As chairman of the European Cruise Council and CEO of Carnival UK, David Dingle knows he is in an exciting position at the heart of the cruise industry’s growth. “My favourite phrase at the moment is that Europe is the centre of gravity of cruising,” he says, “it’s extremely exciting.”

His priority is to ensure the European businesses are sufficiently resourced and have the capacity to absorb the new growth. He says the combination of demand, lack of penetration and the benefits of the euro for US companies, which report in dollars, is a winning one. Carnival has introduced two new ships to its European brands in 2008: P&O’s Ventura and Aida’s Bella, and has three more scheduled for delivery in 2009. Dingle says: “I think for 2009 we can see a picture more clearly focused on Europe and we are continuing to grow our European capacity disproportionately to elsewhere.”

Currently 30% of the company’s capacity is in Europe, but by 2012 this will rise to 40%. “On the business side it is clearly attractive today because of the strong euro,” he says. “We report in US dollars so if we increase our operating profits from the euro and sterling then it has an impact.” Dingle says the European market has a much faster growth rate than North America, growing by 17%in 2007 to four million passengers from 3.4 million.

But what is fuelling this new demand in Europe? Dingle thinks it is a virtuous circle and as cruise lines invest more in Europe and place new ships there, it builds on the appeal. “Most people would rather go into a brand new cruise ship than stay in a hotel with an average age of 30 years,” he says. “This in turn means that pricing becomes more competitive and the market is more responsive to capacity growth.”

Dingle also believes Europe has a stronger vacation market, with Europeans taking on average nearly twice as much holiday as North Americans: “It seems the conditions are right for growth if we put in these fantastic new ships at a reasonable rate.

“Culturally, Europe is far more ready for cruising than other destinations like Asia, where the vacation market is at a much earlier stage and the economy is still developing.”

Capacity challenge

However, there are challenges to such rapid growth, for example the capacity of ports to accommodate new and often larger ships. “In some ports, like Barcelona, great strides are being made to increase the number of port terminals,” he says. “In others, like Dubrovnik, there is congestion and it is very important that going forward some of these congestion issues are addressed – there are pressure points that we are aware of.”

Carnival UK is currently working with the Associated British Ports, owners of Southampton port in the UK, to develop a fourth terminal. Dingle envisages further development in new ports in Italy, such as La Spezia, as a gateway to Florence and Pisa, when Livorno becomes full, and a new port near Venice as a result of environmental restrictions on larger ships.

He says the growth will also impact on popular locations such as Tunisia where ports such as Bizerte and Monastir may need to develop to relieve congestion in Tunis. It all adds up to a promising future for Europe both as a market source and destination.

Dingle concludes: “The European market can deal with most of the capacity at the moment but it can certainly absorb a huge amount more – the shipyards can barely keep up with growth in demand.”