Skift Take

The cruise industry is having a good run. But why not talk frankly about challenges and address them with meaningful solutions?

To hear the cruise industry’s top executives tell it, everything about cruising is great. If only the rest of the world realized it.

At the annual Seatrade Cruise Global conference Tuesday, the leaders of the world’s largest cruise companies — Carnival Corp., Royal Caribbean Cruises, Norwegian Cruise Line Holdings, and MSC Cruises — took on what they consider to be inaccurate perceptions about the industry.

“Ignorance is amazingly difficult to overcome and perceptions are very difficult to overcome,” said Royal Caribbean Cruises CEO Richard Fain.

To be clear, cruising has enjoyed robust growth. Cruise Lines International Association, the industry’s trade group, said Tuesday that 28.5 million people took a cruise last year, a higher-than-expected number that represents a nearly 7 percent increase over the previous year. This year, 30 million people are expected to take a cruise.

Publicly traded cruise companies have been consistently profitable, and they continue to invest in new ships, infrastructure, and technology — all topics that the panel discussed Tuesday.

But Carnival, the world’s largest cruise company, cut its forecast for the year when it reported earnings in December, citing a drag from fuel prices and exchange rates. The company also warned of Brexit-related uncertainty and other political and economic concerns in Europe.

The cruise industry has continued to find itself in the crosshairs of concerns about overtourism, as destinations from Venice to Barcelona to Dubrovnik grapple with crowding. Executives point out that their passengers make up just a small — but visible — portion of those crowds over the course of a year.

“Obviously it’s very easy to point the finger and say, ‘Look at the ship, that must be the problem,'” said Pierfrancesco Vago, executive chairman of MSC Cruises. “So we’ve got to do a [better] job to ensure that people have the correct appreciation of the incredible job that we are doing.”

Arnold Donald, CEO of Carnival Corp., said cruise lines could play a role, such as collaborating on the scheduling of ships in locations such as Dubrovnik.

“We can be part of the solution too, and we’ve done that together,” he said.

And no one brought up the most high-profile recent cruise ordeal, when 479 passengers were airlifted from the Viking Sky last month after it suffered engine failure during a violent storm in Norway.

Moderator Lucy Hockings, a BBC World News presenter, pressed the CEOs about factors that could derail the industry’s growth, environmental concerns, and the ways cruise lines can avoid overwhelming destinations.

The executives defended the industry’s impact on the environment, highlighting technological advancements that have made ships more fuel-efficient. Donald said his company has reduced fuel consumption by 33 percent since 2007.

“Just keep in mind, in our industry — and we do have to change the perception — nobody wants to go a polluted marine environment, nobody wants to go to a place where they can’t breathe the air,” he said.

After several rounds, Norwegian Cruise Line Holdings CEO Frank Del Rio decided he’d had enough.

“The dialogue that you’re following, you’re trying to find negatives,” he said. “Let’s talk about the positives of the cruise industry.”

“That’s my job,” Hockings said.

“No, you’re not in the news business now, we’re not politicians, we’re business people,” Del Rio said. “Look at the positives of the industry, the millions of jobs that we create worldwide, the economic impact when our ships arrive in these islands or a place like Venice …  There are more people that want us to come to these ports than those that don’t want us to come.”

Del Rio also changed the subject when the topic turned to China, a market that competitors from Carnival and Royal Caribbean were enthusiastic about. Norwegian recently redirected its China-based ship to North America, where it found business was stronger.

“I think enough has been said about China,” he said. “Destinations come and go popularity-wise for different reasons. I’ve very pleased to see the Eastern Med coming back … I’m rooting for Turkey.”

The panel represented most of the world’s long-established ocean cruise lines. But some competitors, such as the soon-to-launch Virgin Voyages and Ritz-Carlton Yacht Collection,  were not on the stage. Executives said they welcome more players into the cruise world.

“To have a vibrant industry, you need new entrants,” Del Rio said. “Keeps us on our toes. Competition is a wonderful thing for everyone, for us, for consumers. To some degree, the industry has gotten too concentrated. I welcome the new competitors … they’re introducing new wrinkles into the product. We’ll see if they work.”


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Tags: carnival, clia, msc cruises, norwegian cruise line, royal caribbean, seatrade

Photo credit: Cruise executives speak during the State of the Industry panel at Seatrade Cruise Global. From left: moderator Lucy Hockings, a presenter on BBC World News, MSC Cruises Executive Chairman Pierfrancesco Vago, Royal Caribbean Cruises CEO Richard Fain, Carnival Corp. CEO Arnold Donald, and Norwegian Cruise Line Holdings CEO Frank Del Rio. Seatrade Cruise Global

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