in existence; or if this is not possible, […]

  • Aviation

Top four airports report return to profit after post-Covid period comes to an end

The aeronautical operations of Brisbane, Melbourne, Perth and Sydney airports returned to profit in 2022-23, the first full financial year since the end of COVID-19 travel restrictions, the ACCC’s latest Airport Monitoring Report shows. In contrast, all four monitored airports reported losses on their aeronautical operations in 2021-22. A return to profit was helped by […]

  • Luxury

COMO launches new family-sized farmhouse in the heart of Tuscany

COMO Hotels and Resorts has launched its new farmhouse apartments in the heart of Tuscany, just in time for Australians to escape our wet winter. And it’s also an ideal time for Aussies of Italian ancestry to explore their home country as 2024 has been declared the year of Roots and Heritage Tourism by the […]

  • Aviation

Green light, green fuel for Townsville Airport as passenger numbers set to double to 3.7m

The Townsville Airport Master Plan, including the expansion of the airport terminal and development of the surrounding precinct, has been given the green light by the Federal Government. The 2023 plan outlined Townsville Airport’s strategic vision and growth objectives over the next two decades, with a detailed focus on the initial eight years. Townsville Airport […]

  • Destinations
  • News

New Caledonia in lockdown and airport closed after violent riots rock Noumea

New Caledonia officials have announced a 6pm-6am curfew, a liquor ban and have closed the country’s main airport after overnight riots in which vehicles were torched and roads blocked in the wake of proposed constitutional reforms. Australian Government website Smartraveller has issued an alert informing visitors to exercise a high degree of caution in metropolitan […]