Spring 2014: Luxury Market: New Guest Profiles?

March, 2014 – This article from Cruise Industry News discusses how the luxury cruise industry needs to be doing a better job of attracting the affluent market. (http://www.cruiseindustrynews.com/cruise-magazine/feature-magazine-articles/67-articles/10726-spring-2014-luxury-market-new-guest-profiles.html)

The luxury market has always been a small segment of the total cruise market, representing some 1.5 percent of the overall passenger capacity. This year, the brands that traditionally define the market – Crystal, Hapag-Lloyd, Regent, Seabourn and Silversea – can carry an estimated 295,000 passengers.

In addition are other brands such as Ponant and SeaDream, which are also luxury products, and the top end suites on contemporary brands that cost as much and deliver many of the same services and amenities.

In addition to Cunard, Norwegian and MSC offering exclusive suites and services, Celebrity has announced that it will introduce a new “Suite Class” experience in 2015.

Thus, the luxury market may need to be refined. Also, because the so-called affluent market in the U.S. generated 3.6 million cruise passengers last year, according to Ron Kurtz, president of the American Affluence Research Center (AARC). That is more than 30 percent of all American cruise passengers and considerably more than the combined capacity of the luxury fleet in 2014.

“These are people with a household net worth of $800,000, as defined by the Federal Reserve Board, but basically one million or more,” Kurtz explained. “They represent 11.5 million households and the top 10 percent of all U.S. households.”

He said that with this market segment generating so many passengers, the luxury brands need to understand better why these people are going on mid-market ships. With a market capacity of less than 300,000, is the luxury market missing the boat?

“The 3.6 million affluent passengers who cruise show that there is a lot of potential,” Kurtz added, “but the brands are not doing enough to attract new passengers and younger passengers. And they need to look at why the affluent go on contemporary cruises. Anecdotally, it may be because of multi-generational travel, and the luxury brands have traditionally had an older-passenger profile. And my experience over the past two to three years is that the service and food standards also are not as high as they used to be. I do not know if this is because of profit pressures or staffing issues.”

Cruise Industry News has talked to the different brands about what they offer and how they are meeting market demands.