At the beginning of the year, many companies, governments, and travel authorities had predicted a stronger recovery for the cruise market in 2021. Unfortunately, that was not the case.
The pandemic has proven unpredictable, with many cruise destinations going into second and third lockdowns during 2021 after a global surge in Covid-19 cases.
While the cruise industry has experienced a 96% Year-on-Year (YoY) increase of passengers, reaching 13.9 million, it still does not compare to the pre-pandemic levels of 2019, where there were 29.7 million passengers globally. It has been an even worse year for travel intermediaries specializing in cruise holidays.
These companies are the primary selling points for cruise trips and are often responsible for selling upgrades, premium drinks packages and excursions. Global spending across 60 major cruise markets increased by 65% YoY, resulting in total revenues of $19.4bn. Nevertheless, this was still far from pre-pandemic levels in 2019, which were approximately $29.8bn, 35% higher than 2021’s figure.
To reduce costs, many ships were retired between 2019 and 2021. Cruise ships are the most expensive assets, making this practice a necessity for many firms to stay afloat.
However, more optimistic times lie ahead for the sector. During the pandemic, the cruise industry has witnessed new innovative cruise ships and a brand-new competitor in the form of Virgin Voyages. Many cruise liners have come good with orders for new cruise ships built before the pandemic, resulting in an exciting time for loyal cruise holidaymakers to try new ships, services, and onboard experiences.
Global cruise passengers and revenue
2021 provided a tough lesson for the cruise industry, with businesses aiming to make a swifter recovery from the latest round of lockdowns.
The cruise industry’s recovery rate was modest in 2021. Although a 96% YoY increase sounds positive, it is still nowhere near pre-pandemic levels. In 2021, only 13.9 million passengers went on a cruise, 53% lower than the pre-pandemic levels of 2019.
With the fluctuations of global passengers, revenues will generally follow a similar pattern unless there is a substantial shift in consumer behaviour. Usually, the most significant impacts on a travel company’s revenues, aside from passenger flows, are an economic recession, foreign exchange, or a change in booking trends.
|Position||Cruise Company||Market Cap (January 2022)|
|1||Walt Disney Co||$286.9bn|
|4||Royal Caribbean Group||$20.8bn|
|6||MSC Cruises||N/A – private company|
|7||Norwegian Cruise Line Holdings||$9.2bn|
|9||Lindblad Expeditions Holdings||$881.5m|
During the pandemic, it has become clear that the latter affected cruise intermediary revenues. In 2021, revenue generated for cruises from intermediaries reached $19.5bn, a 65% YoY increase from $11.8bn. However, cruise passenger flows increased by 95% YoY, which is a significantly higher rate of improvement.
According to the CEO of the Royal Caribbean Group, Richard Fain, this was not unexpected. The world’s fourth-largest cruise company has seen intermediaries such as online travel agencies (OTAs) and high street agencies lose a proportion of their market share, with customers opting to book directly with the cruise operator rather than a third party.
The same sentiment was echoed by Norwegian Cruise Lines CEO Frank Del Rio, who said the company had witnessed a similar booking pattern. The result is not surprising. Many agencies have had to cut back on their workforce due to poor revenue performance in 2020, resulting in fewer sales agents to capture the rising demand in 2021. This has led to more customers booking directly with cruise companies.
Research from GlobalData also supports this, when comparing two consumer surveys from 2019 and 2021. In 2019, 44% of respondents said they typically book via an OTA. However, in a Q4 2021 survey, only 24% of respondents said they booked their last holiday via this booking method. In addition, respondents who said they booked directly increased from 32% to 36%.
New cruise ships and trends for 2022
There are many new cruise ships scheduled to set sail in 2022. Many of these boast a more contemporary feel to their décor and interior, moving away from the traditional looks of the past cruise ships and moving to a more fashionable boutique hotel design.
The motivation for this stems from the fact that cruise operators need to attract a younger market. This evolution is necessary for making cruise businesses more resilient in the future by drawing the next generation of cruise tourists.
According to a 2020 GlobalData survey, 37% of GEN Z and Millennials said that they ‘strongly’ or ‘slightly’ agreed with the notion that they would book an international trip this year. In comparison, only 22% of those older than 35 responded with the same sentiment, highlighting that the younger generation may be more likely to travel in today’s travel climate.
Furthermore, cruising has also become more popular with younger adults. In GlobalData’s Q3 2019 and 2021 global consumer surveys, the percentage of Gen Z and Millennial respondents who typically take a cruise holiday increased from 17% to 21%, indicating changes in consumer tastes.
|Cruise line||New ship|
|Celebrity Cruises||Celebrity Beyond|
|MSC||MSC Seascape |
MSC World Europa
|Norwegian Cruise Lines||Norwegian Prima|
|Ritz Royal Yacht Collection||Evrima|
|Royal Caribbean||Wonder of the Seas|
|Viking||Viking Mars |
|Virgin Voyages||Resilient Lady |
The importance of Covid-19 safety protocols on cruise ships has never been more critical. According to GlobalData, there is a demand from consumers to receive information about Covid-19 initiatives. This data shows that consumers need substantial levels of communication from cruise providers, and that cruise companies will need to develop robust communication strategies, which need to be scaled over the next few years.
Many travellers are opting to book directly with the operator rather than via an intermediary such as an OTA. According to a Q3 2019 GlobalData survey, 44% of consumers said they typically book via an OTA.
However, this has fallen substantially over the last two years. In a Q4 2021 survey, only 24% of respondents said they booked their previous holiday via an OTA.
In addition, respondents who said they booked directly with a travel supplier increased from 32% to 36%, showing that booking directly with the supplier is becoming more trustworthy and popular.
Nevertheless, this booking behaviour could well be a temporary result, with some cruise operators expecting intermediary trade to pick up again in 2022.