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Hotels Making Big Money off Cruising

Hotels near major cruise ports are awash with pre and post cruise stay potential and that means big money.

Thursday, August 27, 2015
Scott Kauffman
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The cruise industry just keeps getting bigger and bigger. And the latest symbol of how big the business is becoming is the behemoth being built for Royal Caribbean Cruises Ltd.

Named Harmony of the Seas, Royal Caribbean’s newest ship is 227,000 gross registered tons and plans to hold 5,479 passengers at double occupancy in 2,747 staterooms. It is 1,718 tons larger than its two sister ships in the massive Oasis class.

Scheduled for delivery next spring, it’s yet another sign of how bullish the cruise industry has become. Indeed, as more vacationers are gravitating to the value-oriented, stress-free nature of cruises versus traditional hotel and resort-style trips, the cruise industry is full steam ahead when it comes to building bigger and better ships.

Consider the cruise line industry welcomed 22.1 million passengers in 2014, a 24 percent increase from the 17.8 million passengers that went cruising in 2009, according to Cruise Lines International Association, Inc. To put the size of the cruise industry in another perspective, the total number of passengers has nearly doubled since 12.6 million took cruises in 2007 and represents $117 billion in global economic impact ($44 billion in the U.S.).

And this year, by most accounts, should be another record year of cruising with more than 23 million passengers worldwide. That explains 55 new ocean liners or river ships planned for delivery over the next five years, according to CLIA, at an average cost of $500 million per ship.

Florida is the epicenter of the world’s cruise industry, serving as the headquarters for numerous lines and the starting point for most trips to the Caribbean, the world’s most popular cruise destination. According to CLIA’s recent study titled, “The Contribution of the North American Cruise Industry to the U.S. Economy in 2013,” Florida accounted for 62 percent of all U.S. cruise embarkations and welcomed an estimated 9.46 million cruise passengers and crew members in 2013.

And Central Florida’s Port Canaveral, one of the three busiest ports in the world (PortMiami and Port Everglades are the other two), is just a short drive from Orlando, the North American vacation capital of the world.

So what does all of this increased cruise business mean for mainstream hoteliers and resort owners? From initial blush, the net effect for the hotel business seems to be nothing but a boon for business – rather than competition.

“It’s brought a tremendous amount of people to our area,” says Pat Looney, longtime general manager at the Residence Inn Cape Canaveral/Cocoa Beach. “If you think about it, a 4,000 passenger ship is a potential 1,000-room hotel.”

And whichever way you look at it, Looney welcomes the alternative vacation lifestyle.

“A lot of the families are flying into Orlando the night before or driving in the night before so they don’t have the stress of traveling the same day of the cruise,” says Looney, who’s been running Orlando-area hotels for more than 20 years. “Those are extra nights for us. Our occupancy is typically pretty strong Friday and Saturday. What the cruise business does is helped Thursday nights and Sundays because most of the ships leave Port Canaveral on Saturday and Sunday.”

Joe Panackia, longtime general manager at the Radisson Resort at the Port, is minutes from Port Canaveral. And he, too, has seen nothing but a net positive from the cruise business.

“It’s not only this area that benefits from this traveler but the whole airport area does quite well,” Panackia points out. “They usually come in the night before so ideally it’s not the traveler you want. You really want that multi-stay traveler.”

Nonetheless, Panackia welcomes the wave of business and says his hotel actually shifted its business years ago to focus toward the cruise line traveler. For instance, the hotel now owns and operators 30 busses to shuttle guests to the cruise port. The hotel also has ample land that can provide more affordable overnight parking options for more than 500 vehicles.

“You have to have some infrastructure in place to cater this type of traveler,” Panackia says. “With these one-night guests, you’re moving lots of luggage. It’s not like the corporate guy who has his roll-in bag, has a cocktail and is gone in the morning.

“With these other guests, we’re taking care of them here then have to provide transportation when they leave. If you think about it, we’re not saving them anymore money on our parking. It just allows them to spend and enjoy more money on their cruise vacation.”

To be sure, cruise passengers are high spenders, with more than 60 percent of cruise travelers having household incomes above $60,000, according to the CLIA study. Based on a January 2013 report by Florida TaxWatch, titled, ”Investing in Tourism: Analyzing the Economic Impact of Expanding Florida Tourism.” daily expenditures averaged $264.58 per passenger in Miami alone, and studies have shown that cruise passengers tend to stay in Florida some days before and/or after their cruise.

In the eyes of noted University of Central Florida economist Sean Snaith, with a record 60 million visitors in 2014, hotel and resort operators shouldn’t feel that Orlando’s tourism pie is getting any smaller as a result of more people eschewing traditional trips for cruises.

“The pie is actually getting bigger each year,” says Snaith, who oversees UCF’s Institute for Economic Competitiveness. “Versus them losing a bit of their slice. Cruising is not the perfect substitute for spending a week in Orlando and going to Disney World or Universal Studios. It’s not like you’re robbing Peter to pay Paul. Overall, I think it adds to visitations and more stays.”

Scott Kauffman
Hotel Interactive® Editorial Division

Bio: Scott Kauffman is a leading journalist on golf course development and luxury resort and real estate development worldwide. Kauffman has 25 years of journalism experience, including full-time writing and editing positions with the Honolulu Star-Bulletin, USA Today and Orlando Sentinel newspapers, and Golfweek Group magazines. Over the last 12 years, the award-winning writer has specialized in golf course real estate and resort development and been published by more than 30 regional ...
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