Cruise Inc: Big Money On the High Seas Airs and Brings Insight Into the Cruise Industry

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CNBC aired their new show Cruise Inc: Big Money On the High Seas this week. NCL Cruise Line gave CNBC Reporter Peter Greenberg unprecedented access to the Norwegian Pearl for a one week cruise. As the title indicates the documentary focuses on the financial side of the cruise industry, especially in the current troubled economy. I’ll highlight for our readers some of the more interesting statistics put forth in this documentary.

Statics about the Industry as a whole

  • The cruise industry as a whole is a $30 Billion industry carrying 13 million passengers every year.
  • Cabin sales actually represent the largest piece of revenue
  • Market share in the global industry is split between Carnival (and all its subsidiaries) at 50%, Royal Caribbean (all all its subsidiaries) at 30%, and NCL (Star Cruises Parent Company) at 10%.
  • On board spending accounts for 1/4 of the revenue in the industry.
  • Cruise lines pay as much as $1,000,000 for companies like Jean Ann Ryan Production to produce their shows for the main theater.
  • Production dancers can earn about $25,000 for a six month contract.
  • Noro-Virus is one of the second most common illnesses caught by Americans every year, and according to NCL representatives it has been unfairly associated with the cruise industry and exaggerated as a problem in the cruise industry. Only 4 NCL ships had significant Noro outbreaks in 2008.

NCL and NCL Pearl Specific Facts

  • NCL introduced “Free Style” cruising in 2000 in an effort to attract people who have yet to take their first cruise. They wanted to portray a cruise experience as just like any other resort vacation experience.
  • NCL tries to make sure their ships sail full, with ideal occupancy being 102% for a minimum. The 100% occupancy is based on 2 people occupying each cabin, families with a 3rd or 4th person, or groups of friends traveling with 3 or 4 in a room help the line to achieve the 102% occupancy rate.
  • NCL Pearl has cabins ranging in price from $35 per person per day to over $2000 per person per day.
  • NCL Pearl has 7 specialty restaurants.
  • According the Cruise Director Simon Murray, there are 100+ activities available to passengers every day.
  • NCL has a liquor collection team to confiscate or collect liquor not purchased onboard the ship.
  • NCL, like most cruise lines, flags their ships in non-American countries to avoid the strict regulation imposed on American Flagged ships. When NCL tried to sail three ships in the Hawaiian islands under the American flag, they experienced losses of $100 Million dollars.

Crew Facts

  • Most of the crew work 10 Hour days, 7 days a week
  • Cabin Stewards earn about $2500 per weeks
  • Many of the crew work onboard the ship in order to provide a better life for their family back at home.

Safety & The Environment

  • NCL “Grand Dame” the aging Norway ship was involved in a deadly boiler explosion. 8 crew members were killed. The company plead guilty to gross negligence in 2008, and paid over 20 million in fines and restitution.
  • Ships conduct weekly fire drills and evacuation drills to insure safety of passengers.
  • NCL has 1,100 cameras to monitor on board safety and security on ships like Norwegian Pearl
  • After several companies being caught on and before 1999 committing environmental violations, the industry has initiated sweeping changes to insure that the ships are acting environmentally responsible.

On Board Spending and Port Spending Habits

  • The cruise lines have a per passenger per day benchmark for on board beverage spending in order for them to have profitable cruise. For the cruise on the show dollar goal was $7.25 per person per day for soft drinks and alcoholic beverages. (See the above Liquor Collection team)
  • Only 30% of passengers book their excursion online at home before the cruise.
  • 75% of passengers book at least one shore excursion during the cruise.
  • Cruise line and shore excursion companies split the shore excursion monies any where from 40/60, 50/50, or 60/40.
  • Recommended stores like Diamonds International share the cruise line passengers revenues with the cruise ships that have brought them into port.
  • Cruise ships can have as much as $250,000 economic impact on port city per ship per day
  • In most port cities, the entire community benefits from the cruise ship’s presence.

I thought show was very interesting, and provided some concrete data to fill in the blanks for me on many practices that I had long suspected. For those of you who might be new to the cruise industry the show provides many insights into just how the cruise industry operates. There is also many topics that merit more discussion. We have already started a thread for discussion of the show in our forum area. We’d love to hear your impressions and thought on the show.