The art of creating an attractive, efficient, and profitable itinerary.
Article from CruisesNews magazine no. 50 – September 2019
The purpose of designing a cruise itinerary is to determine the optimal sequence of a set of ports of call (a port of call is an intermediate stop on a cruise itinerary) and the arrival and departure times at each port of call. This design should maximize the benefit of activities directly related to the destination port (such as optional excursions) and minimize the cost of port fees and fuel.
These factors must be related: if docking at a port with the lowest rates causes fuel consumption to skyrocket, that port will be discarded. To solve this equation, and given that in most cruise itineraries there are not many viable ports of call, the first step is to list all possible sequences of ports of call. Then, the arrival and departure times at each port of call must be optimized by developing a dynamically focused schedule. To improve the efficiency of the calculation, effective limits are usually introduced on the cost of each sequence of ports of call, eliminating suboptimal sequences without altering the dynamic programming algorithm. After testing all viable sequences by computer, the results show that using limits on the profit of each sequence of ports of call considerably improves the efficiency of the computer program; secondly, the total profit of the cruise itinerary is sensitive to the price of fuel, and therefore, it is necessary to have the most accurate estimate of the fuel price possible. And third, the optimal sequence of ports of call is not necessarily the sequence with the shortest travel distance, especially when the ports do not have a natural geographical sequence.
Selecting a Destination:
The person responsible for creating itineraries on a cruise line is the "itinerary planner." This is generally a team that decides years in advance where the cruise line's ships will go and what kind of vacations they will offer. Some of them are true gurus, like Simon Douwes of Holland America, who visits more than 25 new ports a year to create attractive itineraries for his cruise line's ships, which visit more than 400 ports annually, 5% of which are inaugural calls. In addition to his instinct and experience, he uses software tools like Cielia to aid in his decision-making.
However, for most people in the cruise world, that complexity doesn't exist. Cruisers either think the itinerary is obvious (and never in terms of logistical or marketing challenges), or they simply simplify it as if they were planning their own vacation.
It seems obvious, but the first decision a shipowner must make is which destination, which part of the world, they want to market their ships to: the Caribbean, the Mediterranean, or the Baltic. For the itinerary manager, this initial decision, made several years in advance of the cruise, means having to deal with geopolitical problems beyond their control. The conflicts in Tunisia, Turkey, or Ukraine, or Trump's recent decisions regarding Cuba, for example, have required adapting, or even changing, very elaborate plans, often in a very short period of time.
For a shipowner, planning itineraries is one of the most important and complex decisions they have to make each year.
For example, the departure of Tunisia in 2015 primarily benefited Valletta, which has even gained homeport status for TUI and P&O Cruises, as have the ports of Sicily and Corsica. These itinerary changes in search of safe ports of call are difficult to reverse, especially when accompanied by private investments involving cruise lines, as is the case with Cagliari and Valletta.
To make this decision, there are two very important factors:
What is my primary source market? Many cruise passengers prefer to sail close to home. We have many examples: Pullmantur offers cruises during peak season only in Europe, and its largest ship departs from Barcelona. Aida and TUI ships also primarily sail in Europe because their German and Austrian passengers don't want to undertake a long journey to enjoy their vacations. Or Carnival Cruise Lines, which offers an experience very much to the liking of North Americans, practically only offers trips from US ports to very nearby destinations such as the Caribbean, the Mexican Riviera, or Alaska. In many cases, a ship is filled with passengers from the same country or even region.
Where do my customers want to travel? This is the million-dollar question. While the previous one has a simple answer, defining the desires of future cruise passengers in advance is often a real enigma. But cruise lines have to diversify their offerings or they will eventually lose customers. Pullmantur, for example, added the Persian Gulf to its itineraries; and even Carnival offers Mediterranean cruises regularly for its American customers.
Choosing a Homeport:
Once the shipowner has decided on the destination where they want to operate their vessels, the next decision is where their passengers will begin their vacations. Or, in other words, their homeport. If a cruise line decides to focus on the Baltic, in which port will their passengers embark? Kiel, Copenhagen, Stockholm? Or if the option is Alaska, what will lead a shipowner to choose Vancouver, Seward, or Seattle? The most important factors in this decision are usually the following:
Air connections. There are destinations, such as Alaska, where almost 100% of passengers arrive by plane. Without air connections, cruises to that destination would not exist on their current scale. A home port that lacks an international airport with ample connections significantly complicates the viability of itineraries. Copenhagen, Barcelona, and Civitavecchia are examples of complementary port/airport connections. Airport-port coordination is also vital to ensure that luggage arrives on board the ship.
In reality, itinerary planning is a complex optimization problem, which does not usually have a perfect solution.
Nearby source markets. Many ports have grown based on their proximity to source markets, allowing cruise passengers to arrive by car or train. After 9/11, cruise lines diversified their embarkation ports so their North American customers wouldn't have to fly. The strategy worked so well that some of these ports, like Jacksonville and Galveston, have become established. In Europe, Trieste and Venice; in the Mediterranean, Southampton and Dover; and German ports like Hamburg, Kiel, and Bremerhaven can also be included in this category.
Homeport/Destination. Some homeports are also destinations in themselves. This means that passengers often want to extend their stay by a few days before and after their cruise. This necessitates a wide range of hotels, leisure activities, and services, in addition to port and airport infrastructure. Venice is the prime example of this, but it also applies to Barcelona, Civitavecchia/Rome, and across the Atlantic, San Juan, New York, and New Orleans.
Infrastructure. Today, a home port is unthinkable without dedicated infrastructure. In addition to having docks with sufficient physical capacity (length, draft, etc.), appropriate equipment (fenders, bollards capable of berthing megaships), and services such as fuel, water, waste disposal, and even cold ironing, a home port needs terminals to properly manage (ISPS Code) passengers, baggage, etc. This investment can be public, private, or a public-private partnership. Shipping companies secure preferential berthing rights in these ports by building terminals. In major home ports, such as Miami or Barcelona, there is a boom in the construction of long-term concessioned terminals promoted by the shipowners themselves.
The most extreme case might be Savona, a port that decided to become a home port, entrusting its fate to a single cruise line, Costa Cruises. This decision allowed for the development of port infrastructure, including its two Palacrociere docks, which led to it surpassing one million passengers in 2014.
The perfect port is one with low costs and that generates a generous margin.
Interporting. Increasingly, especially in the Mediterranean, cruise lines are opting to offer multiple embarkation ports, given that they need to serve several different source markets located along the potential cruise itinerary. As a result, instead of having a single home port, they may have up to three, generally a Spanish port (especially Barcelona, but also Palma, Tarragona, or Valencia), a French port (Marseille), and an Italian port (Civitavecchia, Genoa, or Savona). In Northern Europe, cruise lines like CM&V embark in the UK and the Netherlands, but this phenomenon has not reached the same level of importance as in the Mediterranean. This option brings the cruise closer to source markets, broadens the customer base, and is an increasingly common trend. Even cruise lines like Aida, primarily targeting the German market, use interporting, for example, Palma as an embarkation port, but also Barcelona, on their new AidaNova.
Port of Call Selection:
Historically, the destinations included in the itinerary have been the primary motivation for customers selecting a cruise. However, since 2014, price has taken precedence, reflecting increased global economic sensitivity. In 2014, CLIA reported that the main motivation for cruising was value for money (87%), followed by destinations/itinerary (78%).
Therefore, the itinerary is a fundamental promotional parameter in shipping companies' strategies. Once the destination and port of embarkation have been selected, the port calls must be decided. Here, too, there are several criteria.
Marketing. Some ports are reason enough to embark on a cruise. These are known as "marquee ports." In the Mediterranean, they would include Venice, Piraeus, Mykonos, Barcelona, and a few others. In the Baltic, they would be St. Petersburg and Tallinn; in Alaska, Glacier Bay; and in the Caribbean, St. Thomas. The opposite extreme is a filler port, although nowadays all ports of call have their appeal. In the case of interporting, a home port might seem like a filler port to a cruise passenger who embarked from another home port. This is the case for Spanish passengers, such as Marseille or Savona.
Another type of port is the shuttle port, used to access a marquee destination. This might be the case in Motril, Spain, for reaching Granada, or Livorno or Spezia for visiting Florence or Pisa. But even shuttle ports want to move beyond that role. For example, in Livorno, around 60% of passengers were visiting Florence, Pisa, or Lucca. The Livorno Port Authority applied to a European project (FREST) to study this phenomenon in detail. The result was to develop complementary tourism in the city itself and in the surrounding areas as a key to distributing the economic benefits of cruise ships more equitably.
Logistics and fuel prices. Fuel prices vary significantly from port to port due to tax reasons, etc. If a port offers the possibility of refueling, shipping lines will try to stop there. There are marquee ports with very competitive fuel prices, such as St. Petersburg or Singapore. That's a winning combination. But for other ports without those advantages, like Gibraltar, it's a very important competitive advantage.
Optional excursions. For cruise lines, it's very important to know how much money they'll earn from optional excursions. This is how shipowners make money at destinations, with healthy profit margins. Some ports, even those with significant natural beauty or historical monuments, won't receive any calls if they don't offer a wide range of excursions.
The world's largest cruise brand, Carnival Cruise Lines, has 50% of its business in voyages of seven nights or longer, and the other 50% in itineraries of three to five days.
There are several studies on the impact of optional excursions on cruise line revenues. One of the most interesting was conducted in Copenhagen. According to this study, 97% of transit passengers went ashore in the Danish capital in 2013 and spent an average of five hours in the city. The average duration of an optional excursion was 3.9 hours. 55% of transit passengers participated in an optional excursion, and 89% of that latter percentage booked the excursion directly with the cruise line. In other words, on a megaship with 4,000 passengers, 1,900 passengers took an excursion with the cruise line, with a considerable impact on the cruise's bottom line. Furthermore, for disembarking passengers, the excursion can end at the airport, which is another added benefit.
Tourist infrastructure is very important for a port of call: coaches, guides, etc., and opening hours for shops and attractions that are compatible with cruises.
Another example is Cozumel. Ten years ago, Carnival Cruise Line offered only fifteen optional excursions. Today, it offers more than fifty. The 2019 cruise passenger demands a wide range of activities in port. The days of cramming fifty passengers into a coach at a time and taking them on a three-hour tour of the destination with nothing more to do than take photos out the windows and make a pre-arranged shopping stop are long gone. And any destination that doesn't understand this will be left off cruise line itineraries.
Passenger reviews of previous port calls. How have passengers rated the port during previous calls? If a cruise line has visited the port in the past, itinerary planners will consult passenger surveys. While perhaps not as crucial as the previous surveys, the importance of satisfaction surveys should not be underestimated. If a port has good ratings, it will surely receive more visits. A low rating can mean the end of port calls, unless very competitive fuel prices or port fees help it climb the rankings
Port infrastructure. A port of call doesn't need large terminals because passengers arrive already checked in, but it must provide access control facilities according to the ISPS code, and adequate and safe docks to avoid cancellations due to weather conditions. This is the case of Marseille. Its entrance used to be narrow, and when the Mistral wind blew strongly, which happens fairly often, ships would cancel their stop and dock in other ports like Toulon. Today, the entrance has been widened, and cancellations have been drastically reduced.
Bureaucracy. Generally, a port that requires an entry visa is likely to be dropped from an itinerary… unless it's called St. Petersburg or New York, and justifies a cruise on its own.
Luxury and premium cruise lines are adding more ports of call and fewer days at sea to their itineraries, and they've discovered that's what sells.
Port fees. In Spain, all ports offer discounts for cruise ship berths up to the maximum allowed by law. Because all Port Authorities offer these discounts, these fees, despite being a significant cost in the operating expenses of shipping companies, are not usually a differentiating factor between ports, except when ports from different countries, with different rates, compete to be a home port or for transit stops.
Creating the itinerary
Once the ingredients of a cruise have been selected (destination, home port and a list of potential ports of call), they all need to be cooked together in a pot to obtain the final dish, an attractive itinerary.
This is the most complex and technical part of the route definition process. Decisions are no longer made on isolated aspects, but rather all the areas to be considered in the definition process are interconnected, involving highly complex variables.
Cruise duration. If most passengers arrive at the home port by plane, the cruise will generally be long, lasting more than a week. But if it departs from a home port where passengers arrive by car, such as Galveston, a shorter cruise can be offered. For the same passenger, for example, an American, a seven-night Caribbean cruise might be sufficient, but if they have to fly to Europe, they will opt for a 10-12 day itinerary in the Mediterranean or Northern Europe. Cruise lines take this into account and schedule both options in their inventory. This way, they cover both demands. A longer cruise requires a greater commitment to the customer but guarantees the ship will be occupied for a longer period. On the other hand, a longer cruise has its advantages: the cruise has to be sold to fewer people, and based on a ship with a capacity of 2,000 passengers, it seems logical that it will be easier to find 2,000 for a 12-day cruise than 8,000 for four three-day cruises. For example, Royal Caribbean is offering week-long cruises from Barcelona this summer on the Oasis of the Seas, and twelve-night cruises on the Vision of the Seas. The same is true for NCL (Norwegian Epic and Norwegian Pearl). There are also cultural differences: Germans prefer longer cruises, while the Chinese prefer shorter ones, from three to five days.
Despite rising fuel prices, shipping companies need attractive itineraries to compete.
Round, itinerary, or linear cruises. Cruises can be round, if the departure and arrival ports are the same, for example, the typical seven-night cruise departing from Barcelona; itinerary, where the departure and arrival ports are different, but the subsequent itinerary is the same, offered in reverse. This would be the case with itineraries such as Barcelona-Venice, which then continue with Venice-Barcelona; and linear. Perhaps the paradigm is the itinerary cruises in Alaska, generally from Vancouver or Seattle to Seward (see CN 44).
Round-trip itineraries are usually more expensive because passengers perceive a round-trip airfare as cheaper. From an operational standpoint, they simplify logistics because there is only one home port. However, round-trip itineraries typically offer more ports of call and lower fuel consumption, since there is no need to return to the original home port, sometimes pushing the engine to its limits. A round-trip itinerary is incompatible with a home port that relies on passengers arriving by car.
Finally, a linear itinerary is one in which the departure and arrival ports are different, but without immediate reversal. A typical example is repositioning cruises between two cruise destinations during seasonal changes. These are long voyages, at inconvenient times, and without a clear destination, making them often difficult to sell.
A port, regardless of its infrastructure or beauty, will never be attractive if it is not located next to others that allow you to design an itinerary.
Number of days at sea. This is one of the most complicated factors to define. It depends primarily on the type of ship, passenger segmentation, and the cruise destination. Generally, a cruise line with smaller ships minimizes the number of days at sea, or in other words, offers the maximum number of port calls possible. This is their recipe for achieving immersion in the destination. This summer, for example, Azamara offers a daily port call on all its Mediterranean cruises. The same is true for Silversea and Seabourn.
At the other extreme, it's difficult to experience a megaship without any days at sea. But this statement is also relative. This summer, the Oasis of the Seas only offers one day at sea on its Mediterranean cruises from Barcelona, while when sailing the Caribbean, it offers three days on its two alternative itineraries (and, moreover, in ports like Labadee or Falmouth, controlled by RCCL). Its competitor from Barcelona, the Norwegian Epic, offers an almost identical itinerary with a single day at sea (Barcelona, at sea, Naples, Civitavecchia, Livorno, Cannes, Palma, Barcelona), departing on Sunday. However, in the Caribbean, its typical cruise includes three days at sea (Cape Canaveral, two days at sea, Tortola, St. Thomas, one day at sea, Great Stirrup Cay (NCL private island), Cape Canaveral). In other words, the same ship can be used in two very different ways depending on the destination.
But in 2017 there were 41 ships over 125,000 GT. By 2025, there will be double that number. Compared to the 23 in 2013, the growth is truly remarkable. We're talking about ships that carry an average of 4,000 passengers. The reality is that the ships are growing in size, but the ports are the same. If ports want to be included in the itineraries of these megaships, they have to invest. The four major cruise lines (Carnival, RCCL, NCL, and MSC Cruises) are investing in terminals and prime berths around the world. Or they are partnering with port operators (like RCCL and Global Ports) to offer attractive itineraries.
A cruise line will never call at a port its customers have never heard of, no matter how beautiful it is, because these destinations do not help sell the cruise.
Increased onboard spending. Competition among cruise lines has led to a decrease in ticket prices, making onboard spending crucial to their economic viability. From this perspective, the ideal port call should only last as long as necessary for passengers to take the official optional excursions. Once all the excursionists are onboard, the ship must depart as soon as possible so that the shops and casino can open, and the bars can fill with passengers eager to share their experiences of the day. This model is practiced mainly by the most popular cruise lines (Costa, MSC, Royal Caribbean, etc.), while it is less important for premium lines (such as Oceania or Azamara, which schedule evening activities at some ports of call), or for luxury lines, which offer virtually all-inclusive packages.
Distance between ports. If the shipowner has previously analyzed the differences in fuel prices between ports of call, they now need to determine the speed required to comfortably cover the itinerary. Fuel is the second largest expense on board, but it can be reduced by sailing at a lower speed. The simplest way to save fuel is to shorten the duration of port calls, thereby increasing the sailing time between ports and reducing speed. The order in which ports are visited is also very important, as this reduces distance and, consequently, speed.
Shipping companies have managed to reduce the speed of their cruise ships without sacrificing the content and appeal of the itineraries they offer their customers.
Coastal shipping. In some countries, coastal shipping (between ports within the same state) is regulated in such a way that it is only legal for vessels flying the flag of that state. The most important example is the United States. The Jones Act, for instance, prohibits a foreign-flagged vessel from conducting an inter-island cruise in Hawaii. To comply with this legislation, the cruise ship must visit at least one foreign port on its itinerary. Therefore, in Alaska, many cruises have Vancouver (Canada) as their home port, since the remaining stops are in North American ports. Alternatively, if the home port is Seattle, it must call at a Canadian port such as Victoria to comply with this regulation.
Another consideration is tax settlements or deductions. For example, a cruise ship that visits only European Union ports must declare VAT. This is why stops in Russia are included on Baltic cruises, or in Moroccan ports on cruises departing from the Canary Islands. The exclusion of Tunisia from Western Mediterranean cruise itineraries after the 2015 terrorist attacks dealt a severe blow to the cruise lines' finances, although on the other hand, they saved a considerable amount of fuel. The return of cruises to Turkey also brings tax advantages.
Coordination between shipping lines and ports – Congestion.
It is possible that all itinerary planners could design the same route, which could lead to a very serious congestion problem, both at the home port and at the destination. Port authorities and port associations grouped by destination try to avoid this.
For example, in Barcelona, as a home port, all megaships would need to dock on weekends to embark and disembark passengers, since work holidays typically begin on Saturdays. If all megaships embarked and disembarked on the same day, the Catalan port would have to handle peaks of over sixty thousand people embarking and disembarking, an unfeasible situation that could cause its collapse and severe congestion in the city.
As their fleets have grown, shipping companies have entered new destinations, experimenting with ports they had no prior experience with. The transfer of expertise, and even technology, is very positive for the ports.
However, the arrival of megaships at homeports is orderly, a maximum of two per day, which has allowed for sensible and reasonable growth of port infrastructure. This situation is repeated in ports such as Venice, Copenhagen, etc. Major US homeports, such as Miami, Port Canaveral, etc., pressured shipping companies to adopt 8/6-night itineraries, or shorter 3 or 4-night cruises, to avoid weekend congestion.
Another example is Palma de Mallorca. Its role is more diluted, somewhere between a home port and a port of call. It has the disadvantage of not having a strong source market, but the great advantage of extensive air connections with two very important European source markets: Germany and Great Britain. It is more complementary to, than a competitor of, Barcelona and Valencia, making it an essential port of call for ships based in those ports. Five of the megaships based in Barcelona call in Palma; the two megaships based in Valencia do as well (MSC Divina and Costa Fortuna in spring and autumn); and the Costa Fortuna also calls there during its summer calls from Tarragona.
The distribution is also orderly, as in Barcelona, with Saturdays and Mondays with three ships, although the star day as a home port is really Saturday, with more than 5,000 people embarking and disembarking.
If we extend this analysis to the destination, the situation is similar. The distribution of port calls for the eight ships based in Barcelona is also balanced. Civitavecchia, Rome's launch port, is visited six times by these megaships, but on four different days, with a maximum of two vessels in port simultaneously. Palma also receives five calls, also distributed over three days. The launch ports to Florence, La Spezia, and Livorno also receive five calls, but on three different days (Tuesday through Friday).
In other words, thanks to the joint management of itineraries, it has been possible, despite the anti-cruise voices that argue otherwise, to manage the use of finite destinations among all interested parties (shipping companies, ports, destinations), as well as to allow the planning of very expensive infrastructure for ports, and to enable its amortization.
To be profitable, a cruise ship needs a home port in a region with a sustainable source market.
The cruise industry is the first to be interested in offering a quality product to its customers, with attractive yet sustainable destinations. A destination is appealing not only because of its monuments or attractions, but also because of the hospitality of its people. The cruise industry is committed to ensuring this, as demonstrated by the recent agreement signed between Dubrovnik and CLIA, which will surely be the first of many.
How does a port's appeal or prestige factor into itinerary planning?
A port of call can be included in an itinerary in several ways, depending on its tourism reputation. Some ports have developed their own tourism reputation, their own appeal, so they practically sell themselves, or at least very easily. This is the case with destinations like Venice, St. Petersburg, Amsterdam, St. Maarten, or the Virgin Islands. It's easier to sell tickets to these places because people are already familiar with their brand. The problem is the congestion inherent in these "branded" ports, which increases if they are also home ports. And in recent months, there has been a certain degree of social backlash, especially in Europe.
In other cases, cruise lines add a new destination to an itinerary, allowing it to develop as a cruise port. For example, Bari has established itself as one of the most visited ports on the Adriatic, despite lacking the allure of Venice or Dubrovnik; or Sarande, in Albania, discovered by MSC Cruises and also established as a cruise port of call, perhaps because it avoids declaring VAT on the voyage as a non-EU port; or Progreso, in the Mexican Yucatán, which also lacks significant tourist attractions but offers quick access to Chichén Itzá, the Mayan ruins of Uxmal, or the colonial beauty of Mérida.
And in the Caribbean, it's the cruise lines themselves that create the ports of call. The Caribbean, as a "sun and beach" destination, allows shipowners to extend the ship's experience to their own ports of call, built around the customer experience, ensuring that all the "land-based" profit also goes to the cruise lines. Carnival has its own ports in Grand Turk, on the island of Roatán (Mahogany Bay), and several private islands, such as Half Moon Cay and Princess Cays in the Bahamas. Royal Caribbean owns Labadee and has just opened Perfect Day at CocoCay after a $250 million renovation. Disney offers Castaway Cay, which, when it opened in the late 1990s, was the first private island to include a jetty for docking, instead of using tenders. And MSC Cruises promoted Sir Bani Yas in the Persian Gulf; and will soon open Ocean Cay MSC Marine Reserve in the Bahamas.
If two ports meet a shipping company's requirements, the deciding factor is usually the number of attractions each can offer passengers. It's important to remember that shipping companies "sell dreams.".
Often, building a private port or island means starting from scratch. These are usually isolated islands with no infrastructure whatsoever. In some cases, like Half Moon Cay, the island had never been inhabited. Or, in the case of MSC Cruises' Ocean Cay, it was a construction waste dump. But these locations already have some of the features that guests appreciate. Grand Turk, thanks to its location in the Turks and Caicos Islands, boasts magnificent beaches and a remarkable array of water activities, so Carnival focused its efforts on building bars and food and beverage outlets. Furthermore, Carnival created excursions so that its passengers could experience new sensations, from swimming with stingrays to horseback riding and eco-safaris, to create a well-rounded experience.
