2024-11-03 05:01:00
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The world’s biggest cruise groups are pouring money into private destinations for their customers as booming demand rubs up against a backlash against overtourism in many popular spots.
The biggest operator, Carnival, is in the midst of developing the $600mn Celebration Key on the island of Grand Bahama. The “first-ever exclusive destination to be purpose-built” for the company will open next year.
Meanwhile, rival Royal Caribbean is planning to spend a similar amount building the 200-acre Perfect Day Mexico resort on Mexico’s Caribbean coast in Mahahual. It will have beaches, water parks and other entertainments and is scheduled to open in 2027.
Another major operator, Norwegian Cruise Line, is building a two-ship pier to its own private island Great Stirrup Cay to allow it to double visitor numbers to 700,000 from 2026.
By 2025 passenger capacity at cruise company-owned private islands in the Caribbean will have more than doubled from 2019, according to Christian Savelli, cruise analytics director at Tourism Economics.
The industry is hoping to emulate the success of Royal Caribbean’s Perfect Day CocoCay private island, which reopened in 2019 after a $250mn redevelopment. Barclays’ analysts attribute a nearly 8 per cent rise in the cruise operator’s net yield — the main industry measure of profitability — to this relaunch.
“One of the value points of us adding more [of] these destinations or creating them is to really spread or distribute our guests more broadly,” chief executive Jason Liberty told the Financial Times. This can help reduce congestion in traditional hotspots.
Royal Caribbean is also developing two beach clubs on islands in the Bahamas and Mexico to be opened by 2026, which are smaller than the larger Perfect Day resorts.
The Miami-based cruise line is “taking pressure off of the system . . . [by] putting up new experiences” for its guests at destinations where otherwise “there is not enough to do”, Liberty added.
“You deliver the experience, you have the [passenger] volume, and people want to pay more money to go to those destinations. So we see a higher return profile on the destination than we do on the ships.”
Norwegian chief executive Harry Sommer recently said the new pier on Great Stirrup Cay should ultimately generate “higher guest satisfaction, higher revenue, higher repeat rates [that] becomes a virtuous cycle”.
Operators are spending money to build their own resorts as they try to balance a rise in demand since the pandemic and a backlash against the growing number and size of cruise liners in crowded tourist destinations.
In 2023, 31.7mn people worldwide went on cruise trips, up 7 per cent from 2019, according to the Cruise Lines International Association. It expects passenger numbers to have reached 39.7mn by 2027. Carnival, Royal Caribbean and Norwegian all recently increased their profit forecasts for this year, driven by rising bookings.
Savelli said passenger numbers were growing faster in the Caribbean than in all other major regions including the Mediterranean, driven by the popularity of private resorts.
While more people want to go on cruise trips, fewer locals are happy to see big ships full of people in places that already have a lot of tourists.
Larger cruise ships have been banned from docking in Venice and earlier this year the city started charging day-trippers an entrance fee of €5. In September, authorities in Ibiza announced that no more than two cruise ships would be allowed to dock at the same time. Alaska is set to impose a cap on the number of cruise passengers visiting the major port of Juneau from 2026.
Royal Caribbean’s Liberty played down congestion caused by cruise ships, blaming Airbnb and local population growth instead. But Bob Levinstein, chief executive of cruise holiday marketplace CruiseCompete.com, said overtourism worries had “cruise lines thinking more seriously about how they can have more control over the destinations, and private islands are a smart way to do that”.
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**Interview with Cruise Industry Expert, Sarah Johnson**
**Interviewer:** Thank you for joining us today, Sarah. As an expert in the travel and leisure industry, what are your thoughts on the current trend of cruise lines investing heavily in private destinations?
**Sarah Johnson:** Thanks for having me! It’s a fascinating time in the cruise industry. The shift towards private islands is a direct response to increasing demand for unique experiences while also addressing the concerns surrounding overtourism in popular destinations. Cruise lines see private islands as a way to control the guest experience and provide exclusive offerings that can enhance passenger satisfaction.
**Interviewer:** Carnival, Royal Caribbean, and Norwegian Cruise Line are significantly expanding their private island offerings. What do you think drives this trend?
**Sarah Johnson:** The primary driver is the desire for a more controlled and enjoyable experience for travelers. By developing these private destinations, cruise lines can manage crowds more effectively, ensuring that guests have access to amenities without being overwhelmed. For instance, Carnival’s Celebration Key is set to be the first-ever purpose-built island for guests, which reflects a commitment to creating an unparalleled experience.
**Interviewer:** Speaking of experiences, Royal Caribbean’s success with Perfect Day CocoCay seems to have changed the game. How do you see this impacting the broader industry?
**Sarah Johnson:** Absolutely. The almost instantaneous rise in profitability following the redevelopment of CocoCay demonstrates the potential return on investment when done right. It sets a benchmark for other operators. The industry is recognizing that destination experiences can yield higher revenue than ship operations alone. This shift encourages cruise lines to invest in unique environments that guests are willing to pay a premium for.
**Interviewer:** With all this development, do you think future cruise guests will prefer these private destinations over traditional ports of call?
**Sarah Johnson:** It’s possible! These private destinations allow for tailored experiences, reducing the chaos typical of popular cruise ports. However, I think many guests will still value the cultural immersion traditional ports can offer. The key for cruise lines will be to strike a balance—offering both the private island experience and opportunities for guests to explore local culture and communities.
**Interviewer:** what can guests expect from the new developments in private islands in the near future?
**Sarah Johnson:** Expect a focus on unique amenities and experiences, such as water parks, scenic beaches, and themed resorts. Innovative offerings like the beach clubs planned by Royal Caribbean in the Bahamas and Mexico are designed to provide a blend of relaxation and adventure. the emphasis will be on creating memorable experiences that encourage repeat visits.
**Interviewer:** Thank you, Sarah, for sharing your insights with us today!
**Sarah Johnson:** My pleasure! Thank you for having me.
