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Wednesday Letter: NZ Cruise CEO Kevin O’Sullivan

30 Aug 2017  By Contributor

Three cruise ships – one each at Captain Cook, Queens and Princes Wharves in Auckland over the summer.

Chief executive of the newly named NZ Cruise Association, Kevin O’Sullivan, on the huge growth expected for the sector and the latest findings on the economic impact cruise is having on NZ, released at the industry conference in Auckland yesterday.

Kevin O’Sullivan

Every year, at this time, we present the figures for the last season and give forecasts for the next two seasons. This information is most important to understanding the value of our industry, and we rely on Market Economic’s expertise for the modelling work that gives us predictions for future benefits.
Cruising is a very popular activity throughout the world and has grown at around 7% each year. In 1989, there were four million passengers taking a cruise. In 2017, this has risen to 26 million cruise ship passengers. Since 2010, global cruise tourism has grown even more rapidly, increasing by more than one million passengers each year.
Passenger growth is strongest in the Asia-Pacific region with the three fastest growing markets being China, New Zealand and Australia. The size of ships is increasing too – cruise ships now average 1800 passengers and many of the new builds have a capacity of 4000 or more.
Cruise tourism has been growing at nearly twice the global average since the late 1990s, and since 2010, cruise passengers visiting New Zealand have more than doubled from 100,000 to around 250,000. Scheduled bookings for 2018-19 indicate that this will increase to almost 350,000 passengers.
In this last 2016-17 season, there were 42 ships, on 138 voyages and 747 port days. In this coming season the numbers are rising a little – 37 ships, 162 voyages and 809 port days. But in the 2018-19 season, although the number of ships remains constant, the voyages increase and the number of port days expected increases massively to 984. These numbers are subject to change – they might increase further or decrease – but so far these are the numbers we are looking at.
What is driving this is a number of factors? Much larger ships with many more passengers. Most of this growth is generated by only six ships:

  • Ovation of the Seas
  • Celebrity Solstice
  • Radiance of the Seas
  • Majestic Princess
  • Golden Princess
  • Norwegian Jade

The number of port days is increased considerably by cruises out of Auckland by the Pacific Jewel. In every month of the year, there are cruise ships in New Zealand waters.
As the number of port days increase, so, of course, does the number of passengers, growing from 235,900 in the last season to over 344,000 in the 2018-19 season. The number of passenger port days will increase from 1.36 million to 1.9 million over this time period with a significant increase in passengers exchanging in New Zealand: 95,800 currently rising to a predicted 147,000 in the 2018-19 season.
Crew also add value to the New Zealand economy, although they are more difficult to count as they will arrive and depart multiple times. But again, the larger ships mean greater numbers of crew port days, increasing from 540,000 to 816,500 between 2016 and 2019, and a consequent increase in crew members departing and joining the ships in New Zealand.
Australians accounted again for around half of the cruise passengers coming to New Zealand in the 2016-17 season, 80% of whom were transit passengers, on round trip voyages from Australia. North Americans made up 21% of passengers, Europeans 13% and New Zealanders 10%. The number of New Zealanders has declined as a ship left the local market during the season. The Pacific Jewel will replace the Pacific Pearl and we will see an increase in domestic passengers again.
The combination of passenger, crew and vessel spend added to a total of $624m in the 2016-17 season and this is expected to rise to $911m. These figures are at the heart of the importance of the cruise industry to the New Zealand cruise economy. Value added is already at a respectable $447m, but will rise to a whopping $640m in the 2018-19 season. Employment supported by the cruise industry will increase by more than 3,000 to an expected 11,400.
So, overall the New Zealand cruise industry continues to expand. Scheduling is still extremely volatile and subject to change. However, for the 2018-19 season:

    • Port days will increase by 31% to 984
    • Passenger numbers will increase by 46% to 344,000
    • Economic contribution will increase by 43% to $640 million
    • Cruise tourism employment will increase by 38% to 11,400 jobs

These numbers are huge and I will leave you with some questions, not answers:
Are we ready?
Do we have the infrastructure to deal with the new generation of ships?
What do we need to do to prepare?

You can view our full coverage of the New Zealand Cruise Association Conference in Auckland at tomorrow. 

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