Research note: the growth of cruising in Australia.
Keywords: cruising, growth, Australia
The cruise industry is undergoing a period of rapid growth and remarkable change. In 2009, 20 million people undertook cruising (Ward, 2011; Table 1). The industry is being driven by an insatiable demand and the cruise lines are responding by building larger and larger ships (Dowling, 2006). The largest cruise liners in the world are Royal Caribbean International's (RCI) two 'Oasis class' 225,282 tonne ships, Oasis of the Seas (built in 2009) and Allure of the Seas (2010). These ships are far larger than their nearest competitors, the RCI 'Freedom class' 154,407 tonne sister ships Freedom of the Seas (2006), Liberty of the Seas (2007) and Independence of the Seas (2008).
Allied to the growth in cruise ships is the emergence of new trends in cruising. These include an increased number of large resort ships, which include greater multigenerational cruising; the rise of smaller luxury and/or expedition ships; the growth of shopping malls on board; and the increased demand for active adventures onshore (after Ward, 2011). It is estimated that cruise lines currently visit around 2000 destinations (Ward, 2011) with traditional destinations being the Caribbean, the Mediterranean, Alaska and the Bahamas. However, the growth of cruising has now led to a greater demand for 'newer', exotic and more remote destinations. One emerging destination is Australia and New Zealand, which is experiencing rapid growth in both demand (passengers) and supply (infrastructure and destination development).
Cruising in Australia
In Australia some research has been undertaken in relation to its economic impacts (Dwyer & Forsyth, 1996), cruise passengers (Douglas & Douglas, 2004; Fanning & James, 2006), expedition ships (Ellis & Kriwoken, 2006; Walker & Moscardo, 2006; Scherrer, Smith, Dowling, 2008, 2011), and policy issues (Dobson & Gill, 2006). However, information on the numbers, growth and impacts of cruising in Australia is largely confined to a range of industry reports. These include economic reports for cruise lines as well as the wider industry, industry annual reports, and annual industry statistical reports. Despite the large amount of data relatively little is known, or has been published in the academic literature, on these aspects of the Australian cruise industry. Therefore, this research examines the recent rapid growth of cruising in Australia by bringing together the industry data, and then raising some of the resultant issues impacting the industry at this time.
The main cruise industry organisations in Australia are the International Cruise Council of Australasia (ICCA; www.cruising.org.au) and Cruise Down Under (CDU; www.cruisedownunder.com). The former is essentially a marketing body with the latter involved in development issues. According to the ICCA the number of Australians taking a cruise holiday increased by 27% to 466,392 in 2010 (ICCA, 2011; Table 2). This is a record result and represented the Australian cruise industry's sixth consecutive year of double-digit growth. The overall proportion of Australians taking a cruise holiday is 2.1%, which has risen from 0.6% in 2002. This compares with New Zealand (1.0%), United Kingdom (2.6%) and North America (3.1%). It is projected that 1 million passengers (4.2% of the projected Australian population) will be cruising by 2020 (ICCA, 2011).
The estimated annual sea days rose by 18% to 4.7 million in 2010, as the number of cruise passengers increased along with the popularity of longer cruises. According to the ICCA (2011) the main cruising destinations for Australians were to the South Pacific, (171,857 passengers or 37% of Australia's cruise market), Australia (90,751 passengers, 19%) and New Zealand (46,643, 10%). Other cruise destinations were Europe and Asia (both 8%), river cruising (6%), the Americas (5%), Alaska (4%) and world voyages (2%). The average length of cruise in 2010 was 10 days with cruises varying from 5 to 7 days (27%), 8 to 14 days (47%) and 15 to 21 days (12%; ICCA, 2011).
Each year CDU and the Commonwealth Government's Tourism Australia undertake an economic impact assessment of the cruise shipping industry in the country. This has been conducted now for five consecutive years by the economic consultancy the AECgroup. The reports are carried out to gain an understanding of the size, growth and economic significance of the industry to the Australian economy as well as to assist with future planning and strategy. Much of the following information has been adapted from their most recent report (AEC, 2010) supplemented by a report for Carnival Australia (Access Economics, 2009) and the annual report of Cruise Down Under (CDU; 2010).
The majority of indicators show a growth in the industry across a range of criteria during the period 1 July 2009 to 30 June 2010 (Table 3). During that period 34 cruise ships visited Australian ports, an increase of nine (36%) in the last 4 years. Ten ships were home ported in Australia for at least part of the cruise season (traditionally October-March), an increase of 43% over the previous year. The ships are much larger and their passenger capacities are higher. In the 2009-2010 year, 15 cruise ships visiting Australian ports had passenger capacities of more than 1,000 with the largest ship, Queen Mary 2, having a capacity of 3,090 passengers. In addition 13 cruise ships from 12 cruise lines, which did not visit the previous year, visited Australia in the 2009-2010 year.
In 2009-2010 cruise ships visited 30 Australian ports and with a combined total of 583 port visits. The industry contributed $1.281 million to the economy, spreading the income across both urban and regional Australia. While a decade ago there were few home-ported ships in Australia, in the 2009-2010 season there are 10 ships from six cruise lines, based out of seven ports--Adelaide, Brisbane, Cairns, Darwin, Melbourne, Perth and Sydney (AEC, 2010). Some ships were ported in more than one domestic port in the year for different cruises.
Overall, there were 583 cruise ship visits to Australian ports in 2009-2010, an increase of 79% from the 2004 total of 325. Sydney, Brisbane and Melbourne are the most visited ports, with Sydney (119 ship visits) recording the most visits due to its position as Australia's marquee port. Other ports to report strong growth were Port Douglas, Queensland (15 more visits than 2008-2009), Geraldton, Western Australia (14) and Fremantle, Western Australia (11). New ports visited by cruise ships included Eden (New South Wales), Hamilton Island (Queensland), Norfolk Island (Pacific Ocean) and Christmas Island (Indian Ocean; AEC 2010). The total passenger days at port was 1,072,239, an increase of 20% over the previous year.
During recent years there has been a parallel increase in the number of cruise lines which have support operations located in Australia, including corporate offices, advertising and marketing operations, and logistics operations. These include Carnival Australia, Royal Caribbean and Silversea Cruises. Royal Caribbean completed its third and most successful Australian cruising season on record in April 2010 with a total of 30,000 passengers carried on 15 cruises, all of which sailed full. Celebrity Cruises is returning to Australian waters in 2012 with Celebrity Solstice to be based there with Celebrity Millennium sharing time between Australia and Asia (Cruise Weekly, 2011).
As a consequence of the growth in the number of cruise ships visiting Australia and the ports visited, is an allied growth in the passenger capacities of the ships, the number of cruise passengers visiting Australia, and their total expenditure while in the country. In the 5-year period between 2005 and 2009 the passenger capacity of cruise ships grew from 21,500 to 41,803, an increase of 94%. Overall the proportion of Australians taking a cruise holiday has risen from 0.6% of the population in 2002 to 2.1% in 2010, overtaking many European markets and comparing favourably with the penetration of more mature cruise markets such as the United Kingdom (2.6%) and North America (3.1%).
The total passenger days at port was 1,072,239 and the total passenger expenditure was AUD$263 million, an increase of 99% (from $132 million) over the past 5 years. Total crew expenditure was $38 million and port-related expenditure was $361 million. AEC estimates that the total expenditure is $815 million and when domestic passengers and crew are also included then the total expenditure attributed to cruising in Australia is $1.282 billion (AEC, 2010). Another contribution is the direct employment of 5,781 full time equivalent positions (FTEs) paid a collective $333 million. Further evidence of the rapid growth of Australian cruising is that the largest operator, Carnival Australia's Princess Cruises' Sea Princess as well as Cunard's Queen Mary 2, will be part of nine ships based in Australian waters over the 2011-2012 summer. The 77,000 tonne Sea Princess will be home ported in Sydney from October 2011 to March 2012.
Between P&O Cruises and Princess Cruises, Australian based cruises to New Zealand have risen from 11 in 2009, 17 (2010), 31 (2011) to 38 (2012). Royal Caribbean International will homeport two super liners in Sydney from October 2011, the Rhapsody of the Seas, which has completed three summer seasons, along with the Radiance of the Seas, the first 21st century ship to be based in Australia and the newest, largest and most modern ship to be home ported in Sydney. RCL's 2011 season will feature 29 sailings, comprising 13 itineraries calling at 50 ports in nine countries. Gavin Smith, Managing Director, Royal Caribbean Cruises Australia says 'The move is a demonstration of the strength of the local cruise market, and is in response to demand from American, European and Asian visitors to experience Australia and our region on board our cruise ships' (Ryan, 2010, p. 4).
The rapid rise in cruising in Australia comes with attendant opportunities and issues. A major issue is that the cruise sector is not well understood. A critical question for economic analysis in relation to the industry in Australia is whether cruising attracts new visitors to destinations or merely re-directs visitors from other tourism styles (Dwyer & Forsyth 1996). The official government statistical agencies are not actively involved in collecting data on cruising (Access Economics, 2008). The increase in the number of cruise ships visiting the region has led to increased visitors to the region, but lower yields (CDU, 2010). Other issues relate to port infrastructure, which are of a variable quality across Australia. The port of Fremantle has recently refurbished their terminal building and both Brisbane and Darwin have built new terminals. A new terminal at Cairns allows the port to accommodate two large cruise ships at a time. Future suggested developments include new terminals in Townsville and Hobart. Likewise, in New Zealand, Auckland's Princes Wharf is no longer adequate to accommodate the growing number of larger ships visiting the city and the inadequate infrastructure is inhibiting the growth of the industry (Market Economics, 2010).
There are a number of issues posing constraints to the cruise tourism industry in Australia. The most significant is the importance of Sydney as being central to the growth of the cruise sector in Australasia. The issue has been partially addressed by the New South Wales State Government, but not in the way in which the industry wanted. Sydney's best known cruise terminal is the Overseas Passenger Terminal in Circular Quay. However, the terminal has long ceased to offer a full turn-around service for cruise ships, since most of its warehouse space is leased to restaurants. A less glamorous but more functional facility is located in nearby Darling Harbour (Wastnage, 2009). These two berths are normally sufficient for the cruise ships that pass through the city at any time but not always and larger ships are not able to use the berths at all. Carnival, the largest cruise operator in Australia, launched a public campaign to try to get the government to solve the problem partly because its new generation large ships; for example, the Queen Mary 2, is not able to use either facility. The government's response was to announce the building of a new Cruise Passenger Terminal at White Bay, Balmain. It has been chosen because of its deep-water berths and better road access and the development is expected to commence in 2011 and be completed in 2012. However, the critics have already pointed out that the new terminal still lies upstream of the Sydney Harbour Bridge, making it impossible for large cruise ships to berth there, thus making the proposed new terminal at White Bay all but irrelevant.
Australia has a number of 'proclaimed ports', which are designated embarkation ports. This is inflexible and needs to be addressed so that most if not all ports can become points of embarkation. In Western Australia (WA) strict state gaming controls mean that ships are not allowed to open their casinos while in WA state waters. This is due to a monopoly situation being granted to the sole shore-based casino. Another key issue is the remoteness of the region from the world's major cruise markets. The tyranny of distance from the northern hemisphere centres of population is often cited as a major reason for potential cruisers not visiting the region. Also, Australia's large land mass and dispersed population makes it difficult to offer packages with frequent port visits as usually occurs in other major cruising destinations (Access Economics, 2009). In WA the growth of cruising has resulted in an increase in frequency of visits and the number of visitors to sites along the coast. This has led to a number of associated environmental and cultural impacts especially at sites of Aboriginal significance (Scherrer et al., 2008). A major impact is the lack of consultation with traditional owners, permission not being sought for access and cultural protocols not being followed resulting in a perceived lack of respect for traditional custodians. The Kimberley findings illustrate that there are a range of governance, management, environmental and cultural issues generated by the industry. This has led to calls for the appointment of a body to oversee cruising development in the region (Scherrer et al., 2011).
This research note presents a brief snapshot of the cruise industry in Australia during a time of unprecedented growth. Such growth has generated a number of challenges for the industry some of which have been highlighted. Several are worthy of further research and include the costs of not having dedicated cruise infrastructure. Cruise port and terminal infrastructure in Australia is predominantly multipurpose in character catering for both freight and cruise segments, and sometimes naval ships as well (Tourism and Transport Forum [TTF], 2010). Thus, it is recommended that research be undertaken into the costs of building dedicated cruise terminals as opposed to continuing to use multipurpose terminals as the future of the cruise industry is predicated on adequate infrastructure in Australia's major city ports. In this regard TTF (2010) recommends a review of the impact of the growing size of cruise ships on current and future port infrastructure in major centres. Of equal importance is the need to develop a long term cruise shipping strategy for Australia, underpinned by strong industry economic data. In addition, more research should be undertaken on the economic, social and environmental impacts of cruise ship visits to regional ports. With limited existing information, it is hard to convince regional administrators of the potential value the cruise industry might have for their communities.
The data presented in this research note indicate that cruising is a growth phenomenon in Australia and New Zealand. The projected growth for the industry is that cruise ships visits to Australian ports will increase by approximately 50 to 60 visits to an estimated 630 to 640 in the 2010-2011 season (AEC, 2010). The Australian-based Orion Expedition Cruises has purchased a second ship to be named Orion 2 and a number of new ships will visit Australia for the first time over the 2011-2012 season.
Australia has a long-term tourism development policy, but it has not had a dedicated national cruise strategy for 15 years (Commonwealth Department of Tourism, 1995). However, recently Australian Customs established a National Sea Passenger Facilitation Committee similar to the existing Aviation Committee. The committee brings together key border agencies and other departments with an interest in the cruise shipping industry and provides a forum where the cruise industry and supporting industries can raise issues directly with relevant areas of the Australian government (CDU, 2010).
Finally, central to the future of cruising in the region is the need to address capacity issues of the ports generally, but the marquee ports of Sydney and Auckland, specifically. The constraints include the number of ship berths, passenger exchange handling, port facilities, coach and transport links, air travel facilities and tourist activities (Market Economics, 2010). Until this is addressed, cruising's growth in Australia and New Zealand will be further constrained.
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School of Marketing, Tourism & Leisure, Edith Cowan University, Western Australia
Ross Dowling, School of Marketing, Tourism & Leisure, Edith Cowan University, Joondalup WA 6027, Australia. E-mail: email@example.com
Dowling, R. (2011). Research note: The growth of cruising in Australia. Journal of Hospitality and Tourism Management, 18, 117-120. DOI 10.1375/jhtm.18.1.117
Table 1 Global Cruise Passengers (2010) Region Number United States 13,500,000 Europe (excluding UK) 2,900,000 United Kingdom 1,550,000 Canada 770000 Asia (excluding Japan) 600,000 Australia and New Zealand 330,000 Scandinavia 200,000 Japan 180,000 Cyprus 75,000 Freighter passengers 3,000 Total 20,108,000 Source: Ward (2011). Table 2 Australian Cruise Passenger Numbers (2002-2010) Year Number Per cent increase 2002 116,308 -- 2003 153,781 32 2004 158,415 3 2005 186,666 18 2006 221,033 18 2007 263,435 19 2008 330,290 26 2009 366,290 11 2010 466,692 27 Source: ICCA (2011). Table 3 Australian Cruise Ship Industry Demand Indicators Criteria Number Per cent increase Visiting cruise ships 38 11.8 Cruise passenger capacity 42,291 10.9 Crew number 19,513 9.8 Australian ports visited by cruise ships 28 7.7 Total number of cruise ship visits to Australian ports 521 6.8 Total passenger days at ports 863,351 34.3 Source: AEC Group (2010).