MEGATREND DISCUSSION: Massification of the Cruise Industry

A Sea Change in Cruise Experiences

As the cruise industry evolves post-pandemic, one of the most profound shifts we’re seeing is the trend of massification. The mass-market model, which has driven profitability in industries from airlines to consumer goods, is making waves in cruising. Massification in this context means larger ships, higher capacity, and a focus on high-volume, high-efficiency operations over personalization and traditional luxury. While this trend is bolstering the bottom line, it raises questions about the long-term impacts on passenger satisfaction and the cruising experience potentially creating markets for new generations of cruisers focused on non-traditional approaches, or massification could create a “race to the bottom” in cruise service and experience leading to a completely different perspective of the definition and value of cruising. As you’ll see, this one is big. As such, It’s a bit longer than the others.

The Rise of Mega-Ships: A New Paradigm for Cruising

Before we dive into the implications, let’s consider the structural changes underway. Today, about 70% of new ship orders are for mega-ships capable of carrying upwards of 7,000 passengers, packed with a host of onboard activities, dining options, and entertainment. The industry’s shift toward larger ships mirrors the airline industry’s response during the 2008 recession, which saw a pivot from dedicated freighters to using passenger flights for “belly freight” to enhance margins. Just as airlines reshaped their model, cruise lines are shifting their priorities to generate revenue from volume and onboard spending, with a deemphasis, but not elimination, of traditional cruise line models that are higher priced with higher standards of service experience.

Cruise lines such as Royal Caribbean, Norwegian, and Carnival are leading this charge. By adding extensive onboard activities, themed experiences, and “ship within a ship” concepts that offer premium, segregated areas, they are trying to meet the full spectrum of cruisers. The focus is increasingly on providing a high-energy, family-friendly experience, where the ship itself becomes the destination. Ships continue to allocate more space to these private areas, but overcrowded public spaces make it increasingly difficult. Further, the perception of “passenger classes” on these megaships is becoming an increasingly common complaint as the last six months of ratings have been demonstrably lower than previous periods with significant dissatisfaction due to overcrowding, reduced amenities compared to previous periods, and reduction in service levels and experience. New cruisers, however, report higher levels of satisfaction, along with younger cruisers having higher ratings than others. This suggests the vision of massification has strong potential, but aligning the right passenger to the right cruise line has become critical.

Implications of Massification: The Cruise Industry’s ‘Race to the Bottom’?

Massification has brought a new set of implications to the industry. The question isn’t just how big these ships can get, but how these changes impact the overall cruise experience, both for first-time cruisers and long-time cruise veterans. Here’s a breakdown of the primary impacts we’re observing:

Overcrowding and Service Declines
With higher passenger capacity, overcrowding has become a real concern. As ships grow larger, lines rely more heavily on self-service and technology to manage the flow of people, resulting in less personalized attention and increased wait times. There is a mass market category who navigate this congestion well and are intrigued by all the options. In 2024, this is a smaller market compared to the broader traditional cruise market and the lines will continue to experience confusion among veteran and older passengers looking for a higher level of service and relationship. The massification vision suggests that, over time, the size of the market focused on this kind of cruising will grow much faster than the traditional cruising market which has strong merit strategically. The broader question will be the transition from one style, the mass market style, and a higher touch or authentic experience they can’t provide and how that will affect demand across ever tighter segments.
Shifting Focus to Onboard Spending
Like airlines introducing baggage fees, cruise lines are increasingly reliant on onboard revenue. Specialty dining, pay-to-play activities, drink packages, and excursions are becoming central to profitability. This shift can be a frustration point, particularly for veteran cruisers who remember an all-inclusive model. While first-time cruisers and families might embrace the variety and convenience, this revenue strategy risks alienating loyal cruisers who prefer a straightforward, inclusive experience. Packaging, especially along loyalty program lines, could make a significant impact positively in the customer value experience, if it were economical and allowed for personalization. This kind of “pick 3, or Pick 5” approach, as well as the all-in pricing, is economically disadvantaged too all but the most ardent passengers. Continued cost escalation and “pay to play” are being recognized and hurt current line ratings except in areas of existing all-in pricing, or a few lines that appear to curb the behavior.
Expectation Management Challenges
Marketing promises of luxury and exclusivity are often at odds with the realities of a mass-market experience. Current messaging is too broad and unspecified in terms of service and experience levels. The obfuscation makes it easy to project multiple things to multiple people, but cruise brands are increasingly failing to meet cruiser expectations when compared to the branding. Managing expectations in a blurred line industry is relatively easy. Managing it when expectations to the core offering, service, are rapidly changing and you get the significant reductions in cruise passenger ratings that we’ve experienced between May 2024 and end of October 2024. These ratings are, on average, 12% lower, or the drop of a rating from a 4.5 out of 5 to a 3.5 out of 5 since the pandemic. Further, the major lines with the megaship inventory have fallen almost 20% lower over the same period, of a drop that feels like a 4.5 to a 3.0 or lower on a 5-point scale. Given the nature of passenger ratings, typically either superb or negative with a base of consistent reviewers, there appears to be a trend for increased negative rating across most lines and within the megaship category the most.

Observations from the Field: How Major Lines Are Implementing Massification

The observable impacts of massification are evident across the industry, with notable shifts in operations:

Royal Caribbean’s Mega-Ship Strategy: Known for its massive ships like the Icon of the Seas and Utopia of the Seas, Royal Caribbean has prioritized capacity and volume, often touting the expansive entertainment options onboard to appeal to families and mass-market travelers. It’s also expending its three-to-five-day itineraries as a way to entice new cruisers in their target demographics to try cruising.
Norwegian’s ‘Ship within a Ship’ Concept: Norwegian Cruise Line has carved out premium, private areas on its mega-ships, such as “The Haven,” a luxury enclave for high-paying passengers. This approach attempts to offer exclusivity within the mass-market framework but also highlights the industry’s need for segmentation within single vessels.
Carnival’s Onboard Revenue Emphasis: With ships like Mardi Gras, Carnival has embraced onboard spending, offering multiple specialty dining venues and paid activities to boost revenue, echoing the airline industry’s reliance on ancillary fees.
MSC’s Volume Focus: MSC’s mega-ships cater to high capacity, and with dedicated private islands, they offer a controlled environment to capture additional revenue while providing a managed escape from overcrowded port cities.
Increased Focus on Private Islands: Every major cruise line is actively building and developing private islands as ways to provide and extend itineraries in its most popular regions. This is a major development that will be tracked on its own

The Long-Term Impact of Massification: Key Scenarios to Watch

Based on industry data, we anticipate several possible future developments tied to this trend:

Overcrowding and Service Quality Declines
Likelihood: High
The combination of high passenger volume and limited crew-to-passenger ratios are leading to further declines in service quality and passenger satisfaction over the short term. We’re already seeing evidence of impact of congestion, cleanliness, and service inconsistencies highlighted in passenger reviews, particularly on budget cruise lines. Cruise lines will continue to adapt their ratios and practices, along with technology, to combat this. Their pace and level of success will be critical to attracting new generations of crusing
Disenchantment among Veteran Cruisers
Likelihood: High
Loyal cruisers accustomed to traditional, high-touch experiences are increasingly disillusioned with the mass-market shift. For many, the appeal of cruising lies in personalized service, not self-service kiosks or crowded amenities. Cruise lines are confronting this with “ship within a ship” constructs that have gained some appeal but will likely create a class system on mega ships. The success of retaining a more discriminate, service-based passenger, will drive the speed of market bifurcation between mass market cruising and traditional, higher experience cruising.
Bifurcation of the Market
Likelihood: High
As mass-market mega-ships attract new and increasingly budget-conscious travelers, the cruise market will likely split into two primary segments with other subsegments within them: mass-market mega-ships offering budget-friendly, entertainment-packed experiences, and smaller, premium lines that focus on high-end service and exclusivity. This bifurcation will redefine the competitive landscape, with different brands catering to distinct customer demographics and needs.
Increased Environmental Scrutiny
Likelihood: Moderate to High
Mega-ships’ large environmental footprint, despite efforts toward sustainability, will drive increased regulatory pressures and community resistance in high-traffic port cities and especially in heritage or similar port cities.. This is where the trend of massification overlaps with Increased Regulatory and Local Compliance Requirements, as local communities and regulators are likely to impose restrictions on larger vessels and further restrict cruising access within its jurisdiction.
Challenges in Maintaining Passenger Expectations
Likelihood: Moderate to High
With passenger ratings trending downward, the industry may need to shift its branding strategy. Cruise lines that don’t manage expectations risk alienating passengers who anticipate a luxury experience only to find a mass-market reality. In particular, the perception gap between marketing and the actual onboard experience could hurt customer loyalty over time.

The Future of Cruising in a Mass-Market World

As the cruise industry continues down the path of massification, it faces both opportunities and challenges. None of this is a mystery to the major and specialty cruise lines, and every line has its vision and plan for the future. The cruise industry has been adapting in this way for almost fifty years. This is why most passengers would say that a day on ANY cruise line is better than a day in an average US hotel. There is a floor of service across the lines that, if passengers are honest, creates a baseline of service excellence across the industry. Lines that are focused on high touch and high service parallel with the Ritz Carleton type brand hotels. We often lose that context in passenger ratings, especially when service needs are legitimately left unmet and missed. The failure rate in the industry is surprisingly low. The problem isn’t service. It’s expectation.

The cruise brands shoot themselves in the foot by creating a marketing image of one kind of cruiser, building a ship for a tighter demographic, and then offering a pay-to-play watered down multi-generational experience that all but the primary demographic can enjoy. Too harsh? Perhaps.

But in an era of lost civility, extremism, cultural entitlement, increasingly dangerous port destinations, global climate and storms, and a rise in passenger incidents on-board and at port, I have to ask, “Where did cruising go?”.

If there is a “Zeus” of this pantheon of megatrends, it would be Massification. It is the Uber Megatrend transformer with the “all spark” (sorry, just had a flash back with my boys in front of the TV when they were about 12). It is size and capacity, at scale, with a small overall mix of destinations, which don’t really matter because it’s about the ship, and islands, the stuff that we can do. It fits our phrenetic world, need for media, and more. It’s “Helen”, to take an analogy too far, is the Traditional Cruiser in their many forms seeking experience, exceptional service, and authenticity. With effective branding and messaging, the cruise industry can actually have it all and build a strongly loyal customer base who gets everything they are looking for. In that world, segmentation is everything, Identity of the passenger and their preference is life blood, and tailoring price, value, and loyalty to their blood and marrow is lifetime revenue, the holy grail.

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