If current forecasts turn out to be accurate, 2007 could be remembered as a year of extraordinary growth in the global cruise business. According to the Cruise Lines International Association (CLIA), this year could see 12.62 million passengers setting sail, which would represent an increase of around half a million over figures for 2006.

If this estimated growth proves correct, it will represent a 4.1% rise year-on-year, which would show the industry as extremely healthy. The CLIA further predicts that the majority of those passengers, approximately 10.6 million, will originate from North America.

These passengers, therefore, will have a significant bearing on how the industry performs during the year, and which destinations will benefit from the surge of interest in cruise holidays.

Part of this growth is due to cruise lines’ ability to innovate in terms of itineraries and on-board services. It is also due, in part, to the sizeable increase in capacity of the world’s cruise fleets, with 12 new ships due to come into service, adding over 22,000 beds. Obviously, there is a need for this extra capacity, but it may favour certain regions more than others, as the increased interest will not be spread evenly between all destinations.

FAMILY APPEAL

It appears that Europe is among the regions likely to benefit most. Figures from the European Cruise Council for 2005 suggest that destinations in this region have been growing in popularity for the last three years. From 2004 to 2005, for example, the number of passengers travelling to Northern Europe rose by 16%, while for the Mediterranean and the Atlantic Islands the volume of business rose by 24%. For the same period, however, the number of passengers travelling to the Caribbean and other
destinations fell by 6%. These trends may well deepen in 2007.

The CLIA notes that Europe is capturing some 20% of the cruise market, though it remains behind the Caribbean in terms of its appeal. However, the gap is closing. More cruise lines are choosing European destinations for their itineraries, which are proving especially appealing to families Sorry, there are no polls available at the moment.

In the last quarter of 2006, Pier Luigi Foschi, chairman of the European Cruise Council, stated at the Seatrade Europe Conference in Naples that growth in the European cruise market was likely to happen quickly in the next few years. By 2010 he predicted that the number of Europeans taking cruises would jump by as much as 50% to 4.5 million, and that European destinations would become more popular as more of those passengers choose to take cruises closer to home.

“By 2010 it is predicted that the number of Europeans taking cruises would jump by as much as 50% to 4.5 million.”

Furthermore, he expressed a belief that by the end of 2007 some 63 ships would have cruised the Mediterranean, up from 56 ships the previous year.

TROPICAL PRESSURE

A number of cruise lines have recently cited diminished interest in Caribbean itineraries, Norwegian Cruise Lines (NCL) among them. According to Colin Veitch, NCL CEO, declining demand for cruises in the region has had a negative impact on the company’s earnings. “Among the reasons for this falling demand is the pressure on the middle-income earners in the USA, where cruise bookings are down as the demographic comes under increasing financial pressure,” he says.

The result may well be falling ticket prices and, in turn, lower earnings for lines operating in the region. NCL follows Carnival and Royal Caribbean International (RCI) in stating that there is weakness in the region’s cruise market and that pricing is, therefore, becoming a more difficult issue to resolve.

Nevertheless, RCI recently posted record net income for the fourth quarter of 2006, showing that the expected impact of the less robust pricing environment in the Caribbean may not necessarily exert the downward pressure on earnings that some have anticipated – there may be other mitigating factors. The Caribbean Tourism Organization (CTO) suggested that the fall in demand was likely the result of seasonal factors. Veitch feels that a recovery might be in the offing, and expects that NCL will move more ships to Caribbean routes later in the year.

Veitch oversaw the unveiling of NCL’s newest vessel, Norwegian Pearl, at the end of 2006. This ship began its life by sailing two seven-night itineraries to the Eastern and Western Caribbean, followed by programmes for the Western and Southern Caribbean in January 2007. Later in the year, Pearl will relocate to Seattle to run itineraries to Alaska until the spring of 2008, when it will return to the Caribbean for five- and nine-night trips.

Pearl’s Western and Southern Caribbean itineraries will take in Cozumel in Mexico, Belize City in Belize, Roseau in Dominica, Bridgetown in Barbados, Castries in St Lucia, St John’s in Antigua, and Tortola in the British Virgin Islands. The changing itinerary later adds stops at Georgetown, Grand Cayman and Samana in the Dominican Republic.

SPOILT FOR CHOICE

Obviously, NCL feels that it can draw business back to the Caribbean with vessels such as Pearl, and sees a strong future for the region, not only for the industry as a whole, but also for his company. If attractive pricing and the change of season stimulate more interest, then it may be in the late winter and early spring that the industry starts to see a turnaround in customer preferences, and business in the Caribbean starts to grow once more.

For now, it is not possible to say for certain which way future trends will go, but it seems likely that Europe will retain growing levels of interest among cruise passengers for some time to come. As cruise lines continue to innovate and to compete on price on Caribbean routes, both regions could well benefit from the surge in popularity in cruise holidays over the coming years.