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Study finds continued slowdown in U.S. cruise passenger growth

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Study finds continued slowdown in U.S. cruise passenger growth

By Tom Stieghorst
The number of cruise passengers sourced from the U.S. isn’t growing as fast as it once was, leaving U.S. travel agents with a market that may contract if trends continue.

Figures from the 2014 Economic Impact study recently released by CLIA show that growth has declined in each of the past four years.

While the absolute number of U.S. passengers has grown since 2010, from 10.1 million to 10.7 million last year, the relative share sourced from the U.S. has dropped from 68% to 61%.

Growth was a barely positive 0.3% in 2013, following increases of 2.2% in 2012, 3.5% in 2011 and 6.2% in 2010.

Separately, the number of passengers embarking on a cruise at a U.S. port last year fell 1.3%.

What accounts for the slowdown?

Andrew Moody, one of the authors of the study and president of Business Research and Economic Advisors of Exton, Pa., cited several factors that could be diminishing growth in the U.S.

One is that cruise lines have put the brakes on ship construction in recent years, to try to allow prices to rise. That has slowed growth in the supply of cabins available for sale.

At the same time, the industry has been devoting ships both new and old to distant markets and has increased its capacity to sell cruises on those ships in Europe, Asia and elsewhere.

“Marketing is becoming global,” Moody said. “As more and more capacity comes on, they’re going to move it to some of these markets. Certainly Australia has been a singular market [that has] benefited from all that.”

The Carnival Spirit and Royal Caribbean International’s Rhapsody of the Seas are among the ships operated by North American lines that have been shifted full time to Australia in recent years, helping to make it the fastest-growing cruise market.

In contrast to the Australian economy, which never really lost its footing, the U.S. economy has been in recovery mode since 2008, Moody said, another factor slowing growth.

And while the U.S. economy is on the rebound this year, growth in the cruise sector has been uneven. That shows up in the count of passengers embarking from a U.S. port, which fell in 2013 to less than 10 million, vs. nearly 10.1 million in 2012.

The number of passengers sourced from the U.S. includes residents who went abroad to catch their cruise, be it to Barcelona or Vancouver. The number embarking from U.S. ports could include foreign customers who fly to the U.S. to board a cruise but is mostly Americans.

That 1.3% decline Moody attributed mainly to a slump in the Western states.

“Some of that decline has to do with the Mexico/West market,” Moody said. “It still remains very weak, and that has an effect on the California ports.”

On the East Coast, Florida ports are holding their own, and New York has seen an increase in embarkations, Moody said. “The California declines offset a lot of the growth elsewhere in the country,” he said.

In a separate study of the impact of the cruise industry on the global economy, Business Research and Economic Advisors said the top 10 sources of cruise passengers worldwide, in descending order, were the U.S., U.K., Germany, Italy, Australia, Canada, Brazil, China, France and Spain.

Beyond the slowdown in U.S. passenger growth, the impact study estimated that for the first time, direct spending by North American cruise lines, passengers and crew in the U.S. topped $20 billion.

The global study pegged direct spending by cruise lines, passengers and crew worldwide at $52.3 billion last year.

Spending in U.S. cruise sector tops $20 billion

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By Tom Stieghorst
For the first time, the money spent in the U.S. cruise sector exceeded $20 billion last year, according to a CLIA study of the cruise industry’s economic impact.

That includes direct spending by passengers, crew and the cruise lines on items such as provisions, excursions, meals on shore and pre-and post-cruise hotel stays.

The $20.1 billion in direct spending mushrooms to a $44 billion economic impact when the effects of indirect spending and tertiary-level multipliers are factored in, the study says. In a separate study done for CLIA for the first time, researchers estimated the global cruise industry’s economic impact at $117 billion.

CLIA has commissioned an annual study of the cruise industry’s economic impact for at least a decade. This year’s 106-page report has in-depth data on spending, as well as state-by-state breakdowns for each economic category. As in the past, 10 states account for 80% of the economic activity in the cruise business, with Florida, California and Texas leading the way.

The number of passengers who traveled globally last year on North America-based lines rose 3.9%, to 17.6 million, CLIA said. The industry’s fleet, net of retirements, increased by 1 ship to 178 ships with a combined capacity of 338,505 lower berths,

An estimated 10.7 million U.S. residents took cruise vacations throughout the world, accounting for 61% of global passengers. Departures from U.S. ports totaled 9.96 million, a 1.3% decline, as more ships in the U.S. fleet operated outside U.S. waters, particularly in Asia, Australia and the Pacific islands.

Another significant finding in this year’s report is that employment generated by North American cruise lines has exceeded the level it reached before the 2008-09 economic downturn.

Jobs in the U.S. attributed to CLIA member lines (excluding river cruise lines) reached 363,393 last year, compared to 357,710 in 2008. The total plunged to 313,998 in 2009 and had only recovered to 356,393 by 2012.

When it comes to jobs directly held by cruise line employees, that total reached 147,898 last year, the study said. Cruise line employment peaked in 2007 at 158,376.

CLIA: Capacity up in developing markets

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By Tom Stieghorst
CLIA’s annual report on the economic contribution of the cruise industry highlights growth in less developed cruise territories, including Asia, the Australia/Pacific region and South America.

The report said these three areas recorded 20% capacity growth in 2013 and accounted for more than half the global increase in available bed days. Europe’s capacity growth slowed from 18% in 2011 to 3.5% last year.

CLIA said the number of passengers carried in 2013 by its member lines rose 3.9%, to 17.6 million (river cruises are not included in the tally).

Bed days increased 4.8% because the average cruise was longer and capacity was higher, CLIA said.

Passenger embarkations at U.S. ports fell 1.3%, to nearly 10 million, the first time in at least four years that happened. CLIA attributed the decline primarily to redeployments to markets more distant from the U.S.

Direct spending by cruise lines, passengers and crew in the U.S. crossed the $20 billion threshold, rising 2.4% to $20.1 billion in 2013. More than 80% of that was for wages, taxes, and goods and services. Passengers and crew accounted for $3.63 billion in spending.

CLIA member cruise lines in North America showed a net increase of one ship in 2013, to 178, with a combined capacity of 338,505 berths, the study said.