How can digital drive growth when there’s no scope to expand?
As cruise passenger numbers are growing globally, Royal Caribbean is striving to meet increased demand and digitalize without downtime.
In the hospitality industry, fully booked rooms point to a thriving business. However, in this transformative age, it’s essential that businesses constantly monitor trends. Innovative companies know the minute they rest on their laurels is the moment they start to sink.
The challenge of duality — finding a way to maintain your existing business while developing new revenue streams in parallel — is acute. When you are reliant on physical space for revenue, taking that physical space out of service for upgrades and redesigns can present a significant business risk.
Royal Caribbean Cruises found itself in this position. The company has long been an innovator in their industry, particularly in maximizing the physical spaces on board its cruise ships to accommodate the ongoing significant global growth in cruise passengers (from 17.8 million visitors a year in 2009 to an expected 27.2 million in 2018).
The challenge the company faced was in finding new ways to drive growth and attract a new generation of customers in the digital age. While cruises may have a reputation for appealing to older holidaymakers, nearly 41% of cruise passengers in 2017 were under the age of 34 — and millennial passengers expect digital on-board experiences.
the past, the hospitality and leisure space had catered to growth by increasing capacity. Build more rooms and pools, and when space to build is limited, put on more shows and rethink your use of space to get more customers through the doors. For cruise lines in particular, such upgrade work can also lead to ships being out of service for months, making the work uneconomical.
“Our ship design and our guest experiences are all cutting-edge, but it was time to consider digital transformation, something we haven’t spent a lot of time thinking about in the past,” says Lisa Lutoff-Perlo, President and CEO of Royal Caribbean’s Celebrity Cruises division.
This is all too common an experience for CEOs, with EY finding that 50% of CEOs do not believe their companies have implemented the necessary steps to counter disruption. Failure to do so is putting market leadership and capitalization at risk.
Executing this kind of transformation is no small task. “The cruise business is an amalgamation of many different industries,” explains Cheryl Grise, EY Advisory Lead, Southeast Region. “It’s media and entertainment, health meets hospitality, and retail meets transportation. It’s all of those industries coming together — industry convergence at its finest.”
This meant EY had to tap into its knowledge and experience across multiple sectors and service lines to unpack and address the core challenge.