Special Report: Deloitte tips cruise sector to grow but at what price?

Special Report: Deloitte tips cruise sector to grow but at what price?

Can growing demand for cruise offset rising pressure on household incomes? Ian Taylor reports

UK demand for cruises returned to a record level last year, with 9% growth to almost 1.8 million passengers following a first dip in numbers in 30 years in 2014.

Alistair Pritchard, head of the travel, hospitality and leisure practice at Deloitte, has no doubt the UK cruise market can grow further, insisting: “If the UK gets the capacity, it can grow.”

But he adds a caveat: “Can the sector get the prices out of that capacity that it can in Asia?”

Pritchard will address a session on ‘Cruisers of the Future’ at next month’s Travel Convention, drawing on Deloitte’s analysis of consumer research which suggests “people expect to devote more discretionary spending to holidays than retail, and by quite a multiple”.

However, Pritchard has identified some challenges for a sector overreliant on older customers and keen to extend its appeal.

He said: “Cruise companies make great efforts to focus on younger groups. One of the challenges is that some they target are likely to have less to spend.

“Younger people have borne the brunt of the financial crisis and recession, and face rising rents and the challenge of getting on the housing ladder.”

The Institute for Fiscal Studies calculates the average income of UK 22-30-year-olds has fallen 8% since 2008.

At the same time, many people in or near retirement are less well off than a few years ago. Pritchard said: “There are going to be a lot more retired people, and improvements in health andmedicine mean they will be in better health than in the past. But a lot could find they’re not so affluent because of changes to the pensions regime. Also, an increasing number of people are supporting their offspring.

“We’ve probably not seen the full impact yet, [but] people retiring now are not seeing some of the benefits people did 10-15 years ago. There are still opportunities to take lump sums, but there are caps.

“A lot of parents are supporting their children through university. People are staying at home longer, which costs their parents money, and parents are helping their children on the property ladder. Twenty years ago people were able to get on the ladder themselves and their parents retired with final salary pensions. What will it look like in 20 years?”

Pritchard insisted: “It’s not all doom and gloom. Our analysis of holidaymakers’ attitudes suggests one-third are interested in cruising.”

However, only one-third of UK cruise passengers were new to the sector last year. “The reason is there is a misconception of cruise,” he said. “People still think of it as a single product for an older demographic. They don’t understand the variety on offer. Good travel agents can help consumers understand that.

“The sector has fantastic opportunities. There is good growth, good repeat levels, interest in cruise is growing and it has become a global market. But the sector needs to think ahead to what consumers will want in 2022. It’s such a long lead time [in cruise] and look how quickly things have changed in the last five years.”

Join the Cruisers of the Future debate at the Travel Convention 2016, in Yas Island, Abu Dhabi: October 10-12.

thetravelconvention.com

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