Seatrade Cruise Connection

June 2006

State of the Niche Industry: Optimistic About Growth

The “big four” cruise companies may dominate the industry, but smaller cruise companies make up a larger slice of the pie than most people realize, according to Richard Jansen, senior vice president for DVB Bank AG.

During the State of the Industry: Beyond the Big Four panel, Jansen said his company estimates that small cruise lines — roughly 40 brands —make up a $6 billion slice of a global cruise market that generates $20 billion in sales annually.

Panelists expressed optimism that the slice will grow even larger. “We think there’s a great future in our market segment,” said Mark Conroy, president and CEO of Regent Seven Seas Cruises.

In 1980, Conroy was at Norwegian Cruise Line when the line launched S.S. Norway. That year the company turned $200 million in revenues, Conroy said. Today, his company generates $400 million in annual revenues — but with only 1.5 percent of the industry’s capacity.

“We predict the small-ship market will be the fast-growing segment over the next 10 years,” said Charles Robertson, chairman & CEO of American Cruise Lines Inc. “We think small ships can be built economically.”

Panelists agreed that the challenge for small-ship operators is getting their stories out to the traveling public. “The luxury segment has to work even harder in what is becoming a very large voice out there,” said Gregg Michel, president & CEO of Crystal Cruises.

But, added David Drier, president of Clipper Cruise Line, “As the big guys get bigger, the little guys will get more noticed.”

Small-ship operators feel the market has room for growth. “When we formed Oceania in 2002, our aim was to fill an underserved niche,” said Frank del Rio, president & CEO of Oceania Cruises.

“What small operators bring to the business is innovation,” said Roberto Giorgi, managing director of V. Ships, a sentiment echoed by Larry Pimentel, president & CEO of Seadream Yacht Club.

“I can tell you without hesitation that we create our products with unique passion,” Pimentel said. “Small is beautiful, and a few of us do that very well.”