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The recent spectacular growth of the Australian cruise market has hardly gone unnoticed within the industry, but if any confirmation was necessary, it came with Cruise Lines International Association (CLIA)'s decision to export its Cruise3Sixty conference concept, held Down Under in February. Over the past ten years, this has developed into the largest conference that brings together cruise companies and the travel-trade sector and which now attracts more than 2,000 delegates – but it had never previously been staged outside North America.

During those same ten years, the Australian market has grown an average of 20% annually, so it was a logical move for the new global CLIA to bring its premier event to Sydney as CLIA Cruise3Sixty Australasia. Brett Jardine, General Manager of CLIA Australasia (formerly the International Cruise Council Australasia), said: "This reflects the massive expansion of our local cruise industry, as well as its enormous potential. For the past two years, Australia has been the world's fastest-growing cruise market, and this event was a fantastic forum for agents and operators looking to build their cruise business further."

Cruise3Sixty Australasia was staged two-thirds of the way through another record-breaking summer cruise season, lasting from October 2013 to April 2014, which saw 34 ships (one more than during 2012/13) in the region, making 588 calls (versus 559) on 202 roundtrips (compared with 183). But an increasing number of ships are operating in the region year-round, and the stepped up deployments are boosting Australian passenger numbers, which rose from just short of 700,000 in 2012 to an estimated 760,000 in 2013. In just five years, Australia’s cruise market has increased by more than 130% and has given Australia a 3.6% share of global cruise passengers. It also means that Australia is now the fifth-largest source market, behind only the U.S., UK, Germany and Italy.

An even more significant statistic – given Australasia’s location so far from the world's major cruise source markets and cruise company bases – is that it now ranks fourth on the list of cruise destinations worldwide, based on berths deployed. For 2014, Australia accounts for 6% of all global itineraries, putting it behind only the Caribbean (37%), Mediterranean (19%) and Northern Europe (11%). But if market leader Carnival Australia is right, growth in Australia is set to accelerate still faster. Its market penetration is already on a par with the U.S. at about 3.5%, but Carnival Australia CEO Ann Sherry believes this will reach 10% by 2030. In other words, there will be 2 million Australian cruise passengers by that time, having passed the 1 million mark somewhere between 2015 and 2017.

Although Royal Caribbean Cruises Ltd. has become a major player, with the seasonal deployment of Royal Caribbean International's Voyager of the Seas augmenting other RCI and Celebrity ships operating in the region, Carnival Australia is driving most of the growth. It currently carries about 80% of Australian passengers on seven brands: P&O Cruises Australia (which has about 40% of the market), Princess Cruises (now selling three instead of just two of its four seasonal Australasia-based ships on the local market), Carnival Cruise Lines, Cunard Line, P&O Cruises, Holland America Line (now selling its two seasonal Australasia-based ships locally) and Seabourn Cruise Line.

In a significant move, these brands are now being marketed under the World's Leading Cruise Lines banner, which was dropped several years ago in favor of the Complete Cruise Solutions branding used in the UK retail sector. Between them, the seven lines are operating 21 ships out of Australasian ports in 2014. P&O Cruises Australia's three ships are making a record 143 cruises through 2014/15 and, for the first time, are offering cruises from every mainland state. This is because, in 2015, the brand is returning to Western Australia with the Pacific Jewel cruising out of Fremantle. This program includes two roundtrips to Asia with calls in Indonesia, Brunei, Malaysia, Vietnam and Singapore. The same ship will also make the brand's first-ever roundtrip sailings from Adelaide.

What’s more, sales for the brand's ex-Melbourne cruises in 2014 have sold so well that the season has been extended for 2015, and there are more cruises from Brisbane to Papua New Guinea (where significant port infrastructure investment has taken place). In addition, there has been an increase in the number of short-break (three-day) cruises out of three ports, including Sydney. These short cruises target first-time cruisers, and the brand has developed a DIY web marketing campaign for travel agents to support that aim.

The major boost to Carnival Australia’s capacity, though, was the introduction of Carnival Cruise Lines' Carnival Spirit beginning in October 2012. This ship – the largest to homeport year-round in Sydney – has been particularly successful in attracting first-time cruisers, who accounted for 60% of the first 100,000 booked. As a result, CCL is also deploying the Carnival Legend seasonally, as of this September, following a refit to "Aussify" its product (for example, the installation of a Green Thunder waterslide, which was previously installed aboard the Carnival Spirit). The ship will operate 8- to 12-day cruises to the South Pacific, calling at New Caledonia, Vanuatu and Fiji through the austral summer before returning to the Northern Hemisphere, and will further boost Sydney's cruise traffic, which has more than doubled from 119 calls in 2009/10 to 259 in 2013/14.

Last April, Sydney opened its new AU$57 million cruise facility at White Bay and is now planning a major upgrade of the Overseas Passenger Terminal at Circular Quay. But cruise companies are still battling for more facilities that can handle megaships of increasing size, which are too tall to pass under the Harbour Bridge to the White Bay terminal. Ann Sherry has always been vocal on this issue, while RCI President and CEO Adam Goldstein recently said, "The challenge in Australia is the need for Sydney, in particular, to augment its infrastructure so that the industry's newer, larger ships can homeport there. Every time I am in Sydney, I meet with government officials in New South Wales to advocate for infrastructure investment."

Most recently, both CEOs have been lobbying for the government to open up the Garden Island Royal Australian Navy site for regular cruise calls. Following a study into its use, cruise lines were given increased access but still on a largely ad hoc basis, so there is no clear understanding of how many calls will be allowed. The industry is now awaiting the results of a task force, set up last summer by Prime Minister Kevin Rudd, to look into moving some or all of the naval fleet to Queensland. Rudd has clearly seen the benefits of cruise tourism, which directly generates more than AU$1.7 billion for the national economy, including AU$1 billion just for New South Wales (NSW). In fact, including indirect benefits and the impact of the domestic cruise sector, the total economic impact approaches AU$2.9 billion. But the most recent impact study projects that the number of ships unable to pass under the bridge will increase from a third to 56% by 2020 – calling into question how much traffic (and therefore economic impact) can really grow.

There also are questions regarding the proposed development of a new terminal on Queensland's Gold Coast. A preferred developer (China Property Consortium) was announced last month, but now an economic impact study has been commissioned to test the whole project's viability, which has been undermined by the decision not to allow a casino license. Meanwhile, there have been a couple of other boosts to the Australasian cruise sector, starting with the decision by UK-based Cruise and Maritime Voyages to create an Australian division to operate the chartered Astor in the budget sector, which has been reduced in size by the failure of a previous operator. At the other end of the price scale, luxury brand Ponant Cruises has set up an Australian office (headed by industry veteran Sarina Bratton) and deployed one of its newest ships, L'Austral, to both Australia and New Zealand for the 2014/15 season.

In the current season of New Zealand cruising, there has actually been a slight reduction in traffic, with eight fewer cruises (121), on four fewer ships (33) spending 24 fewer days (739) in port. As a result, the number of cruise visitors is expected to fall 11,000 to exactly 200,000 – composed of 184,000 international (down nearly 10,000) and 15,700 domestic (down nearly 2,000). But this did follow a season (2011/12) which enjoyed a 22% increase in cruise visitors and a 7% increase to NZ$310 million in economic impact. The largest two source markets remain Australia (51%) and the US (19%) – although the largest drop in passengers is among Australians, while there has been an increase in U.S. passengers. While the overall numbers are expected to remain around 200,000 in 2014/15, the increase in U.S. passengers is expected to continue. And the 2012 dip in the total number of New Zealanders cruising is expected to be reversed this year.

Witten by Tony Peisley

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