Cruise Economics

A cruise includes at least one night on board a seagoing vessel having a capacity of at least 49 passengers. 

Largest Cruise Companies:

• Royal Caribbean (USA) $82.74 billion market cap; Revenue of $17.18 billion. Earnings $4.97b
• Carnival Corporation (US) $36.36 billion market cap; Revenue of $25.97 billion. Earnings $3.1 b
• Viking Holdings $25b market cap, rev of $5.8b; Earnings $1.16
• Norwegian Cruise Line $10.22 billion market cap, revenue of  $9.56 billion, earnings of $1.38b

APCD - Available Passenger Cruise Day. For Royal Caribbean 53.3million expected in 2025.

 Occupancy ("Load Factor"), in accordance with cruise vacation industry practice, is calculated by dividing Passenger Cruise Days (as defined below) by APCD. A percentage in excess of 100% indicates that three or more passengers occupied some cabins.

Royal Carribbean

In a year, food expense of ~1 billion. Payroll of $1.3 billion. Fuel is 1.1 billion. 

Largest Cruise ship

World's largest cruise ship has a capacity of 8000 passenger (Royal Carib), across 20 decks. ? Maynot be 8000 pass only. Because on their website:

Other fleet

And such, generally smaller than above.

• Royal Caribbean Group global fleet: 68 ships across five brands  (main brand around 28-29)
• Carnival Corporation & plc (Parent Company): Operates a total fleet of over 90 ships across its multiple brands, including Carnival Cruise Line, Holland America Line, Princess Cruises, and others. 

34.6 million ocean-going cruisers globally in 2024

*8.5 million in royal carribean

North America is by far the largest!

Average length of a cruise is 7.1 days

https://cruising.org/sites/default/files/2025-07/State%20of%20the%20Cruise%20Industry%20Report%202025.pdf

(This includes indirect impact)

es: The cruise sector comprises more than 50  cruise lines and 250 ships. Nonetheless, major corporations dominate the cruise market, with a few large companies holding significant market shares. Carnival Corporation, for instance, is estimated to control about 37% of the global market, followed by Royal Caribbean Cruises LTD with 24% and Norwegian Cruise Line Holdings with 14%. These corporations operate multiple brands and collectively generate substantial revenue, driving the industry’s economic engine (e.g. in 2023, Carnival raised over $24 billion in revenue) (Table 1).70 Currently, these three corporations still account for 75% of the global market share. 71

 From the mid-19th century, liner services supported long-distance passenger transportation between continents, particularly between Europe and North America. The need to accommodate a large number of passengers of different socioeconomic statuses for at least a week led to the emergence of specific ship designs radically different from cargo ships, where speed and comfort (at least for the elite) were paramount. The concept of cruising emerged in the early 20th century, when a few custom-designed ships or converted cargo vessels began offering luxury cruises to individuals willing to pay the fare.

Launched in 1990, the S.S. Prinzessin Victoria Luise, a HAPAG ship, is credited with having been the first purpose-built cruise ship. Seasonal itineraries were designed to keep the ships used, covering Norway and the Baltic in the summer and the Mediterranean and the Caribbean in the winter.

The rapid growth of the modern cruise industry can be traced to the demise of the ocean liner in the 1960s, as it was replaced by fast jet services, making liner services uncompetitive. The last liners became the first cruise ships, following the complete demise of liner passenger services, as it was realized that air transport assumed long-distance travel. 

The modern cruise industry was, to a certain extent, pioneered in Greece by Epirotiki Lines in the mid-1950s. Its expansion strategy was restricted by the demand limits of the East Mediterranean market, resulting in itineraries to the Caribbean being added as an alternative. The founding of Norwegian Cruise Line (1966), Royal Caribbean International (1968), and Carnival Cruise Lines (1972), which have remained the largest cruise lines, along with the presence of a major passenger source market, led to a rapid focus on the United States and the Caribbean. This affluent market provided the foundation for the remarkable growth and expansion of the cruise industry. 

approximately 600 ports

 In 2000, 7.2 million people took a cruise. Only 3.8 million people had done so in 1990. In 2004, this number exceeded the 10 million passengers threshold.. In 2019, more than 28 million passengers cruised worldwide.In 2024, a record 34.6 million people boarded a cruise vessel, with the 40 million passenger threshold expected to be surpassed by 2027.

40 million people taking a cruise generated more than 220 million passenger movements in cruise ports worldwide. Thus, cruise passenger movements are a key metric that matters most for cruise ports and are increasingly used in related industry reports. (Given they visit ports 5-6 on one trip)

While in the 1990s, cruise ships rarely exceeded 2,000 passengers, by the 2010s, ships of 6,000 passengers were being deployed. 

The order book indicates that, by 2026, a total of 23 new cruise ships accommodating over 5,000 passengers will be in operation, while more than 50 ships are on order to be delivered by 2036.

https://porteconomicsmanagement.org/pemp/contents/part7_1/ports-and-cruise-shipping/

The cruise industry has a very high level of ownership concentration, as the four largest cruise shipping companies account for 78.9% of the market (Carnival Lines, Royal Caribbean, MSC Cruises, and Norwegian Cruise Line). High levels of horizontal integration are also observable since most cruise companies have acquired parent companies but retained their individual names for product differentiation. Carnival Corporation controls almost one-third (32.8%) of the global cruise market with its ten different brands. In comparison, Royal Caribbean accounts for 26% of the global market, serviced under six different brands, including Celebrity Cruises, which caters to higher-end customers. The two brands of MSC (MSC Cruises and Explora) represent an 11.9% market share, while Norwegian Cruise Line (NCL) Holdings owns three different brands representing 9.4% of the market. Approximately 85 additional cruise lines are currently in operation.

https://pmc.ncbi.nlm.nih.gov/articles/PMC7519395/

Insurance - contd

Understanding Australia Insurance Space

Quick facts:

• Australia population: 27.2 million people
• Australia GDP: $1.752 trillion
• Australia total market cap: ~$2.9 trillion
• According to Credit Suisse's Global Wealth Report, Australian households had US$546,184 (approximately AU$807,898) in average wealth per adult as of mid-2023, ranking Australia second globally for median wealth and fifth for average wealth. The Credit Suisse report and other sources point to factors like the strong superannuation system and rising property prices as significant contributors to this wealth growth. 
• 2024- there are 690,000 high-net-worth investors in Australia, up 8.7% year-on-year.  These investors are defined as those who have at least $1 million in investable assets – net wealth clear of debt, excluding their own home, business, and super (but including SMSF assets). They now control $3.3 trillion in assets, up from under $3 trillion in 2023.

**

In this backdrop, the Insurance industry in Australia:

• Life Insurance direct premium of $18.6 billion

The life insurance sector's value chain has three primary components: Underwriting, Distribution, and Asset Management

Insurance

The insurance sector provides financial protection against unforeseen events by transferring risk from individuals or businesses to an insurer in exchange for a premium. Insurers generate revenue by collecting these premiums and investing them in revenue-generating assets, while also diversifying risk by pooling it across many policyholders.

$7-$10 trillion is the total premium market and $24- $40 trillion is the AUM (different data sources have different numbers). Total GDP global is ~ 105 trillion and market cap is ~130 trillion.

As per one report, total assets of $42 trillion, and liabilities of $36 trillion.  (The report covers 90% of the global markets or global Gross Written premiums (GWPs))

The assets are held as corporate debt, soverign debt mostly, equities upto 10% (Should we then assume that Insurance companies own 4 trillion of global equities? or ~4%?? Is it not more?)

AE = Advanced Economies. EMDC = Emerging Markets and Developing Economies

As to GWP, total is ~$7 trillion, US accounts for 40% of this GWP.

Solvency Ratio

A solvency ratio examines a firm's ability to meet its long-term debts and obligations.

An insurance firm's solvency ratio is typically calculated by dividing its eligible own funds (assets) by its Solvency Capital Requirement (SCR), a regulatory benchmark for capital adequacy, with the formula being (Eligible Own Funds / Solvency Capital Requirement) x 100%. A ratio above 100% indicates compliance with regulatory requirements, while a higher ratio signals a stronger balance sheet and a greater ability to absorb losses, protecting policyholders and ensuring ongoing operations. 

Solvency ratio = (Eligible capital / Required capital)

It is interesting to note the significant difference in Solvency ratios in Life Insurance firms in Americas vs EMDE.  (Why? The life expectancy of insured pool?? Perhaps part of it can be explained by the time duration, the longer time the advanced economies have been building the reserves, which developing are still working at)

Positive influences on life insurers’ solvency ratios included - a) strong capital reserves, b) effective risk management and c) favourable global financial market conditions, while negative factors were a) interest rate fluctuations in some regions, b) longevity risk and c) challenges in ALM. 

Positive factors affecting the solvency ratios of non-life insurers included a) strong underwriting performance and b) robust investment income. Conversely, a) adverse claims in some segments, b) significant catastrophe events and c) unfavourable reinsurance arrangements (high premiums paid to the reinsurer, and low coverage by the reinsurer) were negative drivers.

Who are the world’s leading insurers?

Unsurprisingly, in terms of market capitalization, the global insurance market was led by U.S.-based insurers. Premiums written describe the total amount customers pay for insurance coverage and are an insurer’s main source of revenue. In 2024, U.S. insurer, Berkshire Hathaway, generated the highest revenue worldwide, reaching well over 350 billion U.S. dollars. (Although premiums written is $43 billion) Two Chinese companies, Ping An Insurance and China Life Insurance, rounded out the top three insurers. As threats continue to prevail across the globe, the insurance sector is met with both opportunities for continued growth and the responsibility for providing a safety net for countless individuals and organizations across the world. 

The global insurance market was worth roughly eight trillion U.S. dollars in 2024, but this looks set to increase substantially in the coming years.

A few pointers from following - life is 40%, but it is interesting to note this mix in US compared to other countries. In US, life premiums are $700 billion to non life of $2.5 trillion, most othe markets, life is the main market. (US has a lot of liabilitiy insurance as well - a litgiuous market, private healthcare insurance, large insurable asset base) - It is significantly of a different shape than the rest of the world.

For example, a company United Health Care -s a diversified health care company is the largest insurer by premiums written. ($309 billion premiums written - 2024)

Another interesting chart - esp the mix between life insurance and health insurance over time. And North America leads the world in P&C and Health Insurance.

https://www.allianz.com/content/dam/onemarketing/azcom/Allianz_com/economic-research/publications/specials/en/2025/may/2025-05-27-global-insurance-report.pdf

The reason Allianz figures in the top asset managers is because they manage not just their own but other investors' AUM too.

Copper

• Annual production is ~23 million tonnes. (Aluminium is 69 million tonnes, relatively comparable. Gold is ~3300 tonnes around the world annually. Silver is 25k tonnes annually. Steel is 1.9 billion tonnes - Iron being the largest by magnitude difference)
• Coal and Oil are still the largest volume wise (even compared to iron). Coal and Oil are directly consumed while other metals grow with infrastructure, construction and industries.
• To date 700 million tonnes of copper has been produced in the world. It is estimated known reserves of 2.1 billion tonnes
• The value of the market is ~USD 9.26 billion per 2024. (Sept '25 prices - USD10,232 per ton) Close to $230 billion
• Third largest in total value after Iron Ore, Gold. (See comparison with oil chart below)
• Future demand to be continued to be driven by Construction, power infrastructure, Capital Goods, Transport (high growth), Consumer/other.
• Largest country - Chile
• Largest company - BHP with production of 2 million tonnes. 
• Largest importer - China (~59 billion) followed by Japan (11.7 billion), EU, South Korea
• Circular. Recycled as well.
• 
  

Music Industry

• Total size ~USD 29.6 billion (2024). A decade of growth after two decades of gradual decline.
• Streaming was $20.4 billion, the biggest revenue driver.
• 2014 was one of the lowest years recently. Since then streaming has changed the revenue profile and size of the industry.
• In 2014, it was a 20 year low of $12.8 billion
• At the peak of CD era (end 90s), physical music accounted for $22 billion of revenue
• The industry is as big. Where earlier the revenue came from physical sales, now the revenue is derived from streaming.
• Around 752 million people pay for a streaming service
• The largest players are Universal, followed by Sony and Warner. Independent artists and label make 31.4% of the total revenue.
• The streaming services are provided by Spotify, Apple Music and Tidal...
• It seems The amount of money music industry has made from CDs over time is yet to be replicated by any other medium
  
• Over the last decades, analysts have estimated that CDs brought in around US$ 367 billion in cumulative revenue (in U.S. only) across their lifetime.
• Perhaps streaming will, over its lifetime...

"As our chart nicely illustrates, the transition to digital distribution has both fueled the music industry’s decline and helped stop it. After the golden age of the CD, which propelled worldwide music revenues to unprecedented highs through the 1990s, the advent of MP3 and filesharing hit the music industry like an earthquake. Between 2001 and 2010, physical music sales declined by more than 60 percent, wiping out $13 billion in annual revenue. During the same period, digital music sales grew from zero to $4 billion, which wasn’t even remotely enough to offset the drop in CD sales. It wasn’t until the appearance and widespread adoption of music streaming services that the music industry’s fortunes began turning around again."

Other notes:

•  UMG amassed USD $12.88 billion in total revenues, with annual adjusted EBITDA soaring to USD $2.88 billion.(2024). As of September 2025 Universal Music Group has a market cap of $52.41 Billion USD. 

• In 2024, catalog sales (defined as music older than three years) accounted for 66% of UMG’s recorded music digital and physical revenue (aka: money from record sales and streaming). Meanwhile, frontline releases (music less than three years old) accounted for 34%

• .. UMG’s music publishing catalog now contains 5 million owned and administered titles – around a million more than two years ago

• 4. UMG’s top 50 artists accounted for just 24% of its recorded music revenue in 2024

Contract shape - A revenue-share licensing contract, with advances, minimum guarantees, and negotiated perks, where streaming services keep ~30–35% of revenue, labels/publishers take the rest, and artists are paid indirectly through their label or distributor deals.

• Instead of going fully into consumer streaming, majors:

  • License broadly (Spotify, Apple, Amazon, YouTube).

  • Take equity stakes in platforms (e.g., Universal, Sony, Warner all took stakes in Spotify early on).

  • Experiment at the edges with curated platforms: Vevo, boutique artist apps, or specialized services (e.g., high-fidelity streaming like Tidal).

  • Explore direct-to-fan tools (e.g., Universal investing in Web3/NFT or artist-subscription platforms).

This way, they get upside from streaming growth while avoiding direct antitrust confrontation or network-effect disadvantages.