The global cruise industry that accounts for 5% of global travel modes, was forecast to reach sales worth 71 billion (USD) in 2020 in constant terms. However, it has taken a battering from the coronavirus pandemic that has brought global travel and tourism to a standstill. Travel bans imposed across the globe, hundreds of thousands of flight cancellations, thousands of cancelled cruise voyages and port closures have led to a sharp drop in tourism demand.
Despite the unprecedented scale of the pandemic, dealing with crisis is not new to the cruise industry. During the Great Recession of 2008-2009, cruise sales world-wide fell by 7% and recovered after three years to pre-crisis levels. This was the same recovery time taken by airlines that were the first to be hit by the economic shock and subsequently the first to recover once demand returned and capacity normalised, with cruise very often dependent on air capacity to transport passengers to ports of call around the world. As with the wider travel and tourism industry, the reduction of air capacity in cases by up to 80% by airlines like British Airways and Virgin Atlantic will have a suffocating effect on cruise demand from key source markets like the UK.
The cruise industry – like the rest of the travel industry – is in a state of crisis management. However, once the crisis passes, it may no longer be business as usual, particularly as consumers will be increasingly concerned about their impacts on local communities and economies in line with growing awareness of sustainability. Cruise already comes under a lot of criticism for causing over-tourism in local destinations, adding thousands of day trippers, congregating in visitor hot spots and spending less than overnight visitors.
In the short term, cruise brands are likely to benefit from the consumer trend of booking 12-24 months in advance, which will help to manage long-term demand, unlike airlines that operate more tactically. Cruise operators will also be watching for the first signs of recovery and potential green shoots from the airlines, which tend to recover first once bans and restrictions are lifted.
For further information, please contact Caroline Bremner, Head of Travel Research at Euromonitor
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