The Sunshine Economy: Technology, Cruising and a Booming Business
Big cruise companies like Royal Caribbean Cruises and Carnival Corp. are increasingly turning to technology to step up their passengers’ on-board experiences and make boarding the ships more efficient in all aspects, including the design.
That’s what Royal Caribbean has done with the new Edge class of ships it announced last week. It will be the first new class for the company in more than a decade. The company brags that they will be the first cruise ships designed entirely by 3D, including a virtual reality stimulator now housed at the firm's new Innovation Lab at its PortMiami headquarters.
This investment in technology comes as the cruise business is booming. Profits at Royal Caribbean were up more than 20 percent in 2016 over 2015 thanks to record bookings. The company says this year began at a better pace than a year ago and with higher ticket prices. Its two Miami-based competitors, Carnival Corp. and Norwegian Cruise Line Holdings, also reported record profits last year.
For Royal Caribbean, there is the app-based technology allowing passengers to make dinner reservations, check out activities or order drinks. It will be rolled out this summer and be installed in about 20 percent of Royal Caribbean’s fleet by the end of the year. Half of the fleet will have it by the end of 2018.
There’s also facial recognition software allowing the boarding of a ship without ever stopping to check in. And a combination of technologies that could allow drinks to be delivered right into your hands: The drink is ordered through the ship's app and it's delivered using wayfinding technology that allows the water/waitress to know your exact location.
These types of technologies can have a direct connection to the business: Getting passengers on board ships faster and making it easier for passengers to spend money on board is important. About a third of Royal Caribbean’s revenues come from on-board spending. But some of the innovations don’t have such a direct profit motive.
Take X-Ray vision. Royal Caribbean Cruises Chairman and CEO Richard Fain demonstrates:
WLRN's Sunshine Economy spoke with Fain about Royal Caribbean's business, the cruising industry, it's turn to technology and the role of South Florida. Here are some of his takeaways:
Fain on RCL's business:
• Bookings on Harmony of the Seas are "delicious."
• "Asia has been very powerful for us."
• "The United States and Caribbean are going gangbusters. It's frankly rather surprising just how good the U.S. market continues to be. There seems to be a level of consumer confidence I haven't seen in a long time."
Fain on the growth of cruising:
• "The market has grown very strongly for a very long period of time and nothing grows forever. But the industry started from such a low base. Only about 3 percent of travel in the United States is cruising travel. In the UK it's half that. On the [European] continent it's even lower, and in Asia it's lower still."
• "One of the [signs] of a market maturing would be less first-timers. Our company alone is attracting 1.5-2 million first-timers a year. These are markets that are still growing very quickly."
Fain on the new class of ships:
• "For this vessel [the Celebrity Edge], everything has been done in 3D. That's given us the ability to do things that you couldn't do based on the old two dimensional thinking."
• "The thing the virtual reality simulator does is democratize the process. A dining room manager [can walk around it]. The hotel director. A waiter, a cabin steward can say, 'This is my experience. This is too tight for me,' or 'This is the wrong direction.' It allows us to bring to bear their expertise."
• "Nobody has used 3D technology the way we have. Now I think people will learn and people will do more and more of it."
Fain on new investments in South Florida:
• "The decision to build this Innovation Lab [on PortMiami] is a huge investment." (The company is not disclosing specific financial or personnel information regarding its Innovation Lab.)
• "I knew it was successful when even our chief financial officer said, 'That's a pretty good investment.' "
• "Miami has been successful in upping it's game and doing a better job of attracting people. But that is still the biggest issue for any business today. The steps that Miami is taking to make itself more attractive, and I would like to count the Innovation Lab as part of that, that crucial for our success as a company company and that is crucial for our success as a community."