**2. Development of the North American and European cruise industries**

The modern cruise industry can be said to have begun with the sailing of the *Sunward* in 1966. Seeing her alongside the quay in Nassau late December 1966, her crisp modern lines and large windows accented with potted plants stood in sharp contrast to the aged former coastal liners that were characteristic of the Miami cruise trade. The modern cruise industry was concentrated in North America though the early 1990s. The geographical distribution of the industry in 1966 is illustrated in **Figure 6**.

Most of North America's growth followed Marti's [3] definition of organic expansion throughout the Caribbean and then to Alaska and the Mexican Riviera and eventually to Europe. The major exception was Princess Cruises. Their 1974 acquisition by London-based P&O Lines provided an infusion of capital leading

**Figure 6.** *Major world cruise areas 1966.*

to a major upgrade of their fleet by the year's end. This pattern would be repeated between North America and Europe in the 1990s and between Asia and North America in 2000. In 1970, the industry carried 500,000 passengers. The major lines were Home Lines, Sitmar Cruises, Norwegian Caribbean Line (NCL), Cunard Line, Holland America Line (HAL), and Princess Cruises. In 1975, the TV series "Love Boat" started a 10+ year run that brought cruising into the living rooms of millions of Americans who had never seen the ocean. Royal Caribbean Cruises Limited started in 1971 with two new ships. Royal Viking Line (RVL) started with three new ships in the luxury segment and Carnival Cruise Line with the 1960-built ex-*Empress of Canada* as *Mardi Gras*. By 1980, the industry carried 1.4 million passengers, Carnival had three secondhand ships, Royal Viking and Royal Caribbean lengthen their ships to meet demand, and NCL proved the concept that a 2000-passenger ship could be successful in 1-week cruises with the converted ex-*France* operating in *Norway*. The early 1980s saw the advent of second-generation cruise ships with Carnival, Royal Caribbean, and HAL newbuilds. These were followed in quick succession by third-generation newbuilds from Carnival, Sitmar, and Princess in the mid-1980s. Ward [10] described the industry with this inflection point, "The first edition of this book, reviewing, testing, and evaluating 120 ships was published in 1985, when cruising was viewed as an expensive, rarefied experience." At the same time boutique cruise ships the size of large yachts appeared. In 1984, Seatrade held their first cruise shipping conference in New York City. In 1985, the industry carried 2.2 million passengers. In 1988, 3.2 million passengers were carried and the industry began to consolidate. HAL brought Home Lines and Carnival brought HAL. Princess brought Sitmar and Admiral Cruises was acquired by Royal Caribbean. NCL had brought RVL in 1984 but continued to operate it as a separate brand. That same year, fourth-generation cruise ships made their debut with Royal Caribbean's *Sovereign of the Seas*. Sporting multi-deck atriums and broadway-sized show theaters, these were the largest ships built since the 1930s. In 1990, there was a boutique ship proliferation and the industry carried 3.6 million passengers. By 1992, this was 4.1 and by 1994 the numbers were 4.5 million. Up to this point, the focus of statistics was North America. However, in 1995, North American passenger numbers declined to 4.1 million, the first decline since the start of record keeping.

**243**

**3. Literature review**

*Globalization of the Cruise Industry: A Tale of Ships Part II - Asia Post 1994*

to retain repeat passengers is another factor driving fleet expansion.

The stagnation of 1994/1995 led to an attention shift outside of North America to Europe and Asia. Globalization in Europe would be led by newbuildings in the UK and German markets, followed by an attempt at pan-European cruising by Festival Cruises. Festival was eventually forced into bankruptcy by the owner's financial problems with his tanker fleet. This globalization was characterized initially by Marti's [3] organic expansion which was followed by mergers and acquisitions as North America-based lines brought or merged with Europe-based lines. The major exception was MSC Cruises. Backed by the world's second largest container shipping company MSC, MSC Cruises was able to take advantage of Festival's demise and modernize their fleet overnight. Since then they have expanded into the Caribbean, South America, and Asia as well as being a dominant player in Europe. They are well along the way to overtaking Norwegian Cruise Line as the third largest cruise company.

Josiam et al. [14] write, "There are only a few research studies on travelers' motivation to experience a cruise vacation and their subsequent satisfaction with that experience. Because Asian travelers are an emerging segment of the cruise industry, there is need for cruise operators to better understand the needs of the ethnic Chinese segment and the Taiwanese traveler in particular. The purpose of this article is to address this gap in the literature (p. 77)." In the years since this was written, Carnival, Royal Caribbean, and NCL have put major ships in Asia targeting the Chinese market. They've overcome cultural issues by recruiting their management teams from Asian hospitality, consumer goods, and marketing industries.

A key factor in this growth was cruising's high customer satisfaction resulting in repeat cruisers. The industry continues to attract new cruisers but repeat passengers are important. Miller and Grazer [11] write, "Cruise lines have long recognized the importance of repeat passengers. According to ship personnel, many sailings have at least forty percent repeat customers. Cruise lines often sail with passengers who have 700 or more days with that particular line (p. 78)." In order to retain these passengers, cruise lines need to offer new experiences in terms of ships and ports. Gibson [12] writes "The success of a cruise business, in terms of securing repeat customers and capturing new business, is directly related to reputation. In turn, past and present customers and their perception of service and product quality directly inform that reputation (p. 169)." As mentioned earlier the cruise industry is supply led. A new ship rewards repeaters something different and entices new-to-cruising passengers with, what Richard Fain, Chairman of Royal Caribbean, calls the latest "Wow!" factor. According to the 1998 CLIA Industry report [13], 24% of perspective cruise passengers were repeat passengers. In surveys taken between 1990 and 1996, 59–70% of these passengers intended to definitely/probably take another cruise. This makes these passengers particularly important to a cruise line's profitability. In spite of all the bells and whistles added over the past 30 years, executives at cruise conferences often remark that passengers pick their cruise because of the destination. Newness in both destinations and hardware remains important in attracting and retaining passengers. Josiam et al. [14] discuss the pull factors in attracting passengers. They write "Prior research identifies five pull factors with respect to cruise travel motivation (Lu, 2001). These five pull factors are national environment and safety, entertainment and sports recreation, nature and wilderness, learning opportunity, and modernity and facilities. Lu also points out that 'nature & wilderness' is the main reason pulling travelers to take cruise ship tours (85)." These factors are all inherent characteristics of a destination. The need to offer new destinations in order

*DOI: http://dx.doi.org/10.5772/intechopen.88157*

#### *Globalization of the Cruise Industry: A Tale of Ships Part II - Asia Post 1994 DOI: http://dx.doi.org/10.5772/intechopen.88157*

*Education, Human Rights and Peace in Sustainable Development*

to a major upgrade of their fleet by the year's end. This pattern would be repeated between North America and Europe in the 1990s and between Asia and North America in 2000. In 1970, the industry carried 500,000 passengers. The major lines were Home Lines, Sitmar Cruises, Norwegian Caribbean Line (NCL), Cunard Line, Holland America Line (HAL), and Princess Cruises. In 1975, the TV series "Love Boat" started a 10+ year run that brought cruising into the living rooms of millions of Americans who had never seen the ocean. Royal Caribbean Cruises Limited started in 1971 with two new ships. Royal Viking Line (RVL) started with three new ships in the luxury segment and Carnival Cruise Line with the 1960-built ex-*Empress of Canada* as *Mardi Gras*. By 1980, the industry carried 1.4 million passengers, Carnival had three secondhand ships, Royal Viking and Royal Caribbean lengthen their ships to meet demand, and NCL proved the concept that a 2000-passenger ship could be successful in 1-week cruises with the converted ex-*France* operating in *Norway*. The early 1980s saw the advent of second-generation cruise ships with Carnival, Royal Caribbean, and HAL newbuilds. These were followed in quick succession by third-generation newbuilds from Carnival, Sitmar, and Princess in the mid-1980s. Ward [10] described the industry with this inflection point, "The first edition of this book, reviewing, testing, and evaluating 120 ships was published in 1985, when cruising was viewed as an expensive, rarefied experience." At the same time boutique cruise ships the size of large yachts appeared. In 1984, Seatrade held their first cruise shipping conference in New York City. In 1985, the industry carried 2.2 million passengers. In 1988, 3.2 million passengers were carried and the industry began to consolidate. HAL brought Home Lines and Carnival brought HAL. Princess brought Sitmar and Admiral Cruises was acquired by Royal Caribbean. NCL had brought RVL in 1984 but continued to operate it as a separate brand. That same year, fourth-generation cruise ships made their debut with Royal Caribbean's *Sovereign of the Seas*. Sporting multi-deck atriums and broadway-sized show theaters, these were the largest ships built since the 1930s. In 1990, there was a boutique ship proliferation and the industry carried 3.6 million passengers. By 1992, this was 4.1 and by 1994 the numbers were 4.5 million. Up to this point, the focus of statistics was North America. However, in 1995, North American passenger numbers declined to 4.1 million, the first decline since the start of record keeping.

**242**

**Figure 6.**

*Major world cruise areas 1966.*

A key factor in this growth was cruising's high customer satisfaction resulting in repeat cruisers. The industry continues to attract new cruisers but repeat passengers are important. Miller and Grazer [11] write, "Cruise lines have long recognized the importance of repeat passengers. According to ship personnel, many sailings have at least forty percent repeat customers. Cruise lines often sail with passengers who have 700 or more days with that particular line (p. 78)." In order to retain these passengers, cruise lines need to offer new experiences in terms of ships and ports. Gibson [12] writes "The success of a cruise business, in terms of securing repeat customers and capturing new business, is directly related to reputation. In turn, past and present customers and their perception of service and product quality directly inform that reputation (p. 169)." As mentioned earlier the cruise industry is supply led. A new ship rewards repeaters something different and entices new-to-cruising passengers with, what Richard Fain, Chairman of Royal Caribbean, calls the latest "Wow!" factor. According to the 1998 CLIA Industry report [13], 24% of perspective cruise passengers were repeat passengers. In surveys taken between 1990 and 1996, 59–70% of these passengers intended to definitely/probably take another cruise. This makes these passengers particularly important to a cruise line's profitability. In spite of all the bells and whistles added over the past 30 years, executives at cruise conferences often remark that passengers pick their cruise because of the destination. Newness in both destinations and hardware remains important in attracting and retaining passengers. Josiam et al. [14] discuss the pull factors in attracting passengers. They write "Prior research identifies five pull factors with respect to cruise travel motivation (Lu, 2001). These five pull factors are national environment and safety, entertainment and sports recreation, nature and wilderness, learning opportunity, and modernity and facilities. Lu also points out that 'nature & wilderness' is the main reason pulling travelers to take cruise ship tours (85)." These factors are all inherent characteristics of a destination. The need to offer new destinations in order to retain repeat passengers is another factor driving fleet expansion.

The stagnation of 1994/1995 led to an attention shift outside of North America to Europe and Asia. Globalization in Europe would be led by newbuildings in the UK and German markets, followed by an attempt at pan-European cruising by Festival Cruises. Festival was eventually forced into bankruptcy by the owner's financial problems with his tanker fleet. This globalization was characterized initially by Marti's [3] organic expansion which was followed by mergers and acquisitions as North America-based lines brought or merged with Europe-based lines. The major exception was MSC Cruises. Backed by the world's second largest container shipping company MSC, MSC Cruises was able to take advantage of Festival's demise and modernize their fleet overnight. Since then they have expanded into the Caribbean, South America, and Asia as well as being a dominant player in Europe. They are well along the way to overtaking Norwegian Cruise Line as the third largest cruise company.
