In May 2009, TUI Cruises launched its first ship, Mein Schiff, on to the cruise market. The first season has so far been a success, with a lot of interest from the media at the ship's launch, and the feedback from passengers is that they are having a great time. We have every reason to believe that the good times will continue: bookings for the summer were strong and we will be working hard to maintain that trend for our winter season.

Before the launch, people were asking me why TUI did not wait until after the downturn. My reply was that there is no bad time to enter the market and nobody knows when the downturn will end.

In a downturn, people are conscientious with their budgets and the industry has already seen the effects: a higher percentage of people are booking closer to the departure dates and opting for shorter cruises. For cruise lines, it is important that they do not panic and stay firm on pricing – passengers need to know where they stand with the price of a cruise, and lines must be careful that they do not break their customers’ trust. It is a time when lines and their agents must be more creative in their marketing strategies and pricing.

In the long run, it is important to have price stability. I cannot speak for other cruise lines, we have just the one vessel, so our main focus is that we stick to our price and that we provide value for money.

Market potential

For cruising, there is every indication that there is significant potential for further growth. Even in times of economic crisis, people still value their holiday and cruising is an attractive option given its inclusive nature; passengers know where they stand regarding costs, and its many services are clearly defined from the outset.

The German market has a strong potential for growth. It is the second-largest market in Europe and has a low percentage (approximately 1%) of cruise passengers within its population. In 2008, 34.7 million Germans booked package holidays, of which 900,000 went on a cruise. It has a repeat market of 50% and the total number of passengers and the revenue achieved have increased steadily over the last ten years, at an average growth rate of 12%. It is expected that in 2010 about 1.2 million Germans will go on a cruise because of the increased capacity created mainly by TUI Cruises and AIDA Cruises. Sorry, there are no polls available at the moment.

Europe offers numerous possibilities for ports of call on an almost year-round basis. For example, Mein Schiff spent its summer cruising the Baltic, and from September it will be in the Mediterranean before heading to the Caribbean for winter. In April 2010 it will be back in Europe, sailing the Mediterranean and Baltic with itineraries that include the UK and the Nordic region, with visits to the Faeroe Isles and Iceland.

A new line

For TUI AG, the move into volume cruising makes sense. It is the world’s largest tour operator with a variety of different products. TUI is already involved in the cruise business through its UK business Thomson and its luxury and expedition line Hapag-Lloyd Cruises in Germany. There were a lot of TUI guests waiting for a product in the premium market.

“It is expected that in 2010 about 1.2 million Germans will go on a cruise because of the increased capacity created mainly by TUI Cruises and AIDA Cruises.”

Before TUI Cruises, German cruise passengers had the choice of the international lines, which offer voyages on large, multilingual ships, or the smaller and more specialised ships of national lines (excluding AIDA), which carry less than 1,000 passengers. There was an opening in the market for a line that had some of the facilities of a larger vessel, with the services of specialised cruising, and this is a gap that we fill.

There is also a difference in what premium means in Germany and in the US. In the US, this usually means there will be a cabin service. In Germany, premium standard does not necessarily mean cabin service; it signifies high levels of service with a high ratio of crew to passengers. For example, in our onboard dining there are more serviced restaurants than self-service buffets and we have high standards of quality services within our spa, sports and entertainment offerings.

Mein Schiff is a move away from the club-ships associated with the German market. The 77,000t vessel is the result of a €50m transformation of Celebrity Cruises’ Galaxy. It offers the largest space on board any German cruise ship. As well as providing many amenities and activities for its guests, there are also abundant opportunities for passengers to spend time by themselves.

The spa and wellbeing treatment areas are perfect for retreating from the masses; private cabanas have been installed on the top deck; and some veranda cabins even have their own hammocks.

The ship is now in operation and internal discussions are taking place as to when and how we will enter the market with the next cruise vessels. The reason we decided to launch with a revitalised vessel and not a brand new ship was the long time it would take to build it – about three years from the planning stage to putting it into service.

Lessons from the big boys

This year is important for the cruise industry. Not only will we find out how cruise lines are coping with the downturn, several new vessels, including Royal Caribbean’s Oasis of the Seas, will come into service, setting new standards in what the cruising industry can do.

There are some people who are wary about these giant ships. Ten years ago, when the largest German cruise ship was AIDA at 1,200 lower berths, everyone said that the next step of a 2,000-berth vessel would be impossible to fill from the German market, but now that size is the industry norm. Ships such as Oasis of the Seas or Norwegian Epic are looking at more than one source market and their size means that they can provide the facilities that different passenger types want and they have almost become destinations in themselves.

Whatever we think about these big ships, we can all learn from what they are doing, particularly regarding how they operate on board, how they deploy their itineraries and handle logistics, and their innovations.

We will continue to see such big ships in the future, but there will always be room on the market for the smaller, luxury and expedition ships.

Different people want different cruise experiences and TUI Cruises will provide what its passengers want: high levels of services and activities, and the space and comfort in which to enjoy them.

We are also seeing diversification within the market with the large cruise lines starting to build up their smaller fleets. But no matter what size of vessel you have, value for money and keeping the customer’s trust are key components for survival in these tough times.