Source: adapted from Cruise Market Watch. Note: Growth rates not depicted for 2020 (-74.2%), 2021 (+96.1%), 2022 (+46.7%) and 2023 (+50.4%).
The global cruise market has witnessed continuous growth throughout the last three decades, a growth that was interrupted in 2020 by the COVID-19 pandemic. In the 1990s and the 2000s, the size of the global cruise markets doubled about every 10 years, representing an annual growth rate of about 7%. Growth rates were relatively lower since the financial crisis of 2008-09. Yet, despite geopolitical difficulties (i.e, the Arab Spring that affected cruising in the Meditteranean) or the negative image produced by the Costa Concordia accident in Italy), the cruise industry has demonstrated a capacity for uninterrupted growth, the pace of which was faster than that of other transport or tourism industries. Only the COVID-19 pandemic represented a major setback.
In 2019, almost 30 million single passengers enjoyed a cruise on one of the 400 cruise vessels calling at one of the main cruise regions of the world (North America, Caribbean, South America, Mediterranean, North Europe, Australia, Asia, Africa), generating more than 150 million passenger movements in world cruise ports. At the turn of the century, the number of persons who took a cruise was just over seven million.
The global cruise industry remains relatively small compared with the tourism industry, which accounted for 1 billion arrivals in 2011. For instance, it was estimated that about 37 million people visited Las Vegas in 2010, while the global cruise industry carried about 18 million passengers the same year. However, this observation must be nuanced because most cruises typically involve 3 to 5 ports of call with the corresponding number of visits per passenger. Second, the industry remains fundamentally derived from the supply of ships and itineraries. Thus, the strategy is to fill the ships, which are a fixed supply, and when the demand is weaker, discounts are offered to keep the ships full. Third, the customer base of the cruise industry tends to be of a higher income level than the customer base of the tourism industry at large. This market segment is usually less impacted by economic downturns. Further, the growth in income levels in many countries, including developing economies, has expanded the customer base susceptible to taking a cruise. In light of this context, there is little evidence about the full extent of the market potential of the cruise industry and when a saturation point could be reached.
The COVID-19 pandemic triggered unprecedented global health and economic crisis. In February-March 2020, COVID-19 outbreaks associated with three cruise ship voyages caused more than 800 confirmed cases among passengers and crew. The whole industry voluntarily suspended worldwide operations, with the timing and the conditions of return remaining questionable. In late April 2020, all global destinations had COVID-19 travel restrictions, while the 2020 prospects suggested a decline in arrivals of 60%-80%. Six months later, the second wave of the pandemic resulted in the postponement of cruise calls in most world ports, including the regions (e.g. in Europe and Japan) that have seen a restart of cruising. As the post-COVID-19 new normal evolves, a precise assessment of the longer-term implications is challenging. 2020 turned out to be the most disastrous year in cruise shipping history, with the number of passengers dropping from 27.5 million in 2019 to just above 7 million. This represented a 75% drop in traffic.
After more than one year of hiatus, cruise operations resumed in the Caribbean in June 2021. Some test cruises took place in the Mediterranean market in the summer of 2020. Throughout 2021, occupancy rates remained low, around 50%, with the number of passengers bouncing back to 13.9 million. In 2022, occupancy rates improved to around 78%, with 20.4 million people taking a cruise, and by 2023, the number of passengers, at 30.7 million, exceeded pre-pandemic levels. However, 2022 brought new challenges for the industry with an increase in the price of food by 20%, an important cost component in a cruise offering. Further, the war in Ukraine impacted Baltic cruises as St. Petersburgh, Russia, could not be called, inciting a redeployment of ships to other markets. Labor shortages were also experienced as Russian and Ukrainian seafarers were much less available. Further, an economic downturn in China seriously undermines future growth prospects in the region. It may incite cruise lines to revise their deployment in a region that, before the COVID-19 pandemic, showed significant growth.