Four Significant Challenges Confronting the Cruise Industry Essay

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21st century, significant challenges confront the modern cruise ship industry. The four most prominent are industry concentration resulting in a lack of product diversification, an ever increasing expansion in the tonnage of ships requiring further investment in port facilities, a limited number ports of call producing tourist over-crowding and an environmental record that demands improvement and may be an expensive source of litigation. Through an understanding of these issues, the cruise ship industry can ensure its viability looking forward.

The cruise ship industry is dominated by four major companies: Carnival Lines, Royal Caribbean, Norwegian Cruises and MSC Cruises. The remaining 4% of the industry which is not controlled by these behemoths faces significant challenges to operate. A modern ship able to carry thousands of passengers can cost over 1 billion dollars and takes 4 years to launch from order to delivery. Due to this high buy-in cost, this phenomenon results in a non-competitive industry in which four companies only need to match the amenities and booking prices of the other three companies. Furthermore, it leads to product homogenization as everyone simply looks to hold and grow their market share rather than to radically change the product (i.e. The cruise ship experience) as smaller more competitive companies would seek to do to gain customers.

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In the years ahead, if the industry hopes to draw in new customer populations it is important that steps be taken to facilitate competition and innovation in the industry.

Another major development facing the cruise ship industry is the dramatic expansion in the tonnage and passenger capacity of ships. The new RCC Freedom of the Seas is being built at 160,000 Gt. with 3,643 lower berths. This change in the size and carrying capacity of newer ships will demand expansion of port facilities to accommodate both the larger ships and the increased resources that must be delivered to these ships (i.e. food, water, waste disposal and sewage treatment to name a few). Whether this investment will come from the industry itself or from port countries is a significant point of contention that must be resolved.

A third area of concern for the cruise ship industry….....

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