Royal Caribbean Cruises in the Tourism and Cruise Industry

2585 words (10 pages) Essay

8th Feb 2020 Tourism Reference this

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Introduction

The Cruise Ship sector of the Travel and Tourism industry is continuously growing in size, further expanding its incredible economic impact. Saint John, New Brunswick recently finished their 30th Cruise Season and Port Saint John, being Canadas third largest port by volume, shared exciting numbers further proving the growing industry is benefiting the small Canadian province. The 2018 season, was Port Saint John’s most successful to date in that it was the longest, with 19% growth from the previous year. The season was host to 79 scheduled ships, over 176,000 guests and 70,000 crew members which generated a $49.9 million boost to the New Brunswick economy. One of the most frequent Cruise Lines visiting Port Saint John was Royal Caribbean Cruises Ltd., with extraordinary success, in Saint John, New Brunswick’s growing port, dominating with a 59% of total port PN’s (passenger nights) (Goldstein, 2018).  And on September 13th, the port was host to the Vice Chairman at Royal Caribbean Cruises, Adam Goldstein. Goldstein offered not only great insight of the current industry, but also where it is growing to. This paper will discuss Royal Caribbean Cruises core principles, further explore how they remain to be a major player in the industry, and how they are utilizing their success to have a positive social, economic and environment impact. Royal Caribbean Cruises Ltd. is a dominant company within the continuously growing tourism sector, that is the cruise industry.

History

Royal Caribbean Cruises Ltd. is a dominant company within the continuously growing tourism sector, that is the cruise industry. This umbrella company consists of an impressive amount of six companies (Royal Caribbean Cruises Ltd, 2018) that cater to a large target market of cruisers, offering unique trips that visit over 1,000 destinations, covering all 7 continents (Gibson, 2012). All together the six companies that Royal Caribbean Cruises Ltd. consists of, can be categorized into Berlitz’s classifications of cruise lines including; standard, premium and luxury. (Butler, UNWTO, 2010) RCCL currently operates not only the world’s largest Cruise ship, rather the top four largest cruise ships operating today. Royal Caribbean Cruises Ltd.’s remarkable development started when the company was founded in 1968, under the name Royal Caribbean International and continues to develop at a striking rate, 50 years later (Royal Caribbean Cruises Ltd, 2018). Various acquisitions and mergers have aided in the growth of Royal Caribbean Cruises Ltd.  and the most notable acquisitions and mergers include; Celebrity Cruises fleet, which was acquired in 1997, as well as Silversea Cruises, Tui Cruises, Azamara Club Cruises, and Pullmantur. (Royal Caribbean Cruises Ltd, 2018) Between these six companies, Royal Caribbean Cruises Ltd. employs 65,000 people from over 120 different countries (Gibson, 2012). With the strength of six prosperous companies, Royal Caribbean Cruises Ltd. has assimilated 33% of the market in the Caribbean, which is the region that attracts the most cruise passengers compared to anywhere else in the world. (Gibson, 2012). The current conventional, leisure ocean cruising is considered to be and American invention (Vogel, Papathanassis & Wolber, 2012). In 1966, 1968 and 1972 three cruise lines were originated in the United States, which have grown to become the “Big Three”. (Vogel, Papathanassis & Wolber, 2012) The Big Three consists of Royal Caribbean Cruises Ltd., Carnival Cruise Line and Norwegian Cruise Lines, all with impressive fleets. Currently, Royal Caribbean Cruises Ltd. is the world’s second largest group in the cruise industry, behind Carnival Cruises (Butler, UNWTO, 2010). Unlike any other subsector in the travel and tourism industry, the Big Three are able to run on, almost always, over 100% capacity, (Butler, UNWTO, 2010) constructed on the fact that cruise lines consider 100% capacity based on double occupancy per room or cabin. The Big Three makes for a very competitive environment for Royal Caribbean Cruises Ltd. and therefore the company must consistently develop their brand, so that they are able to differentiate themselves and continue to be a success.

SWOT Analysis

Being such a dominant company in the industry, Royal Caribbean Cruises Ltd. is required to maintain an up to date understanding of their strengths, weaknesses, opportunities and weaknesses. One of the major strengths for Royal Caribbean is their operational capability (MarketLine, 2018). The company has the ship capacity to serve a large number of consumers, which in turn increases revenue (MarketLine, 2018). Royal Caribbean Cruises Ltd. consists of three different cruise brands that include; Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises. All together these fleets reach over 540 international destinations (MarketLine, 2018). Another major strength Royal Caribbean Cruises Ltd. has is their constant and healthy revenue growth (MarketLine, 2018). The company had year-end revenue reaching $8,496.4 million USD in 2016, which grew to $8,777.8 million USD in 2017s fiscal year, demonstrating a 3.3% annual growth (MarketLine, 2018). Though this growth is quite impressive, Royal Caribbean Cruises Ltd. recognizes that there is opportunity for growth development within the company. Each cruise brand that Royal Caribbean Cruises Ltd. consists of, currently has new orders in for more ships to be built (MarketLine, 2018). The investment of new ships to be added to this already impressive fleet will further expand capacity which will attract more consumers and further expand revenue. The Cruise Lines International Association has indicated that the global cruise line industry is expanding and is currently the leader in consumer interest within the tourism sector which is an excellent opportunity for a major player in the industry (MarketLine, 2018).  It is expected that the global Travel and Tourism Industry is increasing annually by 4%, faster than any other sector that contributes highly to GDP (MarketLine, 2018). Any successful business is able to recognize their weaknesses and threats, to create preventative measures. Royal Caribbean Cruises Ltd.’s current major threats are regulations in the cruise industry, unforeseen circumstances such as natural disasters or disease outbreaks, and competitors. Cruise lines are exposed to international, national and local laws and regulations related to environmental and safety and security policies(MarketLine, 2018).  If the cruise lines do not abide by said laws and regulations, the consequences include various penalties and fines which could be detrimental (MarketLine, 2018). There are also multiple security and sanitation requirements that all cruise lines must follow. Though all of the above requirements are simple to follow, is it situations like hurricanes in the Caribbean and outbursts of a virus, that make for a difficult threat to prevent. These occurrences not only affect the Cruise Industry, but also the tourism movement all together (MarketLine, 2018). The other major threat, which the world has recently been more exposed to, is terrorism. When a terrorist attack occurs, this often drives tourists away from the area or even the country attacked based on security concerns (MarketLine, 2018). The last and most constant threat that Royal Caribbean Cruises Ltd. faces, is competition. Their main competition lies within the other companies in the “Big Three” including Carnival Cruise Line and Norwegian Cruise Lines (MarketLine, 2018). Competitive pressure could be damaging to their short and long-term operations and financial performance. The main threat that Royal Caribbean Cruises Ltd. faces is litigation. The company may be faced with lawsuits which would negatively impact its brand image as well as its financial well-being (MarketLine, 2018). 

On Board Operations

Customer Service

Above all, this dominant company values customer satisfaction, and in 50 years they have serviced over 50 million guests with the best possible and unique experience (Royal Caribbean Cruises Ltd, 2018). This number is going to keep growing with satisfied guests because of the company’s customer service strategy “Gold Anchor Service” (Gibson, 2012). Managing customer service on a cruise ship is not as simple as having a customer service department, as there are many departments onboard a floating resort. Excellent customer service is the key to providing a customer with the ultimate cruise experience. If a consumer leaves their trip with a positive experience, they are most likely going to become a loyal and long term customer. Royal Caribbean Cruises Ltd. has proven to be a leader in customer service within the cruise industry by impressing cruise passengers with their “above and beyond” customer service (Gibson, 2012).

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The company believes that they key to a happy customer, is by offering personalized service that often wows them (Gibson, 2012). Another key factor to ensuring customer service levels are exceptional, is ensuring that staff morale is high. Cruise ships often hire crew members for contracts that last from 6-12 months, and working hours are typically very long and high stress. If crew members are feeling overworked or stressed, this can often lead to unintentional poor customer service, which would decrease revenue in the long term. Cruise ships often hire a person who has the sole position of managing a social club for hired crew, to better manage staff morale (Gibson, 2012).  TRAINING SCHOOL. The customer experience actually begins before the customer boards the ship, and starts when they are booking their dream vacation. Royal Caribbean Cruises Ltd. has recognized that having proper training in place for travel agents, will benefit the company and perhaps get ahead of a bad customer service situation prior to the customer embarking on their trip. In 2017 Royal Caribbean Cruises Ltd. announced that they would be initiating a training program for booking agents (Travel Agent Central 2017). Royal Caribbean University, or “RCU” is an online teaching platform

Market

Market (segmentation, competition, penetration, regions and destinations)

Despite the competitive pressure in the market, Royal Caribbean Cruises Ltd. reported revenues of $8,777.8 million USD for the fiscal year ending in December of 2017, and is forecasting further growth for the 2018 fiscal year (MarketLine, 2018). The company has put growth initiatives into place to aid in this development, and the improving cruise line industry paired with the growing global travel and tourism industry will also be extremely beneficial (MarketLine, 2018).

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Royal Caribbean Cruises Ltd. is competing in the budget, contemporary, premium and luxury segments of the cruise industry. (text book) This wide range of market saturation proves to be extremely beneficial for the company. It is researched that cruises or for consumers with a higher disposable income, and therefore turns some people away. PAGE 35 BERGER Companies with more regal sounding names, including; Royal Caribbean, Celebrity and Regal may be perceived as a higher class experience, when in fact Royal Caribbean’s main target market is middle class customers. (BERGER).

The Caribbean is the worlds largest cruise market and Royal Caribbean Cruises holds 33% of the market share in the area. — further explore regions and destinations. Perhaps the destruction of natural disasters and royal Caribbean contribution to aid in recovery and the economic impact

ECONOMIC SOCIAL ENVIRONMENTAnalysis

These opportunities certainly support the growth of Royal Caribbean Cruises Ltd. though it is the initiative of their Save The Whales program that sets them apart from their competitors where sustainability awareness is at an all time global high. Save The Whales is Royal Caribbean Cruises Ltd.’s unofficial philosophy and commitment to protecting the environment, and the ocean (Royal Caribbean Cruises Ltd, 2018). This ambitious program consists of four key principles including; Reduce, Reuse, Recycle, Practice Pollution Prevention, Go Above and Beyond Compliance, and Continuous Improvement (Royal Caribbean Cruises Ltd, 2018). Environment issues have always been a main concern within the cruise industry not only with the obvious direct waste into the ocean issue but there is also the concern of the effect of engine emissions (Lück, 2007) and Royal Caribbean Cruises Ltd. tackles these issues directly which is noticed on a global stage. The cruise industry not only recognizes environmental impacts, but also economic impacts and social impacts, particularly in the smaller, and evidently more popular small regions in the Caribbean (Lück, 2007) and Royal Caribbean Cruises Ltd has various programs in place to confront these issues.

Conclusion

Overall Royal Caribbean Cruises Ltd. is going to continue to be a dynamic force to be reckoned with in the cruise industry based on their ability to recognize and continue to develop their strengths and opportunities while battling their threats and weaknesses efficiently.

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