Ports should get ready for an increase in shorter itineraries

The Caribbean cruise market is experiencing a significant increase in passenger numbers, but it is not only because more capacity is being placed in this market but because a dramatic shift has occurred in the length of the short Caribbean itinerary market. The trend towards shorter cruise patterns, such as 3/4 night and 5/5/4 night programs, is significantly shifting as a percentage of the total Caribbean traffic.

 

Our last bulletin focused on the shift of lower berth capacity in 2023 to several worldwide markets, particularly the Caribbean. That market continues to grow and is expected to welcome ~41% of global capacity. What has also shifted is the division of cruise lengths within the market.

 

From 2017 to the scheduled deployments in 2023, the percentage of short Caribbean capacity is expected to rise from 38% of the total Caribbean market to ~44% (“short” defined as a cruise of 5 or fewer nights), or a ~15% increase. For ports and destinations, this shift is huge, as it means that a single ship that used to call once a week now may call twice a week, or a 100% increase.  However, this will now shift the location of where this occurs. There will be an impact felt throughout the Caribbean.   

 

Our data indicates that the short cruise market has fueled most of the Caribbean’s capacity growth since 2017, with a CAGR of ~5%. Meanwhile, the long cruise Caribbean market has remained relatively stable since 2017 (~1% CAGR).

 

Caribbean Region Capacity – % of Short Cruise vs. Long Cruise

2017-2019 data from CIN, 2023 data from BA database

The growth in the short cruise market is a result of two factors. First, a growing demand for shorter, more flexible itineraries that can fit into busy schedules and allow for more flexible and affordable cruise options for guests.

 

The second is the desire of operators to optimize ship deployments by shifting itineraries that keep fuel expenses low. Cruise lines are high fixed-cost businesses, and even relatively small changes in fuel prices can significantly impact profits and ship deployments. Fuel is one of the biggest costs of doing business, averaging over 11% of operating expenses in 2019 across the largest four operators.

 

The short Caribbean cruise market is a solution for both, and its growth demonstrates the effectiveness of operators in optimizing yields while meeting the evolving needs of passengers.

 

What does this mean for ports?

 

Caribbean homeports with close proximity to foreign destinations in Florida and the Gulf of Mexico are expected to benefit from the growing popularity of short Caribbean itineraries, while ports further away may face logistical and economic challenges due to speed and distance.

 

Potential Caribbean Destinations Fit within Short Cruise Itineraries

Gulf short itineraries (Galveston, New Orleans & Tampa) are limited to 5/5/4 Night patterns as the nearest foreign ports are one cruising day away. Ports of call within a cruising day in the western Caribbean and the Bahamas (Tampa only) can be included and are expected to benefit.

 

In comparison, itinerary patterns in South Florida are within next-day proximity to foreign ports. Ports within next-day proximity of South Florida are expected to benefit the most as they must be included on three-night weekend cruises, but they can also be included in four-night voyages. These ports stand to benefit the most as they can welcome ships sailing 3/4 Night itinerary patterns.  

 

Of course, the distance to a port of call in the Caribbean will vary based on a specific homeport, and a port that can welcome 4-night cruises from one homeport may not be able to benefit from 4 night itineraries from another. For example, a 5 night itinerary from Tampa can reach Grand Cayman and Cozumel, but a 5 Night from Galveston can only reach Cozumel or Progresso. Sample 4 and 5 Night itineraries that highlight the issues are shown below.

 

5 Night Sample Itineraries

 

4 Night Sample Itineraries

Additionally, these short cruise itineraries provide more overall passenger days to a port that supports these deployments (whether it be a homeport or port of call). For example, a seven-night cruise sailing year-round in the Caribbean on Saturdays will deliver 52 calls to a homeport. Should that ship switch to a three- and four-night itinerary pattern, i.e., now sailing a Monday-to-Friday cruise, and a Friday-to-Monday cruise, that ship is now calling the homeport 104 times in a year, essentially doubling passenger throughput with this shift. The same will happen for ports of call that welcome ships on these itineraries.

 

This increase in passenger flows to ports may require additional infrastructure (such as parking) or resources to accommodate the added throughput.

Data reflected in this bulletin is based on BA’s deployment database that includes all available cruise itineraries in 2023 for the majority of key ocean and river cruise companies. Figures are reflective of lower berths, and actual passengers may be higher or lower than lower berths based on occupancy levels. Data was collected in December 2022 and may change if deployments change.

BA Maritime

CRUISE BULLETINS

Q1 2023 Earnings Report Key Themes and Takeaways

With the last of the big three public companies wrapping up their Q1 2023 earnings reports last week, it’s time for BA’s summary of the key takeaways and themes trending today, and what that means for the future of the industry…

How did 2022 end up and what happens next in 2023

2022 was a monumental transition year where operators placed ships back in operation throughout the first half of the year. After almost three years of uncertainty…

Ports should get ready for an increase in shorter itineraries

BA has just completed an analysis of the 2023 cruise capacity placement using its deployment database which has more than 10,000 sailings, 40 brands, and 300 ships worldwide, thus allowing BA to understand capacity placement by the industry…

2023 global passenger volumes will reach and very likely exceed 2019 levels but distributed differently

BA has just completed an analysis of the 2023 cruise capacity placement using its deployment database which has more than 10,000 sailings, 40 brands, and 300 ships worldwide, thus allowing BA to understand capacity placement by the industry…

Summary & Takeaways from Q3 Earnings Reports (CCL, RCG, NCLH)

A Normalizing Environment Paving Way for Strong 2023. The theme for CCL, RCG, and NCLH on this quarter’s earning calls was each company’s focus which has fully shifted from return to service to a relentless focus on return to strong profitability…

BA CRUISE BULLETIN – The Industry’s Quarterly Update from the Big Three (Public) Companies

This quarter’s earnings reports from Carnival Corp. (June 24), Royal Caribbean Group (July 28), and NCLH (August 9) have sent stocks down, up, and back down again, but overall, the business seems to have taken positive turns, including each company’s operating cash flow for the quarter…

Another Global Hurdle for the Cruise Industry? An Industry on the Rise

According to the most recent World Bank’s latest Global Economic Prospects Report, compounding the damage from the pandemic, the Russian invasion of Ukraine has magnified the slowdown in the global economy, which is entering what could become a protracted period of feeble growth and elevated inflation. The U.S. inflation rate passed 8.3%, the highest in more than 40 years, accompanied by the highest nationwide gas prices ever, and amidst the need for workers in many service industries, there have been layoffs in key tech sectors.

Big Three Cruise Corporations Q1 Earnings Summary

Resounding across all the major cruise operators’ quarterly earnings calls this week (CCLs in March), was that the industry (and each of the brands) have all reached “significant milestones” in their restart process that need to be celebrated. While 2022 is undoubtedly a transition year, 2023 appears to be shaping up to reach the industry’s full potential. NCLH’s presentation included the graphic below, which shows how far the industry has come over the last two and a half years of near-complete shutdown. In this newsletter, BA compares and summarizes key performance, financials, and trends across the big three cruise corporations based on their recent quarterly earnings calls.

The Pathway Forward Anticipates Substantial Cruise Growth, Are you Ready?

It has now been more than two years since the entire worldwide cruise tourism industry ground to a halt due to the Covid-19 pandemic and the subsequent government interventions that impacted all facets of our lives. For the past year, the industry has been slowly and meticulously resetting the onboard and shoreside guest experience through the development of protocols and procedures to get back to the business of cruising and providing people worldwide with great holidays!

Ports should get ready for an increase in shorter itineraries

The Caribbean cruise market is experiencing a significant increase in passenger numbers, but it is not only because more capacity is being placed in this market but because a dramatic shift has occurred in the length of the short Caribbean itinerary market. The trend towards shorter cruise patterns, such as 3/4 night and 5/5/4 night programs, is significantly shifting as a percentage of the total Caribbean traffic.

 

Our last bulletin focused on the shift of lower berth capacity in 2023 to several worldwide markets, particularly the Caribbean. That market continues to grow and is expected to welcome ~41% of global capacity. What has also shifted is the division of cruise lengths within the market.

 

From 2017 to the scheduled deployments in 2023, the percentage of short Caribbean capacity is expected to rise from 38% of the total Caribbean market to ~44% (“short” defined as a cruise of 5 or fewer nights), or a ~15% increase. For ports and destinations, this shift is huge, as it means that a single ship that used to call once a week now may call twice a week, or a 100% increase.  However, this will now shift the location of where this occurs. There will be an impact felt throughout the Caribbean.   

 

Our data indicates that the short cruise market has fueled most of the Caribbean’s capacity growth since 2017, with a CAGR of ~5%. Meanwhile, the long cruise Caribbean market has remained relatively stable since 2017 (~1% CAGR).

 

Caribbean Region Capacity – % of Short Cruise vs. Long Cruise

2017-2019 data from CIN, 2023 data from BA database

The growth in the short cruise market is a result of two factors. First, a growing demand for shorter, more flexible itineraries that can fit into busy schedules and allow for more flexible and affordable cruise options for guests.

 

The second is the desire of operators to optimize ship deployments by shifting itineraries that keep fuel expenses low. Cruise lines are high fixed-cost businesses, and even relatively small changes in fuel prices can significantly impact profits and ship deployments. Fuel is one of the biggest costs of doing business, averaging over 11% of operating expenses in 2019 across the largest four operators.

 

The short Caribbean cruise market is a solution for both, and its growth demonstrates the effectiveness of operators in optimizing yields while meeting the evolving needs of passengers.

 

What does this mean for ports?

Caribbean homeports with close proximity to foreign destinations in Florida and the Gulf of Mexico are expected to benefit from the growing popularity of short Caribbean itineraries, while ports further away may face logistical and economic challenges due to speed and distance.

Potential Caribbean Destinations Fit within Short Cruise Itineraries

Gulf short itineraries (Galveston, New Orleans & Tampa) are limited to 5/5/4 Night patterns as the nearest foreign ports are one cruising day away. Ports of call within a cruising day in the western Caribbean and the Bahamas (Tampa only) can be included and are expected to benefit.

 

In comparison, itinerary patterns in South Florida are within next-day proximity to foreign ports. Ports within next-day proximity of South Florida are expected to benefit the most as they must be included on three-night weekend cruises, but they can also be included in four-night voyages. These ports stand to benefit the most as they can welcome ships sailing 3/4 Night itinerary patterns.  

 

Of course, the distance to a port of call in the Caribbean will vary based on a specific homeport, and a port that can welcome 4-night cruises from one homeport may not be able to benefit from 4 night itineraries from another. For example, a 5 night itinerary from Tampa can reach Grand Cayman and Cozumel, but a 5 Night from Galveston can only reach Cozumel or Progresso. Sample 4 and 5 Night itineraries that highlight the issues are shown below.

 

5 Night Sample Itineraries

4 Night Sample Itineraries

Additionally, these short cruise itineraries provide more overall passenger days to a port that supports these deployments (whether it be a homeport or port of call). For example, a seven-night cruise sailing year-round in the Caribbean on Saturdays will deliver 52 calls to a homeport. Should that ship switch to a three- and four-night itinerary pattern, i.e., now sailing a Monday-to-Friday cruise, and a Friday-to-Monday cruise, that ship is now calling the homeport 104 times in a year, essentially doubling passenger throughput with this shift. The same will happen for ports of call that welcome ships on these itineraries.

 

This increase in passenger flows to ports may require additional infrastructure (such as parking) or resources to accommodate the added throughput.

Data reflected in this bulletin is based on BA’s deployment database that includes all available cruise itineraries in 2023 for the majority of key ocean and river cruise companies. Figures are reflective of lower berths, and actual passengers may be higher or lower than lower berths based on occupancy levels. Data was collected in December 2022 and may change if deployments change.

CRUISE BULLETINS 

Q1 2023 Earnings Report Key Themes and Takeaways

With the last of the big three public companies wrapping up their Q1 2023 earnings reports last week, it’s time for BA’s summary of the key takeaways and themes trending today, and what that means for the future of the industry…

How did 2022 end up and what happens next in 2023

2022 was a monumental transition year where operators placed ships back in operation throughout the first half of the year. After almost three years of uncertainty…

Ports should get ready for an increase in shorter itineraries

BA has just completed an analysis of the 2023 cruise capacity placement using its deployment database which has more than 10,000 sailings, 40 brands, and 300 ships worldwide, thus allowing BA to understand capacity placement by the industry…

2023 global passenger volumes will reach and very likely exceed 2019 levels but distributed differently

BA has just completed an analysis of the 2023 cruise capacity placement using its deployment database which has more than 10,000 sailings, 40 brands, and 300 ships worldwide, thus allowing BA to understand capacity placement by the industry…

Summary & Takeaways from Q3 Earnings Reports (CCL, RCG, NCLH)

A Normalizing Environment Paving Way for Strong 2023. The theme for CCL, RCG, and NCLH on this quarter’s earning calls was each company’s focus which has fully shifted from return to service to a relentless focus on return to strong profitability…

BA CRUISE BULLETIN – The Industry’s Quarterly Update from the Big Three (Public) Companies

This quarter’s earnings reports from Carnival Corp. (June 24), Royal Caribbean Group (July 28), and NCLH (August 9) have sent stocks down, up, and back down again, but overall, the business seems to have taken positive turns, including each company’s operating cash flow for the quarter…

Another Global Hurdle for the Cruise Industry? An Industry on the Rise

According to the most recent World Bank’s latest Global Economic Prospects Report, compounding the damage from the pandemic, the Russian invasion of Ukraine has magnified the slowdown in the global economy, which is entering what could become a protracted period of feeble growth and elevated inflation. The U.S. inflation rate passed 8.3%, the highest in more than 40 years, accompanied by the highest nationwide gas prices ever, and amidst the need for workers in many service industries, there have been layoffs in key tech sectors.

Big Three Cruise Corporations Q1 Earnings Summary

Resounding across all the major cruise operators’ quarterly earnings calls this week (CCLs in March), was that the industry (and each of the brands) have all reached “significant milestones” in their restart process that need to be celebrated. While 2022 is undoubtedly a transition year, 2023 appears to be shaping up to reach the industry’s full potential. NCLH’s presentation included the graphic below, which shows how far the industry has come over the last two and a half years of near-complete shutdown. In this newsletter, BA compares and summarizes key performance, financials, and trends across the big three cruise corporations based on their recent quarterly earnings calls.

The Pathway Forward Anticipates Substantial Cruise Growth, Are you Ready?

It has now been more than two years since the entire worldwide cruise tourism industry ground to a halt due to the Covid-19 pandemic and the subsequent government interventions that impacted all facets of our lives. For the past year, the industry has been slowly and meticulously resetting the onboard and shoreside guest experience through the development of protocols and procedures to get back to the business of cruising and providing people worldwide with great holidays!

BERMELLOAJAMIL© 2022