Overview of the Cruise Industry The Florida-Caribbean Cruise Association stated that the industry forecasted roughly 16 million passengers in 2011, which is a 6.6% increase over the year 2010. In 2010 a record of 15 million passengers were forecasted to have cruised, with 11.1 million originating in North America. The cruise industry is the fastest-growing category in the leisure travel market. Since 1980, the industry has experienced an average annual passenger growth rate of approximately 7.4% per annum. Since 1990, over 169 million passengers have taken a two or more day cruise; over 67% of the total passengers have been generated in the past 10 years, and nearly 40% in the past 5 years. The average length of cruises is nearly 7 days. The cruise product is completely diversified. Throughout the history of the industry, it has responded to the vacation desires of its guests and encompassed innovation to develop new destinations, new ship designs, new and diverse onboard amenities, facilities and services, plus wide-ranging shore side activities. Cruise lines have also offered their guests new cruise themes and voyage lengths to meet the changing vacation patterns of today’s travelers.
The cruise industry’s establishment of over 30 North American embarkation ports provides patrons with unprecedented convenience, cost savings and value by placing cruise ships within driving distance of 75% of North American vacationers. By providing significant cost savings through the convenience of avoiding air travel, the new homeports have introduced leisure cruising to a wider customer base. From a capacity standpoint, utilization is consistently over 100%. The Caribbean is the number one destination, with 41.3% of capacity in 2010. In 2014, 26 new state-of-the-art ships are contracted or planned to be added to the North American fleet costing nearly 12 billion US dollars.
Coastal Systems International, Inc. acknowledged that cruise industry has experienced a tremendous growth over the last couple of decades, rising at an annual growth rate of 7.2%. The current generation of new build ships will provide the largest cruise ships built to date including the Carnival Magic, Norwegian Epic, and the Royal Caribbean Allure and Oasis of the Seas (Source: CLIA, 2008 & 2010). Also, the cruise industry's growth is generating a consistent demand for new berths. Cruise destinations are intensifying from the basic pier structures to wide-ranging day destinations with entertainment, retail, and dining facilities. The Caribbean region is poised to continue capturing the majority of global cruise passengers; however, a significant expansion of port and tourism capacity will be required to accommodate the burgeoning cruise demand (Coastal Systems International, Inc.). The typical cruise ship carrying 2,550 passengers and 480 crew members conservatively generates over 285,000 US dollars in passenger and crew expenditures during a single port-of-call visit (Source: BREA, 2009). Based on these major operational revenues, cruise destination developers and the cruise lines have been successful in securing finances for large-scale, multi-million dollar development projects.

State of the Industry
According to Dr. Jean-Paul Rodrigue and Dr. Theo Notteboom, “the global cruise industry carried approximately 19.1 million passengers in 2011, which sky rocketed from 7.2 million in 2000.” The global growth rate of the cruise industry has been ongoing and steady, at around 7% per year, in spite of economic cycles of growth and recession. Although America was faced with a financial crisis in the years of 2008-2009, it has not impacted the demand for cruises. This underlies that the industry has been so far essentially supply based; meaning, the ships are built and the customers are found to fill them through various marketing and discounting strategies. The possibility for cruise ship operators to successfully follow a supply push strategy makes the cruise industry relatively different from other shipping markets. In most shipping markets, the shipping activity is a clear derived activity of trade and demand is price inelastic. Demand in the cruise business on the other hand is ‘created’ through pricing and branding/marketing. Cruise operators are challenged to develop competitive cruise packages which involve a high-quality stay onboard, a selection of shore-based activities offering access to a variety of cultures and sites and easy transfers to and from the vessel.
The construction of cruise ships tends to take place in cycles where several ships are ordered and enter the market within a short time frame. Since the cruise industry is a relatively small segment of the touristic sector, it has so far been very successful at finding customers to fill a greater number of ever larger ships. The cruise product has become diversified to attract new customers and to respond to the preferences of a wide assortment of customer groups. The cruise industry has innovated through the development of new destinations, new ship designs, new and diverse onboard amenities, facilities and services, plus wide-ranging shore side activities to fulfill the desires of its guests. Most cruise ship operators work around specific cruise themes and voyage lengths can vary to meet the changing vacation patterns of customers. Its highest level of market penetration is in North America with about 3% of the population taking a cruise each year. This includes people who may take more than one cruise in a year so actual figures are actually lower.

Employment Within the Cruise Industry The North American cruise industry generated 329,943 jobs that contributed a $15.2 billion wage impact on the U.S. economy in 2010, a 5.1 percent increase in employment and a 7.0 percent rise in wages over 2009, according to the latest independent study commissioned by Cruise Lines International Association (CLIA). The total cruise industry economic impact in the U.S. in 2010 was $37.85 billion of gross output, a 7.8 percent increase over last year. This positive economic contribution spread across every state economy via $18 billion in direct cruise industry spending, with ten states accounting for 78 percent of total employment and income impacts.
CLIA’s chairman, Howard Frank, said “These job numbers are good news given the challenging economy. We are pleased with the strong gains in the cruise industry’s economic contributions, and that CLIA member lines were directly or indirectly responsible for putting nearly 330,000 Americans to work.” According to “The Contribution of the North American Cruise Industry to the U.S. Economy in 2010,” prepared by BREA (Business Research & Economic Advisors) for CLIA, total industry direct expenditures with U.S.-based businesses increased by 5% to $18 billion. As a result of direct spending, the cruise industry generated the direct employment of 140,359 workers who earned $5.84 billion with U.S. businesses.

Member Cruise Lines and Ships
The CLIA has 26 member cruise lines. Amawaterways is an award-winning river cruise line. It has a fleet of 15 custom-designed vessels in Europe, Russia, Vietnam, Cambodia, and Africa. American Cruise Lines are designed for passengers who are well traveled, but yet curious, sophisticated but informal. They have 13 distinct intineraries which include visits to the most amazing destinantions in the United States from coast to coast. Avalon Waterways set the standard in river and small-ship cruising with the youngest fleet and amazing itineraries throughout Europe. Avalon delivers a world-class cruise experience. Azamara Club Cruises is a sophisticated yet relaxed way of traveling that delivers unique destinations to up-market travelers who want to not only see the places and cultures they visit, but to live them. Azamara's two intimate, 694-guest ships offer a boutique European hotel ambience with extraordinary service, fine cuisine and wines from around the world, and wellness and vigor programs, all while sailing to a host of destinations larger ships can't reach. Carnival Cruise Lines has become the world’s most popular cruise line, carrying more passengers than any other cruise operator. From the moment guests board a Carnival “Fun Ship,” they’re treated to a seemingly endless variety of on-board dining, entertainment and activity options while enjoying friendly and attentive service that has become the company’s hallmark. Celebrity Cruises is designed for discerning cruisers, with modern, sophisticated environments, impeccable service, enriching and inspiring onboard programs, and world-class cuisine. The ultimate in premium cruising, Celebrity sails in Alaska, Bermuda, California, Canada/New England, Europe, the Pacific Coast, Panama Canal, South America, Caribbean and the Galapagos Islands. Costa Cruises has brought its special brand of Italian warmth and European sophistication to travelers around the world. “Cruising Italian Style” with Costa is much more than a voyage to a new and exciting destination – it’s an experience that creates lifetime memories that linger and make guests smile at unexpected moments. Crystal Cruises consistently ranks among the top luxury properties in the world. The line, in just over 20 years, has won an unprecedented number of top awards. Grounded in more than a decade of accolades, Crystal has been voted World's Best by the readers of Travel + Leisure and Condé Nast Traveler more than any other cruise line, hotel or resort in history. Cunard caters to sophisticated, well-seasoned travelers who enjoy the finer things in life. The classic liners attract like-minded guests who enjoy the Cunard hallmarks of impeccable White Star Service, fine dining, sumptuous surroundings, civilized adventure and the legacy of historic voyages and Transatlantic travel. Cunard Line is a proud member of the Carnival Corporation, which also includes Carnival Cruise Lines, Holland America Line, Princess Cruises, Costa Cruises, and Seabourn Cruise Line. Disney Cruise Line was destined to be different. As the first owned and operated cruise line by the dream makers at Disney, Disney Cruise Line specifically designed its ships with areas and activities that appeal to the unique vacation needs of every member of the family. As a result, Disney Cruise Line vacations offer guests an unbelievable cruise experience not found anywhere else. In addition to offering six, seven and eight-night cruise vacations to the Caribbean, Disney Cruise Line offers three four and five-night itineraries to the Bahamas and pre or post options which include a stay at the Walt Disney World Resort. Holland America Line is known for gracious and attentive service. Its ships have one of the highest staff-members-to-guest ratios. Spacious staterooms average 25 percent larger and verandahs twice as large as those on other lines' ships. Dining choices include formal elegance, intimate specialty dining, casual fare and complimentary 24-hour room service. Hurtigruten has navigated the spectacular west coast of Norway for 119 years. Their guests will enjoy 1,250 miles of stunning fjord-filled landscapes with the opportunity to experience dog sledding, snowmobiling and the elusive Northern Lights in winter or discover stunning Geirangerfjord, the Midnight Sun and the exciting Sea Eagle Safari in summer.Travelers interested in specialty and exploration cruising along the spectacular Norwegian coast, Greenland, the Arctic's Spitsbergen, Antarctica and Europe should consider a Hurtigruten voyage. Louis Cruises welcomes travelers to the Mediterranean for an unparalleled “Sea of Memories” experience of enjoyment and discovery…destination-focused itineraries, quality service and 76 years of tradition. On board our mid-sized cruise ships, travelers will find a casual and friendly atmosphere, open-hearted hospitality and very attentive service. Other members include: Norwegian Cruise Line, Oceania Cruises, Paul Guaguin Cruises, Pearl Seas Cruises, Princess Cruises, Regent Seven Seas Cruises, Royal Caribbean International, Seabourn Cruise Line, SeaDrea, Yacht Club, Silversea Cruises, Uniworld Boutique River Cruise Collection, and Windstar Cruises.
Current Economic Trends in the Cruise Industry The cruise industry has been trending toward the design and construction of comprehensive destination developments-whereby investors can finance the basic capital costs for cruise infrastructure based upon the long-term capture of significant operational revenues (associated with shore excursions, leasing of commercial and retail space, and in some instances the sale of residential units). The cruise lines themselves are increasingly investing in port destination facilities, as evidenced by Royal Caribbean International's recent investment in the Falmouth, Jamaica and Roatan, Honduras Ports; Carnival Cruise Line's investment in Grand Turk, TCI; Norwegian Cruise Line's investment in its private island at Great Stirrup Cay, Bahamas; and multiple other port and private island destinations throughout the world. Given the trend toward larger ships that can accommodate 3,000+ passengers, the cruise lines have expressed a preference for ports of call with a pier structure to facilitate the rapid offloading/onloading of the increasingly greater numbers of passengers who visit foreign port facilities. Where fixed piers are not viable (due to physical or economic constraints), a highefficiency vessel tendering operation provides an alternative mechanism to accommodate movement of high volumes of passengers.
The market is also trending toward the creation of authentic ports of call that capture the history and local culture of a cruise destination - this is particularly evident in the newly opened Falmouth, Jamaica Port which incorporates the history of the town of Falmouth into the port promotional materials and shore excursions. The revitalization of the Frederiksted waterfront in St. Croix, U.S. Virgin Islands, provides another example of an existing waterfront town that has been redeveloped to support cruise-based tourism and also appeal to local residents. These
"authentic" ports can either integrate within an existing town or be located adjacent to an established population center; however, these types of port facilities require adequate land space to accommodate the infrastructure and amenities to support and entertain thousands of visitors on a daily basis. Developing cruise destination infrastructure can require a significant investment in terms of land acquisition and infrastructure development. Costs for basic piers and associated marine works can vary between $USD 10M-40M, and total development costs for large cruise destination ports such as Falmouth in Jamaica that recently opened in March, 2011 were reported to be $USD 220M. Another trend is River cruises. If you’re not selling river cruises or increasing your river sales, you’re simply leaving money on the table. River cruising is the top trend cited by the experts we interviewed for this article. While this segment has fewer berths than the ocean side, “river cruising will continue to grow at a faster pace than the rest of the industry,” says Brad Anderson, co-president, Avoya Travel/American Express, San Diego.

Economic Future of the Cruise Industry There can be no argument that the cruise industry is booming. It has experienced consistent growth in all its major source markets over the past ten years and the two leading cruise companies, which account for about 70% of worldwide cruise capacity, are reporting substantial - and ever-increasing - profits. But, with worldwide capacity set to increase 75% by 2015, the question of whether the recent levels of market and profit growth is sustainable is one that is increasingly being posed by financial and corporate analysts.
Although there will always be the possibility of unforeseen events or developments outside the control of the major players within the industry, the answer to that question to be drawn from the report that follows is clearly a positive one. All the key indicators are that, for the foreseeable future, the cruise industry will continue to grow its sales, revenue and profitability. As a still maturing industry, there may be year-on-year variations, but the underlying supply-demand cycle appears set to continue ensuring growth in all key markets.
Crucially, too, the business model of much of the industry is changing to take into account both the economies of scale and also the flexible pricing opportunities inherent in the ever-larger ships being built. This is creating a classic virtuous circle where lead-in prices can be reduced to stimulate the market without damaging overall yields.
While the average capacity of ships delivered in the 1990s was 1,627, this is likely to increase by more than 1,000 berths for those delivered between 2000 and 2010. The average has already increased from 1,773 for deliveries in 2000 to 2,907 in 2005 and this trend is certain to continue from 2006 through 2010 because18 of the 30 ships on order/option were to carry more than 3,000 passengers (five of them more than 4,000). This reflects an ordering pattern which shows virtually all the new ships coming either from mass if slightly lower density. In fact, about 70% of all capacity added between 2006 and 2010 will come from Contemporary brands, with Premium brands accounting for the remaining 30%. Only two Luxury ships, with maximum 500-700 berths apiece, are likely to be delivered during the same period.

References
Travel Agent Central http://www.travelagentcentral.com/cruises/cruise-sales-trends-top-12-2012 The Cruise Industry. Dr. Jean-Paul Rodrigue and Dr. Theo Notteboom http://people.hofstra.edu/geotrans/eng/ch7en/appl7en/ch7a4en.html Florida-Caribbean Cruise Association http://www.f-cca.com/downloads/2011-overview-book_Cruise%20Industry%20Overview%20and%20Statistics.pdf Cruise Industry’s Contribution to U.S. Employment, Economy Grows In 2010. http://cruiseindustryfacts.com/2011/07/26/cruise-industrys-contribution-to-u-s-employment-economy-grows-in-2010/ Cruise Lines International Association, Inc. http://www.cruising.org/regulatory/cruise-lines-ships The Cruise Industry General Analysis and Overview http://www.windrosenetwork.com/The-Cruise-Industry-General-Analysis-and-Overview.html Perspective Vol. 6. Current Trends and Considerations in Cruise Destination Development. Coastal Systems Intenational Inc. http://www.coastalsystemsint.com/pdf/Media/Perspective_v6.pdf The Future of Cruising-Boom or Bust? A Worldwide Analysis. Peasly, Tony Publisher. Ill. Seatrade
http://www.shipsandcruises.com/Future_of_Cruising.htm