Muslim cruises setting sail towards a $1.6 bln business opportunity

Photo: Alfonso de Tomas / Shutterstock.com

22 million passengers spent an estimated $37 billion on cruises globally in 2014. With Muslims spending an estimated $1.6 billion of this total, what opportunities are there for operators to develop cruises targeting Muslim passengers?

There were 22 million cruise passengers in 2014, 3.4 percent higher than the previous year, estimated Cruise Lines International Association (CLIA). The estimated value of this global cruise industry was $37 billion in 2014, according to a study by market research firm Mintel. This represents just under 10 percent of the total global outbound spend on tourism, which was estimated at $1.3 trillion in 2014, according to World Bank data.

A CLIA study found that cruises have primarily been an American phenomenon, with 11.2 million passengers, or 51 percent of total global passengers, coming from the U.S.

Ten countries accounted for 88 percent of total global cruise passengers, with Germany and the UK making up 15 percent, and Australia, Italy and Canada in aggregate adding up to 12 percent.

While the market outside of North America and Europe is home to nearly 85 percent of the world’s population, it only represents 16 percent of all cruise passengers, reported the CLIA. There is hence substantial growth opportunity for cruises, particularly from Emerging Economies.

MUSLIM MARKET OPPORTUNITY

Cruises are increasingly catering to specific religions, with dedicated trips for Christian and Jewish communities. Premier Christian Cruises and Inspiration Cruises are the largest faith-based operators, according to research from Religious Planning Travel Guide in 2015, and typically accommodate the needs of travelers through arranging religious speakers and offering tours of religious sites.

For the Muslim market, travel and tourism companies are globally seeking to address the unique lifestyle needs of Muslims, who spent an estimated $142 billion on outbound tourism in 2014. This accounts for 11 percent of total outbound tourism spend, according to the State of the Global Islamic Economy Report 2015/16.

Muslim spend on cruises in 2014 is estimated by DinarStandard at $1.6 billion. This assumes that the top 10 source markets highlighted by the CLIA study accounts for 88 percent of revenues as well as passenger volume.

The Muslim share of total outbound tourism spend for the top countries highlighted in the CLIA study averaged 2 percent in 2014,  while Muslims accounted for 20 percent of spend on average in the remaining countries, according to DinarStandard analysis and estimates.

MUSLIM-DEDICTAED CRUISES

To accommodate the high potential and lucrative Muslim traveler segment, Muslim-focused cruise companies are beginning to emerge.

U.S.-based Salaam Cruise launched in 2010 and claims to be the “first ever Muslim cruise”. It involved the company leasing a ship from a cruise operator.

The first cruise set sail in 2012 with 150 guests, joined by Shaykh Yasir Qadhi, dean of academic affairs at the U.S.-based Al-Maghreb Institute A subsequent cruise followed in 2013, according to the Islamic news website MuslimMatters.

The cruises involved a three-day long trip to the Bahamas and featured a Muslim-friendly environment, with no alcohol or gambling, and served only halal food.

Fusion Tours just announced Turkey’s first halal cruise, which is due to disembark from the western Izmir province on September 27, 2016.

The tour promises to address the full scope of Muslim needs, including halal food and premises free of alcohol and pork, separate prayer rooms, and single-sex spa facilities and Turkish baths.

The cruise will focus on the Ottoman heritage in the region. Gokmen Aydinalp, Fusion Tour’s project manager, indicated that the interest in the tour was high despite only recently being announced because there is a huge demand for the concept, he told Turkish news website Andalou Agency last year.

MUSLIM-FRIENDLY CRUISES

Many conventional cruise operators have sought to accommodate Muslim needs.

Disney, one of the key players in the global cruise market, which generated approximately $1 billion in revenue in 2014 according to analysts estimates, accommodates halal food subject to advance notice.

The SuperStar Libra Luxury ship began offering halal food to address demand from Malaysian Muslims in 2013. It refurbished one of its restaurants to fulfil the halal requirements from Malaysia’s Department of Islamic Development (JAKIM), and began offering a range of halal food options.

Cynthia Lee, Deputy President of Star Cruise Sales Division, indicated that the company was keen to attract Muslim tourists from Malaysia, with plans to also draw in Muslims from other countries, in particular from the Middle East, she told Aquila Style in an interview in 2013.

CONSIDERATIONS

While Muslim-focused cruises could be attractive, there is limited evidence to date of the viability of cruises focusing exclusively on Muslims, with scope to accommodate non-Muslims.

Cruises involve high fixed costs and capital investments, and need to ensure high occupancy, as well as high spend per passenger to remain profitable.

In an analysis of Carnival’s revenues in 2014, undertaken by Market Realist and based on the company’s annual financial results, the company made 7 percent in net profit margins; 24 percent of revenues were derived from onboard spend, with casino and alcohol income a major component. What this indicates is that removing alcohol and gambling revenues could jeopardize profitability.

The profitability of Muslim-friendly hotels and resorts has to a large extent already been proven, with the notable success of key players, such as Shaza Hotels, which was able to attract investment to fund expansion. The ability of Muslim-friendly cruises to make profits is as yet unproven.

Commenting on the limited evidence of profitability in an interview with DinarStandard for this story, Elnur Seyidli, CEO of Halalbooking.com, commented, “It [Halal Cruises] is attractive to some segments of Muslim travelers, but it is small segment…It is quite costly to implement due to the size of the project…We have heard about these [plans for a halal cruise] … but we do not have reliable information on a reliable service provider who is doing it [successfully].”

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