CHARM 2011 Ship Ahoy: A History of Maritime Passenger ...

CHARM 2011 Proceedings 22

Ship Ahoy: A History of Maritime

Passenger Industry Marketing

Blaine J. Branchik School of Business, Quinnipiac University, Hamden, Connecticut, USA

Abstract

Purpose – The purpose of this paper is to periodize the history of the marketing of the maritime passenger industry, a unique industry that has thrived for over 150 years despite dramatic technological and social changes. Methodology/approach – This study adapts Hollander et.al’s (2005) approach and incorporates secondary data from a variety of expert works and government data as well as primary data such as fare lists, advertisements, and promotional materials. Findings - This study finds that the industry’s marketing history can be divided into six periods: (1) Immigration (mid-19th century to 1914); (2) World War I (1914-1918); (3) Tourism, alcohol and luxury travel (1918 to 1939); (4) World War II (1939 to 1945); (5) Jet age emergence (1945 to 1970); and (6) Cruising for all (1970 to the present day). Increasing focus on small niche markets, operational efficiencies, and mass-consumed luxury are trends for the future. Implications/limitations – This study provides practitioners and academicians insights into how an industry can completely reinvent all elements of its marketing strategy in response to changing social and technological forces. Space constraints limit the information mostly to British, American, and German shipping lines. Originality/value – Although much has been written about maritime history, no known work has examined the history of the marketing of the maritime passenger industry. Keywords – Cruise industry marketing, maritime marketing, industry marketing history, marketing history, shipping marketing Paper type – Research paper

Introduction

In 2009, 13,442,000 passengers sailed on passenger ships worldwide, the result of an annual average growth rate of 7.2 percent over the past twenty years (CLIA, 2010, p. 3). Seventy-five percent of those passengers were North American (Ibid., p. 9). One hundred ninety-eight ships from 24 passenger shipping lines (Ibid, p. 12) cruised around 24 regions, including the most popular cruise destinations, the Caribbean Islands. Other popular itineraries included Mediterranean, Alaskan, Scandinavian, and around the world cruises.

In an era when jet travel has obviated the need for marine passenger travel, the industry has managed not only to survive but also to thrive via a combination of careful targeting and creation of desired marketing mix elements.

Today’s cruise industry can be traced to the beginning of regularly scheduled transatlantic travel in 1840. Before that time, people sailed the seas, crossed oceans, and discovered new worlds. But it was not until Canadian Samuel Cunard formed the British and North American Royal Mail Steam Packet Company that regularly scheduled passenger sailings began (Dickinson and Vladimir, 2007; Maxtone-Graham, 1972). Cunard was the only bidder on a contract with the Royal Post Office to carry mail back and forth between Great Britain and the U.S. and Canada. The first regularly scheduled sailing was on the Britannia, sailing from Liverpool to Halifax and Boston and carrying 115 passengers. It arrived in Boston on July 4, 1840 (Maxtone-Graham, 1972, p. 5). Regularly scheduled service grew from there such that by 1907, the peak year of immigration into the U.S., scheduled maritime passenger service had transported 21 million immigrants sailing primarily from Europe to the U.S., along with all other passengers (Ibid., p. 155). Those 21 million as well as today’s 13.4 million were and are served by businesses creating marketing strategies to meet travelers’ evolving needs while maximizing profits.


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Methodology

This paper presents a periodization of the marketing of maritime passenger service. It uses a four-step adaptation of an existing framework (Hollander et al., 2005), periodizing the segment’s history into six phases: (1) Immigration (mid-19th century to 1914); (2) World War I (1914-1918); (3) Tourism and luxury travel (1918 to 1939); (4) World War II (1939 to 1945); (5) Jet age emergence (1945 to 1970); and (6) Cruising for all (1970 to the present day) (see Exhibit 1.).

This method first undertakes a historical chronology of the industry of interest – in this case the maritime passenger industry – with special focus on factors that may hold implications for marketers (such as demographics, government programs, wars). Within that chronology, the researcher looks for important, revolutionary events or turning points (Hollander et al., 2005) that had specific and profound impacts on the industry. Using those turning points, the history is then divided into phases or periods with the key events/eras as bookends for each period. The researcher then summarizes buyers’ activities and needs associated with those periods. These buyer segments form the sellers’ target markets. Finally, the researcher presents examples of marketing mix elements illustrating the service targeting.

Both primary and secondary sources provided input for this paper. Secondary sources including maritime histories and travelogues provided substantial background on the industry and targets. Industry Association reports and data provided data on shipping firms, destinations, and passenger numbers and demographics. Primary data focused on advertisements, price lists and other promotional materials found at maritime archives, the Ad*Access database at the John W. Hartman Center for Sales, Advertising & Marketing History at Duke University, and the Gjenvick-Gjønvik Archives (http://www.gjenvick.com).


EXHIBIT 1. MARITIME PASSENGER INDUSTRY MARKETING PERIODIZATION

1. Historical Summary 2. Targets 3. Mix elements

a. Phases c. Historical Drivers - Immigrants - Affluent Americans and

Europeans

- Steerage for immigrants - Highlighting luxury

accommodations - Example of German line

building Immigrant Village - Luxury liners – German vs.

French vs. British - Matter of national pride - Point is to get between points A

and B - Disguise fact that ship was on

sea (due to seasickness) – make it look like a giant hotel.

- Multi-class service – 1st, 2

nd, 3

rd

or steerage

1. Immigration - Mid 19

th

century – 1914

- Technological change (steam turbine)

- Immigrants leaving Europe for America; UK to Australia and New Zealand

- Increasing US-Euro travel (immigrants going back to visit the old country)

- German-British competition via ships

- WWI

2. WWI - 1914-1920

- World War I halts non-military sea travel

- Lusitania sunk

- Military troupes - Ships re-painted (dazzle paint) and converted to military use.

3. Tourism, alcohol and luxury travel - 1920s-1939

- US legislation (Emergency Quota Act - 1921) severely limits immigration

- German ships turned over to US and UK

- Great depression - Prohibition - WWI soldiers

exposed to Europe

- WWII begins

- Affluent Europeans and Americans

- 1920s – first time Americans became biggest geo target – 80%

- “Bohemians” flappers, drinkers

- Teachers, students, tourists

- Queen Mary launched 1936 - Conversion of steerage into “third class” Bohemian accommodations

- Upgrading previous steerage areas

- Continued focus on luxury - Origin of the short “booze cruise” to Canada & Bermuda from US (since money tight during depression)

- By late 30s, short booze cruises augmented by more luxurious ships and long itineraries (world cruises)

4. WWII - 1939-1946

- World War II halts non-military sea travel

- Normandie – ultimate luxury liner seized by US, burns and sinks in New York

- Military troupes - Ships re-painted and converted to military use

5. Jet age emergence - 1946 – 1970

- Travel resumes - Immigrations of

war brides - Increasing

American affluence following WWII

- 1956 cusp year when more travelers fly transatlantic than sail

- Boeing 707 goes into service 1958

- British war brides - Wealthy American tourists - Elderly

- Cruising grows in popularity as air travel supersedes transatlantic shipping

- Caronia (1949) expressly built for cruising

- Amenities appear such as outdoor pools, air conditioning

Exhibit 1.

Maritime Passenger Industry Marketing Periodization


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EXHIBIT 1. MARITIME PASSENGER INDUSTRY MARKETING PERIODIZATION (cont.)

1. Historical Summary 2. Targets 3. Mix elements

6. Luxury Cruising for all 1970s - present

- Jet age spells end of trans-Oceanic sailings

- Need to find new targets and uses for equipment

- Increasing affluence and aging

- Positive WOM

- Elderly - Affluent - Middle class - Families - Education/students - Special interest

- Inexpensive cruises - Sub-segmentation within broader cruising market

- Land/sea packages integrate sailing and aviation.

- Marketing mixes become ever specific to meet niche target needs

Maritime Passenger Transportation Industry Marketing Periodization

As mentioned above, people have sailed the lakes, rivers, oceans and seas of the world since time immemorial. However, the modern maritime passenger industry – with regularly scheduled passage – was not born until the middle of the 19th century with the launch of Samuel Cunard’s British and North American Royal Mail Steam Packet Company, later renamed Cunard Line. It was at this point that passengers could pay for passage on a ship and expect to arrive safely and on time. Cunard, for his part, started a business and created a marketing strategy. In fact, Cunard exists as a passenger line to this day as one of the ten brands owned by Carnival Corporation and PLC.

The following sections will elaborate on the phases or periods summarized in Exhibit 1. Each section will begin with a historical summary of each phase. Next it will summarize the historical drivers of the phase itself, highlighting the turning points. The section will then summarize key target markets of that particular phase. Finally, the section will provide example of elements of the marketing mix that illustrate the targeting.

Phase 1: Immigration (Mid-19th

Century to 1914) The United States prides itself on being a nation of immigrants. Between 1820 and 2003, 68,923,308 immigrants arrived in the U.S. Between 1841 and 1920, when immigration was severely curtailed, 29,055,848 of 32,903,854 immigrants arriving in the U.S. traveled from Europe – 88.3% of the total (U.S. Department of Homeland Security 2004, Table 2). In 1907, record 1,285,349 immigrants arrived in the U.S., an annual number not surpassed until 1990 (Office of Immigration Statistics 2009, Table 1). See Exhibit 2 for a graph of immigration volumes to the U.S.

Immigrants represented the bulk of transatlantic passengers and generated the bulk of lines’ revenues. As an example, in 1912, a Hamburg-Amerikanische Packetfahrt Actien-Gesellschaft (HAPAG) liner Imperator left Bremerhaven for New York with 3990 passengers. The table in Exhibit 3 illustrates the proportion of passenger classes. Fourth class – hence immigrant passengers - comprised nearly half of all passengers in this four-class vessel.

The growing surge of immigrants required a growing need for larger ships and more frequent and faster service. The steam turbine in the late 19th century sped travel and larger ships provided more capacity and better cost apportionment. From the mid-19th century through World War I, Great Britain and Germany led the maritime passenger industry. Their ships were symbols of national pride. Each country’s industry received government subsidies. Great Britain led the market with nine major passenger liners; Germany followed with five. The French entered the market at the beginning of the 20th century and had two ships before WWI. Being more concerned with internal expansion in the mid to late-19th century, the U.S. remained a minor player in the transatlantic travel industry.

Targeted market segments in this phase of maritime passenger travel included Europeans immigrating primarily to North America and affluent Americans and Europeans. Companies like Holland America Line, Swedish American Line, and Hamburg American Line chose their names with immigrants to America in mind (Garin, 2005).


EXHIBIT 2. PERSONS OBTAINING LEGAL PERMANENT U.S. RESIDENCE 1840-2008

Source: Office of Immigration Statistics (2009, Table 1.)

Exhibit 3. Passenger Class Breakdown,

HAPAG Liner Imperator, 1912

1st class 700 17.54%

2nd class 600 15.04%

3rd class 940 23.56%

4th class 1750 43.86%

Total passengers 3990 100%100.00%

Crew 1100

Total 9080

Source: Maxtone-Graham, 1972, p. 94

Different countries’ lines carried different nationalities of immigrant passengers. Most British

liners would not carry emigrants from Central Europe because they were thought to have “dirty habits” (Fletcher, 1913). Given the large number of Eastern and Central European emigrants, German ships carried the bulk of pre-war immigrants. Their ports were ideally situated for these immigrants (Maxtone-Graham, 1972). HAPAG realized the impact of word of mouth and the need to target its market segment. Word of a comfortable transatlantic crossing would get back to those yet to emigrate; the line transporting those passengers would gain more business. Albert Balinn, HAPAG’s President created “Emigrant Villages” in 1906 accommodating Eastern European passengers preparing to cross to the U.S. These compounds, located within view of the docks, consisted of unclean and clean sides. Passengers arrived on the inland unclean side via carts from the Hamburg train station. Those passengers had arrived at Hamburg via railway tickets included in their sea passage price. Once there, they were given a shower and physical examination and had luggage fumigated. They then crossed to

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Exhibit 2. Persons Obtaining Legal Permanent U.S. Residence 1840-2008

Exhibit 3. Passenger Class Breakdown, HAPAG Liner Imperator, 1912


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the clean side where they obtained reasonably-priced food and lodging. Emigrant Villages contained a church, infirmary, and canteen. The nights before departures, the Villages often held dances.

Third or steerage class passage was a significant expenditure for immigrant families. A steamship ticket ca. 1904 from the Hamburg American Line for Sloma and Riwa Breitman and their four children, aged 1-1/2 to 7 years for passage from Hamburg to New York totaled 600 deutsche marks (Hamburg American 1904). With an exchange rate of 4.198 DM to a US dollar at the time, those 600 DM would have equated to $142.92 (Bidwell, 1970). In 2009 dollars, that would equate to $3370 (Inflation Calculator, 2009) or about $562 per traveler – likely quite an expenditure for this Russian family. A 1907 eastward passage ticket on the Allan Line from Boston to Londonderry, Ireland on the Laurentian was $24.50 (Eastward Passage Ticket, 1907) or $557 in 2009 dollars (Inflation Calculator 2009).

Although passenger lines generated significant profits from their steerage passengers, their promotional literature came to position them as floating palaces, full of luxurious appointments. During his 1841 transatlantic crossing, Charles Dickens described his cabin on the Britannia as “no bigger than one of those hackney cabriolets which have the door behind, and shoot their fares out, like sacks of coals, upon the pavement” and stated that “nothing smaller for sleeping in was ever made except coffins,” in describing the beds (Dickens, 1842, p. 9) and as “not unlike a gigantic hearse with windows in the sides,” (Ibid., p. 7) describing the dining room.

But by the turn of the 20th century, a brochure for Cunard Line’s Liverpool to Boston steamers Franconia and Laconia, ca. 1912, describes how “...the interior of the steamers is what is known in America as "Colonial," and in Great Britain as "Georgian," and the general effect is a singular refinement and delicacy very attractive to the eye,” and how “...walls, with their broad panels and delicate moulding, cased stanchions with fluted columns and carved caps, are most imposing.” It finally boasts how “there are some en suite state rooms, with private bath rooms” (Cunard, 1912). First class areas in liners such as the doomed RMS Titanic are known for their luxury. Photographs of the Titanic’s grand staircase and a first class stateroom are provided at Exhibit 4.

EXHIBIT 4. FIRST CLASS GRAND STAIRCASE AND STATEROOM,

R.M.S. TITANIC, ca. 1912

Source: http://www.maritimequest.com/liners/titanic_interior_page_1.htm and http://www.maritimequest.com/liners/titanic_interior_page_2.htm

Fares were very high for first class travel. On the Titanic, a one-way first class parlor suite ticket

was $4,350 (Sadur, 2010) or $95,477 in 2009 dollars (Inflation Calculator, 2009); a first class berth was $150 or $3292 in 2009 dollars.

Phase 2: World War I (1914-1920) World War I effectively ended maritime passenger travel in the Atlantic, the most heavily traveled ocean. Most passenger ships were converted to military use, thus depriving shipping lines of their liners. Even if they had the available craft, enemy ships in the Atlantic made the crossing dangerous. From the day war was declared between England and Germany, Liverpool was the scene of dozens of forty-eight hour conversions as ship after ship was provided with armaments and sent to Portsmouth

Exhibit 4. First Class Grand

Staircase and Stateroom,

R.M.S. Titanic, ca. 1912


for ammunition. German ships berthed in New York stayed there for the duration of the War until the U.S. Navy commandeered them after the U. S. entered the War. For example, the Kaiser Wilhelm II was commandeered by the U.S. and renamed the Agamemnon (Maxtone-Graham, 1972, p. 120).

The infamous Cunard liner Lusitania was not commandeered by the British Navy and made one transatlantic crossing per month between Liverpool and New York (the United States was not involved in the war at this point). However, on May 8, 1915, German U-boats sank the British ship off the coast of Ireland killing nearly 1200 passengers (Maxtone-Graham, 1972, p. 128). Some small American liners continued to cross, but passenger counts were very low and marketing was very limited through April 6, 1917, when the U.S. declared war on Germany.

Many of the interiors of the important passenger liners were removed for the duration of the War. Several ships’ exteriors were painted in a style known as “dazzle” paint, a sort of maritime camouflage.

Phase 3: Tourism, Alcohol and Luxury Travel (1920-1939)

Of the 4,735,000 American soldiers fighting in World War I, 53 percent fought overseas, primarily in Europe (Kurian and Chernow, 2007, p. 690). After being exposed to various European countries and regions, soldiers were anxious to revisit some of these European areas with their spouses following the War.

On January 16, 1920, the 18th Amendment to the U.S. Constitution was passed prohibiting the sale of alcohol nationwide (Kutler, 2003, p. 501). Americans who wished to drink legally needed to leave American territory.

The Immigration Act of 1917 had effectively barred most Asians from immigrating to the U.S. Reflecting the isolationism following World War I, the U.S. Congress passed The Quota Act of 1921 and the Johnson-Reed Immigration Act of 1924, severely restricting immigration from Eastern and Southern Europe and reinforcing the ban on Asian immigration (Kutler, 2003, p. 154). As a result, immigration plummeted, cutting off an invaluable source of passengers and revenue from passenger shipping lines.

By 1920, Americans came to represent the majority of liner passengers at 80 percent (Maxtone-Graham, 1972, p. 169), a fact that continues to the present day. But these were not only wealthy Americans as in the years before World War I, but an entirely new type of passenger – the American tourist. With the increasingly restrictive immigration laws in the U.S., immigration plummeted. Between 1921 and 1939, the number of immigrants receiving permanent legal resident status fell from 805,228 to 82,998 (Office of Immigration Statistics 2009, Table 1). Passenger shipping lines were forced to find new target markets and these tourists seemed a natural segment. At the same time, American affluence was growing rapidly. Between 1914 – the beginning of World War I – and 1928 – the year before the stock market crash – GDP in the United Kingdom declined by 2 percent from £4.204 million to £4.117 million, in constant prices (Mitchell, 1998, Table J1). At the same time, U.S. GNP grew by 52 percent, from $125.6 billion to $190.9 billion in constant dollars. These newly affluent Americans included Bohemians (also known as flappers), drinking “booze cruisers”, teachers, students, and first generation Americans returning to visit family in the “old country” (Dickinson and Vladimir, 2008, p. 15). In October of 1929, the U.S. stock market crashed, sending the world into the Great Depression that endured until the beginning of World War II. Finally, In September 1939, France and England declared war on Germany, beginning World War II (Kutler, 2003, p. 543).

In response to increasing affluence and the growth of the American tourist, passenger lines, in particular the French line, adjusted their accommodations, fare structure and positioning. Steerage compartments that were used to transport European immigrants were converted into “tourist third cabin”. Improved amenities included fresh paint, improved service, monogrammed company bed lines, and plain but improving food. Tourist third class was positioned as luxurious, cultural, upper-class, and alcohol-soaked – a lark for the young and adventurous. Round trip fares were $80, more than the former steerage but far below first class accommodations (Garin, 2005, p. 17). Although it required a downsizing in passenger capacities – Cunard Line’s Berengaria reduced capacity from 4100 passengers to 2700 as a result of reconfiguration of steerage (Maxtone-Graham, 1972, p. 170) - it became hugely successful.

On the subject of drinking, a French Line promotional brochure promised, “As you sail away, far beyond the range of amendments and thou-shalt-nots, those dear little iced things begin to appear, sparkling aloft on their slender crystal stems… Utterly French, utterly harmless – and oh so gurglingly good!” (Maxtone-Graham, 1972, p. 170). The smoking lounge on the U.S. Lines ship Leviathan


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became a mockery when passengers joked that it became the “drinking lounge.” Prohibition combined with the great Depression to shift sailing from luxury transatlantic crossing to short “booze cruises” outside U.S. territorial waters to Nova Scotia, Nassau, and Bermuda (Dickinson and Vladimir 2008, 16). The lure of alcohol was so strong that various lines added bars and trained staff to handle thirsty American passengers. The French line trained their “mousses” or bellman to understand the English language question “Where is the bar?” They also were taught the American names of popular cocktails such as martini and Manhattan (Maxtone-Graham, 1972, p. 170).

With the shift to American passengers as the key sailing market segment, the center of passenger sailing shifted from the U.K. and U.S. ports like Boston to New York. This predominance originated from a tremendous geographic advantage. The Port of New York was endowed with nearly 800 miles of waterfront. In comparison, Boston had 140 miles, Baltimore 120, and Philadelphia 37. By 1915, nearly half of the nation’s international commerce passed through the Port of New York (Doig, 2001, p. 27).

The new tourist target does not mean that luxury was overlooked with passenger shipping. During this phase of the history of maritime passenger travel, two of the most famous and most luxurious liners were built and launched.

Launched by the French Line in 1935, The S.S. Normandie was the epitome of art deco-era style and sophistication – the largest, fastest and most glamorous of the so-called “floating palaces” of the early and mid-20th century. An estimated 100,000 spectators lined New York Harbor to greet her on her maiden transatlantic crossing. Normandie was an ocean-going ambassador of French culture, design and stylistic prowess and was heralded as a triumph of the modern. Normandie’s legendary three-deck-high first class dining room was perhaps the most awe-inspiring feature of her interior design. At 305 feet long, it was longer than the Hall of Mirrors at Versailles. The room, which could accommodate 700 diners, boasted twelve tall illuminated pillars of original Lalique glass flanked by thirty-eight matching columns along the walls, and 20-foot tall entrance doors adorned with bronze medallions by artist Raymond Subes. An image of the first class dining salon is provided at Exhibit 5. Other remarkable features included a winter garden replete with exotic birds and plants, an 80-foot-long indoor swimming pool, and the first theater at sea. The interiors spaces were vast with spectacular entryways and long, wide staircases. First class suites featured dining rooms, baby grand pianos, multiple bedrooms, and private decks. Each first class cabin was unique in its interior design. Artists who furnished portions of her interiors included famous art deco-era designers René Lalique, Hermés, Jean Dupas, Jean Patou, and Emile-Jacques Ruhlmann (Maddocks, 1978, p. 80; South Street Seaport Museum, 2010). First class one-way passage for the Normandie’s maiden westbound crossing ranged from $275 to $1400 or from $4,392 to $22,359 in 2010 dollars (US Bureau of Labor Statistics, 2010).

Although full of luxury features and fittings, the British R.M.S. Queen Mary could not rival the Normandie in its style. However, it did position itself as the fastest, largest and most technologically advanced luxury liner at its maiden voyage the year after the Normandie’s (Brinnin, 1971, p. 482).

Phase 4: World War II (1939-1946) Once again, a World War effectively ended maritime passenger travel. Most passenger ships were converted to military use, thus depriving shipping lines of their liners. For example, Cunard’s Queen

Mary, originally launched in 1936 and now a hotel and tourist destination in Long Beach, California, became a troop carrier between March 1940 and September 1946 (The Queen Mary, 2010). The Queen Elizabeth was converted to troop use before her maiden voyage as a liner. During the War, the Queen

Mary and Queen Elizabeth carried 1.6 million men to and from combat zones around the world (Maddocks, 1978, p. 143). Enemy ships in U.S. ports were commandeered. The Normandie was left in New York at the beginning of the War. When the U.S. entered the War, it was commandeered as a troopship and rechristened the Lafayette. While undergoing conversion, it burned and capsized in New York harbor in 1942.

Phase 5: Jet Age Emergence (1946-1970)

Following the War, the first civilian passengers on the great liners such as the Queen Mary were war brides. In the first 18 months after the War, beginning in February through September 1946, the Queen

Mary carried 12,886 European (mostly British) brides of American soldiers and their children to the U.S. and 10,000 to Canada (Maddocks, 1978, p. 154).

October 1947 marked the launch of the Caronia, the first well-known ship designed primarily for cruising. Transatlantic sailings took place, but primarily as a means of repositioning the ship. The


Caronia differed from other major passenger liners up to that point in two ways. First, the ship was designed primarily for first-class configurations. Rather than carry immigrant passengers across the Atlantic, it was designed to carry wealthy tourists on sightseeing cruises in warm waters. The second

Exhibit 5. FIRST CLASS DINING SALON, S.S. NORMANDIE, ca. 1935

Source: http://www.shipsnostalgia.com/guides/images/2/2a/F12_Normandie.jpg

way it differed from traditional transatlantic liners was in its colors. The Caronia was known as the “Green Goddess”, due to the pale green color of her exterior (Maxtone-Graham, 2000, p. 160). This color choice reflected the need to keep the ship cool during tropical cruises. Although transatlantic liners had been used for winter cruises to tropical ports often in the past (the Normandie made a famous pre-World War II cruise from New York to Rio de Janeiro in 1939), these cruises were simply a mean of generating revenues for the shipping lines during the winter when rough seas made transatlantic crossings were uncomfortable and even dangerous.

In the 1950s, Frank Fraser, whose family owned plantations on Jamaica, bought the Nuevo

Dominicano from General Rafael Trujillo, the dictator of the Dominican Republic, and changed the maritime passenger industry in two fundamental ways. First, he started the first genuine cruise line. His ship, therefore his line, was not meant to transport passenger from one location to another, but rather to “cruise.” Second, rather than basing his line in New York, he chose Miami as his base. His actions

Exhibit 5. First Class Dining Salon, S.S. Normandie, ca. 1935


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changed the focus of the maritime passenger industry’s marketing mix from the Atlantic to the Caribbean (Garin, 2005).

In his book, The Great Liners, Melvin Maddocks summarizes the basic target market for post-War sea travel when he states that the “vast middle class was growing in America, and they all went to Europe – or so it seemed – newlyweds, secretaries, haberdashers and college kids, graying old doughboys and recent GIs” (Maddocks, 1978, p. 156).

Notwithstanding the above, when it came to cruising, the most sought-after target market was the idle rich. Cruises were not the ultimate focus of the major European lines, were expensive, and tended to include lengthy sailings from 10 days and up.

Lines were reconfiguring their ships to address the needs of increasingly affluent middle-class Americans. Following the War, the Queen Mary was converted to civilian use to house 1,904 passengers: 701 in first class, 478 in “cabin class”, and 725 in third (Maddocks, 1978, p. 156). For about $300 in cabin class ($3,354.02 in 2010 dollars) and $225 in third ($2,515.51 in 2010 dollars) (U.S. Bureau of Labor Statistics, 2010), passengers got a taste of the luxury of great liners and made passage to Europe (Maddocks, 1978, p. 156).

By 1956, a watershed year in the history of the maritime passenger industry, more transatlantic travelers were crossing by air than by sea. As early as 1952, a Cunard Line transatlantic ad was trying to convince U.S.-U.K. travelers that “Getting there is half the fun!” extolling the “gay relaxation of an ocean voyage” (italics added) versus an air voyage (See Exhibit 6.) Airplanes could shorten the crossing from six days to twelve hours or less. In 1958, with the launch of the Boeing 707 – the first commercial jet airplane – the jet age was born further shortening flight times and cementing the popularity of international air travel and leaving ocean crossings to those with the time and money. The industry was to be relegated to a small niche travel business. However, by 1970, economic factors were aligning to create today’s $24.88 billion (in North America alone) cruise industry (CLIA, 2008, Table ES-1).

Phase 6: Luxury Cruising for All (1970-present)

By 1970, a small ship could be leased for as little as $2500 per day or built for less than $12 million (Dickinson and Vladimir, 2008, p. 117). As a result, many cruise industry competitors entered the cruise industry. Eventually, weak competitors failed. Between 1970 and 2005, 73 cruise brands became defunct (Dickinson and Vladimir, 2008, pp. 118-119). Unlike ships earlier in the 20th century, virtually all new ships were built specifically for cruising, not transatlantic travel. As a result, they had features such as multiple outdoor pools and bars, ample outside decks, and balcony staterooms. In 1970, about 500,000 travelers were cruising. Industry growth was slow due to limited ship capacity and points of embarkation. By 1979, as ships were added, the figure had doubled to approximately 1 million. By 1985, it had doubled again to 2 million, adding another million by 1988. By 2006, slightly more than 10 million travelers were cruising – a twenty-fold increase in 36 years. This exponential growth resulted from the cruise industry broadening its target market from a small, elite niche to a mass-marketed leisure activity.

Before 1970, cruises were costly. In addition, they were seven to fourteen days long. As a result, cruise travelers tended to be affluent retirees. It was in the 1970s that cruise lines began putting air/sea packages together that were affordable with briefer cruises. In January 1971, Royal Caribbean offered round trip air travel from California to Miami and a cruise to Nassau, Bahamas; San Juan, Puerto Rico; and St. Thomas, U.S. Virgin Islands. The price was $368 (Dickinson and Vladimir, 2008, p. 121), or less than $2000 in 2010 dollars (U.S. Bureau of Labor Statistics, 2010). These Californians made for an ideal target market. Many had cruised before to Mexico, were interested in cruising the Caribbean, but had not been able to afford the air/sea fares up to this point. The economics of the cruise business made these sorts of offers possible.

By the mid-1970s, Carnival changed the industry by dealing directly with travel agents to find buyers. Up to that point, cruise lines relied upon tour operators to organize the air/sea packages. As a result, cruise lines were often left with 50% or more of a ship’s capacity unsold less than 2 weeks before a given sailing. Packaging air/sea vacations and dealing with travel agents nationwide provided them greater ability to reach a broader target and to better manage capacity. Carnival is today the world’s largest cruise operator, controlling ten cruise brands worldwide, with over 8 million passengers, 93 ships and US$8.519 billion in revenues in 2009 (Carnival Annual Report).

The popular American television show The Love Boat ran from 1977 to 1986 (Imdb.com, 2010) and proved an invaluable promotional tool for the cruise industry. It concerned a cruise ship, its crew


and passengers. Each episode featured several interwoven sub-plots usually highlighting the fun, romance, and luxury of cruising to be had by ordinary people.

EXHIBIT 6. “GETTING THERE IS HALF THE FUN” CUNARD LINE AD, CA. 1952

Source: Ac*Access database, Duke University, http://library.duke.edu/digitalcollections/adaccess.T3486/pg.1/

Exhibit 6. “Getting there is Half the Fun”, Cunard Line Ad, ca. 1952


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Conclusions

Some statistics illustrate the state of the maritime passenger industry today. Between 1990 and 2009, the industry has experienced an average annual growth rate of 7.2% per year. Forty percent of all passengers between 1980 and 2009 were generated in the five years between 2004 and 2009. The average length of a cruise in number of days has grown from 6.7 days in 1981 to 7.2 days in 2009 (CLIA, 2010). Adjusted to 2008 dollars, the average daily cost to a cruise passenger has declined from $272 in 2005 (U.S. Bureau of Labor Statistics, 2010) to $265 in 2008 (CLIA, 2008, p. 1). Between 2010 and 2014, the 25 member lines of the Cruise Lines International Association will add 23 new ships to the international fleet, representing about 14% of the total number of passenger ships in 2008.

EXHIBIT 7. PROMOTIONAL IMAGES FROM DISNEY CRUISE LINE AND R FAMILY VACATIONS CA.

2010

Source: http://disneycruise.disney.go.com/cruises-destinations/new-to-cruising/ http://www.rfamilyvacations.com/scrapbook/florida07.php

Exhibit 7.

Promotional Images from Disney Cruise Line and R Family

Vacations, ca. 2010


These statistics give us an important window into the current and future status of the maritime passenger industry. (1) Despite economic turbulence, the industry’s marketing strategies continue to attract a growing number of passengers; (2) much of new passenger acquisition is relatively recent; (3) the duration of the typical cruise is growing; (4) the cost of cruises is falling; and (5) passenger lines are adding new capacity.

We can infer that the maritime passenger industry is responding to the evolving needs of its target market – middle class families and seniors – in attracting discretionary dollars put toward vacation travel. As baby boomers age and retire, the size of the senior target will continue to grow. The desire for longer cruises will probably grow along with the population.

Specialized, niche cruise brands have entered the market, appealing to specific segments and sub-segments of the market. Launched in 1998, Disney Cruise Line “offers a unique family vacation that every member of the family believes was created just for them.” (Disney, 2010, p. 1). The Line’s current two-ship fleet is being augmented with two new ships scheduled for launching in 2011 and 2012. In an even more niche-targeted manner, R Family Vacations was founded in 2003 by celebrity Rosie O’Donnell, her domestic partner and a business associate to address the unique vacation needs of lesbian, gay, bisexual and transgendered (LGBT) families and their children (Schroeder, 2010). Promotional images provide a clear indication of the targeting of both cruise providers at Exhibit 7.

Addressing the needs of an entirely different niche, Macworld Magazine, a monthly periodical dedicated to hi-tech products manufactured by Apple, Inc., teams with a tour operator to offer its annual “MacMania” cruises catering to Apple technophiles.

Finally, operational efficiencies are key to the ongoing success of cruise lines. The concept of “luxury” for the large middle class, first conceptualized after World War II (Hine 2007), is ingrained into the minds of baby boomers. The ability of the cruise industry to continue to offer increasingly luxurious vacation experiences at an affordable price will force ever more emphasis on operational efficiencies, including larger ships. In October 2010, Royal Caribbean International’s Allure of the

Seas arrived at its homeport of Fort Lauderdale. The largest ship ever built, it can hold 5400 passengers in 2700 staterooms and features 16 decks containing seven distinctly designed “neighborhoods” intended to meet the needs of its baby boomer (Vitality at Sea Spa and Fitness Zone), elderly (Entertainment Place) and family (Youth Zone) targets (royalcaribbean.com 2010). Larger ships are sure to follow. NCL Corporation’s Norwegian Epic now offers 128 “Solo Studios” to accommodate passengers traveling alone. These sorts of innovations will also continue as the maritime passenger industry continues to innovate, increasing efficiency, and grow in the future. This means of crossing oceans has evolved into a means of affordable luxury vacation and leisure. But with its ever-evolving marketing strategies, the maritime passenger industry will continue its own evolution.

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