Key Take-Aways From Seatrade Europe 2019

Andrew Hazelton, Thomas Mielke | Cruise Sector, GENERAL COMMENTARY

Last week, many of the international senior cruise line executives gathered at Seatrade Europe in Hamburg, Germany. Industry leaders exchanged thoughts and insights with port and destination representatives as well as land-based tour operating partners. Overarchingly, “sustainability” was the topic of conversation – everyone agreed that consumers and cruise businesses alike, as well as the industry’s various partners and travel intermediaries, have grown increasingly concerned about social and environmental impacts of tourism and have started to demand, and implement, concrete action plans addressing key sustainability issues.

Yet, many might argue that in the past the hospitality, travel, and tourism industry has only paid lip-service to sustainability. The topic was often allocated (and relegated) to the Marketing, PR, and Communications departments – a move that, some might say, raised consumers’ scepticism about the depth and extent to which sustainability was front of mind for the companies’ leadership teams.

In what some might call a bizarre twist of circumstances, it now seems that cruise companies are having to fight a “PR battle” – almost all of them have, over the last few years, worked on and implemented very detailed and elaborate action plans to address (first and foremost) environmental concerns. Despite that, consumers are still questioning the cruise sector’s commitment to drive transformative change. Clearly, communication needs to improve, and this view was shared by most cruise executives at the conference. The various C-suite executives in attendance could not have been clearer in their messaging: “We are taking this subject matter extremely seriously and are following through on our commitments and promises in further enhancing the sustainability targets and credentials.”

The ‘Hot Topics’ By 2025

With a diversified program, cruise executives presented on a number of impactful, innovative, and crucial topics in our industry. A lot was covered in Hamburg, but the three following topics stood out to us. These topics were discussed throughout the conference floor, the speaking sessions and panel discussions, as well as during the networking events.

A Call For Greater Collaboration Between Industry Stakeholders: Gavin Smith, SVP Royal Caribbean International, highlighted during the keynote session that the industry is not competing as it relates to sustainability. Instead, cruise companies are joining forces through various committees and associations to more quickly arrive at the desired outcome. Karl Pojer, Chairman of CLIA Germany and CEO Hapag-Lloyd Cruises, added to this, mentioning that sustainability has now become truly part of the industry’s DNA. Although the industry is working together, it appears that there are still some obstacles to overcome, both internally and externally. Gianni Onorato, CEO MSC Cruises, mentioned that his sales team, up until recently, was not necessarily familiar with all the environmental initiatives that the company undertook. Similar stories were shared by other industry executives on the conference floor. Greater flow of information is thus needed to drive sustainable thinking within an organization and across its various departments – to engrain sustainable best practices but also to leverage or drive innovation. Captain Michael McCarthy, Chairman of Cruise Europe, highlighted the lack of collaboration as it relates in particularly to ports and cruise line companies – a more seamless flow of information would ensure that the travel and tourism industry can significantly lessen its impact on the environment and host communities.
Seizing Potential Of Untapped Growth Markets: Delegates and industry executives agreed that statistics for the cruise industry only point one way – up – at least in terms of expansion and growth. Predominantly in Europe, and as it relates to the European travellers, industry leaders get excited about the German-speaking markets. Wybcke Meier, CEO Tui Cruises, highlighted that only 8% of Germans have taken a cruise holiday. In her opinion, the market still represents huge potential. However, and despite all the Brexit conversations, the UK remains an important focus for many of the cruise companies. Gavin Smith from Royal Caribbean International reminded everyone that the UK remains a major hub for cruise line companies, and many of the cruises commence their journeys in the country – those British travellers choosing such cruise holidays are thus less affected by potential Brexit implications. Karl Pojer from Hapag-Lloyd, however, reminded the industry that in Europe clients are (still) first and foremost focused on the routes, whereas in the United States, some of the ships have become the destination themselves. Per Bjornsen, Director at VShips, commented on stage about the anticipated growth of the Asia market. He and VShips are currently actively supporting the launch of a Chinese startup, Astro Ocean. This is quite the interesting development since the local players are now seemingly following in the footprints of some of the larger, globally operating cruise companies, such as Carnival Corporation and Viking Cruises, who have already beefed up their Asian presence.
Preparing For A Brighter Future: Although executives remained undoubtedly optimistic and upbeat about the industry, there was some talk about downward pressure. Executives did not question the continued growth of the cruise sector; however, some have highlighted that, in the recent past, it has come at a cost – and that is price. Some questioned whether this is purely linked to the current economic and political climate, characterized by a fair bit of uncertainty in many of the global source markets, or whether those are the first signs of a market correction. Be that as it may, when asked about the key challenges the industry might face by 2025, the areas most executives were mostly concerned about were (1) finding and retaining qualified staff to develop and build a sustainable talent pipeline and groom the future leaders of the industry, (2) technology and technological advancement and the implications of those two as they relate to the buying behavior and changing consumer preferences, and (3) securing access to ports as well as host communities and/or the development of new destinations controlled by the cruise line companies themselves.