In 2014, the Australian cruise industry leapt ahead of forecasts to reach two major milestones. It not only surpassed its target of attracting one million local cruise passengers (4.2% of the national population), but it also became the world’s fastest-growing outbound market. With double-digit expansion every year, the nation has seen a six-fold increase in passengers over the past decade.
Australia’s success was also a boon for cruising at large – this was the first time any region had achieved more than a 4% market penetration. In a year when the global industry experienced mixed fortunes, and some more well-established source markets saw slow or stagnant growth, Asia-Pacific (and in particular, Australia) was an exception to the rule.
At the turn of the century, Australian holidaymakers were not especially inclined to embark on a cruise. With few ships available and little supporting infrastructure in place, only the most ardent seafarers jumped aboard. In 2002, when CLIA Australia compiled its inaugural annual report, there were just 116,000 local passengers.
Much like today, however, the industry was nothing if not ambitious. Setting a target of one million passengers by 2020, it gradually began to expand its product offering, with more cruise lines establishing a presence down under, and existing lines introducing more itineraries and ships.
Taking Australia by storm
"The big thing in the industry has been the introduction of more locally based cruise ships from a variety of brands," explains Gavin Smith, chair of CLIA Australasia. "All through the 80s and 90s, and the first half of the past decade, Princess and P&O were the only cruise products, so customers didn’t feel like they had much of a choice. But now, they’re finding more relevance in specific brands."
In addition to his role at CLIA, Smith serves as regional vice president of Asia-Pacific at Royal Caribbean Cruises, which encompasses the Royal Caribbean and Celebrity brands, among others. Both these brands have become firmly entrenched in the Australia and New Zealand cruise market.
Celebrity Solstice, which was named Australia’s best cruise ship at the 2015 National Travel Industry Awards, is based in Australia between October and March, cruising the South Pacific, New Zealand and South-east Asia. The ship has been homeported in Sydney since 2012.
Meanwhile, Royal Caribbean has opened bookings for its third Quantum-class cruise ship, Ovation of the Seas, which is currently under construction. When it docks in Perth in December 2016, this 4,180-passenger liner will be the largest ship ever to be based in Australia. Like Voyager of the Seas before it, it will follow the summer around Asia-Pacific, spending southern summers in Australia and northern summers in China. As of the 2016-17 season, it will be one of five Royal Caribbean vessels operating from the region.
"Ovation of the Seas is really an amazing announcement for a market like Australia," says Smith. "It’s the first newbuild ever to be deployed here, and really brings to light the complementary nature of the China-Australia climate. And it’s good for Royal Caribbean Australia to bring in a ship that’s valued at more than a billion dollars; this will make us the most capital-invested cruise brand in Australia. It’s about demonstrating what a best-in-the-world product looks like, and bringing that to Australia’s doorstep."
Carnival Corporation has also made Australasia an important point of focus. Representing seven cruise brands in the region – Carnival Cruises, Cunard, Holland America, P&O, P&O World Cruising, Princess and Seabourn – the operator has been singlehandedly responsible for a large chunk of the market growth. Together, its brands account for around 80% of the Australia and New Zealand cruise sector.
Over the 2015-16 season, Carnival will have an unprecedented 22 ships ported in Australia. Five of these belong to Princess Cruises, including the 2,600-passenger Golden Princess, which makes its Melbourne debut in October. P&O Cruises Australia will also expand its fleet to five, adding Pacific Aria and Pacific Eden to its ranks in November.
Then there is Carnival Spirit, which, with a 2,142-passenger capacity, remains the largest ship to be ported here all year round. Since 2014, it has been joined by its sister ship Carnival Legend for an extended summer season.
"Becoming the world’s fastest growing cruise market was certainly no accident," says Ann Sherry, CEO of Carnival Australia. "As industry leader, we transformed the cruise industry by improving the quality of the local product, in terms of accommodation, dining options and entertainment opportunities. As more people return from great cruise experiences and visits to fascinating destinations, they energise family and friends to try a cruise holiday themselves."
Ambitious plans for Australia
For Australians, the South Pacific remains their cruising ‘backyard’, accounting for nearly 40% of passengers in 2014. 8.8% of passengers travel to New Zealand, whereas 9.3% jet out to Europe and 5.5% head to Asia. This final segment is growing rapidly, with significant investment in port facilities in key Asian destinations, and the particularly strong expansion of the Chinese cruise market.
That said, the significant allure of Australia itself ought not to be dismissed. Alongside the 19% of Australian cruisers who sail around their own country, ever more overseas passengers are choosing to circumnavigate antipodean seas. Hailing predominantly from Europe and the US, these inbound passengers are drawn in by the promise of a full, immersive tour.
"The inbound market is very interested in having a concentration of ports in one country, allowing them to get experiences ashore, and that’s a driver for the majority of cruises departing from Sydney," explains Smith. "Guests are looking for authentic experiences, whether that’s a Lord of the Rings tour in New Zealand or a ranch barbecue in Australia, so our responsibility is to position the region in such a way that they can feel they’ve done something different while they’ve been here."
Considering how the local cruise market has snowballed, it is no surprise that the industry has outlined aggressive targets for the years ahead. With its original goal attained six years ahead of schedule, the new target is for two million passengers by 2020. And this ‘the sky’s the limit’ philosophy does not stop there.
"With Australia being a nation of ‘seahuggers’, we think market penetration of 10% is achievable within the next decade," says Sherry. "That is the equivalent of three million passengers a year in Australia. Following more than a decade of double-digit growth in passenger numbers, there is certainly potential for continued industry expansion."
Considering that the world’s next biggest source market, North America, welcomed aboard just 3.4% of its population last year, growth of this magnitude would establish the region as by far the most receptive in the world. For operators, it presents an astonishing opportunity, allowing them to capitalise on a quickly emerging market that has sprung up from a standing start.
Problems in port
As Australia seeks to realise this potential, it will be looking to address certain infrastructure issues, which are already beginning to pose a problem. Along with cost and environmental challenges, inadequate port facilities in Sydney and Brisbane are widely seen as a key impediment to future growth.
"Cruise facilities are very much approaching capacity, so any line looking to expand their deployment would have difficulty," explains Smith. "We’re working actively with the state and federal government, trying to determine the best method of expanding cruise infrastructure. We’re trying to manage the scale and the ambition of the industry within the tourism needs of the state."
Sherry adds, "In Sydney, Carnival Australia continues to advocate for cruise ships’ long term access to the Garden Island naval base during the peak summer cruise season. We are also exploring the possibility of a dedicated cruise facility in Brisbane, where larger cruise ships could berth closer to the mouth of the Brisbane River."
Still, while the best solutions remain open to question, the Australian appetite for cruising is not up for debate. As more world-class ships are introduced to the region and more Asia-Pacific itineraries are developed, the rise of this market seems unstoppable.
"The obligation of the industry in Australia is to maintain the variety and choice," concludes Smith. "So we will be opening new ports, inventing new shore experiences, improving our service and bringing the best product in the world to Australia. All these things will give more Australians a reason to cruise."
