HIGH WATER MARK FOR RIVER CRUISING
The river cruise industry is booming and operators are throwing their weight behind the sector with new ships, itineraries and destinations – and lots of them. Questions are mounting as to whether the growth is sustainable but operators are confident the
Australian travellers – and travel companies – have fallen in love with river cruising. And as the love affair shows no signs of abating, new vessels, itineraries and destinations are emerging in blink-andyou’ll-miss it succession as operators pull out all the stops to woo passengers aboard. Consumers are the big winners as operators push hard to stay one step ahead, and their efforts are catching the eyes of consumers and pushing bookings up year after year. The river cruise market has exploded in its two decade history with a whopping 500,000 passengers now boarding a river cruise each year. While the number may be a drop in the ocean compared to the 23 million ocean cruise passengers expected to set sail this year, it’s come a long way in recent years, more than doubling the market’s capacity back in 2007 and increasing sevenfold since 2001. Australians are a key part of the growth with CLIA’S latest Cruise Industry Source Market report finding that the number of Australian river cruise passengers jumped 25% from 2012-13 to just shy of 50,000 passengers. Much of the local credit can go to Australian travel industry giants APT and Scenic who have been duking it out with their own vessels in Europe for years – but there are other big players hot on their heels. The surge in capacity is now prompting the question as to whether the growth is sustainable, but those close to the coal face are confident river cruising is set for an ever-brighter future.
Boom or gloom
River cruise companies have been rubbing their hands together at the increase in demand as the sector gains ground on its bigger cousin, ocean cruising. But as the boom showed signs of flat lining late last year, whispers began circling as to whether the sector had peaked and the anchor had been thrown overboard. The major players in the river cruise market have been quick to douse any suggestions that the sector is tapering. Whether it’s the billions of dollars that they have collectively thrown behind new ships, upgrades and product developments, they’re convinced the river cruise boom has only just set sail. Scenic general manager product Aleisha Fittler is among them, telling travelbulletin that the river cruise industry has found its way onto the radar of Australian travellers. “River cruising is a pretty new segment, but it is booming and we don’t see that slowing down at all,” she says. “Ocean cruising has opened up the world but there is a place for river cruising and customers are really catching onto that.” Somewhat unsurprisingly, it’s a view that is also shared by APT, Avalon, Pandaw Cruises and Viking River Cruises who all spoke at length with travelbulletin of the sterling future ahead for river cruising. APT marketing manager Justine Lally predicts the sector will “surge as word of mouth continues to spread”, while Avalon national marketing manager Adam Mussolum pinned river cruise as one of the “strongest performers” in the tourism sector as travellers look for more intimate all-inclusive experiences. “Everything we look at suggests the market is poised for growth,” he says. Uniworld general manager John Molinaro, meanwhile, said river cruising was the “fastest growing industry” as consumer perceptions change and it becomes a more mainstream option for travellers. “Consumers are seeing what the segment has to offer and the choice, options and destinations now available, and they are fuelling more growth,” he says. But APT general marketing manager Debra Fox put it most succinctly in a panel discussion at the recent Cruise3sixty conference in Sydney: “There is not a chance in hell that river cruising has reached its peak.”
Cash on the line
The major players are clearly upbeat about the future of river cruising, and even if their claims of confidence seem somewhat overplayed, they are putting their money where their mouths are. Scenic upgraded its entire fleet in 2013, handing over about $20 million for a refurbishment program to bring its average fleet age down to two years, while Avalon is investing more than ¤20 million to add six new ships to its fleet in the next two years. Viking River Cruises also has 12 new vessels in the pipeline for Europe on the back of 18 vessel launches in 2014, 10 in 2013 and six in 2012, bringing its fleet size to a whopping 64 vessels in 2015.
There is not a chance in hell that river cruising has reached its peak
Add to the list APT’S MS Amavista and MS Amaserena which will debut on the Rhine, Main and Danube Rivers this year, Uniworld’s new 150-passenger boutique ship SS. Maria Theresa, and Amawaterways’ two new vessels this year, and it quickly becomes clear where the industry is heading. “River cruise is booming across the globe and the industry is doing what it can to cater for continued growth,” APT’S Lally says. “Word of mouth is prompting a shift in perceptions of river cruise and the industry is really lifting its game.” The latest CLIA State of the Industry report puts it into perspective, showing that the number of river cruise builds more than doubles that of ocean cruise this year, with 16 new vessels in the pipeline for 2015 compared to just six for ocean cruise. Another six new river vessels are slated to enter the market from 2016-2017 – and that’s just the ones that have been announced at this stage.
Fleet fit-outs
As the market becomes increasingly crowded, cruise companies are answering to the call with ship improvements and add-ons to lure travellers onboard. And as Scenic Tours general manager product for Europe Aleisha Fittler explains, “the devil is in the detail”. Scenic is standing by its Spaceship model which, Fittler says, delivers all-inclusive 5-star luxury with private butler service, all weather balconies, full windows and large cabin spaces. Uniworld, meanwhile, bills its fleet as an ultra luxury boutique cruise line complete with on board antiques, original artworks from Picasso and Matisse, luxurious furnishings and professionally trained butlers. Then there’s Scenic offshoot Evergreen Tours – marketed abroad as Emerald Waterways – which touts its swimming pool that converts to a cinema as a unique selling point, and Avalon’s Suite Ship with open air balconies, floor to ceiling windows and larger bathrooms is its claim to fame. Viking also stands by its model of pumping out virtually identical Longships with amenities such as balconies, a large range of cabin categories and public spaces like the Aquavit Terrace and Observation Lounge. Singling out the differences between high end river cruise lines is an exercise in semantics, and the major players are well aware that the separation is often paper thin. Avalon’s Mussolum says the competition is rife and the noise from competitors can be deafening at times. “There are so many competitors with similar offers out there. All claim to offer a cruise on a river with a luxurious state room, and it’s a real challenge to rise above that noise,” he admits. Destination portfolios have suffered much the same outcome, with cruise lines following the beaten path in impressive fashion. Europe has led the charge with its massive waterways, popularity with tourists and impressive historical and cultural attractions making it a no brainer. However, river cruising has now spread its grasp across the globe with operators now in Asia, the Mississippi, and beyond. In Europe the iconic Amsterdam to Budapest route is the stand out favourite for passengers. The Rhine, Main and Danube rivers reel in the most bookings, including Australian travellers with the latest Cruise Industry Source Market Report showing the number of Australians who travelled on a European river cruise in 2013 topped 41,800 compared to a more modest 4511 passengers for Asian river cruises. Europe holds the most interest from cruise lines who have announced a wave of new itineraries on the Rhone, Seine and the Danube as interest creeps higher. Uniworld’s move to launch into Bordeaux has also prompted a wave of other operators including APT and Scenic to follow suit. Others, such as Viking, have stepped into more regional areas such as the Elbe in northern Germany, with operators also now cruising in Italy and Portugal. All the major players have also expanded their grasp to more “exotic” destinations such as Russia, Egypt, China, Vietnam and Cambodia. Scenic’s Fittler says the company’s decision to launch into Portugal has “exceeded initial forecasts”, while APT’S Lally said its launch into Myanmar was warmly received, selling out 12 months in advance. “There is absolutely demand for Asian river cruising, as many areas are inaccessible by any other mode of transport. It’s all about
creating options that are innovative and different, and cruise companies are really tapping into that,” she says. Other companies are expanding their reach into “under tapped” markets such as the Irrawaddy and the Mekong in Asia, and the Ganges in India. The Mississippi is another up and comer that has found its way onto the map of many river cruise companies.
The next step
While river cruise companies stand firm in their belief that the sector will continue to grow, they also agree that the limited number of “passable” rivers presents a challenge. Not only is the competition fierce, but limited docking space is also giving rise to serious congestion on popular ports in Europe such as Budapest and Amsterdam. With a flooded market of operators who are all going after the all-inclusive high end market at the same ports, the question remains – who is going to step up and change the game? As the number of ships on Europe’s rivers continues to grow, the opportunity to venture into lesser known ports is opening up. But port infrastructure is limited and entering new ports is no easy feat – often requiring cruise lines to collaborate with municipalities to improve infrastructure. Amawaterways and Tauck have made some headway, developing strong relationships with lesser known towns in Germany, while Viking has taken a different approach by privatising many European ports and taking a cut from the bevy of cruise lines who traffic them. Cruise companies have been actively looking at new avenues to boost their competitive edge including shorter cruise durations, more inclusions, themed cruises and new destinations. Others have tossed up options such as multi-river cruise packages connected by land tours, while others have weighed up the idea of introducing more affordable options with less inclusions – much like low cost airlines. Cruise lines unanimously agree that the sector has to think fast in order to progress, Continues over page
and they have their eyes on the future. But for now, it seems innovation is on the tamer end of the spectrum with a strong focus on additional capacity and itineraries. Avalon’s Mussolum says the company’s current focus is on delivering more intimate experiences in destinations such as France. “It’s hard to predict the next trends in the river cruise industry, but destinations are what drive the growth,” he says. Meanwhile, Uniworld has its eye on ship builds and creating more spacious cabins, with new itineraries in India also on the cards for next year. Scenic is stepping up its game with more themed cruises and exclusive itineraries, with Scenic’s Fittler telling travelbulletin that product, rather than being the first into a destination, secures repeat clients. “We’re not the first in many destinations, but we don’t have to be. We want to wait until we can deliver a product in a certain way to make sure we get the guest experience right,” she says. Meanwhile, for Viking it appears that capacity is key, with the line progressing its aggressive expansion plan with 12 new river vessels this year alone.
Paving the way forward
There is no denying that river cruising has come a long way since the 1990s as cruising catches the gaze of more consumers worldwide. Cruise operators attribute the boom to investment and new innovations, but they also agree that river cruising is leveraging off the buzz of ocean cruising. While baby boomers continue to dominate in the river cruising stakes, Avalon’s Mussolum says millennials are driving the sector as more people come onboard for intimate experiences that take travellers into the “heart” of a destination. It’s a trend that he believes is here to stay, and one that will continue to change the demographic and bring the average age down further. “River cruising is catching on with the younger demographic. Ocean cruising grows the industry for us and river cruising feeds off that,” he says. Scenic’s Fittler concedes that river cruising is still in its infancy compared to the likes of ocean cruising, but with continued investment and innovations from cruise operators, she’s hopeful it will grow. Flagging plans to step up the company’s focus in Asia and launch itineraries in India, she says industry growth is by no means a given. But she’s quietly confident, insisting there is a “place for river cruising in the market”. Industry stalwart Molinaro was less reserved in his comments, claiming that river cruising is blossoming as the segment becomes more accessible. “We are well on our way to getting river cruise to the next level. The segment is continuing to grow and as the demographic changes, that will continue. The segment has changed,” he says. Much to the delight of cruise operators, the boom is showing no signs of slowing with record figures pouring in year after year. Certainly questions over the sustainability of the boom will continue to do the rounds, but for now, the river cruise sector is continuing to float at high tide.