National CRE News In Your Inbox.

Sign up for Connect emails to stay informed with CRE stories that are 150 words or less.

Sub Markets

Property Sectors

Topics

National  + Weekender  | 

Cruise Brands’ “Landlubber” Presence: Q&A with PMA’s Leon Camarda

Leon Camarda

In 2020, the cruise business was, well, sunk. Blaring headlines abounded concerning stranded passengers and crew on the Diamond Princess due to the highly contagious SARS-CoV-2. This generated concerns about viral spread among crowds in contained spaces – like those on a cruise ship. The results included a global shutdown on cruising.

What a difference three years makes. These days, the positively setting sail. Cruise organizations are also developing and/or owning commercial real estate and land-based hospitality, retail and entertainment destinations as another way to attract travelers.

Connect CRE recently spoke with Leon Camarda, executive vice president, Project Management Advisors Inc., about this trend of cruise brands “coming ashore” to build and operate commercial real estate holdings.

Q. What is the connection between the cruise lines and hospitality properties?

A. Many cruise brands have invested in elevating their offerings and, I think, now offer a value proposition that resorts and other land-based hospitality venues don’t. Not only are pre-pandemic cruise travelers returning to the seas, but new investments on the part of cruise lines are capturing the interest of customers new to cruise travel.

Cruises are a very attractive option for economy travelers, and there’s currently a competitive dynamic between cruise lines, each hoping to gain more market share. This results in increased value, better service and elevated offerings for cruise travelers across the board.

Going further, cruises often partner with hotels and resorts to offer discounted prices for travelers. This partnership strategy creates more packaged offerings, which are attractive to budget travelers and those looking for prepaid and all-inclusive experiences. This strategy incentivizes further collaboration between cruise lines and other hospitality venues to improve offerings and capture more interest from consumers.

While this was industry standard long before COVID, with the renewed dedication to improving offerings for travelers, we can expect to see cruise lines engaging in new and creative partnerships designed to capture travelers’ attention.

Before the pandemic, cruise lines had a sense of stability – when the pandemic hit, cruises had to rethink their strategies and find ways to recreate the cruise experience. There was a lot of effort and creativity in this pivot, which resulted in some significant discoveries about how people want to travel.

Q. If you would, talk briefly about the entertainment districts being added to ports of call. How do they differ from other such districts?

A. Port venues and entertainment districts are areas where cruise lines have secured a branded, private experience for their travelers. These offer unique, exciting, singular, fun, and high-energy amenities. Some popular amenities for these entertainment districts include water features, local and luxury retail shopping, and food and beverage offerings that reflect the cruise brand and local culture.

These areas are a great opportunity for cruise lines. Not only do their travelers enjoy unique, exciting experiences, but they also create a closed circuit in terms of customer spending, meaning more revenue for the cruise lines. Where typically travelers would explore a local town area at a port of call, now they can spend their time – and money – in these specialized entertainment districts. When considering what to include in these entertainment districts, cruise lines must consider their unique value proposition and brand promise.

Q. What is your outlook for this particular hospitality sector?

A. The outlook for cruises and cruise-affiliated developments is incredibly positive, moving into 2024 and 2025. Cruise lines are racing to create the next best venue, and cruise passengers are hopping aboard for a ride. 

With more attention focused on economy travelers, value propositions have shifted, and cruises are more financially accessible than ever. In the past few years, cruise lines have created new models, assessed cruise routes, and committed to economies of scale to meet the needs of the value traveler.

That said, the current surge in elevated offerings investment will not last forever. While there is still a lot of runway left, ultimately, there will come a point where competition creates challenges with cost, which could lead to cruises becoming less attractive to value travelers. Investments in improved ships and more substantial, amenitized port venues will generate increased costs that will likely be passed on to the end user in the long run.

Connect

Inside The Story

PMA's Leon Camarda

About Amy Wolff Sorter

I love content. I love writing it, visualizing it, and manipulating it to fit into different formats. I have years of experience in working with content, both as creator and editor. The content I create and edit provides assistance with many goals, ranging from lead generation, to developing street cred through well-timed thought-leadership pieces. Content skills include, but aren't limited to, articles and blogs, e-mails, promotional collateral, infographics, e-books and white papers, website copy and more.

  • ◦Development