We sat down with experts to discuss the interesting components of the cruise line industry and what makes it a unique sector within the hospitality industry.

Cruise lines are a very interesting business because a new ship could cost $1 billion. For instance, the Norwegian cruise line has ordered six new ships called Leonardo class ships. The only thing they said was, it’s going to have a passenger capacity of 3,300 people, but what concept should they be?

They announced this in 2017, and the first ship will sail in 2022, so we have a five-year time difference. You have to predict: how is the market? What are the consumer needs? What are the trends? What is the competition doing? Because when a ship is being built it’s hard to change. You can maneuver a few things in terms of the restaurant concepts and services, but it’s pretty much set.

Cruise lines have to look into the future and predict. But it’s an interesting business, because it is a substitute for staying in a resort, and it has advantages.

In a resort in Florida, you go to Orlando and you stay in Orlando. You could visit some of the attractions there. But with the cruise line, you can visit several countries and several ports and do excursions. Today’s cruise lines are a destination by themselves. It’s similar to Las Vegas. Big casinos are destinations by themselves, but they have advantages.

Their advantages include lower labor costs because most of the employees come from countries like the Philippines, and they get paid competitive rates in terms of what they could earn in the Philippines. Resorts pay higher rates in the United States because of the minimum wage and all these things. They have an advantage in terms of their labor costs.

They can also source cheaper food because they buy in quantity for big cruise lines. Carnival Cruise Line has 103 ships, Royal Caribbean has 60, and the Norwegian cruise line has 25. These three companies control about 75% of the global cruise market. It’s an interesting business in terms of economics and offering their best guests more options.

The Norwegian cruise line is an interesting company because they’re using a concept called Free at Sea. So if you buy a higher level cabin, let’s say with a balcony, you can choose from up to six different Free at Sea. It could be a free bar, free specialty dining, a free excursion, free Wi-Fi, or it could be that two more people can stay free in the cabin. All of this is factored into the pricing, but it adds value and adds loyalty.

Some attractions can become destinations in their own right. In Orlando, Florida, we think about theme parks and resort hotels. Disney World is an attraction in its own right with its accommodation facilities and services. It’s almost detached from the rest of Orlando, existing as a destination within a destination.
Atlantis, for example, is a hotel resort company that includes everything for the visitor, from accommodation to restaurants, water parks, and zoos. Because everything is in one place, guests rarely feel the need to leave the bubble to experience anything in its immediate surroundings.
The inner harbor in Baltimore is another example of a tourist bubble. It’s a beautiful development equipped with a stadium, hotels, entertainment, retail, and restaurants. Still, in many ways, it feels detached from the rest of the city. You can almost draw a physical border between the tourism development and the rest of the city. That’s what we would call a “tourism bubble”.
Other great examples of tourism bubbles focus on families. Here, you’re thinking of theme parks, resorts but also examples like Disney Cruises and Disney Islands. A cruise is more like a floating tourist bubble, but it functions in the same way. Everything is on board, from accommodation to food, beverage, and entertainment. You can even visit places along the way, but if you never leave the ship, you still won’t be bored for a single moment.
So, on one hand, we have tourist bubbles, which often mean there is a physical demarcation between the tourist area and the non-tourist area. In large cities, you’ll often find tourism precincts. They’re a little different since they’re areas where tourism services are concentrated, but that physical demarcation isn’t as clearly defined.
Times Square is perhaps the most famous example. A tourism precinct has softer edges. It flows more naturally into the surrounding area.

It isn’t only Airbnb. Other brands have attempted to enter the sharing space—the sharing economy for lodging.

Oasis Collection is one of them. Oasis has attempted to accomplish something similar to Airbnb by utilizing unused capacity. They’ve attempted to design it in a manner that is distinct from Airbnb. While Airbnb tries to offer any type of rental goods, Oasis has defined the kind of product they want to sell on their platform, which is why they call it the Oasis Collection.

Another intriguing aspect of Oasis is the variety of destinations available. They also strive to build a member club where individuals can go if they rent one of their products in a specific location. So, for example, you might rent a curated apartment in Marbella, Spain. Marbella is well-known as a hotspot for nightlife enthusiasts. So you’d go there, rent the Oasis apartment, and at the same time, you’d be able to go to the Oasis club once a week for an all-night party. And you’re only permitted to visit because you’ve rented an Oasis.

Another notable feature of that concept is those apartment owners who rent on Oasis are also club members. If you’re an owner who puts your property on the Oasis platform and your apartment is in Marbella, Spain, but you’re traveling to Paris, you can enjoy the club in Paris because you’re an Oasis Collection owner. As a result, they’ve attempted to build a community of owners and guests who prefer to utilize curated apartments rather than Airbnb-style services.

What made all of this development happen was—and Amazon and Google were part of it, but other companies are also part of it—is the move towards the cloud. Cloud-based data and transactions enable things today that you couldn’t do when the cloud didn’t exist.
Back then, you had to store data in many locations. Now everyone can store data in the cloud. As a result, companies like Google and others can use artificial intelligence, machine learning, and other sorts of capabilities to mine the data and really get to a granular level of understanding of the entire wheel of travel.
That’s what makes it happen. It’s the cloud, artificial intelligence, and machine learning. You can expect to see several new jobs emerging from that in the future, not only in terms of data mining or engineering but also jobs at the property level.
Marriott launched the internal capability of mining its loyal customer’s social media to understand what is happening in their lives so that when they get to a property, Marriott can personalize the experience.
Think about someone posting a picture and saying, we’ve just had an anniversary. We celebrated our son’s 10-year anniversary, and we’re taking a vacation down to Florida. We stayed at Marriott.
Marriott knows at the property level that your kid had celebrated its 10-year anniversary. They can tailor the amenities they will leave in the room, or they can tailor the welcoming that they give you. Say, “Hey, welcome. By the way, we are glad you’re coming here for your 10-year anniversary.” That’s the level of personalization you can expect at the service delivery level, but also during the entire planning phase in the coming years.

What makes the Uber’s. Birds, Turo’s, and Air BnB’s of the world stand out in their innate ability to offer unparalleled experiences for consumers. People have discovered ways to monetize off everything: plots of land for one-of-a-kind glamping experiences, relatively unused real estate, and even personal cars that can be rented to travelers. Whatever the case, the sharing economy has become an effective avenue to give consumers an off-the-beaten-path or one-of-a-kind experience, directly from consumers for consumers. This has changed the game for the travel, tourism, and hospitality industries.
Due to the localization of the experience on sharing economy platforms–individuals now have the upper hand when it comes to offering something unique, anywhere and anytime. You can set your own parameters to be matched with the exact amenities you are looking for; a hot tub, 10 bedrooms, nearby a grocery store, ski-in ski-out access. Renters can tap into unused potentials–such as capacity–to help others, and in doing so help themselves through the extraction of money from said space or thing.
You can’t book a one-of-a-kind place in most traditional hotels–they all look the same. Hotels are built to be standardized and are relatively singular in offerings. The way traditional hotels are structured makes it incredibly challenging for them to offer a truly genuine type of lodging experience. Due to this major economic shift, hotels are forced to rethink their strategies in terms of offerings and customization. Some hotels are moving towards allowing customers to book a specific room in a given hotel, though that room will likely be very similar to another room in the same property.
With all that being said, safety and security are often overlooked when it comes to the sharing economy– something that hotels offer that the sharing economy can’t, yet. While there are rating systems that give you a sense of security on whom the buyer is and what others have experienced when interacting with that buyer’s good, home, or service, it is hard to assess overall safety when actually utilizing whatever said customer has rented. How do you know who’s sleeping in the apartment next door? How do you know the area is safe in general? These are answers you can’t really find via these sharing platforms. While the hospitality industry needs to play catch up on unique offerings, the sharing economy needs to rev up their security and safety metrics.

Transportation is an important component of the travel experience. It’s what gets us to our destination. The airline industry has many different service options, each offering various levels of hospitality to their customers, as follows:
* The full-service airline
These types of airlines, such as Delta or United, typically offer a variety of routes and destinations. Different seating classes are offered at different price points, including economy, premium economy, business class, and first class. These seating classes may have different seat sizes or leg room space, boarding priority, and in-flight food and beverage options.
* The low-cost airline
These types of airlines, such as Spirit Airlines, offer discounted prices and are barer boned compared to the traditional full-service airlines. There is no first-class seating, routes may be more limited, and in-flight food and beverage options may also be limited.
* The luxury airline
These airlines focus on the high-end luxury customer. They have first class facilities that are above and beyond, including cabins that have fully flat beds, personalized services, and a full meal menu with metal cutlery.
The airline Etihad takes luxury to a whole new level with their product called ‘The Residence’. Your 12-hour flight becomes even more luxurious in your own apartment on the plane, complete with a small living room, a bedroom, and even a shower.
* Charter flights
With charter flights you negotiate the price for the entire plane. Package tour operators such as Thomas Cook and TUI will charter a plane for their guests.
Technology has also supported the development of the chartered airplane industry. Apps such as Fly Victor, NetJets, Blade, or Wheels Up allow you to book your private plane or helicopter as simply as you book an Uber.
* Private jets
Some people have their own private jets, which is realistically not within reach for everybody. If you need or want a private jet for a particular trip, a charter flight may be your better option.

Traditionally, typical travel-related companies, such as airlines, cruise lines, buses, or trains, focused only on taking people from point A to B.

Currently, there is a greater emphasis on the traveler’s experience. Safety and fuel efficiency are top priorities at the airline level. But, the in-flight experience for passengers looks more focused.

Seats are getting better. Airlines are also working to improve the servicescape. These are the factors that influence how you feel, breathe, sleep, and digest.

Airlines are emphasizing the importance of the passenger experience with meaningful changes. They are looking for an onboard lighting solution to help passengers cope with jet lag. Travelers are unable to stand often, and food is difficult to digest. Airlines are now considering thoughtful meal options to help you feel better while traveling and avoid getting overstuffed.

Are you curious about these changes? Passengers arriving for a trip or in transit between two aircraft can use the new Changi Airport terminal in Singapore. This enhancement also attempts to appeal to the local community. As a result, they’ve created a one-stop shopping, entertainment, and event destination for all travelers. Airports, for instance, are no longer only concerned with safety and efficiency. They want to make a lasting impression on visitors.

Just like some people have their own private planes, other people have their own private yachts. If you want a taste of that life but you don’t have the funds to buy a yacht, there is technology that can help you including apps like GetMyBoat and YachtLife. There is a way for you to taste that life at sea.

When we think of cruise lines, there’s quite a difference between the Caribbean cruise that you might be familiar with and a river cruise. Caribbean cruises are extremely popular. So popular that some cruise lines now have their own islands. Royal Caribbean, for example, has developed an island that is called CocoCay. Cruises arrive there, the passengers disembark for the day, nobody stays there at night, and everyone goes back on the ship.

It’s a clever business model because all the money that is spent on that island goes straight back to the cruise line. There is no escaping the cruise line entertainment or food. It’s a great way to make sure that all the spending stays within the company.

Another type of cruise that has gained in popularity is river cruises. You might have seen these boats. They look quite different. Rather than the very high ships, they are flatter. They have large windows on the side, when people lie in bed, they can see the shoreline go past. It’s a really popular model in Europe and is now developing in other continents around the world.

When we think about how cruise lines make money, particularly the mass cruises like, Royal Caribbean, a lot of it actually doesn’t come from the price you pay for your room. A lot of it comes from other activities and most importantly, the casino. Because the ship is in international waters, casinos can operate freely on board. That’s one of the biggest money generators for the company as well as retail, food, and beverages. You can think of it as a modern version of the riverboats that went down the Mississippi that also had casinos on them.

Technology has transformed the way we travel. If we think about it, we use technology from the moment we leave until the moment we return. When you think about what inspires you to travel, many of us will say it’s because of Facebook or Instagram. We will think of these destination accounts, such as beautiful destinations that show inspiring photographs of places we’d love to travel to.
Once we’ve been inspired, we have to plan our trip. We might use the airline or travel agent apps, but also apps such as TripIt, that provide all that information in one clear package so that we know where we’re going and where need to be. When we book for the best price, we might use price comparison websites like Trivago. This is a very interesting model because a price comparison website doesn’t book a room for you. It only gives you price comparisons. You have to click on the company you want to book with.
So, how does Trivago make money? Well, every time you click, it receives a commission from the person that completes your booking. After returning from the trip, we might leave a review. Travel reviews are incredibly important because they have a great influence on future travelers.
TripAdvisor is by far the largest travel review app and has recently moved into providing travel bookings. Technology surrounds the whole wheel of travel, as we call it, and is with us almost every step of the way. The way technology has transformed the travel industry means that there are now more professional opportunities for people that we didn’t see in the past. For example, how Instagram influences our travel decisions. There are influencers there that get paid for posting certain photos, ads, and videos about properties and destinations.
Google Guides is also a great way for people to review and influence other people’s traveling. Another area where technology has helped people in developing their own business ideas and becoming a part of a community is reviews. Google Local Guides is an excellent example of how people leave reviews that influence where other people go. And that might lead to professional opportunities down the line. Someone might hire you based on the reviews you have written.

One of the biggest challenges for a service and hospitality business is intangibility. Another is disappearing inventory – if you don’t sell it tonight, it’s gone.

More importantly, you want your customers to dream about staying onboard your cruise and coming to your hotel. With social media and electronic marketing tools, you can actually cost-effectively reach more customers.

But, there’s an overabundance of information. How do you get your information across? When does the consumer use their cell phone? When are they on their desktop? When is the best time to reach them? When are they dreaming? When do they make decisions?

For example, March. January, February, March are the heavy booking times for summer cruises. That’s the time to promote and reach your customers. You can do this through traditional advertising too!

Carnival Cruise Line is involved with many TV shows. They use the old love boat method where consumers see a mini-series happening on a cruise ship. As a result, they get the desire to travel.

Many cruise lines still heavily rely on travel agents. Why?

Because the market penetration of cruise lines in the United States is 13%. Only 13% of the population has taken a cruise. Globally it’s 2% – only 2% of the global population has taken a cruise. In China, it’s only 1%. There is a lot that needs to be done in those markets to build awareness. In many cases, travel agents are still the best way to reach customers. But then if you look at airlines, nobody goes to a travel agent to book a flight.

Customers often use distribution channels, like Expedia and Kayak, which consolidate all the information from various websites. The distribution challenge for airlines is to make sure that if you check through Kayak, the best rate for a flight is on your own site.

If a person books through Expedia, the airline may have to pay 10% to 20% to Expedia. The same goes for hotels. They may have to pay 10% to 20% per booking to booking.com, hotels.com, or Expedia. So you want these customers to book directly with you on the Marriott site or the American Airlines site.

But if you are a small or independent hotel, then you don’t have the marketing power. You don’t have the budget. So often, you may need Expedia to build awareness. It’s a trade-off. You may pay 20% for Expedia to get the booking, but if you don’t do that, you might get no business.

But slowly and by going through consortiums, like Leading Hotels of the World, you can get distribution power behind your brand. You’ll also get access to the consumer. With the exception of grocery stores, many of the hospitality services – car rentals, airlines, hotels, restaurants, are all booked electronically. You can generate demand by taking advantage of these platforms.