Queen Mary 2 in SydneyAustralia is the fastest-growing cruise market in the world, according to a 2013 CLIA Australasia report, and U.S. cruise lines are responding by adding capacity both this year and next.

The number of Australian cruise passengers shot up 20% in 2013, after having advanced 11% the year before.

In fact, a greater percentage of Australians cruised last year (3.6%) than North Americans (3.3%), marking the first time an overseas source market has exceeded North America in cruise penetration.

“We thought that might make the Americans sit up and pay attention,” said Brett Jardine, general manager of CLIA Australasia.

Out of Australia’s population of about 23 million, some 883,348 took a cruise last year, the group said.

Australia’s growth has implications for the U.S. cruise market because big cruise lines have taken notice and are repositioning bigger, more advanced ships from other itineraries to sail from Down Under.

Carnival Spirit, which has been sailing year-round in Australia since 2012, is the only Carnival Cruise Lines ship based full-time outside North America.

In October, the Carnival Legend will join the Spirit for the six-month Aussie summer season.

“That’s a significant amount of capacity for a market of this size,” Jardine said.

During the same time frame, Royal Caribbean International will sail its Voyager, Radiance and Rhapsody of the Seas from Australia.

Celebrity Cruises’ original Solstice-class ship will sail from Australia this winter, joined by its oldest vessel, the Celebrity Century.

And the country’s indigenous line P&O Australia will grow its fleet from three ships to five when the current Holland America Line’s Statendam and Ryndam are transferred to P&O Australia in 2015.

Jardine said that the arrival of new hardware has been one catalyst for the market’s ascent.

“That has raised the awareness of the media here, which has meant more coverage of cruise,” he said. “We found with more coverage of cruise and more ships being physically seen in our ports, consumer awareness continues to grow. As consumer awareness grows, the inquiry level to travel agents grows. As the agent education grows and consumer awareness grows and then when the capacity is available, when you put [it all] together that leads to strong growth.”

Another factor in the Aussie boom has been a robust economy. Jardine said a strong Australian dollar, especially relative to European currencies, has helped drive growth. Last year, the number of Australians cruising in Europe grew 34%, leading all other destinations in growth.

About 70% of Australian cruisers booked an itinerary from a port in Australia in 2013, while the rest cruised abroad.

The key question is whether all this growth is sustainable. Capacity in the Caribbean has grown by double digits this year, and the result has been weak pricing and the need for heavy promotions to fill ships. It is not an experience anyone wants to see repeated in the Australia market.

Les Farrar, managing director for Cruise Holidays in Australia, said overcapacity is a talking point within the trade.

“We are seeing more and more price discounting by online agents, for example,” Farrar said. “There is no doubt we are seeing some signs of potential overcapacity now, and the summer season of 2015-16 will be when it reaches a critical point.”

Still, Farrar added, “Having said that, the ships are still sailing full and the consumer is benefiting from the capacity increase through lower fares, which in turn creates more Australians converted to cruising.”

Cruise Holidays, for example, has grown its footprint from four locations to 31 since it launched under that brand at the start of 2013. Farrar said there were fewer than 20 cruise specialists in Australia five years ago; he estimated that number has grown fivefold since then.

The most popular itineraries from Australia are to the South Pacific, with port calls in islands such as Fiji, New Caledonia and Vanuatu. Last year, 330,670 Australians sailed in the South Pacific, according to CLIA Australasia, a 30.9% increase over the year before.

Next in popularity are coastal and short-break cruises around Australia, which attracted 148,527 guests last year.

Another popular option is sailing to New Zealand, which drew 98,914 Australians in 2013.

Overall, the Australian market is five times larger today than in 2003, when 153,781 Australians took a cruise.

While short cruises of one to four days were the fastest-growing market segment by duration in 2012, last year the eight- to 14-day segment grew by 57%, topping five- to seven-day cruises, which grew 20%, and the one- to four-day market, which cooled to a more modest 9% growth rate in 2013.

Follow Tom Stieghorst on Twitter @tstravelweekly.

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