By
David Mott |
It is not normally realistic to ascribe the success of an industry to a single person. But if exceptions to this rule are to be made, then one would surely go to Ann Sherry, former First Secretary advisor in the Australian Prime Minister’s office and a bank chief executive officer before being recruited by Carnival Australia seven years ago. Her brief was to give a boost to the company’s cruise business and the industry overall, which – at that point in 2007 – was showing signs of recovery from a low point five years earlier when passenger numbers were about 116,000 a year.
Since then, Australia has seen a massive increase in the popularity of cruising and each year since Sherry’s arrival, there has been double-digit industry growth. The 2013 figures, announced in June, confirmed another record year of 20% growth, taking passenger numbers to 833,348. Australia is now the world’s leading cruise market in terms of growth and market penetration, with the equivalent of 3.6% of the population taking a cruise in 2013, compared to 3.3% in North America.
Looking ahead, the magic ‘one million passenger’ market is expected to be reached in 2016, four years earlier than previous estimates. Even more ambitious is Sherry’s expectation that an unprecedented 10% market penetration is possible by 2030, meaning a passenger total of 2.5 million. “I can imagine this target being met if the current rate of growth persists,” she says.
To what does she attribute this current success? “Nearly all the 25 million Australians live around the coast in three major cities – Sydney, Melbourne and Brisbane – so getting on and off ships is very easy for us with good local access,” says Sherry. “If you study the United States business, for example, you will see that Miami, which has similar easy access to ships, fares much better than other areas of that market.”
The CEO says another reason for the current strength is that up to five years ago there were very few specialist travel agents. “Now there are many more to serve a buoyant industry which caters for all segments of the business, from mid-range operations up to the highest luxury class. In the main our fares are a little more expensive than elsewhere in the world. But compared to land-based vacations, cruising is considered a great vacation value, and we are a relatively well-off country which has long holidays.”
The lines within the Carnival stable which go to Australia make up 80% of the business there. They are P&O Australia, Princess Cruises, Holland America Line, Cunard, P&O UK, Seabourn and even Carnival Cruise Lines, the quintessentially American operation which has been spreading its wings in recent times. Seven Carnival Corporation ships are now based year-round in Australia and operations down under now contribute no less than 10% of the company’s total revenues, up from just 3% a few years ago. In addition, P&O Australia announced in May that it will add two ships to its fleet in 2015, bringing its fleet to five ships based year-round in Australia.
There is, of course, one aspect of the business which is not so often mentioned: of all the world’s advanced economies, Australia suffered least from the economic recession which started in 2008. This has been a considerable boost to the national industry. In earlier times one of the problems for the industry was finding attractive itineraries apart from around the Australian coast, still a firm favourite with the lines.
It is also the case that because of the remoteness of Australia there were – and still are – relatively few inward fly/cruises, with the major exception of neighbouring New Zealand. Often the impetus for a fly/cruise will be a special affinity with one line, such as Holland America Line or Cunard Cruise Line. But now bigger and better ships have enabled more imaginative itineraries to be devised to the point where 40% of all sailings are to the Pacific islands, including Vanuatu – where a study on the impact of the business is being carried out – as well as Papua New Guinea and New Zealand.
There are also various industry ventures around the Australian coast, notably short cruises where the ship becomes the destination and does not dock. Cruising now contributes A$2.9 billion a year to the Australian economy – A$1 billion from New South Wales and, a long way second, A$400 million from Queensland. Passenger expenditure was up 20% to A$574 million and port-related spending was 15% better at A$908 million from 2012-2013. “I am not exaggerating when I say we are inundated with approaches from regional centres wanting us to bring our ships to their ports,” says Sherry. Perhaps her previous high-level government connections have worked in her favour as ministers did not follow through with imposing the coastal shipping taxes they had planned. “There’s no point in killing the goose that lays the golden egg,” she says.
But there is always one snag in any buoyant situation and in this case it is the perennial problem of port facilities. “Sydney is the gateway to cruising in Australia. It is the destination jewel that attracts all those visiting international ships as well as supporting the vessels that are based there. If the Sydney facilities are not right or the cost of doing business there is too high, the ships, which are mobile assets, won’t come,” she remarks.
Part of what the industry is looking for in Sydney is the certainty of long-term access to the Garden Island naval base, which experience has shown could accommodate both types of ships quite happily. To date, the cruise industry has been granted just five days of access per annum for a two-year period to 2015. This is a step forward but a long way short of the certainty the lines need for their long-term itinerary planning.
Sherry, at her diplomatic best, says: “The Australian Navy, like navies the world over, struggles with the idea of sharing its facilities even though it has more space than it needs at Garden Island. We already share with them the only drydock we have in Australia.” At the very least, this ongoing tradition of collaboration between the public and private sectors bodes well for future joint projects in the booming cruise business.
This article appeared in the Autumn/Winter 2014 edition of International Cruise & Ferry Review. To read other articles, you can subscribe to the magazine in printed or digital formats.