The Sector Growing at over 18% a Year

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As markets around the world continue to splutter, there is one industry that continues to grow.

Once the domain of the well-heeled and retired, this industry has transformed itself. Over the past couple of decades, it has attracted a much younger crowd.

Sure enough, you might still come across the well to do. The modern-day Thurston Howell IIIs and their lovely wives, ‘Lovey’.

But what you will more likely see are families on their annual vacation. Sitting in the sun, having a drink, while the kids play in the pool.

This industry is cruising. It is part of the much larger travel market. And within the travel market, it is increasing its share of the spoils.

A report by the cruise industry association (CLIA) shows that Australasia makes up over 5% of the cruise market globally.

That makes Australasia the fourth largest in cruise numbers, of the 26 million who cruise worldwide each year.

The CLIA report states:

Since 2008, passenger numbers have risen by an average of 18.5 per cent a year, with the market more than quadrupling in the past ten years and more than tripling since 2010.’

You can see why the big international cruise lines are sending more ships our way.

But it is not just growth in the Australian market. All up, cruise lines are building over 100 new ships. Costing $58 billion in total, they will go into service over the next decade.

These ships are getting bigger, carrying more passengers than ever.

The biggest player in the market is Carnival. Its most recent launch, the Vista, has the capacity for almost 4,000 guests. That’s more than double that of other ships in its fleet.

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Cruises bringing large numbers of tourists to our shores

While plenty of Australians are spending big to cruise outside Australia, it is also bringing large numbers of tourists to our shores. So much so that existing terminals cannot keep up with demand.

The Overseas Passenger Terminal in Sydney alone took in a record 352 ships in the 2017–18 season. Up from 344 the previous year.

Including the cruise terminal at White Bay, that represents 1.6 million visitors a year just through Sydney terminals.

But it’s not just Sydney enjoying the boom. The Port Authority of NSW reported that both Newcastle and Eden enjoyed record years.

For those travelling from outside their hometown, that means booking a night or two in a local hotel. Plus, a meal in a local restaurant.

And for overseas visitors, a chance to add to their stay before flying home. All of this putting money into the economy.

Of course, without suitable facilities, the biggest cruise ships cannot berth.

That is why the NSW government is upgrading Eden’s port to take in bigger ships. Ships that are 300-plus metres long, now popular with the biggest cruise lines.

Brisbane getting in on the action

It is also why the cruise lines are getting involved in building ports. Such as Brisbane.

The Port of Brisbane is building a new international terminal. In doing so, it is partnering up with Carnival. The $158 million project is due for completion in mid-2020.

The authority estimates that it will add $5 billion to the Queensland economy over the 15-year period of the deal.

It will also enable more tourists to visit islands off the coast of Queensland. Something that will help local tourism operators.

While cruising continues to grow, it still has potential risks for operators. Moving those mega ships burns up a lot of energy.

Fuel is the biggest expense. More so than labour costs of the 1,000-plus crew on each vessel. And more than all that food guests shovel down their throats.

Travel is also reliant on the economy. Less people travel when the economy takes a hit.

But with the IMF predicting another year of over 3.5% growth globally, you can expect to see even more cruise ships landing in Australia.


Matt Hibbard,
Editor, Options Trader

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