Strategic positioning analysis of Spanish cruise ports

1. Introduction

The loss in competitiveness of maritime passenger transport over long distances compared with air transport in the 1960s and 1970s facilitated the emergence of a new maritime business, cruise ships, initially created to fill the ship passenger gap created by air transport. The last liners became the first cruise ships, as it took more than a decade to see the complete demise of liner services with the final realisation that long distance travel was now to be assumed by air transport and also considering the 30 years lifespan of a liner. The availability of a fleet of liners which utility was no longer commercially justifiable incited their reconversion to form the first fleet of cruise ships (Rodrigue and Notteboom, 2013). Then, a new type of maritime transport emerged; this was a new means to enjoy the sea and a new type of tourism. Cruise tourism has several particularities that differentiate it from other tourist activities; the main peculiarity is transport means and the type of accommodation used: the cruise ship. In addition, this tourist typology combines two action areas, sea and land, into one product. The combination of both leads to the cruise industry’s key element, the itinerary.

The emergence of cruise traffic and cruise tourism generated changes in various industries. The first change occurred in shipbuilding, with the need to build vessels specifically designed for this purpose. In addition, changes occurred in ports, to adapt port facilities to this type of vessel and their passengers. Furthermore, changes occurred in the tourism industry because of the completely new product, different from any other product; this offered a different opportunity to enjoy leisure time and holidays.

Cruise traffic has been dynamically advancing over the past two decades; from 1990 to 2016, the number of cruise passengers worldwide has grown at an average annual rate of 7.29 per cent. Moreover, forecasts indicate that in 2019, the cruise industry will exceed 25.3 million passengers worldwide, compared with 22.93 million registered in 2016 (Cruise Market Watch, 2017).

The objective of this paper is:

• to identify the current competitive positions of Spanish cruise ports; and

• to explain the different features of the competitive positions obtained.

The paper takes the point of view of competitive positions for analysis to determine the type of position(s) that predominate in a coastal area. Moreover, this point of view is also taken in the analysis to know if the fact that the cruise industry sells itineraries and not just a destination implies a limitation to the number of competitive positions that can be found in a coastal area. In the paper, a portfolio analysis based on the growth-share matrix has been applied as the analysis technique. This is one of the first times in which this type of analysis has been applied in the cruise industry. Therefore, this pioneering research in the study of cruise port competitive positions allows us to answer the following questions:

To achieve the noted objectives, first, there is a literature review related to cruise traffic’s regional distribution. This is followed by an analysis of the changes in cruise traffic in the Spanish Port System (SPS) between 2000 and 2016. Next, a port portfolio analysis is conducted using the growth-share matrix to identify the competitive positions of Spanish cruise ports and the discussion of results is also included. Finally, the work’s conclusions are presented.

2. Literature review: cruise traffic regional distribution

Cruise traffic has a high level of regional concentration worldwide. In 2016, 86.2 per cent of deployed capacity worldwide was concentrated in seven destination regions. The Caribbean and the Mediterranean are the most popular destinations. In 2016, the former represented 33.7 per cent of deployed capacity, and the latter represented 18.7 per cent. Both destination regions remain active throughout the year although differences occur in the deployed capacity from one season to another; these are called annual regions. Moreover, both regions are complementary to one another because the Caribbean has its peak season in the winter, and the Mediterranean peaks in the Northern hemisphere’s summer.

However, the remaining five destination regions remain active during a specific season; therefore, those five regions are called seasonal regions. Northern Europe is the seasonal region with the highest deployed capacity, 11.7 per cent in 2016, followed by Asia (9.2 per cent) and Australia/New Zealand/Pacific (6.1 per cent) [CLIA (Cruise Lines International Association), 2016]. Repositioning itineraries are associated with the seasonality of the itineraries in certain destination regions, as well as to changes in demand in annual regions. On these repositioning trips, the ship changes its destination region to move to another that allows it to achieve higher occupancy rates. Cruise companies also offer these repositioning sailings as a cruise itinerary.

The ports play a key role in the maritime transport associated with a cruise itinerary, constituting the tourism component link that develops on land. In cruise traffic, three types of ports can be distinguished according to the operations performed in them. In homeports, the start and the end of the itinerary occurs; this must satisfy a range of imposed requirements. These requirements arise, on the one hand, from the cruise passengers’ needs and, on the other hand, from the ship. In ports of call, a cruise ship remains for a limited number of hours; during this time, cruise passengers will visit the port’s tourist hinterland.

A port of call’s tourist hinterland is defined as the geographic area available for cruise passengers to visit (cruise excursions) during a port call (Esteve-Perez and Garcia-Sanchez, 2015). Occasionally, in certain ports of call that satisfy the requirements, partial passenger embarking and disembarking operations can be performed; however, this is associated with a small percentage of passengers. This type of operation is called interporting. The global cruise port system is characterised by a high level of regional concentration as well as a clustering of port visits (Rodrigue and Notteboom, 2013). For a destination to be integrated into a cruise network, it has to fulfil a range of prerequisites both at the port’s and at the hinterland’s side. These prerequisites are varying depending on the type of cruise traffic that the destination facilitates (Niavis and Vaggelas, 2016).

With regard to the configuration of ports that comprise an itinerary, mainly, it is possible to identify two types of itineraries. Close itineraries only have one homeport in which the itinerary starts and ends; in this case, the itinerary is a closed loop. Open itineraries are those that have two homeports because the itinerary starts and ends at different ports.

In designing an itinerary, first, the cruise line selects the destination region. The next step consists of selecting the homeport(s), depending on whether the itinerary is open or closed, from which the itinerary will be developed. The decision of a cruise line to call at a specific port or, more importantly, to establish the homeport for their vessels depends on whether the area where the port is located is attractive for cruise itineraries.

Homeports play a key role in vessel deployment and in itinerary design in a specific destination region. Thus, homeports should be strategically located in a geographic area in which attractive inland destinations and port cities are abundant and in close proximity to ensure that cruise lines can design competitive and flexible itineraries (Bagis and Dooms, 2014). A cruise port needs to be located close to or within an area where cruise ships operate (McCalla, 1998).

Given a homeport and a set of ports of call, the next step is to design itinerary schedule which aims to determine a sequence of the ports of call to visit and the arrival and departure times at the port of call (Wang et al., 2016). On a cruise itinerary, must-see ports have significant importance; this type of port provides access to a well-known tourist hinterland. Related to a port’s geographical position, although applied to container ports, Hayuth and Fleming (1994) explain the success of a port in the intermediacy but not in the centrality. Intermediacy refers to an en route location, that is, the port is located relative to where containers originate and where they are destined. Cruise ports can apply a similar reasoning. The optimal sequence of the ports of call to visit is mainly determined by geographical distances (Wang et al., 2016). In the cruise industry, intermediacy ports will be defined as those located between the homeport, and the successive must-see ports of call that comprise the itinerary. This geographical dependence results in a negative spatial relation for a range of short distances between ports, which becomes positive at intermediate distances and becomes negative again for large distances.

Based on the above requirements in designing an itinerary, Spain is chosen as the geographical study area because it has an important maritime character and is a very well-known tourist destination. Spain has a strategic geographical position at the entrance of the Mediterranean Sea and the Atlantic Ocean. Moreover, the extensive Spanish coast must be considered, including the two archipelagos – one on the Mediterranean Sea, the Balearic Islands, and the second on the Atlantic Ocean, the Canary Islands. In addition, Spain is a very strong worldwide tourist country with 75.3 million foreign tourists in 2016 (Hosteltur, 2017).

3. Cruise traffic in the Spanish Port System

The state-owned SPS is composed of 46 General Interest ports managed by 28 Port Authorities (BOE, 2011); this considers the Landlord port management model present in Spain (IME and FEIN, 2009). The growing cruise industry trend has not gone unnoticed in the SPS. The vast majority of the Spanish ports accommodate cruise ships at their docks. Between 2000 and 2016, cruise passenger movements in the SPS grew by an average annual rate of 9.54 per cent. This means that, in 17 years, the number of cruise passengers arriving in Spanish ports has evolved from approximately 1.95 million in 2000 to 8.69 million in 2016.

Considering the configuration of the Spanish coast, it is possible to divide the 46 state-owned ports into three groups according to their geographical position on the Spanish coast. One group consists of the 24 Spanish Mediterranean and Andalusian Atlantic ports; this includes the ports of the Balearic Islands, the autonomous cities of Ceuta and Melilla and the river port of Sevilla. Another is composed of the 11 ports bordering the Cantabrian Sea and the Galician Atlantic coast, and the third group includes the 11 Canary Island ports.

With regard to cruise traffic, there are high differences in the quantities this traffic represented in each of these three coastal areas. Between 2000 and 2016, Spanish Mediterranean and Andalusian Atlantic ports represented approximately 73.5 per cent of the total cruise passenger movements in the SPS (Table I). This is followed by the Canary Islands with 21.3 per cent and the Cantabrian and Atlantic Galician coast ports with 5.2 per cent.

During the past 17 years, the three coastal areas registered an average annual growth rate in cruise traffic higher than the growth rate registered worldwide of 7.97 per cent. The highest growth was registered in the Canarian ports, with a rate of 12.54 per cent. This was followed by the Cantabrian and Atlantic Galician coast ports with 10.80 per cent and the Spanish Mediterranean and Andalusian Atlantic ports with 8.91 per cent.

Spain has homeports in its three coastal areas. Between 2000 and 2015, the home in/out passenger category grew at an average annual rate of 11.21 per cent; see Figure 1. In this period, home in/out passenger movements have represented annually, an average, 32.4 per cent of total cruise passenger movements.

4. Strategic positioning analysis of Spanish cruise ports

In this section, a strategic positioning analysis (SPA) of the Spanish cruise ports is developed to identify the competitive position of each port of the three Spanish coastal areas defined in the above section. According to Winkelmans and Coeck (1993), the main purposes of this type of analysis are to process and present statistical information on the recent evolution or change in the competitive position of different seaports and to help assess the future economic potential of a seaport, given anticipated future developments. The SPA developed to determine the competitive position of the ports in the three port ranges considered consists of a portfolio analysis. The portfolio analysis is conducted using the growth-share matrix initially introduced by Boston Consulting Group (Henderson, 1979); in this case, the analysis used the version adapted to the port industry. This version of the matrix represents the average market share in the X-axis and the average growth ratio for a given time period in the Y-axis. In addition, this version introduces an additional dimension, a circular shape with a surface proportional to the absolute traffic volume of the port considered in the total range (Haezendock et al., 2006). The matrix is divided into four quadrants, each of which corresponds to a competitive position (Figure 2).

The majority of applications of this matrix in the port industry research field focus on cargo traffic and, more particularly, on containerised cargo. This technique has been applied in the port industry’s research developed, for example, by Haezendock et al. (2006), Park (2006) and Winkelmans and Coeck (1993). The first application to passenger cruise traffic dates to 2013; that paper, the work of Bagis and Dooms (2014), analysed the competitive position of six cruise ports in the Eastern Mediterranean region.

The application of this matrix to the analysis of cruise traffic has certain limitations because the cruise industry sells itineraries, not ports (Rodrigue and Notteboom, 2013); this generates an interdependency between the two. This implies that the growth in cruise passenger movements of a given port lead to a similar growth in the remaining ports that comprise the itinerary. This aspect is not very present in container traffic. The geographical interdependence of ports on an itinerary ensure that the Star Performer (refer again to Figure 2) position is very difficult to achieve. In the development of a cruise itinerary, one has to take into account the geographical limitations from the point of view of balancing sailing time and shore time. This approach seeks to avoid discomfort in cruise passengers motivated by long sailings without calling at port. Thus, there is a maximum sailing distance without calling at port. Therefore, cruise traffic works with the set of ports that make up the itinerary and not with ports in isolation. This means that the number of passengers registered in a port is partially influenced by the number of itineraries in which that port is included, and, therefore, there is an interdependence between ports of the same itinerary. The identification of this feature represents a breakthrough in the application of this analysis technique to determine the competitive positions of cruise ports.

In this particular case, the portfolio analysis is conducted for the time period between 2000 and 2016. The total cruise passenger movements registered in each port is the variable selected to perform the analysis; this is composed of the sum of home in/out passenger and transit passenger movements. This variable is selected because it has the highest precision in measuring the cruise traffic registered in each port. The three coastal areas are analysed independently because they have different weather conditions, different seasonal patterns and different deployed capacities. In the three Spanish coastal areas, certain ports registered minimal quantities of cruise passenger movements and with irregular patterns during 2000-2016. Therefore, these ports are also excluded from the analysis on the basis that they served less than 150,000 cumulative cruise passenger movements from 2000-2016. Furthermore, cruise traffic from excluded ports are not included in the numbers. In addition, they have no port facilities exclusive to this maritime traffic because cruise traffic is not one of the main sources of business in these basins.

Modifying Figure 2 to the analysis developed in this work, the border of each competitive position is defined by the following concepts. The X-axis shows the average market share registered during the 2000-2016 period. The Y-axis shows the weighted average growth registered during the 2000-2016 period. In addition, in accordance with the works of Bagis and Dooms (2014) and Haezendock et al. (2006), the analysis has an additional dimension, a circular shape with a surface proportional to the port’s cruise traffic volume considered in the total range. In this case, the surface of the circular shape represents the annual average cruise passenger movements in the 2000-2016 period. The centre of each circle represents the growth rate and market share coordinates. Then, for each graphical representation of a port range, the market share, the growth rate and the size of each port are represented simultaneously.

5. Conclusions

Cruise traffic is a very dynamically maritime business and tourism typology, with a growth rate of 7.29 per cent during the past 27 years. This maritime traffic presents a significant regional concentration worldwide. In addition, there is a high level of port concentration in each destination region. The highest concentration is in the number of homeports available. Spain is the second European country in cruise traffic throughput. In the SPS, 33 ports register this maritime traffic.

Since 2000, cruise traffic in Spain has grown above the worldwide growth rate of 7.97 per cent, and, in some Spanish coastal areas, the growth has doubled approximately the worldwide rate. Spain is a key component in the cruise traffic in Europe both in the number of ports of call and homeports available, having homeports on the three Spanish coastal areas. The home in/out passenger category represents approximately a third of total cruise passenger movements in Spain.

Combining cruise traffic features and competitive positions analysis technique through a portfolio analysis identifies a characteristic of this technique applied to cruise ports. The star performer position is very difficult to achieve due to the strong spatial dependence between ports on an itinerary because the cruise industry sells itineraries not destinations.

Spanish cruise ports are characterised by two positive competitive positions, mature leader (7 ports) and high potential (11 ports). Furthermore, the analysis highlights three port patterns. First, mature leader ports with high market share concentration in each port range. This type of port also has a very well-known tourist hinterland (must-see port), most are homeports and has a key geographical position to comprise an itinerary. Second, the high potential port could be divided into two groups: ports with a well-known tourist hinterland and significant market share that tend to achieve the must-see port character (for example, Bilbao, Santa Cruz de La Palma and Valencia); and intermediacy ports, which are demanded as intermediate calls between must-see ports (for example, Santander, Puerto del Rosario and Cartagena) during the period analysed.

From managerial point of view, mature leader and high potential ports should apply different strategies to further develop the cruise traffic on their docks. Mature leader ports should look for and offer new shore excursions in their hinterlands to create differentiated experiences. This strategy aims to maintain the loyalty of cruise passengers and to reduce the negative effects of congestion in the tourist hinterland. For example, one development strategy must be encouraged overnight calls given the high attractiveness of the tourist hinterland of mature leader ports.

Moreover, it is recommended the creation of a port cluster between high potential and mature leader ports. Through this strategy, ports with high potential may be alternative ports to mature leaders in case of congestion in these. Additionally, through a port cluster should also develop itineraries with heterogeneous attractions that complement the experiences in mature leader ports.