The cruise line industry has come roaring back to life, marking a remarkable revival for a sector once synonymous with the outbreak of the deadly coronavirus pandemic.
The record number of passengers now cruising to Australian ports, which surpasses the pre-pandemic era, is credited to aggressive pricing strategies enticing customers away from high air fares and expensive hotels.
Lingering health concerns of holidaying in close-quarters appear to have dissipated, with about 1.1 million people forecast to take a cruise in Australia this summer season, according to industry figures. That is almost one-third above pre-pandemic numbers.
New figures show Carnival Australia, the country’s largest cruise ship operator, will make 846 domestic port calls in 2024, compared with 575 last year, underpinned by a boom in Queensland cruise holidays.
Demand for short cruises, which typically last from two to five days, is particularly strong.
“There was a lot of pent-up demand for cruising in Australia after the industry was shut down for two years,” Carnival Australia’s chief commercial officer, Kathryn Robertson, said.
“Plus, with so many interest rate rises, Australians are looking for holidays that are affordable.”
Carnival Australia, part of the US-listed Carnival Corporation, includes P&O, Princess, Seabourn, and several other branded liners.
Few companies have endured a more tumultuous journey through the pandemic than cruise operators.
Passengers on the Diamond Princess suffered a horror holiday at the start of the pandemic, as contagion swept through the vessel which was quarantined at the port of Yokohama. The outbreak resulted in 14 deaths.
Shortly after, a breakdown in Australia’s biosecurity safeguards was blamed for allowing an outbreak on the Ruby Princess to help spread the virus around the country after docking in Sydney. An inquiry linked more than 900 Covid-19 cases and 28 deaths to the ship.
The industry shut earlier, and reopened later, than other parts of the tourism and travel sector, raising questions over whether passengers would ever feel safe about cruising again.
Cruise ships represent a higher risk setting for communicable diseases, including gastroenteritis and Covid-19, according to Australian health authorities.
Pierre Benckendorff, a professor of tourism business at the University of Queensland, said the relative cheapness of cruising had won over consumers amid rising living costs.
He said cruise operators offered discounts last year at a time when international air fares were at record highs, putting the industry on track to surpass revenues generated in 2019, which itself was a high point.
“The big appeal is the all-inclusive ticket price, which, while it often doesn’t include alcohol, still allows you to stick to a budget very easily,” he said.
He said cruising loyalists tend to be “destination agnostic”.
P&O Cruises – a line operated by Carnival – advertises a 12-night voyage from Sydney to Fiji via New Caledonia in May from $1,389 per person for a twin share room, which includes all meals.
In contrast, return flights from Sydney to Nadi during the same period would cost a traveller about $650 alone.
Speaking generally, Benckendorff said the attractive pricing for cruise packages was only possible because operators weren’t subject to laws governing Australian wages.
“Shipping companies are operating in international waters, they’re not subject to Australian minimum award wages, so they’ll register the ship somewhere else with cheaper wages, and staff won’t be Australian, they might be from the Philippines or Greece,” he said.
“Their cost base is much lower than an airline or restaurant in Australia, that’s how they keep their prices competitive.”
In a sign of the strong outlook for cruising, new entrants are courting the local market.
In December, Virgin global founder Sir Richard Branson travelled to Sydney to launch Virgin Voyages in Australia, a Florida-headquartered line geared towards adults, specifically the singles market.
Disney’s cruise line has made a foray into Australia and New Zealand, beginning with an October to February season with port calls in Hobart and Noumea among others.
Disney is also building a new cruise ship to be based out of Singapore – its first in Asia – which will probably lead to more Australian itineraries in the future.
The past year has proven to be a boon for shareholders of the world’s three biggest operators, listed in the US.
Carnival shares are up more than 80% from a year ago, even after a recent pullback. Shares in Royal Caribbean Cruises have increased more than 110%, while Norwegian Cruise Line Holdings stock has risen 30%.
Despite the gains, the share prices have yet to fully recover to pre-pandemic highs, as inflationary cost pressures affecting food and onboard services pressure profit margins.
The growth in the sector comes despite an increasing awareness of the health and environmental impacts of the industry, which is pitting climate groups against those seeking to expand the floating tourism sector.
Port cities around Europe have been considering restrictions on cruise ships, which included a 2021 decision by the Italian government to permanently ban large liners in the Venetian lagoon.
Meanwhile, the NSW government is looking for a new cruise terminal site amid fears it is losing market share of port visits to other states.
