Top hotel groups take the plunge in cruise market

Some of the world's leading hotel groups are eyeing up the cruise market as an attractive way to expand their brands.

This month Hilton International began operating Hilton Suites on board three cruise ships owned by Festival Cruises, which operates in the Caribbean, the Canary Islands and northern Europe. The 300 suites are being marketed by both Hilton and Festival.

A spokesman for Hilton said that while this was no indication that the group would launch its own ship, it was a safe way to break into a new market. "Although there are similarities, hotels and cruise liners are very different operations and we don't have the expertise in the cruise industry, which is why this deal is an ideal way to get into the area."

Four Seasons is another company looking to the water as a way of broadening its offering. This month the group launched its own vessel in the Maldives: a 39m three-tiered catamaran that takes 22 passengers. The new ship is the ocean-going wing of its Four Season Resort Maldives.

Last November Kempinski's first ship - the Kempinski Ganna - set sail and, with 70 cabins, it's claimed to be the largest vessel on Egypt's River Nile. A spokeswoman said that it was too early to say whether the hotel group planned to expand its cruise interests. "This is our first test, we will see how it goes."

So is there growth in the cruise market?

Moves by hotel groups into cruises coincide with a spurt of growth for the cruise industry. About 40 cruise ships are due to launch within the next two years, including Cunard's Queen Mary II, whose maiden voyage will be in January 2004. This will be the largest cruise ship in the world, able to accommodate 3,090 passengers, and will be one of 11 ships to be used as a floating hotel in Athens during the 2004 Olympic Games.

According to a report by management consultancy GP Wild, The Future of Cruise Tourism to 2012, extra bed capacity in the cruise market over the next two years is likely to lead to discounting and lower yields, but in the long term there is still huge growth potential for cruising which could see European passenger numbers doubling to four million by 2012, with the overall global market standing at 16 million.

And with cruise liners going much more upmarket, with many new ships now fitted with health spas and gyms, it makes sense for hoteliers to work with cruise operators rather than compete against them.

Source: Caterer and Hotelkeeper magazine, 30 January - 5 February 2003