Cohort: Spring 2015
January 16, 2015
The Industry of Cruise Liners and How They Succeed
Over the course of this paper, the Cruise Line industry will be thoroughly examined and discussed in order to answer some important questions. First, the current state and some brief history of the industry will be looked at. Some topics that will be discussed will be the structure of the industry, trends within it, the treat of substitutions and new entrants, and the power that the suppliers have. The second question will ask what the market is for the Cruise Line industry. In order to answer that, the market will be analyzed by answering topics such as market size, types of consumers, seasonal buying, special niches, and geographic constraints including governmental regulation. The third question will cover who the key competitors in the industry are. Some topics that’ll be discussed will be if the competition is direct or indirect, is the competition rough or minimal, and what types of niches/advantages companies have. By looking at these questions and answering them accordingly, the Cruise Line industry’s key success factors should stand out to you. The things that most affect industry members ability to prosper will explain to us why one Cruise Line is more successful in leading the marketplace than others. This will lay out the foundation to answering a very important question; what is the future outlook of the Cruise Line industry?
For those who don’t know much about the cruise line industry, it was said to begin around 1970 when about 500,000 people took part in overnight cruises. Since then, the passenger cruise industry, according to Cruise Lines International Association, has increased dramatically to more than 13.2 million people in 2008. Not only is business booming for the industry, but the economic benefit in the U.S. was about $38 billion. It’s estimated that 75% of the industries revenue comes from passenger ticket sales, with the rest coming from gambling, retail concessions, and equipment rentals. The most popular destinations traveled from North America are the Caribbean and Bahamas, and the most popular departure points are in Florida. Since the industry is growing rapidly, research is always being conducted to help the evolution of the cruise ship experience. Some newer offerings are Wi-Fi availability, bowling alleys, spas, golf, and much more, just so companies are able to compete at top level. Two distinct cruise lines have developed over time, one being a super luxury cruise that tend to the very rich, and the other being a short budget cruise that tends to the middle to wealthier class. The luxury ships are normally smaller in size but can be big, where the mass market middle class ships are highly advertised and ginormous. Travel agencies take a big role in the Industries growth, for more than 90% of passengers book their vacation through travel agencies. More than half of travel agents sales come from the cruise industry, and repeat business is vital to their success.
Ocean vessels in the early 1800’s only traveled when the weather was good and the ship was full of cargo. Passengers were usually second option when it came to ship travel. Then in 1818, the James Monroe left New York and headed to Liverpool with passengers and mail. Being the first of the Black Ball Line service (aka Packet Ships), they focused on the passengers’ comfort. The first regular passenger ship without delivering mail was the City of Glasgow in 1852, which was also the first to have a spar deck in which passengers used as a recreation area for good and bad weather. From then on, the ship industry started evolving. German Superliners were created in the early 1900’s, which created competition to make a successful ship passenger services. Ships started becoming the biggest, the fastest, the most...
References: Lynn M. Pearce, Ed (2011). Vol. 2: Agriculture, Mining, Construction, Wholesale, & Retail Industries. 6th ed. Detroit: Gale.
(2013). Number of cruise passengers by source market. http://www.statista.com.proxy.library.ohiou.edu/statistics/287111/cruise-passengers-by-source-country/
Schein, A (2014). Cruise Ships. Austin: Hoover
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