In the current market, only 20 percent of Americans have actually taken a cruise. In Europe and Asia, that percent is even smaller. Despite those poor participation numbers, the cruise industry is ever-growing and has plenty of room for expansion. The Cruise Lines International Association currently values the industry at $126 billion. The growing trend of cruises has helped persuade newcomers to take their first cruises, which tends to lead to repeat business, and is currently leading to an increase in demand.
Many billionaires around the world have noticed the trend of repeat business and have jumped at the chance to be a part of the industry. One such example is Richard Branson. In 2014, Branson started his own cruise line, Virgin Voyages. He planned to spend more than $2.5 billion to get three ships up and running. His unique approach to cruise ships is centered around adult-only ships for what he is referring to as “rebels with a cause”. While the ships are not completed to this point and aren’t scheduled for completion until 2020, many feel he certainly has identified a niche within the ever-growing cruise ship industry.
Chinese billionaire Lim Kok Thay also saw a similar opportunity. Thay serves as the Chairman of the resorts and casinos company Genting Group, and he is working to expand the luxury cruise industry. In addition to working for the company that owns Asia’s Star Cruises and Dream Cruises, Thay acquired Crystal Cruises for $550 million in 2015. He is hoping to utilize the Crystal Cruises brand to fully capitalize on the top-end sector of the cruise industry. To do so, he and Crystal Cruises have worked to grow at an alarming rate. In 2015, the company had only two cruise ships. Now, the company has a total of six cruise ships, many river vessels which navigate up and down the Danube and Rhine Rivers, purchased three shipyards and also ordered an ocean-and-expedition ship. Of the six cruise ships, four are brand new and the two that were acquired have been renovated to reflect an increase in luxury for the brand.
Last but not least is Madame Pinault. Pinault fell in love with cruises and the industry on an adventure to Antarctica. After her wonderful experience, she dove into the market with her husband, setting up six expedition yachts, and also commissioning the very first electric-hybrid icebreaker. Pinault’s company, PONANT, is bringing top-notch technology to the newest commissioned ship which is very environmentally friendly as it is powered entirely by liquid natural gas. As the name suggests, the ship is expected to allow for impressive compact ice navigation as well as reverse sailing in extreme conditions. The ship is expected to cost over $320 million and will carry over 270 passengers upon completion in 2021.
Wealthy individuals across the world are taking advantage of the opportunities within the ever-growing industry. These individuals have the extensive wealth to support the immense infrastructure of shipbuilding. These individuals still face high amounts of risk with their investments. According to Bloomberg Intelligence’s Egger, “Cruise sales are affected by swings in consumer discretionary demand and the price of fuel, the expense for which amounted to between 6 percent and 8 percent of Carnival’s sales in the past three years.” In addition, both geopolitical issues and weather events can affect the availability and demand for cruises.