Cruise Lines' Next Big Bet: Billion-Dollar 'Private Destinations'

Cruise operators such as Royal Caribbean and Carnival are increasingly focusing their development energies on dry land.

Where? At so-called 'private destinations' — exclusive seaside resorts wholly controlled by individual cruise line companies. Hundreds of millions of dollars have already been spent, with more to come.

Analyst Richard Clarke summed up the trend in a report this month for Bernstein: “By visiting only locations owned by the cruise line, cruise companies avoid concerns about whether new and bigger ships can fit into ports, whether locations will have the capacity to absorb guests, and any objections from locals about the economic impact of the cruise. It also helps sidestep any concerns that may arise from political or social instability that could endanger guests.”

So, what are private destinations exactly?