Cruise sector growth

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Scale is a central theme in the cruise industry, originating from the excessive scale of ocean liners in the 1960s. As air travel replaced ocean travel, ships designed for scheduled services were repurposed for leisure cruising. Achieving cost-saving scale effects has driven business development and innovation for cruise lines. The formation of fleets in the 1970s reduced marketing, distribution, personnel, training, purchasing, and administrative costs per unit of capacity, leading to lower ticket prices and increased demand for cruises. Since the 1980s, scale effects have been realized at the individual ship level, with the introduction of large, purpose-built vessels further lowering unit costs and enhancing comfort and convenience. Papatheodorou (2006) emphasizes that for unit cost savings to occur, cruise capacity must align with sales scale. Consequently, larger fleets and ships have been linked to more professional sales management and revenue management strategies to ensure full occupancy. However, the fleets and ships of leading cruise companies like Carnival Corporation and Royal Caribbean Cruises have now reached such sizes that unit costs have become largely unaffected by scale.