'i Think The Demand Will Continue To Grow': Clia's New Ceo On Cruise Industry's Future

How to find the best price, perks when booking a cruise

Find the cruise that works for your budget with these tips.

• The cruise industry is experiencing a period of significant growth, with a surge in new ship orders and record passenger numbers projected.
• Collaboration with destinations is crucial to ensure sustainable tourism management and positive relationships with local communities.
• Sustainability is a key focus, with the industry aiming for net-zero emissions by 2050 and investing in alternative fuel technologies.

Charles "Bud" Darr has loved oceangoing ships long before he worked with cruises.

Darr, who became Cruise Lines International Association’s new president and CEO earlier this month, has been a competitive ocean racer for most of his life and joined the U.S. Navy at 17. “My mom had to sign my contract because I was too young,” he told USA TODAY. He later served in the Coast Guard before joining the cruise industry with roles at CLIA – its leading trade association – and later MSC Group.

He returns to the organization as the industry is having a growth spurt.

Cruise lines have launched a series of splashy, innovative ships in recent years. AAA recently predicted a record 19 million Americans will take cruises in 2025. CLIA also forecasted continued passenger growth through at least 2027.

Darr spoke to USA TODAY about the current state of cruising, how the industry is courting younger passengers and what it will take to reach its sustainability goals. This interview has been edited for length and clarity.

Answer: I think it's a very sound product that provides great value to people who are looking for a holiday, particularly family holidays … and it continues to compete extremely well against other vacation options. And it is an industry that I think is worthy of a great deal of optimism for the future. 

Some indicators of that are not just market valuations ... if you look at our order book for our members ... is currently at 67 new ships, compared ... to 51 the year before. So, that's indicative of a great sense of optimism, not just among those that run and own the cruise lines, but it's also among the investment community and lending community that, in the longer term, have to share that optimism – or else we wouldn't see that sort of new construction in the works.

I would say it's an evolution of the design of cruise ships. And that's both from a sustainability viewpoint as well as a safety feature viewpoint. I'll also add that the innovations that have been made with regard to the guest experience are almost breathtaking. Every new generation of ships just tends to have more and more features in all of those lanes that help us provide a healthy, safe, secure, environmentally sound value vacation experience that keeps getting more and more interesting. 

I'll also say that there has definitely been a trend towards more and more private destinations, whether those are islands or other types of private destinations. I think those offer some unique opportunities because they allow any given cruise line to take advantage of the feedback that we get from guests … and build that into an optimal destination that is principally under the cruise line's own control ... And it's also helped offer some other options to take some of the volume of passengers out of some places that may have a little difficulty managing their tourism flows.

And then I would say it started in my (previous) time at CLIA; we got a little surprised when we started doing the polling and looking at who wanted what in the public … that a lot of younger cruisers – and the demographic continues to get younger and younger – really are willing to pay a premium for an interesting expedition or a luxury experience.

If you look at the distribution of the order book, which is fairly consistent with the distribution of the current fleet overall, about 70% of it is medium or small-sized ships. So, although it's the large ships that tend to draw the most attention, it really represents, among the number of ships, roughly about a third that are on the water and that’ll be on the water in the future. And the other two-thirds are these smaller ships that offer a different guest experience altogether.

Our cruise lines market to the target demographic in the right places ... And word of mouth counts for a lot. Repeat business counts for a lot. Among that type of demographic, we've got in the industry about an 80% return rate, which is pretty remarkable when you think about it.

It's also a very durable product offering that cruises provide with regard to the underlying economic conditions. Historically, in a down economy, cruising (tends to do) relatively, extremely well because people really start to think about the dollars and cents. They're still going to take a holiday when their pockets are pinched for every penny, but they're going to really think a lot more about where the value lies. … And when they make that choice, whether you're a younger person or an older person, you're looking (at) where you can get the most value. That's really where I think a cruise has a tremendous advantage over a lot of other vacation opportunities that are out there.

The more novel the amenities that we're providing, the broader the net you cast among the consumer community as to what might be of interest to them.

When you look at the old days where, you know, maybe you had shuffleboard and a couple of saltwater swimming pools, it is just so remarkably different today. For example, I love Formula 1, and I came from ( MSC, which) had a global sponsorship with Formula 1, which was a nice fit. The Formula 1 simulator is just plain fun. … The types of water attractions they have on board or children's activities broken up by different age groups, or they have different spaces dedicated to children to facilitate multi-generational experiences. And then, integration with shoreside entertainment providers – Disney, being the greatest example of all, but to some degree, they all have partnerships to do that – have all just been extremely creative and successful ... But it does draw new people in, and it tends to make them want to come back.

Well, there's so much to get excited about. It's hard for me to single one out. But I will say that there is more and more attraction in the Mediterranean because there are just so many destinations to choose from, and they're culturally so much different depending on which part of the Mediterranean Sea you might be operating in. I think there are some great opportunities there that are growing. They have to grow, of course, in a sustainable and managed way to continue to provide both the guest experience we want and also for us to be good corporate citizens as we serve those communities.

I also really like the Baltic. You know, even though we're really not calling on St. Petersburg anymore for obvious reasons, the Baltic is still fascinating. You wake up every morning in a place that's so totally different than the one that you went to sleep in the night before, but you only pack and unpack one time. Those are really very interesting itineraries that are still very popular.

Alaska continues to be extremely popular with new entrants coming into the market there, as well. There's a limited amount of physical space available for the ships and the passengers, so that has to be managed carefully.

As far as new and emerging markets, Southeast Asia offers some interesting opportunities. It's distant from a lot of the typical source markets, so it's not without its challenges, but we have some members that have really done quite well there.

First and foremost, it's a significant challenge in many different ways. Second, I would say I'm confident we're gonna get there. And I'm actually pretty confident all of shipping is gonna get there.

… The common denominator in success or failure ... (is) going to be the availability of the alternative zero, or more likely near-zero, greenhouse gas emission fuels. And that is a big question mark because the capacity is not there among the energy providers yet … So that is outside the control of the cruise industry or the rest of the maritime community.

Our members are investing tens of billions of dollars in ships that are designed to run on fuels that don't yet exist in the market. But keep in mind, pre-pandemic, the average age of a cruise ship that went to recycling was over 40 years. If you think about 2050, you may be just a little past halfway in the life cycle of one of these ships. So we have to be prepared. 

I think you're going to continue to see more innovation. You're going to see continued growth. … I think there will continue to be the kind of innovation in environment, safety and guest experience that's built into the ship. But I think that to make it all work and make it truly a longer-term solution to people's holiday needs, we also have to work very closely with the communities that we serve to make sure that they are managing tourism, not just from a cruise ... in an integrated way. ... There are only so many destinations to go around. There's only so much capacity, and it has to be used not only in an efficient way but also in a sustainable and sound way. And that is very possible to do. It just takes cooperation and commitment.

… From a healthy business standpoint, the reality is capacity is somewhat constrained because there are a very limited number of shipyards, all currently based in Europe, that can actually deliver a medium or large-size cruise ship reliably for the market. So it's not as if it's possible to flood the market with a huge amount of capacity very quickly when the market's not capable of absorbing that. And I think that’s actually kind of a healthy guardrail, that overzealous investment can't real quickly overwhelm the demand. But I think the demand will continue to grow.

Nathan Diller is a consumer travel reporter for USA TODAY based in Nashville. You can reach him at ndiller@usatoday.com.