As the industry enters the new millennium, Rod McLeod, president and CEO of United States Lines, sees the industry developing in several directions:
One is the internationalization of the industry – creating new demand in Europe and elsewhere.
Another is the diversification of the cruise product with the largest ships ever being built as well as several small ones that are equally successful, according to McLeod. “We have created a large industry that is mostly targeting North America,” McLeod said, “but I believe Europe can become equally large and then there is Star Cruises percolating away in the Far East where Evergreen is also studying that market.”
McLeod joined Royal Caribbean Cruise Line in 1972. His task was to start the marketing department.
He also recalled his first meeting of the Cruise Lines International Association (CLIA) in 1974. “The whole thesis of that meeting was that we have to do something, that the industry was dying,” McLeod said.
“Back then more ships were being withdrawn than were being built. The only orders on the books were for Royal Viking Line and Norwegian American.
“And at that CLIA meeting, Swedish American Lines used the opportunity to announce that it was closing down.
“We realized that cruising was a great vacation but that ship travel was lousy transportation. We looked at it as a product; they saw it as transportation across the Atlantic or from island to island.
“At that meeting, I think the established lines looked upon me and Bob (Dickinson) as renegades. I think they were surprised we even had shoes on, expecting us to come directly from the beach,” McLeod laughed.
McLeod divides the industry’s development by the decades:
The 70s was used to establish the scope of the market, he explained. The industry developed around ports so that most passengers sailing out of Miami came from Florida. “That is when we started air/sea programs to reach out across the country into the heartland,” he said.
“We also began to see that it was working: we were growing the market both in terms of passengers booking cruises and travel agents selling cruises. But the product we were selling was too limited.”
In the 80s, the industry saw a broadening of the cruise product, according to McLeod. “We realized we could shape the product to appeal to different groups – families for instance.
“We began to implement changes on the ships of the 80s. We launched fitness centers, for instance. Nobody cared about fitness centers in the 70s.
“When we reached that point, we made the commitment in the late 80s to build the next-generation vessels, which would be bigger in order to appeal to all these different people.”
The 90s has been the marketing decade, McLeod said. “We have become more sophisticated; we spend more money; we have become product marketers.”
The next decade will not only see the industry growing worldwide and diversifying, but may also see increased focus on port developments.
“The biggest challenge ahead is the destination – meaning the infrastructure of existing ports and the need to find new ports,” McLeod said.
“I cannot accept that ships are destinations unto themselves, but I think they are an important part of the experience. If ships were the destinations, why aren’t we seeing seven-day cruises to nowhere?
“People want destinations and the ship,” McLeod said.
Now 59, McLeod spent most of his career at Royal Caribbean where he was executive vice president of sales, marketing and passenger services before he left in 1996 to join Carnival Corporation as senior vice president of marketing. He also did a brief stint from 1986 to 1988 as president of Norwegian Cruise Line. Earlier this year, McLeod left Carnival to join American Classic Voyages’ upstart, United States Lines.
—
This article ran as part of a special Millennium section of the of Cruise Industry News Quarterly Magazine, Winter 1999-2000.
Related articles:
Art Rodney: Industry Evolution
John Maxtone-Graham: A 100 Passenger Years
Knut Kloster: Industry Creator
Ted Arison: The Century’s Shipping Giant
Arne Wilhelmsen: The Bigger, The Better
Nicola Costa: Developing Europe
Ed Stephen: Market Was Always There
Bruce Nierenberg: More Homeports
Warren Titus: Proactive Industry
Stanley McDonald: Full Ships from Day One
Barney Ebsworth: It’s All About Marketing
Lord Sterling: Worldwide OutlookLord Sterling: Worldwide Outlook
