• Stephan Busch

The River & Sea Cruise Debacle 2022 - an update



The predictions are from 2020 and were considered by many to be too negative. I myself still had hope that it would not come to that. Unfortunately, I was right about many things. Here's an update.


Rapid ascent to almost complete standstill

River cruises have become quite popular in recent years for all walks of life. From cheap to moderate, from expensive to very exclusive. There was something for everyone. The major share - mainly thanks to Vikings advertising and PR in the early years - for all cruise companies was the American and the English-speaking market (UK, Australia, Canada, etc.) with 75%. But Germans, Swiss, French, Spaniards and South Americans are also discovering this type of tourism for themselves. Russian guests have been increasing in numbers and many ships have been made available exclusively for Chinese guests.

And today? 2022?

The Chinese

are still not back and it will take time.


The American

are slowly coming back but are far from filling the capacities they had before Corona and the conflict in Europe


The Australians

could slowly come back, but here too it will probably take years before the figures for 2019 are reached


The Russians

won't come for a long time.

Israelis, South Americans, Indians and many other countries will also avoid cruise tourism for a long time.


Gone are the days when transporting passengers from the airport to the ship was a logistical nightmare.

Today, the airline industry, in its most optimistic attitude, is forecasting a recovery in 2024 at the earliest. The latest figures speak of 2026. Pilots in Frankfurt and Amsterdam are asking for forgivness that handling is so slow but what do you expect when you fire thousands of trained staff?


“Global passenger traffic (revenue passenger kilometers or RPKs) will not return to pre-COVID-19 levels until 2024, a year later than previously forecast. "

(IATA Official Statement, July 2020)

Gone are the days when shipyards were fully booked

In recent years it has not been a problem financially to order new ships - but with so many new ships on order it has become a problem to find shipyards with space for another new build. The shipyards were fully booked until 2026.


Bernd Meyer (Meyer Werften Papenburg, Germany) predicts a future that is precarious for all shipyards:


"Never before has the entire cruise fleet of over 400 ships shut down," he said. Meyer predicts the recovery is still a long way off - he thinks it will be in 2030 before the cruise ship market matches last year's.


In his address (to his staff), Meyer cited previous crises, most notably the 1973 oil crisis, which triggered a tanker market crisis and a structural crisis for the German shipbuilding industry. "It took us 20 years to get back to where we were in 1973," he said.

(Frederik Erdmann | April 16, 2020 https://www.seatrade-cruise.com/news/amid-order-shifts-cutbacks-cruise-market-will-need-decade-recover-bernard-meyer


That statement was made in April 2020, but since then, seven cruise lines have gone bankrupt and Carnival alone (the largest cruise line) has retired 18 ships to date (junk). The future doesn't look rosy.


The times when supplying a ship with everything necessary was a challenge are over

Suppliers happily and plentifully provided food, beverages, housewares, maintenance materials and anything else a ship might need. Some ports began to ban the loading of ships in their ports as the mass of busses transporting guests to ships and excursions and the amount of trucks needed to supply ships became a traffic nightmare.


When the Corona panic started in March, all suppliers' warehouses were full to supply the fleets of all the ready-to-go river cruise companies with over 400 ships for months, which were fully booked until November. The worst time for suppliers. If the corona panic had come in December, they would not have bought anything - but in March the warehouses were full to the brim. The orders never came. Some suppliers have even started selling directly from their warehouses to anyone to minimize losses. The rest went in the trash can. And the rest was big!


In 2022 many suppliers went bankrupt, transport prices have increased insanely and there can be no question of a recovery for a long time.


The sky was the limit

Twenty years ago, in the year 2000, sea cruise ships counted 7 million guests. For 2020, the number of booked guests was up to 32 million. And then suddenly we were almost at 0!


River cruise tourism was growing just fast and the first ducks had to go ashore as the rivers filled up with new boats every year. The ducks are back and having fun in the water!


Crew from everywhere - no more!

When the river cruising boom began when the crew was mainly from western Europe, it switched to eastern Europe as capacity increased, and Filipinos and Indonesians were flown in to meet demand each year. Working conditions and social benefits declined on the same scale.


During Corona, the staff was quickly and brutally dismissed. Some companies were still paying for a few months but again - with the ongoing problems - this had to stop at one point. The few employees who were able to come at all had only a few cruises without a tip and unannounced salary cuts of up to 30%. Same work, same hours, same attendance - 24 hours on board - just no income to justify commuting to work - to your employer. This will be a boomerang for river cruise companies and their human resources departments as people will not fall for the same method twice and warn others. Qualified staff - as rare as it used to be - will be a thing of the past!


In 2022 it is the past! Finding staff is harder than ever - have the conditions improved so much that it could be attractive again? As in the hotel and catering industry, you have to say clearly: No!


Predictions 2020 come true?


Back to normal?

There will be no going back to normal. Given that airlines, with their most optimistic outlook, do not expect a return to normal before 2024, the river cruise industry might not expect a return to normal - return to 2019 numbers - not before 2024 - 2026 considering that 75% of the market is still are American and English speakers (UK, Australia, etc.)


The insolvency of many large and small travel agencies will also have an impact. The number of ships will have to be reduced.

Who can still afford it in the next few years?


In Germany alone, salaries fell by 11 to 17 percent during the Corona crisis.

(Statista.com 09/18/2020)


The richest country in Europe? This only applies to the lucky people who still have a job. How can everyone afford cruises in the future?


The additional price increases in all areas, which are not fought, dampened or intercepted by politics, but are defended, leave many people who were our guests in the past or could be in the future financially unable to think of cruises.


Crew?

Given the recovery timeline (2024 - 2026), all crew members must look for other sources of income and new jobs. However difficult that may be, most of the really good and qualified ones will succeed. The river cruise industry and its human resources departments need to adjust and change their attitudes, behaviors and rewards, and vastly improve their approach in order to attract people who can do at least the basic jobs. It is time to dissolve entire HR departments and build them up from scratch.



Did that happen in 2022? A clear “No” is the answer.


River cruise as such?

It's a great way to travel and has rightly boomed, offering guests a unique way to easily reach and discover new and old places. River cruises have found their place and will continue to exist. Hopefully it will recover faster than we might now think. A lot needs to improve and change. Those companies that are willing to change, improve and rethink the business and the conditions they set for guests and employees will thrive. We won't miss the others.


It's time to hire people who have the experience and brains but also had the legs on deck and pay them well. In an industry that grew by itself success was easy. These times are over!


Predictions are assumptions and a lot of guesswork. As negative as they may look now, we should keep the glimmer of hope that we will be surprised and things will change for the better. Even today in 2022 we haven't given up hope, even if it's worse than we expected in 2020.


Stephan Busch has an invaluable and diverse experience in the hospitality industry ranging from senior management positions with the most renowned hotel and resort companies to the project development - launch of operations, business development- for hotel and cruise companies in Asia, Europe, Canada and Russia.

His expertise includes not only planning, opening and operating of hotels, international golf clubs, airports, resorts and cruise ships, but also successful restructuring and repositioning of businesses during the financial crisis in Asia.

Stephan Busch earned his Master Certificate in Hospitality Management from Cornell University, USA and served many years as Academic Director / Faculty of Hospitality & Tourism at the State University for Humanities RGGU Moscow as well as the Swiss International University St. Petersburg.


33 views0 comments