Cruising has expanded in recent decades from serving only the very rich to providing activities and entertainment options even for the middle-class vacationer.
The reaction was swift, with two dozen comments providing both positive and negative feedback.
This article will use the same framework to analyze the cruise industry, again with particular application to Carnival NYSE: CCLthe market-share leader of the cruise industry.
Worldwide, there are cruise ships with a total passenger capacity of more thanThe industry is a very concentrated one. Founded in and representing 63 cruise lines and 50, travel agents, the CLIA is a powerful advocate of its members interests before regulatory and legislative policy makers around the world.
It also claims that the cruise industry is growing at nearly twice the rate of the U. Carnival has ships, capable of carryingpassengers at any one time. Royal Caribbean is the second largest player, with 42 ships and a capacity ofAt a minimum, it generates useful questions and food for thought. For more information on how the framework works, please refer to my earlier article by clicking the hyperlink in the first paragraph.
Attractiveness of the Cruise Industry The first force in the framework is industry rivalry. Each cruise line has successfully generated differentiated brands, making it price comparisons less likely because they are apples and oranges and not directly comparable.
Carnival has branded itself successfully as the fun ship. Customers frequently sailing on Carnival also accumulate frequent cruising points that can be used to exchange for valuable onboard credit, fast-track embarkation and debarkation, and other benefits.
There is significant switching costs associated with changing from one cruise line to another. Known as the most innovative cruise line, Royal Caribbean offers unique featuressuch as the Broadway show CATS, activities such as rock climbing, zip lining, ice skating, and surfing feet above the ocean.
The oligopolistic nature of the cruise industry does not compete primarily on price alone. Instead, there is product differentiation and strong brands, reducing the intensity of industry rivalry.
Thus, the first force of low industry rivalry suggests an industry that is highly profitable in the long run and therefore highly attractive to the investor. The threat of new entrants is low for the cruise industry. With vast economies of scale enjoyed by the three incumbents, new players would find it hard to be price competitive.
Moreover, the new entrant would not have strong brands and the built-in customer loyalties of the existing brands.
The financial barrier to entry is very high, with ships costing hundreds of millions of dollars, and with a limited number of shipyards capable of building large cruise ships. The second force points toward a highly attractive industry. Similarly, the third force of the threat of substitution is a positive one for the industry.The global cruise market is worth $40 B, up 7% from to More than 22 M passengers expected to cruise in , up 3% from to Using Porter's Five-Forces Framework, smooth.
Det Norske Luftfartselskap A/S (literally "The Norwegian Aviation Company") or DNL, trading internationally as Norwegian Air Lines, was an airline and flag carrier of webkandii.comd in , it operated domestic and international routes from to and from to It became one of the three founders of Scandinavian Airlines System (SAS) and became one of its three holding.
Royal Caribbean grabbed headlines in December after more than people fell ill on two of the company’s cruise ships. While it may seem like an alarming number of individuals, it’s actually. The Leisure- Cruise Industry Major: Marketing Porter’s Six Forces I. Threat of New Entrants: Low * Barriers to entry: High * High Capital Requirements: The capital required to start up a cruise line is one of the key factors contributing to this industry’s high barriers to entry.
Analysis of the US cruise line industry J.S.
Perry Hobson The cruise line industry has been through a metamorphosis. From being a declining mode of travel in the s, the cruise line industry turned the cor- ner in the s and became one of the fastest growing segments of the wider tourism industry during the s.
Two expedition cruise lines have scrapped plans to cruise across Arctic Canada through the famed Northwest Passage because ice has clogged the route.