Cruise companies capitalize on demand for larger, luxurious ships

As South Florida continues its reign as the world’s capital of cruising, local industry giants are spending millions of dollars to launch their biggest ships yet and construct new terminals to accommodate them.

Carnival Corp., Royal Caribbean Cruises Ltd., and Norwegian Cruise Line Holdings Ltd. – all based in Miami-Dade County – are spending big money to expand their fleets.

It couldn’t come at a more strategic time, as the popularity of cruising continues to rise and the sector is expected to serve 30 million people this year – up 6 percent from 2018, the Cruise Lines International Association reports. The companies’ revenues rise as they launch ships that can hold more passengers to accommodate the demand.

South Florida stands to benefit from the boom as many of the world’s largest cruise ships sail from tri-county area ports year-round. Cruise giants have also built massive terminals at PortMiami and Port Everglades to help welcome nearly 2 million additional passengers to a region that already reaps billions of dollars in economic impact from cruise travelers.

“Cruise passengers are essential to the continued growth and development of the tourism industry in Miami-Dade County, and contribute millions of dollars to our local economy annually,” said Bill Talbert, president, and CEO of the Greater Miami Convention & Visitors Bureau. “That includes air travel, hotel nights, entertainment and shopping.”

Boom time 

This year is expected to be the best yet for South Florida-based cruise giants, as data indicates consumers will continue to spend more on travel, said Ivan Feinseth, director of research for Tigress Financial: “2017 was a record year, 2018 was an even bigger record year, and 2019 will most likely be another record,” as indicated by advance booking sales.

And as their ships get larger, cruise companies are spending less per passenger, he said.

Half of the 10 largest cruise ships in the world sail from either PortMiami or Port Everglades, including Royal Caribbean’s 5,518-passenger Symphony of the Seas, which began sailing from Miami in November.

“Cruising has been growing the past five years,” said Roger Frizzell, Carnival Corp.’s chief communications officer. “There have been significant new ships brought to the market, new features, more [people] are trying cruising as an option.”

Carnival (NYSE: CCL), which has the largest fleet of any cruise company, has increased net income 141 percent as it added 11 ships across its 10 brands in the past five years.

The gains are as impressive for Royal Caribbean (NYSE: RCL), which reported net income up 200 percent as it added nine ships across three brands in the past five years – each with larger passenger counts than the last.

Meanwhile, Norwegian (NYSE: NCLH), the smallest cruise company of the three by fleet and revenue, increased net income 638 percent through significant mergers and acquisitions. It added five ships across three brands the past five years.

More cruisers to come

PortMiami will be a hot spot for new fleet additions from Fortune 500 companies and their smaller competitors.

This fall, the 3,998-passenger Norwegian Encore will debut there. Also beginning in the fall, MSC Cruises’ MSC Meraviglia, will carry 5,714 passengers from the port year-round.

The new Virgin Voyages cruise line, from billionaire Sir Richard Branson, will sail its first vessel, the 2,700-passenger Scarlet Lady, from PortMiami by 2020. And Disney Cruise Line wants to homeport two large cruise ships at the port in 2023 and 2024.

These companies and others are investing in terminal upgrades for their new ships. All four cruise lines have new terminals in various planning stages at PortMiami.

PortMiami is the world’s No. 1 cruise port, with more than 5 million passengers annually. Port Everglades isn’t far behind, with more than 3.8 million passengers in 2017, and the Port of West Palm Beach touts 700,000 cruise passengers a year.

Those passengers are spending additional money on airfare and hotel nights, local tourism officials say. For instance, the majority of PortMiami’s cruise passengers spend at least one night in Miami prior to departing on a cruise or immediately after its return, GMCVB’s Talbert said. The average spends for an overnight visitor in Miami-Dade County is $239.07.