What the hotel industry can learn from cruises

Image: ©Creative RF / MatthewBird.

One European region is getting a tourism boost from an unlikely sector—and the hotel industry is poised to grow as a result.

The Mediterranean was the most popular cruise destination for guests from the UK and Ireland last year, according to the annual Cruise Lines International Association study. As such, cruise operators are adding more destinations in the region, as well as looking to hotel groups’ current target clientele—millennials. 

CLIA said that the Mediterranean was the top choice of destination for UK cruisers last year with 458,000 passengers. Similar to previous years, four out of five Europeans chose to cruise in Europe, with half of them going to the Mediterranean and Atlantic islands. 

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In total, the sector’s revenue in Europe grew by 18 percent on the year to €3.4 billion (excluding on-board sales), driven by a daily price increase from €182 to €187 and a slight increase in cruise length.

What Cruise Clients Mean for Hotels

Hotels have yet to make the shift from dry land to floating rooms, although there are those who have dipped a toe in the water. Belmond—the former Orient Express Hotels—has a legacy of cruising. The group’s current focus under new CEO Roeland Vos is expanding its hotel business, but the cruising division launched new luxury routes in France last year, as well as a cruise in Myanmar. 

HNA Group—the new owner of Carlson—which takes a broad approach to the hospitality sector, also owns a cruise business, serving its domestic market. 

Cruise operators are starting to fish in the same territory as hotels and eyeing the millennial travelers. Uniworld recently launched its U cruises, offering “new way for exploratory, younger travellers to experience the pulse of Europe,” promising “Instagram and Snapchat-worthy” views. 

“We are targeting an active traveler between the ages of 18 and 40, with everything from the décor, dining and cocktail service to the land activities thoughtfully curated to appeal to, and meet the needs of, this audience,” said Ellen Bettridge, president & CEO, Uniworld.

It’s no secret that millennials are consistently searching for unique experiences—something that cruise ships can easily deliver with ever-changing views from the portholes. If hospitality companies want to capture this lucrative market, moving onto the water could be a good solution.

The Value of Cruises in Europe

The fall of the pound as Brexit approaches appears to have provided some motivation for bookings. “Cruises are incredibly good value, and this is important as so much of the cruise experience is included in the price, therefore enabling holidaymakers to budget up front without needing to worry about the exchange rate and its impact on their summer holiday when in the destination,” said Andy Harmer, SVP membership & director, CLIA UK & Ireland.

“In 2016, the average age of those passengers who cruised dipped quite significantly to be at its lowest for six years at just over 55. A number of cruise lines now offer sailings to more adventurous destinations such as South America, Antarctica and Asia that are naturally of interest to a younger crowd. The great on-board food and wine offering is also attracting a younger demographic along with new state-of-the-art accommodation to rival any hotel suite on land.

“Increasingly we are finding holidaymakers choosing cruise as their main holiday of the year. With the added benefit of being able to visit multiple destinations in one city we are also finding that cruising is really appealing to Brits that also enjoy a shorter European break and are now replacing these smaller trips with a cruise in order to visit some of the continent’s most iconic destinations.”

The cruise operators are confident looking into the year ahead. Jason Liberty, Royal Caribbean CFO, told analysts at the company’s most-recent results that he saw “strong demand” for the European market coming from North America, as well as from Europe.

The group has cut its capacity in the Eastern Mediterranean in half, largely as a result of instability in Turkey, with the focus increasingly on Western Europe as opposed to Eastern Europe, Liberty said. Demand from North America responded favorably. “We are now booked at a much higher load factor than last year in the Mediterranean.”

Royal Caribbean’s enthusiasm for the Mediterranean is strong enough that its latest ship, the Symphony of the Seas, will debut on a cruise in the region next year. The ship will be the largest ever built, with 18 decks and capacity for 5,494 passengers. Illustrating the ever-growing amenities offered by cruise ships, it will feature a surf simulator, ice-skating rink, rock-climbing wall, several waterslides and a bar tended by robots. 

Disney Cruise Line is also expanding in the region, and from next year its guests can visit Barcelona and Rome for the first time as a single cruise, as well as Genoa, Italy, as part of a 10-night Mediterranean itinerary. 

Katherine Doggrell is an editor at Hotel Analyst, the U.K.-based news analysis service for hotel investors.

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