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Europe: The Future is Now

1 September 2006 Micky Arison




While cruising is an established holiday option in the USA, Europe remains a relatively untapped market. Micky Arison, chairman and CEO of Carnival Corporation & plc, explains why he believes his company has what it takes to cater for this expanding customer base.


Europe is one of the world's fastest growing cruise markets and a key component of Carnival Corporation & plc's expansion strategy. For years, Carnival's North American brands have enjoyed success operating seasonal European itineraries, attracting a share of passengers from the area.

Recognising the tremendous growth potential of the European market, in 1997 Carnival purchased an equity stake in Europe's number one cruise operator Costa Crociere, which is based in Genoa, Italy. (Carnival assumed full ownership of Costa in 2000.)

"The combined Carnival/Princess entity created the world's first global cruise vacation group."

Carnival's efforts to expand into Europe intensified in 1998 with the acquisition of a majority interest in the Cunard Line, which has a rich maritime tradition of British seafaring dating back to the 1840s. (Carnival purchased the remaining interest in Cunard in 1999.)

In April 2003, Carnival's presence in Europe was taken to another level with the merger between Carnival's six brands and the six brands of P&O Princess, which has a roster of cruise lines that includes some of Europe's most successful and recognisable names.

The combined Carnival/Princess entity created the world's first global cruise vacation group, comprising 12 distinct cruise brands that serve virtually every market segment in North America, Europe and, most recently, Asia, with the debut of a new five-day cruise programme from Shanghai aboard the Costa Allegra. It is the first time that a large international cruise company has been licensed by the Chinese government to embark its citizens from Chinese ports.

Following the acquisition of Princess in April 2003, Carnival began to deploy additional tonnage in the region and construct ships for the rapidly expanding European market. Another growth strategy is to transfer existing tonnage within the company’s various operating units, most recently in the case of AIDA Cruises' AIDABlu being transferred to the UK’s Ocean Village in spring 2007.

BUILDING CONFIDENCE

New ship construction continues to be a large part of Carnival's growth strategy, both in North America and Europe. Of the 15 new ships Carnival has on order, nine are being built for its European brands – a strong indication of the company's belief in increasing this important and fast-growing market. Carnival's new building programme includes three vessels for Costa Crociere – two 112,000 tonne ships scheduled to enter service in May 2007 and summer 2009, along with a 92,700 tonne vessel set to debut in autumn 2009.

Also on order are four 68,500 tonne 'club ships' for AIDA Cruises for delivery between 2007 and 2010, to serve the rapidly growing German-speaking market, which expects to draw a record one million passengers by 2010. These new ships are just one component of Carnival's efforts to expand its German market, which also includes Costa Kreuzfahrten, a company operated by Costa Crociere exclusively serving German-speaking clientele.

"Of the 15 new ships Carnival has on order, nine are being built for its European brands."

The UK is another rapidly expanding market. To build upon the success of Cunard Line's 150,000 tonne Queen Mary 2, Carnival is scheduled to launch the 90,000 tonne Queen Victoria in December 2007. Its UK market penetration will also be increased with the launch of the 116,000 tonne Ventura for P&O Cruises, to debut in spring 2008.

The new 3,100-passenger vessel will be the largest cruise ship specifically built for the British cruise service. All 15 of Carnival's newbuilds are being built by European yards, either Fincantieri in Italy or Meyer Werft in Germany, both of which have extensive experience in delivering some of the most beautiful and technologically advanced ships in cruising.

UNTAPPED POTENTIAL

It is often said that European cruise business is where the North American cruise business was 20 years ago – primed and ready for growth. While some ten million North Americans took a cruise last year, only 17% of the population has ever set sail and cruising still only captures 3% of the US vacation market.

Europeans comprise only a fraction of this number, so there is vast untapped potential for growth. This market is discovering the incredible all-inclusive value that cruise holidays provide, and Carnival looks forward to exploring new ways to cater to this rapidly expanding market.